CESTAT Upholds Rs. 50K Penalty on Customs Broker for Failing to Verify Misdeclared Import Weight [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in its recent ruling upheld a penalty of Rs. 50,000 imposed on Customs Broker (CB) under Regulation 18 of the Customs Brokers Licensing Regulations (CBLR) 2013, for failing to exercise due diligence in reporting misdeclared weights of imported consignments.

The appellant, Raj Brothers Shipping Pvt. Ltd., were the holders of a CB License issued by Chennai Customs. Based on inputs that goods imported under two Bills of Entry were misdeclared in respect of weight the consignments in dispute were detained by SIIB (Special Intelligence and Investigation Branch) officers.

The importer, M/s. Global Impex, had declared container weights as 7124 kgs and 6448 but on examination these goods were 13520 kgs and 14718 kgs respectively. It was found that the importer had imported 18 such consignments and in 10 previous consignments the weight was mis-declared.

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The authorities noted that the CB collects the weighment slip at the time of clearance from Container Freight Station (CFS) and should have intimated the Customs about the huge difference in declared and actual weights.

The commissioner found that the handling of dockets and insertion of forged weighment slips were done by CB's employees and that the broker failed to inform the Assistant Commissioner/Deputy Commissioner (AC/DC) about the same and actively connived with the importer.

The appellant was represented by N. Viswanathan argued that there is no statutory requirement for CBs to verify weight and that they file the bill based on documents provided by the importer and the weighment of goods at CFS is between the CFS and Customs authorities.

They further submitted that the proceedings after revocation were not proper as the enquiry report was ex parte and they were held liable under a regulation not cited in the notice. They subsequently claimed no knowledge of the mis-declaration.

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The bench comprising Ajit Kumar (Technical Member) and P. Dinesha (Judicial Member) finding merits in the Commissioner's submission held that CBLR requires the appellant to discharge its functions with diligence and display the prudence expected of a common man. Merely stating that the appellant was not aware of the said mis-declaration would not suffice.

The tribunal further observed that the CB should have noticed the difference in font size, dotted lines, etc., on the weighment slips to entertain a reasonable doubt about the misdeclaration of weight. Still, he had failed to advise the importer or alert the department, violating Regulation 11(d) of CBLR.

The tribunal held that violations, even without intent, are sufficient to take action against the CB as established in Noble Agency v. Commissioner of Customs (2002) and affirmed by the Supreme Court in Commissioner of Customs v. K. M. Ganatra & Co. (2016). Accordingly, the appeal was disposed of.

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