₹50k is Maximum Penalty under CBLR, Revenue Cannot Seek Higher Penalty in Forged Mate Receipt Case: CESTAT [Read Order]

The Customs Brokers Licensing Regulations (CBLR), 2013 stipulate a maximum penalty of ₹50,000, and the Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the Revenue cannot pursue a greater penalty.

The appeal was filed by the Commissioner of Customs against M/s. Leona Worldwide Logistics. It challenged the Order-in-Original dated 23.12.2015. The Commissioner imposed a penalty of ₹50,000 instead of revoking the Customs Broker licence.

The Department submitted that the penalty was not commensurate with the gravity of the offence, and the Commissioner ought to have revoked the broker’s licence.

During scrutiny of export documents by the Export Promotion Copy Section, it was found that the signatures on two mate receipts Mate Receipts submitted for printing of EP copies were forged, in relation to two shipping bills handled by the Customs Broker.

Investigation by the Docks Intelligence Unit (DIU) revealed that an employee of the broker had forged the mate receipts to avoid late fee charges in one instance and due to loss of the original mate receipt in another.

This led to allegations that the broker failed to discharge obligations under Regulation 17(9) of CBLR, 2013.

A Show Cause Notice was issued proposing revocation of the broker’s licence and forfeiture of security deposit. The Inquiry Officer found violations of Regulations 17(9) and 18(c).

However, after considering the explanation of the broker, including that the exports had actually taken place and there was no mala fide intention to cause loss to the State, the Commissioner decided to impose only the maximum penalty of ₹50,000 and did not revoke the licence.

Before CESTAT, the Revenue pressed for a higher penalty.

The bench of tribunal Vasa Seshagiri Rao, Technical member and P. Dinesha, Judicial member, examined CBLR, 2013 and noted that the Regulations clearly prescribe an upper cap of ₹50,000 for penalty.

The appellate tribunal observed that when the rules itself fix the maximum penalty, imposing that maximum amount cannot be treated as inadequate or “not commensurate”.

It was also noted that the Regulations do not provide for forfeiture of security deposit in the manner sought by the Department. Accordingly, the appeal was dismissed.

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