The Delhi Bench of the Customs Excise & Service Tax Appellate Tribunal (CESTAT) in M/s. Global Marine Agencies vs. CC held that the renewal of the Customs Broker License could not be refused only for the reason that the appellant had been penalized under Section 114 of the Customs Act, 1962.
The issue arose when the Commissioner of Customs rejected the application of the appellant for renewal of their Customs Broker License. Aggrieved by the decision, appeal was made to the CESTAT.
The Counsel for the applicant argued that the Commissioner had erred in rejecting the application without observing the Regulation 18(C) of the Customs Brokers Licensing Regulations (CBLR), 2013. He submitted that the Commissioner is empowered not to renew the Customs Broker License only in the case of instances of misconduct defined as per the said regulation. He also pointed out that no proceedings were pending against the appellant initiated under CBLR, 2013. He explained that only instances cited by the Revenue about the alleged misconduct on the part of the Customs Broker was penalty imposed on him under Section 114(1) of the Customs Act, 1962 and the penalties imposed were challenged before the Tribunal.
The Counsel for the Department argued that penalties stand imposed against the appellant under Section114 in two different cases and such penalties had been imposed for acts of omission and commission in the case of certain fraudulent exports. He contended that such penalties imposed were to be considered as instances of misconduct and in terms of Regulation 9(2), the Commissioner was within his right not to renew the license.
The Bench comprising of Judicial Member S.K. Mohanty and Technical Member V. Padmanabhan observed that the fact of appellant penalized under Section 114 of the Customs Act, 1962 could not be construed as misconduct for the purpose of Regulation 9(2). “Before such an action can be considered as misconduct, the licencing authority is required to examine whether any regulations have been contravened, through a process of formal enquiry. Unless such procedure has been completed, it will not be proper to view such penalties as misconduct for purposes of Regulation 9(2).”
Setting aside the order, the bench held “In view of the above discussions, we are of the view that the renewal of the Customs Broker License cannot be refused only for the reason that the appellant has been penalized under Section 114. Regulation 18 (proviso) makes it abundantly clear that the actions taken under the CBLR, 2013 will be without prejudice to the action that may be taken under Customs Act, 1962, thereby making it explicit that the proceedings under the Act as well as the Regulation are distinct and separate.”
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