Customs Broker License Revocation is Harsh Penalty, Must be Based on Proven Involvement in Fraud: CESTAT [Read Order]

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Bangalore Bench, partially allowed the appeal and held that harsh penal consequence of revocation of license depends on the involvement that the customs broker has in the alleged fraud.

The facts allege the appellant to have assisted some of the cargo companies abroad for mis-using the provisions of Baggage Rules, 2016 and so proceedings were initiated wherein one of the baggage consignment filed by the appellant was identified. The total value of the subject consignment worked out to INR 1,14,520/- against the declared value of INR 27,000/-. The goods were seized due to mis-declaration and statements of the appellant and passenger were recorded.

On the conclusion of investigation, proceeding under CBLR, 2018 was initiated and the Adjudication Authority revoked the license, forfeited security deposit and imposed penalty. Aggrieved by this, the present appeal was filed.

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The counsel for the appellant submitted that the methods adopted to assess the value and to allege loss of revenue is unsustainable as inventory is prepared by adding assessable value on the used personal effects and the alleged differential duty was negligible, this proves that there was no attempt to misuse the extended benefit.

The counsel argued on various other points relating to CBLR, defending the alleged violation of Regulation 10 and 13, relying on several case laws such as Commissioner of Customs, Bangalore v. MNS Exports (P) Ltd. (2012).

Ultimately, the tribunal was of the view that some of the alleged violations were unsustainable while some were upheld. CESTAT observed that customs broker regulation envisages harsh penal consequences but they depend upon the involvement of the broker in the alleged fraud.

In the present case, directions for the license revocation and forfeiture of security deposits were set aside. However, considering the violation of Regulation 10(d), the penalty of INR 50,000/- imposed was confirmed. The appeal was conclusively partially allowed by the two member bench of P.A. Augustian (Judicial Member) and Pullela Nageswara Rao (Technical Member).

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