2019 (12) TMI 246 - AT - Customs

Revocation of customs broker Licence - forfeiture of security deposit - imposition of penalty - misdeclaration of imported goods - Red Sanders were being smuggled under the guise of Natural Slate Stone - provisions of Regulation 11 and Regulation 17 (9) of CBLR, 2013 - allegation based mainly on statements of personnel of Customs Broker - HELD THAT - It is clear that the customs broker has filed a shipping bill for the purported export of natural slate stone on behalf of M/s.Amrita Export. The same has been permitted to be stuffed into the container; after due examination by the Preventive Officer posted in the CFS, a onetime bottle seal has also been affixed. The allegations against the appellants appear to be based on the statements of personnel of the customs broker. Shri S. Muthukrishnan in charge of customs broker in his statement dt.28.8.2017 and Shri N.V.S. Prasad, General Manager of the customs broker in his statement dt. 1.9.2017 have accepted that they have never met the exporter and have not verified the KYC details and genuineness of the IEC holder and failed to notice the difference in the name of the exporter There is certain force in the argument of the appellant that the non-verification of KYC documents per se has not resulted in the committal of any grave offence because of the fact that the goods declared in the said shipping bill were correct as per declaration; the same goods were allowed to be stuffed into the container by the Preventive Officer and the container was sealed - Admittedly, the offence has taken place after stuffing of the container and sealing of the same that is beyond the involvement of the customs broker. However, the only issue on which the appellant appear to have erred and were not in a position to identify Shri Rajesh Kumar who was projecting himself as the person in charge of the exporter. Their knowledge, if any, could have helped the administration in nailing the person who has arranged for the transportation and took away the container - Understandably, the verification of KYC norms would not have stopped occurrence of the offence going by the facts of this case. However, we find that the customs broker should have exercised a due diligence in verifying KYC norms and the identity of the exporter and their persons and could have found out the difference in the name of the exporter. However, for this purpose, revocation of licence is not warranted. Revocation of licence is a serious penal action which takes away the livelihood of the customs broker and several employees depending on them. Therefore, the penal action, if any, should commensurate with the lapses occurred and the contribution of such lapses in the commission of the offence - In view of the discussions, it is found that though forfeiture of security deposit and imposition of penalty are sustainable, revocation of customs broker licence cannot be sustained. The forfeiture of security deposit of ₹ 50,000/- and imposition of penalty of ₹ 50,000/- is upheld - the revocation of licence of the customs broker is set aside - appeal allowed in part.

Summary

Issues:
Violation of Regulation 11 and Regulation 17(9) of CBLR, 2013 by the customs broker.

Analysis:
The case involved an appeal against an Order in Original passed by the Commissioner of Customs, Chennai-VIII, concerning the violation of regulations by a customs broker. The appellant, a customs broker, was accused of facilitating the smuggling of Red Sanders under the guise of Natural Slate Stone. The officers found Red Sanders logs in a container declared as natural slate stone. The appellant failed to verify KYC details and other necessary information, leading to the violation of CBLR, 2013.

The appellant argued that they had handled the consignment in the normal course of business, denying the allegations. They contended that they were not responsible for actions committed after the legal clearance by customs authorities. They cited legal precedents to support their defense.

The department argued that the appellant had indeed violated the regulations, as evidenced by the acceptance of non-verification of KYC details by the customs broker personnel.

Upon reviewing the case records, the Tribunal found that while the KYC documents were not verified, the goods declared in the shipping bill were correct and legally cleared by customs authorities. The offense occurred after the container was sealed, beyond the involvement of the customs broker. However, the broker erred in not identifying key individuals associated with the consignment.

The Tribunal acknowledged the seriousness of revoking a customs broker's license and considered the lapses in due diligence. They upheld the forfeiture of the security deposit and imposed a penalty but deemed revocation of the license unwarranted. Citing a Madras High Court decision, the Tribunal emphasized that the penalty should be commensurate with the lapses and their contribution to the offense.

In conclusion, the Tribunal partially allowed the appeal by upholding the forfeiture of the security deposit and imposition of a penalty while setting aside the revocation of the customs broker's license. The decision was based on the principle that the broker's role ended before the offense occurred, and the penalty should be proportional to the offense committed.