Unsubstantiated Show Cause Notice And Cancellation Of Licence: CESTAT Restore Customs Broker's Licence

The appellant, M/s. Perfect Cargo and Logistics, is licenced as a customs broker under the Customs Broker Licensing Regulation, 2018 (CBLR). The appellant's licence was revoked by the order, which imposed a penalty of Rs. 50,000.

The Directorate General of Analytics and Risk Management (DGARM) of the Central Board of Indirect Taxes and Customs analysed the data, identified risky exporters involved in IGST refund fraud, got some feedback from the field formations, and found that some exporters could not be verified physically (they were untraceable) and sent an official communication by email to the Commissioner. Of these exporters, there were about 24 exporters whose exports were processed by the appellant as the customs broker. The Commissioner issued a "Show Cause Notice."

An inquiry officer was appointed, who in his report stated that the customs broker had handled various shipping bills for the twenty-four exporters mentioned in the inquiry report who claimed IGST refunds. The exporters, as per information received from DGARM, are non-existent.

The Commissioner then issued an order holding that, because so many of the exporters are untraceable, it appears that the custom broker has failed to comply with the obligations imposed on it under Regulation 10(n) of the CBLR, revoked its license, and imposed a Rs. 50,000 penalty on it.

The appellant claimed that it not only met the requirement under Regulation 10(n) of the CBLR, 2018 by obtaining all required documents from the exporters in accordance with the CBEC's Circular dated 8.4.2010, but that it also submitted them to the Commissioner during the adjudication proceedings.

The applellant contended that no documents whatsoever were given to them along with the show cause notice to substantiate the allegations in it. No documents were also produced before us by the Revenue to support the allegation in the show cause notice.

The question was whether the Revenue had established a case that the appellant had violated Regulation 10(n) of the CBLR,2018, based on the evidence presented in the SCN and the evidence presented by the appellant in defence. If so, whether the revocation of the licence and imposition of the penalty by the impugned order could be sustained.

The CESTAT noted that the SCN was issued only based on a communication from DGARM without any documents or evidence whatsoever to substantiate them. The SCN was issued on the basis of the letter/communication from DGARM, which was not enclosed with the SCN.

"We are surprised that the Commissioner found it proper to deprive the appellant and its employees of their livelihood in such a casual and callous manner. The impugned order cannot be sustained and needs to be set aside," the CESTAT observed.

The Tribunal directed the department to restore the customs broker licence of the appellant within 10 days.

Case Title: M/s Perfect Cargo & Logistics Versus Commissioner of Customs, New Delhi (Airport and General)

Citation: Customs Appeal No. 50875 OF 2021

Dated: 20.04.2022

Counsel For Appellant: Advocates Shubham Tyagi, Vartika Kashyap

Counsel For Respondent: Authorised Representative for the Department Nagendra Yadav

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