Sarajdeep Logistics Pvt Ltd Vs Principal Commissioner of Customs (General) (CESTAT Mumbai)
Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, has overturned an order by the Principal Commissioner of Customs (General), Mumbai, which had revoked the customs broker license of M/s Sarajdeep Logistics Pvt Ltd. The order also included the forfeiture of the security deposit and the imposition of a penalty of ₹ 50,000 under the Customs Brokers Licensing Regulations, 2018.
The proceedings against Sarajdeep Logistics were initiated following the examination of imported “assorted goods” from China, covered by a bill of entry filed by the appellant on behalf of M/s Arise Enterprises. Customs authorities found discrepancies with the prevailing Foreign Trade Policy (FTP) concerning packaged products and noted that certain “toys” did not meet the required quality control standards for import. Initially, the customs broker was alleged to have violated several regulations, including 10(b), 10(d), 10(m), 10(n), and 13(2) of the Customs Brokers Licensing Regulations, 2018. However, an inquiry concluded that regulations 10(d), 10(m), and 13(2) were not breached, a finding the licensing authority later disagreed with, leading to a notice of intended action for breaches of all cited regulations.
The alleged breach of regulation 10(b) pertained to the requirement that business be transacted personally or through authorized employees. The alleged violation of regulation 10(d) was based on the claim that the appellant failed to advise the client on compliance with the Customs Act and did not report non-compliance to the authorities. The charge under regulation 10(m) stemmed from the alleged failure to discharge duties with speed and efficiency. Furthermore, the appellant was accused of breaching regulation 10(n) by failing to verify the correctness of certain particulars and the identity and address of the client, and regulation 13(2) for not exercising proper supervision over employees.
Counsel for Sarajdeep Logistics argued that the findings of the inquiry relied solely on statements recorded under Section 108 of the Customs Act, 1962, which, according to established judicial precedents, is not sufficient evidence for proceedings under the Customs Brokers Licensing Regulations. The counsel cited the Tribunal’s decision in Thakkar Shipping Agency v. Collector of Customs, Bombay [1994 (69) ELT 90 (Tribunal)] and the Telangana High Court’s ruling in Shasta Freight Services Pvt Ltd v. Principal Commissioner of Customs, Hyderabad [2019 (368) ELT 41 (Telangana)] in support of this contention. Additionally, reliance was placed on a Bombay High Court order in Jayesh Shah v. Union of India, which held that customs brokers are generally not responsible for the declared contents of Full Container Load (FCL) containers sealed by the shipper, especially when there is no evidence of the broker’s knowledge of any misdeclaration.
The CESTAT, after hearing the arguments, concurred with the appellant’s submissions. The Tribunal noted that the alleged breaches of regulations 10(b) and 13(2) were based on the statement of one Robert S Chettiar. Citing its own precedent in Thakkar Shipping Agency, the CESTAT held that relying entirely on such statements in inquiry proceedings under the Customs Brokers Licensing Regulations does not meet the legal standard to prove a breach of these obligations. Similarly, the alleged breach of regulation 10(d), which required advising the client on statutory compliance, was also based on the same inadmissible statement, leading the Tribunal to invalidate this finding as well. Regarding the charge under regulation 10(m) for failing to act with speed, the CESTAT found the licensing authority’s interpretation to be incorrect, stating that this provision is intended to prevent prejudice to the importer/exporter due to the broker’s delay, and it cannot be construed to make the broker a surrogate for the licensing authority in educating the client. The Tribunal also found no evidence of any complaint that would trigger the invocation of this provision. Concerning the alleged violation of regulation 10(n), the CESTAT observed that the findings lacked specific details of the incident constituting the breach, rendering the confirmation of this charge unsustainable. In light of these findings, the CESTAT set aside the Principal Commissioner’s order and allowed the appeal filed by Sarajdeep Logistics Pvt Ltd.
FULL TEXT OF THE CESTAT MUMBAI ORDER
