The Bangalore Bench of Customs,Excise and Service Tax Appellate Tribunal (CESTAT) set aside the penalty for non-membership as the customs broker had obtained association membership before the Show Cause Notice (SCN) was served.

Prabhakarkini,appellant-assessee, was issued a Show Cause Notice dated 31.12.2018, alleging violation of the Customs Brokers Licensing Regulations, 2018, on the grounds of ceasing to be a member of the Cochin Customs Brokers Association. Upon adjudication, the Commissioner imposed a penalty of ₹50,000. Aggrieved by this, the assessee filed the present appeal.

Are You Ready for GST Disputes? Master the Litigation Maze! Click here 

The assessee counsel submitted that the Show Cause Notice dated 31.12.2018 was received only on 07.01.2019. It was pointed out that the assessee had applied for membership with the Cochin Customs Brokers Association on 31.12.2018 and was granted membership effective from 02.01.2019, which was prior to the date of receipt of the notice.

The counsel argued that this fact was placed before the adjudicating authority, but it was not taken into account while imposing the penalty. In support of this claim, the counsel relied on the certificate issued by the Cochin Customs Brokers Association, which was part of the paper book.

The departmental representative reiterated the findings recorded by the Commissioner.

The two member bench comprising D.M Mishra (Judicial Member) and Pullela Nageswara Rao ( Technical Member) noted, after considering submissions from both sides and examining the records, that the Commissioner had imposed the penalty solely on the basis that the appellant was not a member of the Cochin Customs Brokers Association, thereby alleging a breach of Rule 20 of the CBLR, 2018.

However, it was evident that the assessee had applied for membership on 31.12.2018 and was granted membership effective from 02.01.2019, prior to the receipt of the Show Cause Notice. Given these facts, the CESTAT found that the penalty imposed was not justified. As a result, the penalty was set aside and the appeal was allowed.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates