2015 (9) TMI 453 - AT - Customs

Revocation of Customs Broker Licence - offence relating to smuggling of Red Sanders - whether revocation of licence of the customs broker, the appellant is correct considering the role of the appellant broker in clandestine export of Red sanders. - Held that - The three actions of the appellant of failing to advice the client regarding affix of bottle seal no., obtaining dock permits and obtaining the second bottle seal have been taken together to come to the conclusion that the omissions of the appellant cannot be treated as innocent acts of omission but a series of acts which taken together become acts of commission on the part of customs broker to facilitate the smuggling of prohibited red sanders. Whether the omission on the part of Broker is deliberate - Held that - Therefore even though not advising the client is an omission on the part of the appellant, it cannot be said that this action was one of the series of acts of the appellant to facilitate smuggling of red sanders. In fact the opposite would have been done if the intention was to facilitate smuggling of red sanders as observed by us earlier. The same applies for obtaining dock permit also. The very fact that appellant simply obtained the dock permits and ignored the fact that the name was different gives a feeling that they may not be actively involved in smuggling because if they were involved they would have advised the client that this could create a problem and they would have changed the transporter or the truck or found some other way. There is no evidence of collusion at the port gate. The fact that they simply obtained the dock permits, in our opinion, cannot mean that it shows malafide intention. The punishment of revocation of licence is disproportionate to the offence committed and therefore cannot be sustained. - Decided in favor of appellant.

Issues Involved:
1. Renewal of Customs Broker Licence
2. Revocation of Licence
3. Principles of Res Judicata
4. Allegations of Misconduct and Violation of Customs Broker Licensing Regulations (CBLR)
5. Proportionality of Punishment

Detailed Analysis:

1. Renewal of Customs Broker Licence:
The appellants, engaged in freight forwarding and Customs Broker activities, applied for renewal of their licence on 14.2.2014. The Commissioner of Customs, Bangalore, issued a show-cause notice for non-renewal based on a report from Kolkata Customs regarding an incident involving the export of prohibited Red Sanders. The Tribunal initially directed the Commissioner to renew the licence, but the Commissioner renewed it only for six months. The High Court later directed the Commissioner to renew the licence within two weeks and report compliance.

2. Revocation of Licence:
A subsequent show-cause notice was issued on 1.9.2014, leading to the revocation of the licence on 20.2.2015, forfeiture of the security deposit, and imposition of a Rs. 50,000 penalty. The revocation was based on the alleged involvement in smuggling Red Sanders and the failure to comply with CBLR regulations.

3. Principles of Res Judicata:
The appellants argued that the proceedings were barred by res judicata as the issues were substantially the same as those considered during the renewal process. The Commissioner, however, distinguished between renewal under Regulation 9 and revocation under Regulation 18, concluding that res judicata did not apply as the grounds for renewal and revocation were different.

4. Allegations of Misconduct and Violation of CBLR:
The Commissioner found the appellants guilty of violating Regulation 11(d) and 17(9) of CBLR, which require advising clients to comply with the law and supervising employees' conduct. The specific allegations included:
- Failure to mention the bottle seal number on the ARE-1 form.
- Obtaining dock permits for a non-existent transporter.
- Obtaining a second bottle seal unnecessarily.

The Tribunal, however, found that while the appellants failed to advise the client regarding the bottle seal number, the other allegations did not conclusively prove misconduct or malafide intention. The Tribunal noted that proper training and supervision of employees were lacking but did not find sufficient evidence of deliberate facilitation of smuggling.

5. Proportionality of Punishment:
The Tribunal considered the punishment of revocation and forfeiture of the entire security deposit disproportionate to the offence. It noted that the appellants had already been prevented from functioning as a Customs Broker for over six months due to non-renewal and the six-month licence period. The Tribunal reduced the penalty from Rs. 50,000 to Rs. 10,000 and set aside the revocation and forfeiture of the security deposit.

Conclusion:
The Tribunal concluded that the appellants' actions did not warrant the severe punishment of licence revocation and total forfeiture of the security deposit. The penalty was reduced to Rs. 10,000 for the failure to advise the client regarding the bottle seal number, and the revocation of the licence was set aside. The Tribunal emphasized the need for proportionality in punishment and the importance of proper training and supervision of employees by the Customs Broker.

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