2024 (6) TMI 718 - AT - Customs

Revocation of the Customs Broker (CB) license - forfeiture of security deposit - levy of penalty - inadmissible evidences - some cargo companies in collusion with the Appellant and other customs brokers were misusing the Transfer of Residence (TR) facility extended to NRIs - recovery of several incriminating documents regarding clearance of non bonafide baggage - HELD THAT - As per the impugned order the Adjudication authority concluded that email communication relied in the Show cause Notice is admissible evidence even in the absence of the certification under the provisions of Section 138C of the Customs Act 1962. Such finding is given on the ground that proceedings under CBLR 2018 are quasi-judicial proceedings and in quasi-judicial proceedings the evidence is appreciated on the principles of preponderance of probability and quasi-judicial authority does not have to prove things beyond doubt as in the case of criminal proceedings and for this reason adjudication authority held that the rigors of provisions of the Indian Evidence Act 1882 are not applicable to quasi-judicial proceedings as held by Supreme Court in the matter of CC Vs M/s Orient Enterprise 1996 (12) TMI 389 - SC ORDER . Non-compliance with the provisions of Section 138C of the Customs Act 1962 - HELD THAT - Unless the requirement of Section 65B of the Evidence Act is satisfied such evidence cannot be admitted in any proceeding. Since Section 138C of the Customs Act is pari materia to Section 65B of the Evidence Act the evidence in the form of computer printouts etc. recovered during the course of investigation can be admitted only subject to the satisfaction of the sub-section (2) of Section 138C - There is no reason forth coming in the impugned order specifying the reason for rejecting request of cross examination of these two employees who had given statements as well as furnished documents retracted from the computer belongs to Appellant which are relied by Adjudication Authority to give finding against the appellant. Such documents cannot be considered as admissible evidence specially in the absence of certification as per Section 138C of Customs Act 1962 and when no opportunity extended for cross examination as per Section 17 of CBLR 2018. Violation of section 10(d) of CBLR 2018 - HELD THAT - As per section 10 (d) Customs Broker shall advise his client to comply with the provisions of the Act other allied Acts and the rules and regulations thereof and in case of non-compliance shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs as the case may be; Thus a duty is cast on the Customs Broker to advise his clients to comply with the provision of law and in case the client failed to comply with the provision it should have been brought to the notice of the Customs Authority - In the present case there is no way for the Customs broker to find out whether the baggage brought by the passenger belongs to them or any other person. It is revealed only at the time of inspection. If the overseas agency had induced the passenger to carry the goods belongs to other NRIs though unaccompanied baggage of a passenger by offering any amount in the absence of any knowledge regarding such offer till the filing of baggage declaration the proceedings initiated against the appellant is unsustainable. Thus the finding regarding alleged violation of the provision of Regulation of 10(d) of the CBLR 2018 is unsustainable. Violation of section 10(e) of CBLR 2018 - HELD THAT - Though the document retrieved from the email communication of the appellant cannot be considered as admissible evidence in the absence of compliance with 138C of the customs Act 1962 in the absence of the categorical denial regarding presence of such document in email of the appellant only presumption can be drawn that though the appellant was not knowing about the content of the mail/communication made on behalf of the appellant there is an omission on the part of appellant in proper supervision of the activities of its staff which amount to non exercise of due diligence as contemplated under section 10(e) of CBLR 2018. However harsh provisions of CBLR, 2018 cannot be invoked for such omission and appropriate penalty under the provisions of Section 18(1) is sufficient in such case. Thus the revocation of the Customs Broker license and forfeiture of Security deposit under section 14 of the CBLR 2018 are unsustainable. Penalty under Regulation 18(1) of the CBLR 2018 - HELD THAT - Considering the suspension of the Customs Broker license since January 2024 a lenient view can be taken regarding penalty. Thus the penalty imposed on the appellant under Regulation 18(1) of the CBLR 2018 is reduced to Rs. 40, 000/-. The impugned order is modified and appeal is partially allowed by setting aside revocation of the Customs Broker license and forfeiture of security deposit under section 14 of the CBLR 2018. The penalty imposed on the appellant under Regulation 18(1) of the CBLR is reduced to Rs. 40, 000/-. Appeal allowed in part.

Summary

Issues Involved:
1. Legality of the revocation of the Customs Broker (CB) license.
2. Compliance with Section 138C of the Customs Act, 1962.
3. Denial of cross-examination.
4. Violation of Regulation 10(d) and 10(e) of the Customs Broker Licensing Regulation, 2018.
5. Forfeiture of security deposit.
6. Imposition of penalty under Regulation 18(1) of the CBLR, 2018.

Issue-Wise Detailed Analysis:

1. Legality of the Revocation of the Customs Broker (CB) License:
The appellant challenged the revocation of the CB license, arguing that the proceedings initiated were prima facie illegal and unsustainable. The appellant contended that the documents relied upon by the Adjudication authority were not in compliance with Section 138C of the Customs Act, 1962, and that no opportunity was extended for cross-examination. The Tribunal found that the revocation of the Customs Broker license and forfeiture of the security deposit under Section 14 of the CBLR, 2018, were unsustainable. The Tribunal modified the impugned order by setting aside the revocation of the Customs Broker license and forfeiture of the security deposit.

2. Compliance with Section 138C of the Customs Act, 1962:
The appellant argued that the documents relied upon by the Adjudication authority were not certified as required under Section 138C of the Customs Act, 1962, and Section 65B of the Indian Evidence Act, 1882. The Tribunal held that the evidence in the form of computer printouts, etc., recovered during the investigation could be admitted only if the requirements of Section 138C were satisfied. In the absence of such certification, the electronic documents could not be relied upon by the Revenue for any quasi-judicial proceedings.

3. Denial of Cross-Examination:
The appellant contended that they were not allowed to cross-examine witnesses whose statements were relied upon by the Adjudication authority. The Tribunal cited the Supreme Court's decision in M/s Andaman Timber Industries Vs. Commissioner of C. Excise, Kolkata-II, which emphasized the importance of cross-examination in quasi-judicial proceedings. The Tribunal found that the denial of cross-examination amounted to a violation of the principles of natural justice, making the order null and void.

4. Violation of Regulation 10(d) and 10(e) of the Customs Broker Licensing Regulation, 2018:
The appellant argued that they had complied with Regulation 10(d) by advising their clients to comply with the provisions of the Act and bringing any non-compliance to the notice of the Customs authorities. The Tribunal found that the responsibility of the Customs Broker was to advise the importer regarding the concerned provisions only when it was brought to their notice that the goods were imported in violation of the law. The Tribunal held that the finding regarding the alleged violation of Regulation 10(d) was unsustainable. Regarding Regulation 10(e), the Tribunal found that there was an omission on the part of the appellant in the proper supervision of their staff, which amounted to non-exercise of due diligence. However, the Tribunal held that the harsh provisions of CBLR, 2018, could not be invoked for such an omission, and an appropriate penalty under Section 18(1) was sufficient.

5. Forfeiture of Security Deposit:
The appellant argued that there was no proposal in the Show Cause Notice (SCN) for the forfeiture of the security deposit. The Tribunal found that the forfeiture of the security deposit under Section 14 of the CBLR, 2018, was unsustainable and set it aside.

6. Imposition of Penalty under Regulation 18(1) of the CBLR, 2018:
The appellant contended that the penalty imposed was excessive. The Tribunal considered the suspension of the Customs Broker license since January 2024 and took a lenient view regarding the penalty. The Tribunal reduced the penalty imposed on the appellant under Regulation 18(1) of the CBLR, 2018, to Rs. 40,000/-.

Conclusion:
The Tribunal modified the impugned order and partially allowed the appeal by setting aside the revocation of the Customs Broker license and forfeiture of the security deposit under Section 14 of the CBLR, 2018. The penalty imposed on the appellant under Regulation 18(1) of the CBLR was reduced to Rs. 40,000/-.