Revocation of Customs Broker Licence for more than 4 Years due to Facilitating Fraudulent Import and Export: CESTAT sets aside Revocation of License [Read Order]

The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) set aside the revocation of the Customs Broker licence for more than 4 years due to facilitating fraudulent import and export. The Tribunal viewed that the revocation of the Customs Brokers License is too harsh a punishment which is bound to affect the livelihood of the Customs Broker and his employees. M/s. Souparnika Shipping Services (the appellant) challenged the Orders of the Principal Commissioner of Customs, Chennai under Customs Broker Licensing Regulations ( CBLR ), 2018. The appellant is the holder of a Customs Broker License issued by Chennai Customs Commissionerate valid up to 15.03.2024 and Shri K.V. Prabhakaran is the proprietor of CHA.

The appellant has acted as the Customs Broker for M/s. Aarthi International for clearance of imported goods declared as “Rice Cookers and Rice Cooker Spare Parts”, whereas on a detailed examination of the imported consignment, contraband Cigarettes were found concealed behind the declared goods which were valued at Rs.6.82 crores.  Investigations conducted revealed that the CHA has violated the provisions of Regulations 10 (b), 10(d), 10(e) and 10(n) of the CBLR, 2018.  The CHA was found to have not exercised due diligence to ascertain the correctness of the information regarding the importer and also deliberately not verified the antecedents of the GST holder, the correctness of the Importer Exporter Code ( IEC ) number, the identity of the client and the declared address by using reliable, independent, authentic documents, data or information as mandated in the Regulations, 2018.  It was found that the documents were handled by one Shri Kalaivanan who was not an employee of the CHA firm.

As a prima facie case existed against the Customs Broker and in case he was allowed to continue to operate, it would be detrimental to the interest of Revenue and to prevent the Customs broker from further misuse of the CHA license, the Customs Broker license of M/s. Souparnika Shipping Services was suspended vide suspension order dated 15.07.2019 pending enquiry. Further, an order of continuation of suspension was issued under Regulation 16 (2) of CBLR, 2018 vide order dated 06.08.2019.  The Principal Commissioner of Customs, Chennai has revoked the Customs Broker License of the appellant under Regulation 17(7) of the CBLR, 2018 which is the order impugned.  Further, a penalty of Rs.50,000 was imposed under Regulation 18(1) of CBLR, 2018 apart from ordering forfeiture of the whole amount of the Security Deposit of Rs.25,000/- furnished by the licensee under Regulation 14 of the CBLR, 2018.

Further, the appellant was also allegedly involved in the case of attempted smuggling of Cigarettes into the country having a value of Rs.6.82 crores leading to the revocation of his license vide Order-in-Original No. 74163/2020 dated 28.02.2020.  The adjudicating authority has also referred to a case where the appellant was involved where Red Sanders attempted to be exported.  M/s. Rubicon Mineral Process filed a Shipping Bill No. 1326995 dated 28.02.2014 for the export of 1440 Bags of Potash Feldspar 200 Mesh to Korea.  Based on specific intelligence, the officers of DRI, Chennai Zonal Unit, when intercepted the container, Red Sanders valued at Rs.3.6 crores were seized which was stacked behind the declared item i.e., Potash Feldspar 200 Mesh bags.

As the Customs Broker was found undertaking Customs clearance work without due diligence and in contravention of provisions of the CBLR, 2018 and the Customs law and as he was involved in successive cases of evasion of duty and misuse of export benefits, the Principal Commissioner of Customs, Chennai vide Order-in-Original has confirmed the revocation of Customs Broker License of M/s. Souparnika Shipping Service under Regulation 17(7) of CBLR, 2018 ( Customs Broker license has been already revoked ). Further, a penalty of Rs.50,000/- was imposed on the appellant under Regulation 18(1) of CBLR, 2018.

A two-member bench of Ms Sulekha Beevi C S, Member ( Judicial ) and Mr Vasa Seshagiri Rao, Member ( Technical ) viewed that “revocation of Customs Brokers License is too harsh a punishment which is bound to affect the livelihood of the Customs Broker and his employees and by taking into consideration that the Customs Broker License was suspended on 15.07.2019 and thus more than four years elapsed since, thus, the revocation is set aside.” The CESTAT directed the Customs authority to issue/revive the Customs Brokers License as the Broker was out of Business for more than four years which is enough punishment for the lapses on his part. Further upheld the penalty of Rs.50,000/- imposed vide impugned Order-in-Original.

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