2021 (1) TMI 818 - AT - Customs

Revocation of Customs Broker License - forfeiture of security deposit - whether the customs broker has failed to follow the Regulations CBLR, 2013 CBLR, 2018 and whether the same should entail in the revocation of the license and forfeiture of security deposit in addition to imposition of penalty? - HELD THAT - In the instant case the employees of the appellant s firm have accepted the documents on behalf of the seven importers and filed a number of check lists in a short span; the customs broker in his statement before D.R.I has accepted the documents from Shri Santhosh Pandey even when he told them that bank related documents and authority letter could be given before carting the goods; they did not receive any documents in original; they have not cross-verified the documents submitted with any reasonable means; they never spoke to or interacted with any of the IEC holders. Where the custom Broker prima facie has some documents; the person who handed over the documents to the Broker is available; it is not alleged that the exporters were fictitious and the fraudulent persons used the high security IDs and passwords of departmental officers, the omission on the part of the Customs Broker becomes a bit less serious. Under the circumstances, there was lapse on the part of the Customs Broker, the same is not at the root of the occurrence of the fraud - the Customs Broker erred inasmuch as non-verifying the antecedents of the exporters and has not obtained authorization. However, the punishment meted out to the Custom Broker should be commensurate with such omission. It is a settled law that penalty should be proportionate to the offence committed. It would be too harsh to revoke the license of the Customs Broker and to leave the right to livelihood of the Customs Broker as well as his employees to the wind. The license has been under the orders of revocation / suspension for more than two years. Under the circumstances, the customs broker has been sufficiently penalized. For the commission of an offence on the part of the customs broker, the livelihood of many other employees of the firm cannot be put to jeopardy - the ends of justice would be met if the security deposited is forfeited and penalty imposed is upheld, while setting aside the order as far as the revocation of the license is concerned. Appeal allowed in part.

Summary

Issues:
Revocation of customs broker license, forfeiture of security deposit, penalty imposition.

Analysis:
The case involved an appeal by M/s. Setwin Shipping Agency, Chennai, a Customs Broker, against the revocation of their license, forfeiture of security deposit, and imposition of a penalty. The department alleged that the broker was involved in a syndicate obtaining IEC from various parties, preparing fake invoices, and accessing customs officers' IDs to issue export orders. The department cited violations of various regulations. The appellant argued that they obtained KYC documents before filing checklists and claimed they were not present during some incidents. They also highlighted actions taken after suspicions arose about exporters. The Revenue contended that the broker failed to verify exporters' credentials, relied on middlemen, and accepted money for clearance. The Tribunal analyzed whether the broker violated regulations and the severity of the punishment.

The Tribunal found that the broker's employees accepted documents from importers without due diligence, did not verify antecedents, and did not obtain necessary authorizations. The broker's defense regarding actions taken post-suspicion was deemed insufficient. While the broker's lapses were acknowledged, the Tribunal noted that the broker's actions were not the root cause of the fraud. The punishment was considered excessive, given the circumstances. Precedents were cited to support the proportionality of penalties to offenses committed. The Tribunal emphasized the importance of considering the livelihoods of the broker and employees when imposing penalties.

Citing previous cases, the Tribunal held that revocation was not justified in this case. Instead, it upheld the forfeiture of the security deposit and the penalty imposition. The Tribunal concluded that the revocation of the customs broker license was set aside, while the forfeiture of the security deposit and penalty imposition were upheld. The decision aimed to balance accountability for offenses with the preservation of livelihoods. The judgment was pronounced on 13.01.2021 by the Appellate Tribunal CESTAT CHENNAI, comprising Ms. Sulekha Beevi C.S., Member (Judicial), and Shri P. Anjani Kumar, Member (Technical).