2024 (7) TMI 1468 - AT - Customs

Revocation of Customs Broker License - forefeiture of entire security deposit - levy of penalty - overvaluation of export goods to claim higher drawback - violation of Regulation 1(4), 10(d), 10(e) and 10(n) of CBLR - HELD THAT - It is found that the finding of the Commissioner that the appellant had sublet his licence to M/s Planet World Cargo and thereby violated Regulation 1(4) is contrary to his finding that the appellant had violated Regulations 10(d), (e) and (n). While holding that the appellant had sublet his licence the Commissioner presumed that the M/s Planet World Cargo acted as the customs broker using the licence sublet by the appellant. He also presumed that Shri Tilak Raj who processed the documents was working for M/s Planet World Cargo. On the contrary, while holding that the appellant had violated Regulations 10(d), (e) and (n), the Commissioner presumes that the appellant was the customs broker in the matter and in that capacity failed to fulfill certain obligations. At any rate, in the entire investigation, even a summon was not issued to the appellant to record his statement to determine if the shipping bill was filed by the appellant or by M/s Planet World Cargo and if it was filed by the appellant then what it had advised the exporter and what information it had imparted to the exporter and how it had verified the identity and functioning of the exporter as required under the Regulations. The impugned order cannot be sustained. The appeal is allowed.

Summary

Issues:
1. Did the appellant violate Regulations 1(4), 10(d), 10(e) and 10(n) or not?
2. If yes, is the revocation of licence, forfeiture of security deposit, and the penalty imposed on the appellant proportionate to the violations?

Analysis:
1. The appellant appealed against the revocation of its customs broker license, forfeiture of security deposit, and imposition of a penalty based on the Commissioner's finding that it violated Customs Brokers Licensing Regulations, 2018. The appellant was accused of subletting its license to another entity, M/s Planet World Cargo, for an export transaction. However, the appellant argued that it did not sublet its license but merely received a client through M/s Planet World Cargo. The Commissioner's finding lacked proper inquiry and evidence as the appellant's statement was not recorded, and no summons were issued during the investigation. The Tribunal found the allegation baseless due to insufficient evidence, leading to the appeal being allowed and the impugned order set aside.

2. Regarding Regulation 10(d), the Commissioner held that the appellant failed to advise the exporter on overvalued goods, but the Tribunal noted that customs brokers do not determine transaction value or assessable value. Without specific evidence, the customs broker cannot be held accountable for such matters. Similarly, under Regulation 10(e), the Commissioner accused the appellant of not ensuring the correctness of information imparted to the client, leading to overvaluation. However, the Tribunal found these allegations unsubstantiated as the customs broker's role does not involve providing values to exporters. Therefore, the violations under Regulations 10(d) and 10(e) were not established.

3. Concerning Regulation 10(n), the Commissioner alleged that the appellant failed to verify the exporter's details, leading to a violation. However, the Tribunal clarified that Regulation 10(n) does not mandate physical verification and can be fulfilled through reliable documents. If official documents like IEC and GSTIN indicated the exporter's legitimacy, the customs broker cannot be faulted. The fault, in this case, lies with the authorities issuing incorrect documents, not the customs broker. Consequently, the Tribunal found no violation of Regulation 10(n) by the appellant.

4. The Commissioner's contradictory findings regarding the appellant's role in the transaction and the lack of proper inquiry or summons during the investigation led to the Tribunal setting aside the impugned order. The Tribunal emphasized the importance of evidence and proper procedure in such cases, ultimately ruling in favor of the appellant and providing consequential relief.