2016 (5) TMI 1061 - AT - Customs

Revokation of CHA licence - Whether the grant of G Card to Shri Naresh Makwana amounts to sub-letting of licence by the present broker so as to hold contravention of Regulation 10 against him - Held that - when the law itself permits engaging a G Card holder for running an extended office of the CHA at any other place then the place of appellant s commissionerate and when such G card holder stands engaged, by following the due processes of law and with the knowledge and consent of the Customs authorities, it cannot be held to be sub-letting of the licence. Inasmuch as the said ground is the only ground adopted by the Commissioner for revoking the licence in question and having held that appointment of a G card holder does not amount to subletting of the licence, the impugned order is not sustainable and set aside. Also the appellant has been completely out of his business and losing his earnings and livelihood for about last three months on account of revocation of his licence (which has also been a punishment for him) and when there was no mens rea involved on the part of the appellant in mis-use of the licence in Mumbai and the decisions pronounced by the Hon ble Bombay High Court in the case of Shri Venkatesh Shipping Services Pvt. Ltd. Vs. Union of India 2012 (9) TMI 425 - BOMBAY HIGH COURT , the present appellant deserves restoration of his Customs Broker Licence. Forfeiture of security - Held that - there is nothing on record to arrive at the conclusion that Shri Naresh Makhwana paid ₹ 35,000/- per month to the appellant as consideration for sub-letting his license. There is no document evidencing the sub-let or the payment or promise to pay monthly consideration. The bank account of Shri Naresh Makhwana or the appellant have not been placed on record to show that there was any such monthly payment made by Shri Naresh Makhwana to appellant. Not even a single instance of payment of ₹ 35,000/- is proved. Thus the retracted statement of the appellant is not corroborated by any independent evidence. The department has failed to establish the flow of consideration from Shri Naresh Makhwana to appellant and the sub-let of license. The Hon ble Member(Technical) has ordered forfeiture of security on the finding that there is subletting of license and that appellant violated Regulation 10 of Customs Brokers License Regulations, 2013 but I disagree with the view of Member (Technical). On this point, I agree with the Member(Judicial) that the revocation of license and forfeiture of security amount has to be set aside in toto and the appeal has to be allowed fully. - Decided in favour of appellant with consequential relief

Issues Involved:
1. Revocation of Customs Broker Licence.
2. Allegation of sub-letting the licence.
3. Forfeiture of security deposit.
4. Compliance with Customs Broker Licensing Regulations, 2013.
5. Legal implications of engaging a G Card holder.
6. Determination of monetary consideration for sub-letting.
7. Validity of the Commissioner’s findings.
8. Consequential relief to the appellant.

Issue-wise Detailed Analysis:

1. Revocation of Customs Broker Licence:
The appeal contested the order revoking the appellant's Customs Broker Licence, which was issued by the Commissioner of Customs, Cochin. The Tribunal found that the revocation was based on the allegation that the appellant had sub-let his licence to a G Card holder, Shri Naresh Makwana. However, the Tribunal concluded that the appointment of a G Card holder is permissible under Regulation 15 of the Customs Broker Licensing Regulations, 2013, and does not constitute sub-letting. Therefore, the revocation of the licence was deemed unsustainable.

2. Allegation of Sub-letting the Licence:
The Commissioner’s order alleged that the appellant sub-let his licence to Shri Naresh Makwana for a monetary consideration of ?35,000 per month. The Tribunal noted that the G Card holder was an authorized employee of the appellant, and his appointment was in accordance with the regulations. The Tribunal found no evidence to support the claim that the licence was sub-let for monetary gain. The arrangement between the appellant and the G Card holder was an internal matter and did not violate the regulations.

3. Forfeiture of Security Deposit:
The Commissioner’s order included the forfeiture of the security deposit, which was challenged by the appellant. The Tribunal held that since the revocation of the licence was set aside, the forfeiture of the security deposit would be contradictory. The Tribunal emphasized that there was no reliable evidence proving the appellant’s involvement in any illegal activities, and thus, the forfeiture of the security deposit was not justified.

4. Compliance with Customs Broker Licensing Regulations, 2013:
The Tribunal examined whether the appellant’s actions were in compliance with the Customs Broker Licensing Regulations, 2013. It was noted that the appellant had engaged a qualified G Card holder as per Regulation 15, and there was no contravention of Regulation 10, which prohibits the transfer or sub-letting of the licence. The Tribunal concluded that the appellant had adhered to the regulations.

5. Legal Implications of Engaging a G Card Holder:
The Tribunal discussed the legal implications of engaging a G Card holder, emphasizing that such appointments are permissible and do not amount to sub-letting. The Tribunal referenced the decision of the Hon’ble Delhi High Court in Ashiana Cargo Services, which held that violations by a G Card holder do not automatically lead to the revocation of the Customs Broker’s licence unless there is evidence of the broker’s involvement.

6. Determination of Monetary Consideration for Sub-letting:
The Tribunal found that the claim of a ?35,000 monthly consideration for sub-letting was not substantiated by any evidence. The appellant’s retraction of his initial statement and the lack of supporting documentation led the Tribunal to conclude that there was no monetary consideration involved in the arrangement with the G Card holder.

7. Validity of the Commissioner’s Findings:
The Tribunal scrutinized the Commissioner’s findings, particularly the conclusion that the appellant had sub-let his licence. The Tribunal noted that the Commissioner’s decision was based on assumptions rather than concrete evidence. The Tribunal disagreed with the Commissioner’s interpretation of the appellant’s arrangement with the G Card holder and found the findings to be flawed.

8. Consequential Relief to the Appellant:
Given the Tribunal’s conclusions, the appeal was allowed with consequential relief to the appellant. The Tribunal set aside the order of revocation and forfeiture, reinstating the appellant’s Customs Broker Licence without any penalties.

Separate Judgments:
The judgment included separate opinions from the Judicial Member and the Technical Member. While both agreed on setting aside the revocation of the licence, they differed on the issue of forfeiture. The Judicial Member favored a complete set-aside of the forfeiture, while the Technical Member suggested partial forfeiture. The matter was referred to a third member, who ultimately agreed with the Judicial Member, resulting in the appeal being fully allowed.

← Previous Next →