Revocation of customs broker License Causes Financial Distress To Customs Broker: CESTAT sets aside Revocation and Upholds Forfeiture of Security Deposit and Penalty [Read Order]

The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) set aside the revocation of the Customs Broker License since it created financial distress for Customs Broker and upheld the forfeiture of the security deposit and penalty.

M/s. Sameer Logistics Private Limited, Linghi Chetty Street, Chennai, who is a holder of a regular Customs Broker Licence issued by the Chennai Customs Commissionerate, have challenged the Order-in-Original which has ordered revocation of their Customs Broker Licence apart from forfeiture of security deposit of Rs.1,00,000/- and also imposition of penalty of Rs.50,000/-, under the provisions of Regulation 20 (7) of the Customs Brokers Licensing Regulations (CBLR), 2013.

The appellant had filed a Bill-of-Entry on behalf of M/s. Jeppiar Furnace and Steels Pvt. Ltd., Chennai, namesake importer, for clearance of goods described as “Low Melting Steel (LMS) Bundle Scrap” which arrived in five 20 feet containers. The import documents namely, invoice, Bill of Lading, etc., were in the name of M/s. Lakshmi Impex, Madurai and the goods were reportedly sold to M/s. Jeppiar Furnace and Steels Pvt. Ltd. Royapettah, Chennai on High Sea Sale (HSS) agreement basis.

Apart from the declared goods, smuggled cigarettes valued at Rs.4.13 crore were found and seized. Consequently, an investigation conducted has revealed that Mr I. Durai Murugan, owner of M/s. India Exim Services had filed the above-impugned Bill-of-Entry on receipt of the import documents from Mr S. Murugan of M/s. Sri Lakshmi Impex, Madurai.

Shri K. Murali, vide his statement, has inter alia stated that his job was confined to removing the customs-cleared consignments to the importer’s destination as mentioned in the KK Form issued by the Customs House Agent.

A Show Cause Notice was issued to the appellant-CHA under Regulation 20 of the CBLR, 2013 proposing to revoke the Customs Broker Licence issued to the appellant, forfeiture of their security deposit and imposition of penalty, under Regulation 18 read with Regulation 20 of the CBLR, 2013 for their failure to comply with the provisions of the CBLR, 2013.

The Commissioner of Customs ordered the revocation of the Customs Broker Licence, imposed a penalty of Rs.50,000/- under Regulation 18 and further ordered forfeiture of the part security deposit of Rs.1,00,000/- under Regulation 18, also ordering the surrender of the ‘G’ Cards and ‘F’ cards issued to the appellant’s employees forthwith.

It was evident that the Customs Broker has violated the Customs Brokers Licensing Regulations (CBLR), 2013 on many counts and so, revocation of their licence is justified; Negligence on their part in allowing unapproved persons in transacting the Customs business has resulted in smuggling of foreign cigarettes valued at Rs. 4.13 crores, by a novel modus operandi which was detected by the Directorate of Revenue Intelligence. The Customs Broker Licence was suspended with effect from 31.01.2017 which was finally revoked on 05.10.2017.

A two-member bench comprising of Mr P Dinesha, Member (Judicial)and Mr Vasa Seshagiri Rao, Member (Technical) held that “the violation of the CBLR, 2013 though stands established, the revocation of Customs Broker Licence is too harsh a punishment and hence, the revocation is set aside considering the fact that the appellant’s Customs Broker Licence was suspended and so, was out of business for more than six and a half years. “

The CESTAT upheld the forfeiture of the security deposit as well as the penalty of Rs.50,000/- imposed by the adjudicating authority on the appellant and set aside the order of revocation. Further directed the Commissioner of Customs to restore the Customs Broker Licence.

To Read the full text of the Order CLICK HERE

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