Customs Broker Licence Can’t Be Revoked On Mere Charge Of Mis–Declaration And Undervaluation Of The Illegal Imports: CESTAT

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the licence cannot be revoked on a mere charge of misdeclaration and undervaluation of illegal imports.

The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that the punishment has to be commensurate with the misconduct and that the charges against the appellant/customs broker are not so grave that the extreme punishment of revocation of licence is called for. Thus, the order so far for revocation of the licence deserves to be set aside. However, the forfeiture of the security deposit and penalty of Rs. 50,000 imposed under Regulation 18 of the Customs Broker Licencing Regulations, 2018 (CBLR) need to be maintained.

The appellant/assessee has been issued a Customs Broker Licence in the year 2010 by the Commissioner of Customs (Airport & General), New Delhi, which is valid up to November 22, 2029. The letter was issued by the Additional Director, Directorate of Revenue Intelligence (DRI), Delhi Zonal Unit (DZU) regarding violations committed by various Customs Brokers in relation to gross misdeclaration and undervaluation in the import of electronic goods by various importers, where the value of the imported goods declared before Customs was roughly 5% of the actual value of the goods.

The show cause notice was issued, calling upon the appellant to show cause as to why they should not be held responsible for contravening the provisions of CBLR 2018. The show cause notice further asked why the Customs Broker Licence should not be revoked, the security deposit should not be forfeited under Regulation 14 read with Regulation 17 of CBLR, and a penalty should not be imposed on them under the provisions of Regulation 18 read with Regulation 17 of CBLR, 2018.

The Adjudicating Authority specifically observed that the Customs Broker, with malafide intention, knowingly abetted the illegal import of the consignments involving gross mis-declaration and undervaluation. The adjudicating authority revoked the customs broker licence of the appellant along with an order of forfeiture of the security amount and also imposed a penalty of Rs. 50,000/- on the appeal before this tribunal.

The appellant contended that no reliance can be placed on the statement recorded under Section 108 for the simple reason that it was not voluntary and has been retracted subsequently. Due to prolonged illness, his health had deteriorated, and he was not fit to make the statement as he was under medication for anti-anxiety.

The applicant contended that there is a violation of the principles of natural justice in as much as he has not been allowed to cross-examine the witnesses who have been alleged to have made the statements under Section 108 and which have been relied upon by the department.

The tribunal held that the statement of the appellant himself is sufficient to establish the substantive allegation of subletting the licence, and therefore nothing much would have changed by allowing him to cross-examine Sanjeev Kumar and Atul Kapoor. There are a number of decisions on the point that failure to provide an opportunity to cross-examine the witnesses when there is already a confessional statement by a party is not a violation of the principles of natural justice.

The tribunal noted that the case had been initiated by the department without complying with the mandatory requirement of furnishing the offence report as defined under the regulations. This is one more reason that restrained the tribunal from upholding the punishment of revocation of the licence of the customs broker.

Case Title: Shyam Singh Versus Commissioner Customs

Case No.: Customs Appeal No. 50033 of 2023

Date: 01.09.2023

Counsel For Appellant: B. L. Garg

Counsel For Respondent: Nagendra Yadav

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