2019 (3) TMI 1531 - AT - Customs

Revocation of CHA License - forfeiture of security deposit - imposition of penalty - whether the appellant has indeed sublet his license to Shri Uma Mahesh who has filed the shipping bills in question in respect of their exporters without verifying the antecedents? - Held that - The amount which is transferred to the appellant every month matches with the amount which he said was the fee he pays for subletting the license of the appellant. If the appellant had, himself, filed the shipping bills for the parties in question, he would have had to verify the antecedents of the exporters or at least their existence. If the exporters did not exist at the address indicated therein he should not have filed the shipping bills - there is strong force in the contention of the revenue that appellant had indeed sublet his license for the shipping bills in question to be filed. Shri S. Uma Mahesh had in fact indicated that he runs a separate company by name M/s VD Logistics which runs the business on its own using the license of the appellant. Retraction of statement during the cross examination - Held that - When Shri S. Uma Mahesh had retracted the statement during the cross examination, it would have been proper for departmental officers to have further questioned him about the amounts being transferred at the rate of ₹ 25,000/- per month. When he said that he had not paid any amount to the appellant he should have been confronted with the bank transfers to establish that the license was, indeed, sublet to him by the appellant - we give the benefit of doubt to the appellant that he had, himself, got the shipping bills filed using the services of Shri S. Uma Mahesh. If that be so, the appellant has failed in discharging his obligation under Regulation 11(a) of CBLR, 2013 in not verifying the antecedents of the exporters and Regulation 17(a) in not supervising the work of his employees. For these violations, the penalty of ₹ 50,000/- imposed upon the appellant under Regulation 22 of CBLR, 2013 appears sufficient. On payment of the penalty, the appellant s license will stand restored and the forfeiture of the security deposit also stands set aside. Appeal allowed in part.

Summary

Issues Involved:
- Alleged subletting of customs broker license
- Failure to verify antecedents of exporters
- Violation of customs broker regulations
- Imposition of penalties and revocation of license

Issue 1: Alleged subletting of customs broker license

The case involved allegations that the appellant, a customs broker, had sublet their license to another individual, Shri S. Uma Mahesh, for processing exports. The appellant denied these allegations, stating that they had filed shipping bills themselves with the help of Shri S. Uma Mahesh, who was an employee. The adjudicating authority found that the appellant had indeed sublet the license and imposed penalties accordingly. The appellant argued that Shri S. Uma Mahesh's statement was obtained under duress, and the prohibition on their operations in Bangalore had been revoked. The departmental representative reiterated the findings, emphasizing the importance of due diligence in verifying antecedents. The tribunal considered both arguments and concluded that there was strong evidence supporting the subletting of the license. However, due to inconsistencies in Shri S. Uma Mahesh's statements and lack of further questioning by departmental officers, the tribunal gave the benefit of doubt to the appellant, partially allowing the appeal and confirming a penalty of &8377; 50,000.

Issue 2: Failure to verify antecedents of exporters

Regulation 11(a) of the Customs Broker Licensing Regulations, 2013 requires customs brokers to verify the antecedents of the companies or firms they work with. The appellant contended that they had verified the IEC codes of exporters from DGFT websites and believed them to be genuine. However, the departmental representative argued that mere verification of IEC codes was insufficient and that proper due diligence was necessary. The tribunal found that the appellant had failed to fulfill their obligations under Regulation 11(a) by not verifying the antecedents of the exporters. This failure led to the imposition of penalties and the revocation of the license.

Issue 3: Violation of customs broker regulations

The case highlighted several violations of the Customs Broker Licensing Regulations, 2013 by the appellant. These violations included subletting the license, failure to obtain authorization from employing companies, and lack of supervision over employees. The adjudicating authority imposed penalties, revoked the license, and ordered forfeiture of the security deposit. The appellant contested these violations, arguing that they had not sublet the license and had conducted necessary verifications. The tribunal examined the regulations and evidence presented, ultimately finding the appellant in violation of the regulations, leading to the imposition of penalties and revocation of the license.

Issue 4: Imposition of penalties and revocation of license

The Commissioner of Customs issued a show cause notice proposing revocation of the appellant's license, forfeiture of security, and imposition of penalties. The Inquiry Officer's report supported these actions, leading to the revocation of the license, forfeiture of the security deposit, and imposition of a penalty of &8377; 50,000. The appellant challenged these actions, claiming innocence and compliance with regulations. The tribunal reviewed the arguments, evidence, and regulations, ultimately partially allowing the appeal by confirming the penalty of &8377; 50,000 and restoring the license upon payment of the penalty.

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