Customs Commissioner Fails to issue Notice within 90 days: CESTAT Quashes Penalty over Custom Brokers License Proceedings [Read Order]

The Chennai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) quashed Penalty against Customs Brokers as the CustomsCommissioner failed to show compliance with the mandatory 90-day limit for issuingShow Cause Notice under Customs Brokers Licensing Regulations (CBLR) ,2013. Thus, the Tribunal set aside license suspension and security deposit forfeiture.

The Appellant, M/s. La Freight Lift Pvt Ltd, Chennai, preferred two interconnected appeals arising from the same impugned Order-in-Original dated 06.06.2016, was aggrieved by the impugned order in original to the extent that it has ordered a forfeiture of the full amount of security deposit.

The Appellant Customs Broker operating under a valid Customs Broker Licence issued in terms of Regulation 8 of CHALR, 2004. An investigation by the Docks Intelligence Unit (DIU), Custom House, Chennai, was attempted into smuggling of Red Sanders disguised as Mild Steel Round Pipes, with Shipping Bill No. 9880221 dated 05.02.2014.

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The Appellant Customs Broker had facilitated the clearance of this export shipment for the exporter, Dharranee Roofing Plant P Ltd. Investigations revealed that Badri K Narayanan, suspected to be the main culprit, had introduced himself to the exporter as a buying agent and arranged for the customs house agent.

On the other hand, the Department alleged that the Appellant Customs Broker failed to obtain proper authorization from Dharranee Roofing Plant P Ltd, dealt with the unauthorized Badri K Narayanan, and facilitated the illegal activity. It was further stated that the customs broker's manager at Coimbatore had only visited the exporter's office and had not verified the identity, PAN, or memorandum of articles of association of the exporter.

The Department concluded that the Appellant Customs Broker failed to exercise due diligence, identify its client, verify antecedents, and ascertain the source of payments, thus violating Regulations 11(a), 11(b), 11(e), and 11(n) of the Customs Broker Licensing Regulations, 2013 (CBLR 2013). The Appellant Customs Broker's licence was suspended vide suspension order dated 17-04-2014. After a personal hearing on06-05-2014., the Commissioner of Customs, through Order-in-Original No. 25614/2014, dated 20-05-2014, continued the suspension. Subsequently, a show cause notice dated 02-06-2014 was issued, proposing revocation of the licence, forfeiture of the security deposit, or imposition of penalty under Regulation 18 of CBLR 2013.

The Regulation 18 of CBLR 2013 explained that: Revocation of licence or imposition of penalty

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