2024 (11) TMI 138 - AT - Customs

Revocation of customs broker license and imposition of penalty under Customs Brokers Licensing Regulations, 2018 - Forfeiture of the entire amount of security deposit besides imposing penalty of ₹ 50,000 under regulation 18 of Customs Brokers Licensing Regulations, 2018 - HELD THAT - The finding pertaining to the requirement that a customs broker shall obtain authorisation for each client was held as not proved by the enquiry officer. The licensing authority has held that the statements and other evidences indicate that the customs broker had not been in contact with the Director and hence held the charge to be proved. We find it odd that the requirement of obtaining auhorisation had been confused with being in contact with particular person in the company. The client is a company and, as an artificial person, operates through its authorised person. The authorisation contemplated in the Customs Brokers Licensing Regulations, 2018 is a document and the manner in which it is delivered does not erase the fact of existence of such authorisation. It is not on record that such authorisation did not exist but that there was a flaw in the manner of delivery. This is not the intent of regulation 10(a) of Customs Brokers Licensing Regulations, 2018 and the finding that the charge is held as proved is erroneous. In regulation 10(d) of Customs Brokers Licensing Regulations, 2018, the customs broker is required to advice his client to comply with the provisions of statutes and, incase of non-compliance, bring the matter to the notice of the designated authority. Here too, the licensing authority has relied upon lack of contact with the Director of the importer company with all documents were received through a freight forwarder and, on this basis, held that the customs broker had failed to produce evidence that he had advised his client as warranted. There is no evidence on record that the client had not been advised properly by the customs broker. It is not humanly possible for any person to bring on record the nature of any advice having been given from a presumption that such advice had not been. The regulation is abundantly clear that any information which is furnished to the client should be correct and failure to furnish correct information was liable to be held against the customs broker. There is nothing on record to suggest that any information furnished to a client had been found to the contrary. The finding that mis-declaration, which should have come to light during the course of examination by the customs officers, would again have been brought to the notice of the customs officers is not a rational expectation. In fact, for both these provisions, the charge, had been invoked incorrectly and without ascertainment of role of charged person. These were intended to be brought into play when a client of a broker claims to have had advice given to him that is incorrect or information furnished to him was erroneous. These are not to be presumed merely because some offence under the Customs Act, 1962 has occurred. The charge of having breached regulation 10(e) of Customs Brokers Licensing Regulations, 2018 is, therefore, not proved. It is very clear from the expression deployed in the obligation that it attempt to influence would lead to initiation of proceedings against the customs broker and attempt , by definition, is one which has failed. It would, therefore, appear that the intent of this regulation is to proceed against a customs broker on a complaint preferred by an official of the customs; the officer who purportedly carried out the examination has not done so and nor is there any allegation that the furnishing of an incorrect examination report was at the behest of the customs broker. Furthermore, it is also abundantly clear from the said regulation that there should have been use of threat, false accusation, duress or the offer of any special inducement or promise of advantage or by the bestowing of any gift or favour or other thing of value. There is nothing on record to indicate that any of these had been utilised by the customs broker to influence the examination report. Therefore, finding on breach of obligation in regulation 10(i) cannot be held as proved. Regulation 10(n) requires the customs broker to verify the correctness of particulars specified therein. It is seen from the impugned order that these particulars had been obtained but the fact of having received documents through freight forwarding agent has been held to suffice for the purpose of holding the charge to be proved against the customs broker. According to the licensing authority, it was the responsibility of the customs broker to have substantive record of communication with the importer. This is tantamount to adding prescriptions which do not exist in the regulations. The upholding of the charge on such flimsy presumptions is contrary to the intent of the said regulation. Consequently, the finding that the charge is proved is erroneous. In view of the above the revocation of licence, forfeiture of security deposit and imposition of penalty have no basis and are set aside to allow the appeal.

Summary

Issues:
Challenge to revocation of customs broker license and imposition of penalty under Customs Brokers Licensing Regulations, 2018.

Analysis:
The appellant, a customs broker, challenged the revocation of their license and imposition of penalty based on an order by the Principal Commissioner of Customs (General), Mumbai. The charges against the appellant included breaches of various regulations under the Customs Brokers Licensing Regulations, 2018. The enquiry officer found some charges not proved but held one charge of breach of regulation 10(i) as proved. The licensing authority disagreed with the enquiry officer's findings, holding all charges proved, leading to the revocation of the license, forfeiture of security deposit, and imposition of a penalty.

The charges against the appellant included failure to obtain authorization from each client, failure to advise the client to comply with statutes, lack of due diligence in verifying information imparted to the client, and failure to verify specified particulars. The licensing authority relied on evidence related to communication with the client, examination of cargo, and presence during clearance of goods to hold the charges as proved. However, the Appellate Tribunal found discrepancies in the reasoning and application of the regulations in determining the misconduct.

Regarding the charge under regulation 10(a) concerning authorization from clients, the Tribunal noted that the requirement was misunderstood, as the existence of authorization was not disproved, only the manner of delivery was questioned. Therefore, the charge was deemed erroneous. Similarly, for charges under regulations 10(d), 10(e), and 10(n), the Tribunal found that the evidence and conclusions drawn by the licensing authority did not align with the intent of the regulations, leading to the dismissal of these charges as well.

The most significant charge under regulation 10(i) involved attempting to influence customs officials. The Tribunal emphasized that mere presence during examination or subsequent findings of non-declared goods did not establish influence. The regulation required specific actions like threats or inducements, which were not evidenced. Consequently, this charge was also deemed unproved. The Tribunal concluded that the revocation of the license, forfeiture of security deposit, and penalty imposition had no basis and were set aside, allowing the appeal in favor of the appellant.