2025 (6) TMI 1444 - AT - Customs

Levy of penalty on Customs Broker under Regulation 18 of CBLR 2013 - goods imported under two bills of entry were mis-declared in respect of weight - whether the appellant had received fair treatment in the proceedings before the Original Authority? - HELD THAT - The Hon ble Supreme Court in the case of Shri Parma Nanda 1989 (3) TMI 233 - SUPREME COURT held that the Tribunal could exercise only such powers which the civil courts or the High Courts could have exercised by way of judicial review. In Caretel Infotech Ltd. Vs Hindustan Petroleum Corpn. Ltd. 2019 (4) TMI 1838 - SUPREME COURT also the Hon ble Supreme Court observed that Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute their view for that of the administrative authority. Mere disagreement with the decision- making process would not suffice. The appellant has stated that the regulation 11 d which provides for advising the importer of the legal requirements to be complied with by them as per law cannot be pressed into service when importer commits any mis-declaration without the knowledge of the CB as in this case there is no justification for imputing the said contravention against them especially when their director had cleared stated that he was not aware of the said mis-declaration against which no contrary evidence has been brought on record - CBLR 2013 requires the appellant to discharge its functions with diligence and efficiency and display the prudence expected of a common man. Merely stating that he was not aware of the said mis-declaration would not suffice. Regulation 11(d) requires the CB to advise his client to comply with the provisions of the Act 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. The learned commissioner has observed that the CB who collects the weight slips should have noticed the discrepancy in the weight at the time of clearance. It is found that one of the material factor for consideration while imposing a penalty is whether there was any actual loss or potential loss of revenue as a consequence of the actions of the appellant. It is found that the penalty imposed is not disproportionately excessive which would require to be interfered with. Conclusion - The appellant s failure to exercise due diligence by not reporting discrepancies in weighment slips and not advising the importer to comply with customs law constituted a blameworthy act under CBLR 2013. The penalty imposed was appropriate and proportionate. The lower authority has taken a view which is not arbitrary or illogical or suffers from procedural impropriety or was shocking to the conscience or disproportionately excessive - the impugned order upheld - Appeal disposed off.

Summary

The core legal questions considered in this appeal include:

1. Whether the initiation and continuation of proceedings against the appellant Customs Broker (CB) after revocation of their license was proper and permissible in law.

2. Whether the proceedings and order passed by the Commissioner complied with the mandatory procedural requirements, including the time limit for passing the order.

3. Whether the initiation of proceedings without an offence report and the scope of the show cause notice (SCN) issued were legally valid.

4. Whether the appellant CB was under a statutory obligation to verify the weight of consignments or merely to file bills based on documents provided, and the extent of their responsibility under the Customs Brokers Licensing Regulations, 2013 (CBLR 2013).

5. Whether the appellant CB failed in their duty under Regulation 11(d) of CBLR 2013 by not advising the importer to comply with customs law and not reporting discrepancies to the customs authorities.

6. Whether reliance on an ex-parte inquiry report and invocation of Regulation 11(e), which was not specifically charged in the SCN, vitiated the proceedings.

7. Whether the penalty imposed was proportionate and justified based on the facts and evidence.

8. Whether the appellant was accorded fair treatment and due process in the disciplinary proceedings.

9. The propriety of the language used by the appellant in the appeal memorandum and its implications for legal decorum.

Issue-wise Detailed Analysis:

1. Validity of Proceedings Post License Revocation

Legal Framework and Precedents: The revocation of a Customs Broker license terminates its validity, and subsequent actions to revoke the same license are legally untenable. The Tribunal referred to a precedent where a similar order was held to be non est (void) because the license had already been revoked.

Court's Reasoning: The Court noted that while revocation of a license is a one-time action, the cause of action for blameworthy conduct under CBLR 2013 can arise independently whenever evidence of misconduct surfaces during the license's validity. The penalty imposed in the present case was under Regulation 18 and did not involve revocation or forfeiture of security, thus the issue of license revocation was not determinative here.

Conclusion: The appeal on this ground failed as the penalty imposition was valid despite any prior revocation, and the impugned order did not revoke the license.

2. Compliance with Procedural Requirements and Scope of Notice

Legal Framework: The CBLR 2013 and principles of natural justice require timely issuance of orders and adherence to the scope of the SCN. The Tribunal cited Supreme Court rulings emphasizing that new grounds cannot be introduced at the appellate stage.

Court's Reasoning: The Tribunal rejected the appellant's contention that the order was passed beyond the 180-day limit and that the proceedings were initiated without an offence report, holding these grounds inadmissible as they were not raised before the original authority. The Tribunal also found that the impugned order did not traverse beyond the SCN but rather dealt with the CB's lack of due diligence in failing to report discrepancies in weight.

Conclusion: The procedural challenges were not entertained at the appellate stage, and the order was held to be within the scope of the SCN and procedural norms.

3. Statutory Obligation of Customs Broker Regarding Verification of Weight

Legal Framework and Precedents: CBLR 2013 imposes duties on CBs to act with diligence and efficiency. The Tribunal cited authoritative precedents establishing that while CBs are not expected to do the impossible or physically verify goods, they must act responsibly and safeguard interests of both clients and customs. The Supreme Court has underscored the importance of misconduct by CBs and the need for serious view of such lapses.

Court's Reasoning: The Tribunal emphasized that although the physical weighment is the responsibility of customs authorities at the Container Freight Station (CFS), the CB must notice discrepancies in weighment slips and alert the authorities. The CB's failure to detect and report forged or mismatched weighment slips constituted a blameworthy act under Regulation 11(d). The Court held that the CB acts as a partner to customs and must discharge duties with prudence and responsibility.

Application of Law to Facts: The appellant failed to bring the discrepancies to the notice of the AC/DC, despite obvious signs such as differences in font size and dotted lines on weighment slips, which suggested forgery. This failure amounted to dereliction of duty.

Conclusion: The CB's contention that verifying weight was not their statutory duty was rejected, affirming their obligation to exercise due diligence.

4. Duty to Advise Importer and Report Non-Compliance (Regulation 11(d))

Legal Framework: Regulation 11(d) requires CBs to advise clients to comply with customs laws and report non-compliance to customs authorities.

Court's Reasoning: The Tribunal found that mere ignorance of misdeclaration by the CB or its directors is insufficient. The CB is expected to exercise reasonable care and diligence. The failure to alert customs authorities upon noticing discrepancies in weighment slips violated the regulation.

Precedents: The Supreme Court's interpretation of "due diligence" as "doing everything reasonable" was cited to underline the standard expected from CBs.

Conclusion: The appellant was rightly held liable for failure to discharge duties under Regulation 11(d).

5. Reliance on Ex-Parte Inquiry Report and Invocation of Regulation 11(e)

Legal Framework: Procedural fairness and adherence to the SCN are essential. However, omission to specify sub-sections in the SCN does not vitiate proceedings if the appellant is aware of the charges.

Court's Reasoning: The IO had given multiple opportunities for personal hearing, but the appellant did not appear. The appellant's failure to update their address showed negligence. The Tribunal held that the ex-parte inquiry report was valid and that mentioning Regulation 11(e) in the report, though not charged, did not amount to exceeding the SCN's scope.

Conclusion: The appellant's contention on this ground was rejected.

6. Proportionality and Justification of Penalty

Legal Framework: Penalties under CBLR 2013 are disciplinary and meant to ensure compliance and deterrence. The Tribunal noted that penalties should not be interfered with unless they are disproportionate or shock the conscience.

Court's Reasoning: The penalty of Rs. 50,000/- was considered neither excessive nor disproportionate, especially given the potential loss of revenue and security implications.

Conclusion: The penalty was upheld.

7. Fair Treatment and Due Process

Legal Framework: The Tribunal reiterated that its jurisdiction is limited to judicial review, ensuring fair treatment rather than substituting its own judgment. It cannot interfere with findings unless arbitrary or perverse.

Court's Reasoning: The Tribunal found no procedural impropriety or denial of natural justice. The appellant was given opportunities to be heard but failed to appear. The decision-making process was logical and based on evidence.

Conclusion: The appellant received fair treatment.

8. Language and Decorum in Appeal Memorandum

Legal Principles: Legal pleadings must maintain decorum and respect towards judicial/quasi-judicial authorities. The Tribunal cited precedents emphasizing restraint and discouraging aspersions or disrespectful language.

Court's Reasoning: The Tribunal expressed dismay at the appellant's use of intemperate and disrespectful language against the Commissioner. It reminded that errors in decision do not justify disrespect and urged adherence to decorum in future proceedings.

Conclusion: The Tribunal admonished the appellant for improper language.

Significant Holdings:

"The jurisdiction of the Tribunal to interfere with the disciplinary matters or punishment cannot be equated with an appellate jurisdiction. The Tribunal cannot interfere with the findings of the Inquiry Officer or competent authority where they are not arbitrary or utterly perverse."

"Due diligence means doing everything reasonable, not everything possible."

"The Customs Broker is expected to act with great sense of responsibility and take care of the interests of both the client and the Revenue."

"A Customs Broker who fails to advise the importer to comply with the provisions of the Customs Act and fails to bring to the notice of the AC/DC any non-compliance, commits a blameworthy act under Regulation 11(d) of CBLR, 2013."

"The penalty imposed under Regulation 18 of CBLR, 2013 is disciplinary in nature and intended as a deterrent; it should not be interfered with unless it is disproportionate or shocks the conscience."

"The use of unduly strong, intemperate, sarcastic or extravagant language in pleadings against quasi-judicial authorities is discouraged and reflects poorly on the legal profession."

The Court concluded that the appellant's failure to exercise due diligence by not reporting discrepancies in weighment slips and not advising the importer to comply with customs law constituted a blameworthy act under CBLR 2013. The penalty imposed was appropriate and proportionate. Procedural requirements were met, and the appellant was accorded fair treatment. The appeal was therefore dismissed and the impugned order upheld.