In a recent decision, the Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal set aside the customs broker license revocation of M/s Rupali Logistics Clearing & Forwarding Pvt. Ltd. and the imposition of a penalty for alleged violations related to export overvaluation.
The Principal Commissioner had earlier revoked the appellant’s Customs Broker Licence, forfeited their security deposit, and imposed a penalty of Rs. 50,000 under regulations 14 and 18 of the Customs Brokers Licensing Regulations, 2018 ( CBLR ) as it was observed by the Commissioner that the broker failed to exercise due diligence, leading to the misuse of export drawback schemes through overvaluation. The Principal Commissioner observed that the export transactions were supported by fabricated purchase bills and fictitious buyers.
The appellant’s counsel contended that they had handled only a few of the consignments covered in the said investigation and had nothing to do with either the purchase of the goods or the declaration of value.
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The counsel on behalf of the appellant further submitted that its primary obligation was to ensure that the exporter existed and operated at the declared address, which they claimed was fulfilled. Additionally, they argued that their dealings with third parties did not violate any regulations, as the term “exporter” under the Customs Act of 1962 includes beneficial owners.
The specific charges brought under the provisions of CBRL include under Regulation 10( d ) the broker was accused of failing to advise the client on compliance and report non-compliance to the authorities.
But, the bench found no evidence that Rupali Logistics breached statutory provisions during the export process or that they failed to fulfill their duties under this regulation.
The department also alleged that there was a breach of regulation 10(n) of CBRL as the licensing authority alleged that the broker failed to verify the identity and functioning of the exporter at the declared address.
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The tribunal observed that the burden of proof was improperly shifted to the broker. The bench further observed that there was no evidence of the exporter’s non-existence or discrepancies in the GSTIN or Import-Export Code (IEC).
The CESTAT, comprising Ajay Sharma ( Judicial Member ) and C. J. Mathew ( Technical Member ) set aside the impugned order.
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