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2025 (1) TMI 1270 - HC - CustomsRevocation of Custome Broker License - forefeiture of security deposit - levy of penalty - violation of Regulation 11(n) and Regulation 17(9) of the Customs Brokers Licensing Regulations 2013 - HELD THAT - The reasoning given by the CESTAT is that the KYC documents were duly submitted by the Respondent herein. However the Department s case is that the Respondent did not explain as to how it had obtained the said KYC documents. Hence there were serious irregularities in the conduct of its business by the Respondent. In the opinion of this Court since the requisite KYC documents had been submitted by the Respondent and the main irregularity was in respect of the exporter Shri. Rakesh Gupta proprietor of M/s. U.P. Garments whose Importer Exporter Code (hereinafter IEC ) had been misused by other exporters in conspiracy with each other the Respondent s Customs Broker license cannot be cancelled for perpetuity. The Respondent has already suffered severe consequences due to the cancellation of the said license for several months. Conclusion - The Court is of the opinion that the impugned Final Order does not warrant any interference. Moreover it is noted that the CESTAT also records that there is no ground set out in the Order-in-Original as to how the Respondent had violated the requirement of declaration under Regulation 17 (9) of the Customs Brokers Licensing Regulations 2013. The Court is of the view that there is no substantial question of law that has arisen in the present appeal - Appeal dismissed.
ISSUES PRESENTED and CONSIDERED
The primary legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS Revocation of Customs Broker License Relevant Legal Framework and Precedents: The revocation of the Customs Broker license was initially based on perceived irregularities in the Respondent's conduct as a Customs House Agent (CHA). The case revolves around compliance with the Customs Brokers Licensing Regulations, 2013, specifically Regulations 11(n) and 17(9). Court's Interpretation and Reasoning: The CESTAT found that the revocation was unjustified as the Respondent had submitted the required KYC documents. The Tribunal emphasized the necessity of specifying the date on which the Commissioner of Customs received the show cause notice, which was not done, thus violating the procedural requirements of Regulation 20(1). Key Evidence and Findings: The CESTAT noted that while the Respondent submitted KYC documents, the Department failed to demonstrate how these documents were improperly obtained, undermining the allegations of irregular conduct. Application of Law to Facts: The Tribunal applied the procedural requirements of the regulations, finding that the Department did not adhere to the necessary procedural steps, such as specifying the date of receipt of the show cause notice. Treatment of Competing Arguments: The Department argued that the Respondent failed to adequately explain the acquisition of KYC documents. However, the Tribunal found this insufficient to uphold the revocation, as the documents were duly submitted. Conclusions: The CESTAT concluded that the revocation of the license was not justified based on the evidence presented and the procedural lapses by the Department. Violation of Regulations 11(n) and 17(9) Relevant Legal Framework and Precedents: Regulation 11(n) pertains to the obligation of obtaining KYC documents directly from the exporter, while Regulation 17(9) involves the requirement of declaration compliance. Court's Interpretation and Reasoning: The CESTAT found no substantial evidence that the Respondent violated Regulation 11(n), as the KYC documents were submitted, and the source of their acquisition was not a relevant factor. Regarding Regulation 17(9), the Tribunal noted the lack of specific allegations in the show cause notice. Key Evidence and Findings: The CESTAT highlighted that the Commissioner of Customs did not provide a clear basis for the alleged violation of Regulation 17(9), merely reproducing the Respondent's reply without substantive analysis. Application of Law to Facts: The Tribunal applied the regulatory requirements, finding that the Department's failure to specify allegations and substantiate violations rendered the revocation unjustified. Treatment of Competing Arguments: The Department's position was undermined by its inability to clearly articulate how the Respondent violated the regulations, leading to the CESTAT's decision to set aside the revocation. Conclusions: The CESTAT concluded that there was no violation of the cited regulations, and the revocation of the license was not supported by the evidence. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The CESTAT held, "It is not possible to sustain the finding recorded by the Commissioner of Customs that Regulation 11 (n) of the 2013 Regulations has been violated." Core Principles Established: The judgment underscores the necessity for precise procedural adherence by the Department when issuing show cause notices and revoking licenses. It also emphasizes that allegations must be substantiated with clear evidence. Final Determinations on Each Issue: The Court upheld the CESTAT's decision to set aside the revocation of the Respondent's Customs Broker license, finding no substantial question of law in the appeal. The appeal was rejected, and the Respondent's license was effectively reinstated.
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