Failure of CB to act in Proactive manner in fulfilment of obligation under sub-regulation 11(a) of CBLR: CESTAT upholds Forfeiture of Security Deposit [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the forfeiture of security deposit on the ground of failure of customs broker (CB) to act in proactive manner in fulfilment of obligation under sub-regulation 11(a) of the Customs Brokers Licensing Regulations, 2013 (CBLR).

On the basis of such offence report/letter received from DRI, the jurisdictional Principal Commissioner of Customs (General), Mumbai had concluded that there is a prima facie case against the appellants for having contravened Regulations 11(a), 11(d), 11(e), 11(m) and 11(n) of CBLR, 2013.

Accordingly, he had immediately suspended the CB license of the appellants under Regulation 19 of ibid, vide Order No. 43/2013 dated 19.12.2013; and such suspension was continued vide Order No. 45/2013 dated 13.01.2014; further the department had initiated show cause notice dated 11.02.2014 for initiating inquiry proceedings under Regulation 20.

The counsel for the appellant contended that in respect of Regulation 11(a), learned Advocate stated that the appellants had obtained the required authorization from the IEC holders for the purpose of clearance of goods and these along with all documents for import were received through S/Shri Purav Mehta and Pratik Mehta, since it is these two persons who had introduced these IEC holders to the appellants; payment for various services provided by the appellants were received through banking channels and these were also submitted to Customs during investigation. Thus, Advocate pleaded that the appellants have not violated the provisions of Regulation 11(a).

A Two-Member Bench of the Tribunal consisting of S.K. Mohanty, Member (Judicial) and M.M. Parthiban, Member (Technical) observed that “we find that the appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, particularly when the import documents were obtained from the importers through an intermediary in ensuring that all documents relating to imports are genuine, the KYC documents given by the importer are also genuine and that these are not fake or fabricated.”

“Thus, to this extent we find that the appellants CB are found to have not complied with the requirement of sub-regulation 11(a) and thus forfeiture of security deposit for failure in not being proactive for fulfilling of regulation 11(a) of CBLR, 2013 alone, is appropriate and justifiable” the Bench concluded.

To Read the full text of the Order CLICK HERE

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