The CESTAT, Delhi bench has allowed partial relief to Falcon India (Customs Broker) by deleting the penalty order while upholding the revocation of license and the order for forfeiture of the whole amount of security deposit of Rs. 1,10,000/-.
The appellant had a Customs Broker’s license valid up to 14.11.2027. Officers of Directorate of Revenue Intelligence 2 received intelligence that certain importers were undervaluing iron screws/self-drilling screws/chipboard screws and power tools. After investigation, the DRI found that the appellants started importing screws in the name of dummy firms to avoid detection and that they imported goods in the name of M/s Popular Metal Industries5 , M/s K.D. Enterprises and M/s S.S. Enterprises. During searches made on 28.03.2017, cash of Rs. 5,41,14,400/- was also recovered from the residence of Anil and Abhimanyu.
The Tribunal comprising CESTAT President Mr. Justice Dilip Gupta, and Technical Member Mr. P.V. Subba Rao has relied on a catena of decisions and held that the Customs Broker (or Custom House Agent) is a very important person in the transactions in the Custom House and it is appointed as an accredited broker as per the Regulations and is expected to discharge all its responsibilities under them.
“Violations even without intent are sufficient to take action against the appellant. While it is true, as has been decided in a number of cases, that the Customs Broker is not expected to do the impossible and is not expected to physically verify the premises of the importer or doubt the documents issued by various Governmental authorities for KYC, it is equally true that the Customs Broker is expected to act with great sense of responsibility and take care of the interests of both the client and the Revenue. It is expected to advise the client to follow the laws and if the client is not complying, it is obligated under the Regulations to report to the Assistant Commissioner or Deputy Commissioner. Fulfilling such obligations is a necessary condition for the CB licence and it cannot be termed as ‘spying for the department’ as argued by the appellant before us.”
The Tribunal bench did not agree with the arguments of the appellant that revocation of the appellant’s license must be set aside considering the gravity of the case and also considering that it built its business in a manner that if it fulfills its obligations of reporting violations by its clients to the Customs authorities it will lose its business and, therefore, instead, facilitates such clients.
“Therefore, we find that in view of the limitation under section 18 of CBLR, 2013, the penalty of Rs. 50,000/- must be set aside while upholding the revocation of the license and forfeiture of its security deposit,” the Tribunal said.
While concluding, the Tribunal held that “In view of the above, we find that the revocation of the license of the appellant under Regulation 14(b) CBLR 2018 (read with Regulation 18(b) of erstwhile CBLR 2013), forfeiture of the whole amount of security deposit of Rs. 1,10,000/- of the appellant under Regulation 14(b)of CBLR 2018 (read with Regulation 18(b) of the CBLR 2013) calls for no interference. The penalty of Rs. 50,000/- imposed on the appellant under Regulation 18(1) read with Regulation 14(b) of CBLR 2018 (read with erstwhile Regulation 22 read with 18(b) of CBLR 2013) needs to be set aside in view of the limitation under Regulation 18 of CBLR, 2013.”
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