Customs Broker Can't Use Other Credential CESTAT

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that it is impermissible for any Customs Broker to use somebody else’s credentials by mistake.

The bench of Dr. Ms. Rachna Gupta (Judicial Member) and P.V. Subba Rao, (Technical Member) has observed that the Director of the appellant firm Awadhendra Kumar, despite having its own Customs Broker licence, filed the bill of entry using the credentials of Shri Prakhar Gupta in connivance with Shri Prakhar Gupta. rakhar Gupta sublet his licence to the appellant who used the licence to file the bill of entry. The reason for the scheme is obvious that the imported goods were prohibited and the bill of entry filed using the credentials of another Customs Broker.

Background

The appellant, Customs Broker has challenged the order passed by the Commissioner of Customs (Airport & General), New Delhi by which he revoked the customs broker licence of the appellant, forfeited its security deposit and imposed penalty of Rs. 50,000.

The order was passed in pursuance of the show cause notice dated 24.06.2022 issued by the Commissioner, in which it was alleged that the appellant had contravened Regulations 10(a), 10(b), 10(d), 10(e), 10(f) and 10(k) of the Customs Broker Licencing Regulations, 2018.

The Commissioner appointed an Inquiry officer in the matter and after considering his report and the submissions made by the appellant passed the impugned order holding that the appellant had violated the provisions of Regulations 10(a), 10(d), 10(e), 10(f), 10(k) and 10(n) of the CBLR. He held that the appellant had not violated Regulation 10(b).

The Commissioner revoked the licence of the appellant, forfeited its security deposit and imposed a penalty of Rs. 50,000.

The bill of entry was filed with M/s Prakhar Gupta as the Customs Broker. The consignment was examined and samples were sent to the Plant Quarantine and to the Wildlife Crime Control Bureau. Based on their reports, it was concluded that the imported goods were prohibited and could not have been imported at all.

Investigation further showed that although the name of M/s Prakhar Gupta is indicated in the bill of entry as the Customs Broker, the actual processing of the bill of entry and the import consignment was done by the appellant using the Customs Broker’s licence of M/s Prakhar Gupta.

Action was taken against the importer, M/s Prakhar Gupta and the appellant under the Customs Act and the Joint Commissioner of Customs, Preventive Commissionerate passed order-in-original dated 28.03.2022, inter-alia, imposing a fine of Rs. 1,00,000 on Awadhendra Kumar, Director of the appellant and on Prakhar Gupta each under Section 114AA of the Customs Act, 1962.

Arguments

The customs broker contended that order is illegal, baseless and un- sustainable. M/s Prakhar Gupta was the Customs Broker in the import and, therefore, the appellant had no obligation to fulfill the provisions of CBLR in respect of this consignment. Customs Broker licence should not be revoked even if there are minor lapses or omissions.

The broker argued that the Commissioner had not considered the plea of the appellant regarding the effect of the action of revocation on his right to carry on trade or provision.

The department contended that the import consignment was attempted to be cleared by filing the bill of entry using the CB licence of M/s Prakhar Gupta and investigations showed that the Bill of Entry was filed the appellant through its Director, Awadhendra Kumar. The Customs Broker is mandated under Regulation 10(f) of CBLR to inform its clients about various Rules and Regulations in respect of clearance of goods through the customs and in the case, the appellant had failed to do so. Thus, the appellant had violated Regulation 10(f) of CBLR.

Relevant Provision

Regulation 10 (k) requires the Customs Broker to maintain up-to-date records, such as, bill of entry, shipping bill, trans-shipment application etc. All correspondence, other papers relating to his business as Customs Broker and accounts including financial transactions in an orderly and itemized manner.