2021 (3) TMI 1164 - AT - Customs

Fulfillment of obligations by the Customs broker - Cancellation of Customs Broker License - forfeiture of security deposit - imposition of penalty - time limitation - as per the Revenue, it is apparent case of fraud where four different firms got established based upon fake documents. HELD THAT - The appellant has admitted that despite the discrepancies in the documents of these importers, the CHA /appellant opted to not to bring the same to the notice of the competent Customs officers with the sole motive to safeguard his business with these importers. This admission of appellant is sufficient for us to hold the violation of regulation 10(d) 10(e) on part of the appellant. The said violation has been pleaded as inadvertent and unintentional mistake but this amounts to rather conspiring into commission of the offence of evasion of duty by illegally diverting goods from Customs warehouse to domestic market. Once there is acknowledged and admitted violation of CBLR Regulations, the Revenue has the option to follow the discipline governing the Customs House Agents and as such, the Commissioner of Customs is empowered to revoke the license of Customs House Agent and also to forfeit his security if such agent fails to comply with the provisions of Regulation or gets involved in the Act which would amount to mis-conduct/ offence under the Act. The concealment by the appellant about the act of commission of criminal offence as that of fraud from the Customs authorities is held to be an act as that of forfeiting the entire purpose of the licence which was given in favour of the appellant - Interference with punishment imposed would be justified only when it shocks conscience of CESTAT. No indulgence can be shown to persons indulging in acts of corruption. Punishment imposed on Respondent, by Commissioner of Customs, of revocation of their license, when viewed in light of grave and serious acts of misconduct held established, was held justified. There is no irregularity committed by the Adjudicating Authority below while revoking the license of appellant - Appeal dismissed.

Issues Involved:

1. Interpretation of the word "issue" in Regulation 20(1) CBLR, 2013.
2. Nature of the time limit prescribed in Regulation 20(1) CBLR, 2013.
3. Compliance with obligations under sub-regulations 10(b), 10(d), 10(e), and 10(n) of CBLR, 2018 / Regulation 11 of CBLR, 2013.
4. Validity of revocation of the Customs Broker license and forfeiture of the security deposit.

Issue-wise Detailed Analysis:

1. Interpretation of the word "issue" in Regulation 20(1) CBLR, 2013:
The appellant argued that the Show Cause Notice was barred by time as it was not served within 90 days, as required by Regulation 20(1) of CBLR, 2013. However, the Tribunal clarified that "issuance of notice" is distinct from "service of notice," and the notice was issued within the statutory period. The Larger Bench confirmed that the word "issue" does not include "serve."

2. Nature of the time limit prescribed in Regulation 20(1) CBLR, 2013:
The Tribunal held that the time limit prescribed in Regulation 20(1) of CBLR, 2013 is mandatory. This interpretation was upheld by the Hon’ble President in Interim order No. 1/2021.

3. Compliance with obligations under sub-regulations 10(b), 10(d), 10(e), and 10(n) of CBLR, 2018 / Regulation 11 of CBLR, 2013:
The Tribunal examined whether the appellant, as a Customs Broker, fulfilled his obligations under the specified regulations. The appellant claimed he had performed all duties diligently and was unaware of the fraudulent activities by the importers. However, the Department argued that the appellant failed to verify the authenticity of the importers and ignored discrepancies in their documents.

Obligations under Regulation 10(b):
The appellant admitted that business in the Customs station was transacted by Shri Sanjeev Maggu, who was not an authorized representative of the importers or the appellant. This admission indicated non-compliance with Regulation 10(b).

Obligations under Regulation 10(d):
The appellant acknowledged knowing that the importers were dummy proprietors and that goods meant for re-export were being diverted to the domestic market. Despite this knowledge, he did not inform the Customs authorities, violating Regulation 10(d).

Obligations under Regulation 10(e):
The appellant's failure to bring discrepancies to the notice of the Department and his admission of opting to keep mum for business retention purposes constituted a violation of Regulation 10(e).

Obligations under Regulation 10(n):
The appellant admitted not verifying the correctness of the Importer Exporter Code (IEC) number, GSTIN, and the identity of the clients. This failure to exercise due diligence violated Regulation 10(n).

4. Validity of revocation of the Customs Broker license and forfeiture of the security deposit:
The Tribunal concluded that the appellant's admissions under Section 108 of the Customs Act, 1962, were sufficient to prove non-compliance with the CBLR regulations. The Commissioner of Customs was justified in revoking the license and forfeiting the security deposit. The Tribunal emphasized that the appellant's actions undermined the purpose of the Customs Broker license, which is to safeguard the interests of both importers/exporters and the Revenue.

Conclusion:
The Tribunal upheld the order revoking the appellant's Customs Broker license and forfeiting the security deposit, dismissing the appeal. The decision emphasized the importance of compliance with CBLR regulations and the serious view taken of any misconduct by Customs Brokers.

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