Lotus Integrated Logistics Private Limited Vs Principal Commissioner Of Customs (CESTAT Hyderabad)
In the litigation between Lotus Integrated Logistics Private Limited and the Principal Commissioner Of Customs (CESTAT Hyderabad), an interesting development concerning the Central Board of Indirect Taxes and Customs (CBIC) laws was noted. It highlights that violations of the Customs Brokers Licensing Regulations (CBLR) Provisions do not necessarily result in the maximum penalty if they do not lead to license revocation.
Analysis: The case began when the Central Bureau of Investigation (CBI) conducted a joint search that led to allegations of financial misconduct against Lotus Integrated Logistics Private Limited. The CBI investigation resulted in a call to revoke the company’s Customs broker license and impose a penalty under Regulation-18. However, Lotus Integrated Logistics appealed against the verdict, stating procedural inadequacies and lack of concrete evidence. Following a comprehensive review, it was concluded that if the violations aren’t grave enough to warrant a license revocation, they shouldn’t call for the maximum penalty under Rule 18 either.
Conclusion: This case underscores the importance of proportionality in penalizing violations. While Lotus Integrated Logistics was found to have violated the CBLR, 2018 regulations, the court found that these transgressions didn’t warrant license revocation. As a result, the appellant was exempt from the maximum penalty under Rule 18. This case establishes a precedent that if license revocation isn’t justified, neither is imposing the maximum penalty, underlining the importance of appropriate penalties proportional to the severity of the violation.
FULL TEXT OF THE CESTAT HYDERABAD ORDER
The appellants, M/s Lotus Integrated Logistics Private Limited, are customs broker; Central Bureau of Investigation (CBI) conducted a joint search at Calyx Container Terminals Private Limited, Chennai on 30.08.2019; CBI recovered some cash of Rs.81,550/-from the bag and table of Smt. Sanghamitra, Superintendent of Customs in heroffice; a loose sheet containing details of hand-written information was recovered from one Shri N. Muragan, an employee of another CHA M/s Southern Clearing and Forwarding Agencies Private Limited; Shri Muragan stated that as per the directions of Smt. Sanghamitra, he noted down details of money received from19 CHAs, totalling amounting to Rs.69,700/-; the list included the name of the appellant at Sl. No.14 for an amount of Rs.3,600/-; investigations revealed that the appellant’s company at Chennai issued a cash voucher, No. 065 for job No. 929 for Rs.5140/- on 04.09.2019, in the name of Shri K.Guhan; Shri Guhan in his statement before Metropolitan Magistrate on 21.01.2020confirmed that he paid gratification to the officers through Shri Muragan; Custom officers granted LEO after confirming from Shri Muragan about the receipt of bribe and that he received Rs.5,200/- in cash from his office for the purpose of smooth management of loading and unloading and customs clearance work. CBI forwarded a self-contained note dated 31.08.2020 to the Chief Commissioner of Customs, Chennai, who in turn forwarded the offence report to different Commissioners to take action against the delinquent Customs brokers. Accordingly, Commissioner of Customs, Hyderabad issued a notice dated 06.02.2021 to the appellants seeking to revoke the license of Custom broker under Regulation-17 and to impose penalty under Regulation-18; an Inquiry Officer was appointed; the Inquiry Officer submitted the report on 22.06.2021 holding that the appellant is guilty of violation of Regulation-10 (i) CBLR, 2018. Commissioner of Customs vide OIO dated 17.09.2021 imposed the penalty of Rs.50,000/- on the appellant. Hence, this appeal.
2. Shri Srinivas Chaturvedula, learned Counsel appearing on behalf of the appellant submits that the proceedings have been initiated on a unilateral and illegally untested version of CBI; the show cause notice relies upon only one document i.e the alleged self-contained note of CBI; no reliance is placed on any other material, document or witness; the said self-contained report is nothing but list of allegations. He submits that the impugned order has not been issued by observing due process of law; no relevant documents have been supplied to them; the Department was led by the version of CBI which was not accepted yet by any court of law.
He submits that the inquiry conducted by the Inquiry Officer was in gross violation of the principles of natural justice in as much as the documents relied upon were not supplied to the appellant and opportunity of cross-examination of the officers and other persons involved in violation of the ratio laid down in:
