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2025 (3) TMI 1197 - AT - CustomsBreach of regulation 10(d) 10(e) and 10(m) of Customs Brokers Licensing Regulations 2018 for compromising customs clearance by obtaining out of charge on the strength of examination of only three containers - HELD THAT - The inquiry report found the appellant to have breached regulation 10(d) and 10(e) of Customs Brokers Licensing Regulations 2018 and thereafter Principal Commissioner of Customs (General) Mumbai the licensing authority revoked the customs broker licence and forfeiting the security deposit under the authority of regulation 14 of Customs Brokers Licensing Regulations 2018 while further imposing penalty of Rs. 50, 000 under regulation 18 of Customs Brokers Licensing Regulations 2018 by order impugned here. The licensing authority held breach of regulation 10(d) of Customs Brokers Licensing Regulations 2018 to be proved for non-compliance with the direction to submit the entire consignment for examination as evidenced by payment of service fee of only Rs. 3, 750 (Rs. 1, 250 each TEU) and confirmation thereof from closed circuit television cameras installed at the examination area and thus establishing failure to advise the client to comply with the provisions of the Act allied Acts and Rules and Regulations and failure upon non-compliance thereof to bring the matter to the notice of the Deputy Commissioner/Assistant Commissioner as the case may be. There is no doubt that examination as set out in the handwritten directions were not carried out. There is however no ascertainment of disinclination on the part of customs official having granted out of charge while cognizant of the directions to carry out such examination and availability of contingent option to report to higher authorities. The drawal of samples which was sufficient to establish misdeclaration as well presentation of three containers make it abundantly clear that appellant was either not aware of the contents or that there was no intent to conceal the offending goods from action under Customs Act 1962. The failure to produce the remaining containers or to guide the client in that direction is at best a technical violation. There are no evidence to charge the customs broker with not advising the client on requirement to comply with the statues; nor of participation in compelling customs officials not to carry out examination. There is thus no evidence to hold that regulation 10(d) of Customs Brokers Licensing Regulations 2018 had been breached. The licensing authority has mis-applied regulation 10(e) of Customs Brokers Licensing Regulations 2018 which may be invoked only upon complaint from client of having been so misguided by customs broker. The requirements of examination was admittedly endorsed on the bill of entry and in granting out-of- charge the customs officials cannot but have been privy to such instruction. Failure of such customs officials to act on the instruction cannot be attributed to the customs broker inasmuch as the latter does not have the authority to enforce compliance on the part of the customs officials - There is passing reference to alleged collusion of employee of the customs broker with customs officials that does not fall within the purview of regulation 10(e) of Customs Brokers Licensing Regulations 2018. Consequently the facts alleged has no bearing on this particular obligation or breach thereof. Conclusion - There is no defence from the appellant about the cause of non-compliance with inspection requirements in full and in absence thereof responsibility is to be presumed at least partially even if of no serious consequence. Consequently revocation of licence with forfeiting of security deposit is set aside. Imposition of penalty of Rs. 50, 000 is sustained. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment were:
ISSUE-WISE DETAILED ANALYSIS 1. Breach of Regulation 10(d) The relevant legal framework under regulation 10(d) requires customs brokers to advise their clients to comply with customs laws and to report any non-compliance to the authorities. The court examined whether M/s Sky Shipping failed to fulfill this obligation by not ensuring a 100% examination of the consignment as required by the Risk Management System (RMS). The court noted that the customs broker was accused of not advising the importer to comply with the RMS instruction for a full examination and failing to report this non-compliance. The evidence included the fact that only three containers were examined, contrary to the RMS directive for a 100% examination. However, the court found no evidence that the customs broker actively participated in persuading customs officials to overlook the examination requirement. The court also considered the role of the customs officials, who granted 'out of charge' despite being aware of the examination instructions, and found no evidence of collusion between the customs broker and customs officials. The court concluded that there was no breach of regulation 10(d) as there was no evidence that the customs broker failed to advise the client on compliance or participated in evading examination requirements. 2. Breach of Regulation 10(e) Regulation 10(e) requires customs brokers to exercise due diligence in verifying the accuracy of information provided to clients. The court analyzed whether M/s Sky Shipping failed in this duty by not ensuring the full examination of the consignment. The court observed that the requirement for a full examination was noted on the bill of entry, and the customs officials were aware of this. The customs broker could not enforce compliance by customs officials, and there was no evidence that the broker misled the importer regarding the examination requirements. The court found that the licensing authority's reliance on the same facts for both regulation 10(d) and 10(e) breaches was inappropriate, as the broker's actions did not constitute a failure of due diligence under regulation 10(e). The court concluded that there was no breach of regulation 10(e) as there was no evidence of misconduct or misleading information provided to the client. 3. Employee Actions The court considered the involvement of the customs broker's employee, who held a 'H' card instead of a 'G' card, in presenting documents to customs officials. The court found no evidence that the employee's actions contributed to any breach of regulations. The responsibility for ensuring compliance with customs access rules lay more with the customs access system than with the customs broker. SIGNIFICANT HOLDINGS The court held that there was no evidence to support the allegations of breaches under regulations 10(d) and 10(e) of the Customs Brokers Licensing Regulations, 2018. The court found that:
The court set aside the revocation of the customs broker's license and the forfeiture of the security deposit but upheld the imposition of a penalty of Rs. 50,000.
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