In the recent case, the Delhi bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ), upheld a penalty of Rs. 50,000 imposed on the appellant for attempting to export Triethanolamine without proper authorization and set aside the revocation of the appellant’s license and the forfeiture of the security deposit.
Flyover Cargo Pvt. Ltd, the assessee appellant, licensed Customs Broker, filed a shipping bill for the client M/s. RPM Exim Private Ltd. for the export of certain goods dated 11.5.2022 which included 500 grams of Triethanolamine to Mozambique, one of the Specialised Chemicals, Organisms, Machinery, Equipment and Technology ( SCOMET ) which have dual use for several normal industrial or other purposes and also used in manufacture of Weapons of Mass Destruction ( WMD ).
The appellant filed a shipping bill for exporting Triethanolamine to Mozambique without authorization. The goods were seized. In an order dated July 27, 2022, the Assistant Commissioner confiscated the Triethanolamine but allowed it to be redeemed with a fine. Both the exporter and the appellant were fined Rs. 5,000 each under section 114(i) of the Customs Act, 1962.
The Commissioner ruled that the appellant violated Regulation 10(d) of CBLR ( Customs Brokers Licensing Regulations ) 2018, after issuing SCN ( show cause notice ) reviewing the inquiry report and the appellant’s response. As a result, the Commissioner revoked the Customs Brokers’ license, forfeited the security deposit, and imposed a fine of Rs. 50,000.
The petitioner’s counsel raised three different issues: First, whether the petitioner had violated Regulation 10(d) of CBLR 2018; second, whether the Show Cause Notice ( SCN ) is time-barred; and third, the proportionality of the action.
The Tribunal contended that Regulation 10(d) requires Customs Brokers to ensure their clients follow the Customs Act and related rules. If clients do not comply, the broker must report this to the Deputy or Assistant Commissioner of Customs. Customs Brokers are expected to know the Customs Act and related laws, including import and export restrictions, and to advise their clients accordingly. Even though the appellant had argued that the client declared Triethanolamine was not a SCOMET item and was for soil testing the argument was considered invalid. Therefore,the appellant has violated the Regulation 10(d) of CBLR 2018.
The Tribunal stated that the appellant’s claim that the SCN was issued 255 days after the report is incorrect. The Commissioner is bound to act only after receiving the correct offence report. Initially, the report received on July 29, 2022, named a different Customs Broker. The Commissioner sought clarification and received the corrected report with the appellant’s name on November 18, 2022. The show cause notice ( SCN ) was then issued on February 6, 2023, within 80 days of receiving the correct report.
The Tribunal stated that attempting to export a SCOMET item without authorization is a serious violation. Here, it wasn’t a mere oversight, as the exporter declared it was not a SCOMET item. The appellant should have checked the policy, which listed Triethanolamine as a SCOMET item, and advised the exporter accordingly.
A coram of Justice Dilip Gupta ( President ) and P. V. Subba Roa ( Technical Member ) on considering the facts and circumstances of the case contended that the penalty for violation be upheld and to overturn the license revocation and security deposit forfeiture.
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