2020 (8) TMI 59 - AT - Customs

Revocation of Custom Broker license - forfeiture of security amount - imposition of penalty - export of prohibited goods - NDPS goods - It appeared to Revenue that appellant had not obtained any authorisation from the exporting firm M/s Hindustan Exim India and further allowed CB licence to be used for exporting of NDPS goods - validity of relied upon documents - HELD THAT - Customs has blindly relied upon the investigation by the Delhi Police, but at the same time have erred in not referring to the charge sheet submitted by Delhi Police under NDPS Act before the Additional Special Judge, Patiala House - the relied upon documents have not been supplied to the appellant. Ashish Sharma, Prop. of M/s Hindustan Exim India, whose statement has been heavily relied in the present proceedings (which was recorded by the Delhi Police) was never examined by the Customs Authority at any stage or in this proceeding. Thus, the impugned order is bad for not complying with the mandate of Section 138B of the Customs Act. Even a copy of the statement was not supplied to the appellant. The appellant have produced copy of authorisation given to them by M/s Hindustan Exim India, to act as their custom broker - thus, no show cause notice appears to have been issued in the alleged offence under the Customs Act so far. Thus, the adjudicating authority have accepted the report of the inquiry officer in a mechanical way, without application of mind. The respondent Commissioner to restore the Customs Broker license of the appellant within a period of thirty days from the date of receipt / service of this order - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Revocation of Customs Broker Licence.
2. Forfeiture of Security Deposit.
3. Imposition of Penalty.
4. Alleged Connivance in Smuggling of Narcotics.
5. Violation of Customs Broker Licensing Regulations (CBLR), 2018.
6. Reliance on Investigation by Delhi Police.
7. Denial of Natural Justice and Procedural Lapses.

Issue-Wise Detailed Analysis:

1. Revocation of Customs Broker Licence:
The Customs Broker Licence of the appellant was revoked based on the allegation that the appellant allowed an unauthorized person, Shri Ashish Sharma, to misuse their licence for smuggling narcotic drugs and psychotropic substances. The appellant contended that they were victims of fraud committed by Ashish Sharma and others, who misused their licence without their knowledge or consent. The Tribunal found that the Customs authorities had not conducted an independent investigation and relied solely on the investigation by Delhi Police, which did not implicate the appellant in any wrongdoing. Consequently, the Tribunal set aside the revocation of the licence.

2. Forfeiture of Security Deposit:
The Order-in-Original included the forfeiture of the entire security deposit of ?75,000/- of the appellant. The appellant argued that the forfeiture was unjust as they were not involved in any illegal activities. The Tribunal observed that the Customs authorities failed to provide sufficient evidence to prove the appellant's involvement in the alleged smuggling activities. Therefore, the forfeiture of the security deposit was deemed unsustainable and was set aside.

3. Imposition of Penalty:
A penalty of ?50,000/- was imposed on the appellant. The appellant contended that the penalty was arbitrary and without proper justification. The Tribunal noted that the Customs authorities had not provided the appellant with the necessary documents and did not allow cross-examination of witnesses, thereby violating principles of natural justice. As a result, the imposition of the penalty was found to be unjustified and was set aside.

4. Alleged Connivance in Smuggling of Narcotics:
The appellant was accused of conniving with Ashish Sharma in the smuggling of narcotic drugs. However, the Tribunal found that the Customs authorities did not produce any concrete evidence to support this allegation. The investigation by Delhi Police did not find any money trail or suspicious activities linking the appellant to the smuggling operation. The Tribunal concluded that there was no case of connivance made out against the appellant.

5. Violation of Customs Broker Licensing Regulations (CBLR), 2018:
The appellant was alleged to have violated various provisions of CBLR, 2018, including failing to obtain proper authorization from the exporter and allowing unauthorized use of their licence. The Tribunal found that the Customs authorities did not provide sufficient evidence to prove these violations. The appellant had produced a copy of the authorization from M/s Hindustan Exim India, and there was no indication of any procedural lapses on their part. Therefore, the alleged violations of CBLR, 2018, were not substantiated.

6. Reliance on Investigation by Delhi Police:
The Customs authorities relied heavily on the investigation conducted by Delhi Police, which formed the basis of the allegations against the appellant. The Tribunal observed that the Customs authorities did not conduct their own investigation and did not refer to the charge sheet filed by Delhi Police, which did not implicate the appellant. The reliance on the Delhi Police investigation without independent verification was found to be erroneous.

7. Denial of Natural Justice and Procedural Lapses:
The appellant argued that they were denied a fair opportunity to defend themselves as the Customs authorities did not provide the relied upon documents and did not allow cross-examination of witnesses. The Tribunal agreed with the appellant, noting that the principles of natural justice were violated. The Customs authorities' failure to provide necessary documents and allow cross-examination rendered the proceedings procedurally flawed.

Conclusion:
The Tribunal found that the Customs authorities had not provided sufficient evidence to justify the revocation of the Customs Broker Licence, forfeiture of the security deposit, and imposition of the penalty. The investigation relied upon by the Customs authorities was found to be inadequate, and the appellant was denied a fair opportunity to defend themselves. Therefore, the Tribunal set aside the impugned order and directed the restoration of the appellant's Customs Broker Licence within thirty days.

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