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2024 (2) TMI 979 - AT - CustomsRevocation of Customs Broker License - Deemed revocation - Validity of order passed under Regulation 17(4) - forfeiture of security deposit - imposition of penalty - Violation of Regulations 10(a), 10(d) and 10(n) of CBLR, 2018 - whether the appellant Customs Broker has fulfilled all his obligations as required under CBLR, 2018 or not - HELD THAT - There is no legal provision under Regulation 17(7) ibid, for issue of an order as deemed revocation of CB license to take into effect on a future date, in case the earlier order of the same authority is set aside in any appellate forum, immediately with effect from such order of the appellate authority. Thus, the legal provision under Regulation 17(7) ibid, on this ground alone the impugned order is liable to be set aside. In the absence of any document to prove the claim of mis-declaration of export goods, the findings given by the learned Principal Commissioner of Customs in the impugned order that the appellants has aided and abetted the exporter in availing ineligible export incentives, is difficult to be proved for fastening such liability on the appellants CB for holding them responsible for violation of Regulation 10(a) ibid. The ineligible claim for export incentives was found by the department only on the basis of specific investigation conducted by the NSPU/R I customs authorities, and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. Further, the voluntary statement given by Shri Sachin Sitaram Shinde, Proprietor of the appellants CB firm was on 03.03.2022 i.e., almost 3 years subsequent to before Customs investigation authorities clearly show that such mis-declaration was not known to the appellants CB. Thus, there is no possibility for the appellants CB to bring to the notice of the Deputy Commissioner of Customs (DC) or Assistant Commissioner of Customs (AC) about the mis-declaration of imported goods. Thus, we are of the considered view that the violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable. We find that CBIC had issued instructions in implementing the KYC norms for verification of identity, existence of the importer/exporter by Customs Broker in Circular, and verification of any two documents among specified documents is sufficient for fulfilling the obligation prescribed under Regulation 10(n) of CBLR, 2018. We find that in the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department. Thus, we do not find any legal basis for upholding of the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order on the above issue. Thus, we do not find any merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in deemed revocation of the CB license of the appellants; for forfeiture of security deposit second time and for imposition of penalty, inasmuch as there is no violation of regulations 10(a), 10(d) and 10(n) ibid, and the findings in the impugned order is contrary to the facts on record. Further, the impugned order is not sustainable as it has been issued in violation of Regulation 17(7) ibid and in non-compliance with the provisions contained in Regulation 17(4) ibid in terms of the judgement of the Hon ble Supreme Court in the case of Shasta Freight Services Pvt. Ltd. 2019 (9) TMI 363 - TELANGANA AND ANDHRA PRADESH HIGH COURT , inasmuch as the principles of natural justice in affording the opportunity for cross examination was not followed in the impugned order. Therefore, by setting aside the impugned order, we allow the appeal in favour of the appellants.
Issues Involved:
1. Compliance with Customs Brokers Licensing Regulations (CBLR), 2018. 2. Procedural adherence in inquiry proceedings. 3. Entitlement to cross-examination. 4. Merits of the allegations under Regulations 10(a), 10(d), and 10(n). Summary: 1. Compliance with Customs Brokers Licensing Regulations (CBLR), 2018: The appellants, M/s Suswashis Clearing and Forwarding Agency, were accused of violating Regulations 10(a), 10(d), and 10(n) of CBLR, 2018. The Principal Commissioner of Customs concluded that the appellants did not interact with the IEC holder/exporter, failed to verify the KYC documents properly, and did not advise the exporter to comply with the Act. 2. Procedural Adherence in Inquiry Proceedings: The Tribunal examined whether the inquiry proceedings complied with Regulation 17 of CBLR, 2018. It was found that the Principal Commissioner of Customs passed the impugned order without following the prescribed procedure. Specifically, the Tribunal noted that the appellants' CB license had already been revoked by an earlier order, making the subsequent order for deemed revocation legally unsustainable. The Tribunal emphasized that there is no legal provision for issuing an order as "deemed revocation of CB license" to take effect on a future date. 3. Entitlement to Cross-Examination: The Tribunal found that the appellants were denied the opportunity to cross-examine key witnesses, which is a violation of Regulation 17(4) of CBLR, 2018. The Tribunal cited the judgment of the Hon'ble Telangana High Court in the case of Shasta Freight Services Pvt. Ltd., upheld by the Hon'ble Supreme Court, which held that denial of cross-examination constitutes a breach of natural justice. 4. Merits of the Allegations under Regulations 10(a), 10(d), and 10(n): - Regulation 10(a): The Tribunal found that the appellants obtained the export documents through intermediaries, which is not barred by CBLR. The Tribunal noted that the alleged ineligible export benefits were solely due to the actions of the exporter, and there was no role of the Customs Broker in these activities. - Regulation 10(d): The Tribunal concluded that the appellants could not have advised the exporter to comply with the Act as they were unaware of the misdeclaration. The voluntary statement given by the appellants' proprietor was recorded almost three years after the investigation began, indicating no prior knowledge of the misdeclaration. - Regulation 10(n): The Tribunal found that the appellants had complied with KYC norms by obtaining and verifying the necessary documents from the exporter. The Tribunal cited previous judgments supporting the view that the Customs Broker is not expected to verify the genuineness of every transaction but to process documents based on the provided information. Conclusion: The Tribunal set aside the impugned order, allowing the appeal in favor of the appellants. It concluded that there was no violation of Regulations 10(a), 10(d), and 10(n) of CBLR, 2018, and that the inquiry proceedings were conducted in violation of the principles of natural justice.
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