2024 (3) TMI 461 - AT - Customs

Levy of Penalty on Customs Broker - pre-condition to restore the license - No authorization from the importer/exporter for clearance of goods nor was the verification of the credentials of the client undertaken - violation of Regulation 11(a) - HELD THAT - The fact remains that a copy of the passport has been duly supplied at the time of clearance of the household goods. The fact that the passport of the individual was supplied by the Customs Broker for purpose of clearance of the household good is substantive acknowledgement of obtaining the purported authorization as prescribed. Since this was not a case of regular import by an IEC holder but supply of domestic household goods, we do not find any merit in the department s plea in subjecting the appellant to severe penal action. The penalty imposed is certainly excessive and not proportionate to the nature of the said offence, if any. We do not find it a fit case for imposition of such harsh penal consequences and at best, if any violation- being hyper-technical, it ought to have been let off on a mere caution to the appellant. We therefore set aside the impugned order and allow the appeal filed by the party with consequential relief if any as per law.

Issues involved:
The issues involved in the judgment are the imposition of a penalty on the appellant by the Commissioner of Customs for alleged violations of Customs Brokers Licensing Regulations (CBLR), 2013, specifically regarding the authorization from the importer/exporter for clearance of goods and verification of client credentials.

Summary of Judgment:

Issue 1: Authorization from Importer/Exporter
The appellant, a Customs Broker, was penalized for not obtaining authorization from the importer/exporter for the clearance of household goods, as required by Regulation 11(a) of the CBLR, 2013. The department alleged that the appellant accepted the clearance job without proper authorization, leading to a penalty of Rs. 50,000. The appellant argued that all formalities were completed at the direction of the importer, but the department contended that no written authorization was obtained from the relevant individuals. The appellate authority found that the submission of a copy of the importer's passport at the time of clearance was sufficient to establish identity and authorization, thus dropping the charge of Regulation 11(a) violation.

Issue 2: Verification of Client Credentials
Another allegation against the appellant was the failure to verify the antecedents and identity of the client, as required by Regulation 11(n) of the CBLR, 2013. The department claimed that the appellant did not undertake proper verification, resulting in a careless handling of the customs brokerage job. However, the appellate authority dismissed this charge, noting that due to the nature of the import (domestic household goods), the passport provided by the importer was deemed satisfactory for establishing identity.

Issue 3: Supervision and Conduct of Employees
Additionally, the department accused the appellant of violating Regulation 17 by failing to supervise employees to ensure proper conduct in business transactions. The appellate authority, after reviewing the case records and arguments from both sides, found that the department's case was overly technical. They concluded that the penalty imposed was excessive and disproportionate to any offense committed. The judgment set aside the penalty of Rs. 50,000, cautioning the appellant to comply with Customs Broker obligations in the future but not imposing any further penalties.

In conclusion, the judgment allowed the appeal filed by the appellant, setting aside the penalty and advising caution for future compliance with Customs Broker regulations.

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