2022 (12) TMI 1300 - AT - Customs

Revocation of Customs Brokers License - levy of penalty - allegation of Manipulation and fabrication of lab reports - of Obtaining fabricated test reports to avoid the detection of the true identity of goods to bypass the restrictions imposed by Ministry of Commerce - allegation of import of Superior Kerosene Oil (SKO) in the guise of Industrial Composite Mixture Plus/Low Aromatic White Spirit - fundamental charge against the appellant is that the appellant tried to influence the officers of the custom laboratory, kandla for issuing fabricated test report in order to avoid the material getting classified as SKO (Superior Kerosene Oil) falling under Customs Tariff heading No.27101910 which is of restricted nature. HELD THAT - The notice has alleged that though the imported goods were SKO falling under Customs Tariff Heading No. 27101910 but the same were misdeclared as ICMP (Industrial Composite Mixture Plus) falling under Customs Tariff heading 27101910 - The main charge of misconduct against the appellant is that he had tried to influence the officers of Kandla Laboratory and take care that the final boiling point of the cargo should be below 240 Celsius. It has been alleged that this was done in order to ensure that the goods imported by the various importers through the appellant did not qualify as SKO but qualified as ICMP. It is seen that other than alleged manipulation of final boiling point, there is no other manipulation by the appellant from the officers of the chemical laboratory, Kandla. From the test report, it is seen that the requirement of final boiling point for SKO is 300 Degree Celsius maximum. Thus, if final boiling point of any petro chemical exceeds 300 degree Celsius the same would not qualify as SKO. Alleged manipulation of the final boiling point by the officers of Kandla laboratory at the behest of the appellant - HELD THAT - It is seen that the appellant has alleged to have asked the officers of Kandla chemical laboratory to show that the max. boiling point is below 240 degree Celsius. The motive for doing this is supposed to be that the goods should not qualify as SKO. It is not understood as to how by getting report manipulated to show that the final boiling point is below 240 degree Celsius, the appellant could have achieved the objective of getting out of the specifications of SKO as extracted from the test report of CRCL, New Delhi reproduced at para 9.3 of the show cause notice. By putting the final boiling point below 240 degree Celsius, it is obvious that the goods would qualify as SKO and not get out of requirements of being SKO. It is not understood as to how the appellant could have helped the importers by manipulating the final boiling point of the samples to below 240 degree Celsius as alleged in the show cause notice. The objective of taking the goods out of the description of SKO could only have been achieved if the final boiling point was above 300 degree Celsius. This dichotomy has not been clarified in the impugned order. Since all the charges essentially flow from this fundamental charge of manipulating test report therefore, the impugned order in the present stage cannot be sustained unless the above dichotomy is explained. The impugned order is set aside and the matter is remanded to the original adjudicating authority for fresh decision after giving opportunity to the appellant to defend themselves. Appeal is allowed by way of remand.

Issues Involved:
1. Alleged manipulation of test reports by the appellant.
2. Suspension and revocation of Customs Broker License.
3. Alleged violations of various regulations under Customs Brokers Licensing Regulations (CBLR), 2018.

Issue-wise Detailed Analysis:

1. Alleged Manipulation of Test Reports by the Appellant:
The primary accusation against the appellant, a custom broker, was that they influenced the chemical examiner at Kandla Laboratory to issue fabricated test reports to misclassify imported goods. The goods, suspected to be Superior Kerosene Oil (SKO), were declared as Industrial Composite Mixture Plus (ICMP) to bypass import restrictions. The Department of Revenue Intelligence (DRI) detained a consignment under Bill of Entry No. 7749179 dated 23.08.2018, and the test report from Kandla Laboratory indicated the goods met the requirements of Kerosene as per IS 1459-1974. The appellant allegedly manipulated the final boiling point of the cargo to be below 240 degrees Celsius to avoid classification as SKO, which is restricted for import.

2. Suspension and Revocation of Customs Broker License:
Based on the investigation, the appellant's license was suspended on 15.02.2019 and continued on 28.02.2019. A show cause notice dated 07.05.2019 was issued by the Principal Commissioner, Custom House, Kandla, proposing the revocation of the Customs Broker License under Regulation 14 of CBLR, 2018, forfeiture of the security furnished, and imposition of a penalty under Regulation 18 for failing to comply with several provisions of Regulation 10 of CBLR, 2018. The charges were confirmed, leading to the appellant's appeal before the tribunal.

3. Alleged Violations of Various Regulations under CBLR, 2018:
The appellant's defense addressed multiple alleged violations:
- Regulation 10(a): The appellant argued that they obtained authorizations from all importers and none denied appointing them as the Customs Broker.
- Regulation 10(d): The appellant contended that the department did not establish the imported goods as SKO, thus the allegation of non-compliance with advising clients to follow the law was unfounded.
- Regulation 10(e): The appellant maintained that it is not the broker's responsibility to test the nature and description of goods but to rely on the importer's declaration.
- Regulation 10(i): The appellant denied any conversation or deal with the chemical examiner to manipulate reports.
- Regulation 10(f): The appellant argued that the violation could only be established if the goods were proven to be SKO, which was not done.
- Regulation 10(m): The appellant claimed the allegation was unsubstantiated and without evidence.
- Regulation 10(n): The appellant argued that all importers were verified and participated in the inquiry, thus the allegation of non-verification was incorrect.

Tribunal's Findings:
The tribunal noted that the main charge was the manipulation of the final boiling point to ensure the goods did not qualify as SKO but as ICMP. However, the tribunal found that even if the final boiling point was manipulated to below 240 degrees Celsius, it would still qualify as SKO, which contradicted the appellant's alleged objective. This fundamental discrepancy was not clarified in the impugned order. Consequently, the tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for a fresh decision after giving the appellant an opportunity to defend themselves.

Conclusion:
The appeal was allowed by way of remand, and the case was sent back to the original adjudicating authority for reconsideration. The tribunal emphasized the need to clarify the fundamental charge of manipulating the test report and the resulting classification of the goods.

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