Failure To File Declaration May Be Considered As Technical Irregularity If Customs Authorities Failed To Notice It: CESTAT

“There is no doubt that the declaration had to be made and, the deployment of 'abundant caution' in the instructions notwithstanding, it would appear that the said declaration was of not of insignificance in the procedure prescribed under Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 and handling of drawback claims but it has not been shown that customs broker had not advised the client about the documentation and that non-compliance thereof was not to be taken thereof by the proper officer except upon reporting by the broker” stated the Bench of Ajay Sharma (Judicial Member) and CJ Mathew (Technical Member).

In this case the proceedings were against several exporters in connection with drawback allegedly claimed in excess of eligibility and facilitated by one Mr Suhel Ansari, who had furnished fraudulent invoices of purported suppliers of textile articles.

The assessee/ M/s East West Freight Carriers Ltd was charged with negligence in advising the claimant to comply with provisions of Customs Act, 1962.

The assessee/appellant, holder of customs broker licence, are aggrieved by order of the licensing authority, Principal Commissioner of Customs (General), Mumbai, revoking the licence and forfeiting of security deposit, under regulation 14 of Customs Broker Licensing Regulations, 2018.

The assessee submitted that there was nothing on record to indicate that the assessee was part of a larger conspiracy, if any, to avail ineligible drawback. As the goods had been physically examined before export upon which responsibility of the assessee, who had no role either in procurement of the goods or engagement with overseas customer.

The department submitted that the attempt to obtain ineligible drawback was abundantly clear from the circumstances and that the assessee had failed to brief the exporter on the significance of the declarations owing to which the three regulations were breached.

The bench opined that the alleged conspiracy is mere narration of events and episodes leading to the eventual decision to proceed against the assessee, and others, under the Customs Broker Licensing Regulations, 2018.

“It was necessary for the licensing authority to depict the elements of this conspiracy in terms of the stipulations in Customs Act, 1962 that were breached thereof and attributable, in part at least, to failure in advising the client to comply with the statutory requirements, failure to ascertain information supplied to client owing to which the client had strayed and the failure to communicate the instructions in circulars and public notices,” added the Tribunal.

The bench opined that the drawback claims in the seven shipping bills, even if ineligible, is not of such magnitude as to warrant imposition of all the penalties and detriments available in the empowerment of the licensing authority.

In view of the above, the Tribunal set aside the revocation and forfeiture of security deposit under regulation 14 of Customs Broker Licensing Regulations, 2018 and uphold the penalty under regulation 18 of Customs Broker Licensing Regulations, 2018.

Case Title: East West Fright Carriers Ltd. v. Principal Commissioner of Customs (General)

Case Number: CUSTOMS APPEAL NO: 86361 OF 2024

Counsel for Appellant/ Assessee: Prashant Patankar

Counsel for Respondent/ Department: Krishna Murari Azad

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