Case Law Details
Trade Wings Logistics India Pvt. Ltd Vs Commissioner of Customs (CESTAT Chennai)
Trade Wings Logistics India Pvt. Ltd. filed an appeal against the revocation of its Custom Brokers license and the imposition of penalties by the Commissioner of Customs. The appeal is based on the ground that the Show Cause Notice (SCN) was issued beyond the stipulated 90 days from the date of the offense report.
The appellant argued that the SCN was issued without a specific offense report and contended that the date of occurrence should be considered the offense report. CESTAT Chennai cited relevant regulations and higher court judgments, emphasizing that the time limit for issuing the SCN is mandatory.
CESTAT Chennai allowed the appeal, setting aside the revocation of the license, as the SCN was issued beyond the mandated 90-day period from the date of the offense report. The decision highlights the significance of complying with the prescribed timelines in such proceedings.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The appeal is filed against the order passed by the commissioner revoking the Custom Brokers license of the appellant and also ordering for forfeiture of security deposit (Rs.50,000/-) and imposing a penalty of Rs.50,000/-.
2. Brief facts are that, special Intelligence & Investigation Branch, Air Cargo Complex, Mumbai with respect to the Investigation being carried into the role of Customs Broker, Trade Wings Logistics India Pvt. Ltd., in the case of attempt to export carpets made from wool waste pasted on cotton thread in guise of Handmade carpets, to avail drawback wrongfully to the Rs.24,90,393/- and mis-declaration in terms of Quality and Quantity in 29 Shipping Bills dated 21.12.2016 filed on the behalf of the exporter M/s Galaxy Enterprises, Mumbai through the said Customs Broker were verified.
3. It appeared that the shipping bills were split up purposefully by the exporter to escape the attention of the huge drawback claims made by them. The above consignment was to be examined and was berthed at SANCO-II CFS by the customs broker. It was informed that the representative of exporter Shri. Arya Reddy would be coming to Chennai on 09.01.2017 for purpose of witnessing the examination of goods. Subsequently the customs broker informed that no contact could be established with Sh. Arya Reddy. On examination it was found that the goods were mis-declared with respect to the quantity and value with an intent to avail excess drawback. The goods were seized and the container sealed. On 31.01.2017, 4 samples were drawn from the consignment under mahazar proceedings. These samples were sent to CARPET EXPORT PROMOTION COUNCIL for their report. The report stated that goods were not handmade carpets, but only made of wool which was pasted on cotton thread. The estimated price of the samples ranged from only US $3.00 to US $5.00 per square meter. It appeared that the exporter had misdeclared the export consignment to avail wrongful and ineligible drawback.
4. The Customs Broker (appellant herein) was issued a Show Cause Notice under the Regulation 17 of the Customs Brokers Licensing Regulations, 2018 read/with Regulation 20 of Customs Brokers Licensing Regulations, 2013. After due process of law the original authority ordered for revocation of the Licence and to forfeit the security deposit (of Rs.50,000/-) and Penalty of Rs.50,000 was also imposed.
5. The Learned counsel Ms. J. Ragini appeared and argued for the appellant. It is submitted that the requirement of mandatory time limit has not been complied in the proceedings. The case was detected on 31.01.2017 when detailed examination of the Cargo was carried out. However, the Show Cause Notice has been issued much later only on 19.01.2018. In the absence of any offence report, the occurrence and knowledge of the misdeclaration is to be taken as the date of offence report as observed by the Hon’ble Jurisdictional High Court in the case or MM Logistics reported in 2020(373) E.L.T. 677 (Tri-Delhi). As per Regulation, 20, the Show Cause Notice ought to have been issued to the appellant within 90 days from the date of offence report. In the present case the Show Cause Notice has been issued much later and therefore the order of revocation for license is vitiated and cannot be sustained.
6. The appellant had filed reply to the Show Cause Notice on 05.03.2018. The inquiry officer submitted the inquiry report on 22.11.2018 and the same was issued to the appellant on 03.12.2018. In the present case the time limit stipulated has not been complied with for issuance of Show Cause Notice and for providing the inquiry report. The learned counsel relied upon the decision of the jurisdictional High Court in the case of HSN Shipping Pvt. Ltd. was Commissioner Customs Chennai 2020 (372)E.L.T. 689(Madras).
7. It is also argued that the allegation of mis-declaration is with regard to the Quality and Quantity of the goods. The shortage in quantity and overvaluation can be known only on detailed examination of the goods. The Customs Broker does not have opportunity to examine the goods and relies upon the declaration made by the exporter. For such wrong declaration made by the exporter, the customs broker cannot be held responsible. There is no evidence adduced by the Department to establish that the appellant had colluded or abetted in mis-declaration of the goods.
8. The Learned Counsel argued that Revocation of license is an extreme punishment and has to be resorted to in respect of serious violations with mala fide intention by the Customs broker. This case does not warrant such a harsh punishment as the appellant had no knowledge about the variation in quantity and quality of the goods that are to be exported. The learned Counsel prayed that the appeal may be allowed.
9. The Learned Authorized Representative Shri Rudra Pratap Singh supported the findings in the impugned order.
10. Heard both sides.
11. The provisions of regulation 19 and 20 of CBLR 2018 are reproduced as under:
“19. Suspension of licence. — (1) Notwithstanding anything contained in regulation 18, the Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the licence of a Customs Broker where an enquiry against such agent is pending or contemplated.
(2) Where a licence is suspended under sub-regulation (1), the Commissioner of Customs shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose licence is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs Broker :
Provided that in case the Commissioner of Customs passes an order for continuing the suspension, the further procedure thereafter shall be as provided in regulation 20.
20. Procedure for revoking licence or imposing penalty. — (1) The Commissioner of Customs shall issue a notice in writing to the Customs Broker within a period of ninety days from the date of receipt of an offence report, stating the grounds on which it is proposed to revoke the licence or impose penalty requiring the said Customs Broker to submit within thirty days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs Broker desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs…..”
12. It can be seen from Regulation 20 that the Department has to issue the Show Cause Notice in writing to the customs broker within a period of 90 days from the date of receipt of an offence report informing the Customs Broker, the grounds on which it is proposed to revoke the license or impose penalty. In the present case, there is no offence report. In the case of M Logistics Vs. Commissioner of Customs, New Delhi [2020(373) ELT 677 (Tri. De.)] it was held that in the absence of filing of a specific offence report the date of occurrence itself should be considered as the offence report. In the present case, the date of occurrence /examination of goods is 31.01.2017. The Show Cause Notice ought to have been issued within 90 days from this date. However, the Show Cause Notice has been issued only on 19.01.2018, which is beyond the stipulated time limit of 90 days.
13. The higher courts have always considered that it is mandatory to follow the time period stipulated in these Regulations. The Hon’ble High Court in the case Sabin Logistics Pvt. Ltd. [2019 (367) ELT 200 (Mad.)] held that when Regulation spells out specific period of limitation, such period has to be mandatorily complied. In the case of HSN Shipping Pvt. Ltd. Vs. Commissioner of Customs, Chennai [2020 (372) ELT 689 (Mad.)] the Hon’ble Jurisdictional High Court held that time limit for issuing the Show Cause Notice is mandatory and the notice issued after 90 days of offence report is to be quashed.
14. After appreciating the facts and following the principle laid in the above decisions, we are of the considered opinion that the revocation of license ordered is vitiated for not complying with mandatory procedure. The impugned order therefore cannot sustain. The same is set aside. In the result, the appeal is allowed with consequential relief, if any, as per law.
(Order pronounced in open court on 21.07.2023)
