Case Law Details
Sainath Clearing Agency Vs Principal Commissioner of Customs (General) (CESTAT Mumbai)
In a pivotal legal case, M/s Sainath Clearing Agency’s customs broker license revocation by the Principal Commissioner of Customs (General) in Mumbai has brought significant attention. This article delves deep into the legal proceedings, shedding light on the case’s background, the findings, and the profound implications of this legal battle.
Unfolding the Background: The legal dispute in question pertains to M/s Sainath Clearing Agency, which was in possession of a customs broker license. This license was revoked by the Principal Commissioner of Customs (General) in Mumbai. In addition to the revocation, a substantial penalty was imposed, and the security deposit was forfeited. These actions were executed under the framework of the Customs Broker Licensing Regulations, 2018.
Allegations of Violations: The core of the revocation and subsequent penalties revolved around alleged violations connected to the handling of a bill of entry for imports facilitated by M/s Twister Enterprises. These violations were construed as breaches of obligations specified in the Customs Broker Licensing Regulations, 2018.
Protracted Inquiry Process: The inquiry into these alleged violations extended over a significant period. This prolonged duration was partly attributed to administrative constraints and the responses provided by the appellant during the hearing notices.
Contestation of Findings: The appellant contested the findings within the inquiry report, asserting that the charges were erroneous. The charges were predicated on alleged shortcomings in advising the client regarding compliance with statutory regulations and the verification of information concerning the customs clearance process.
Challenges to the Charges: The appellant contended that the charges were inadequately supported by evidence, particularly in the context of the broad obligations assigned to customs brokers. Furthermore, they argued that the charges did not warrant the drastic measures of license revocation.
Scrutiny of Charges: The charges brought against the appellant encompassed failure to advise the client on statutory compliance, a lack of due diligence in confirming the accuracy of information, and the failure to verify specified details and the identity of the client.
Deficiency in Specifics: The determination against the appellant concerning these charges was grounded in a perceived deficiency of specific details and verifications throughout the handling of the client’s case.
Presumption of Accurate Advice: This article underscores the presumption that customs brokers routinely provide accurate advice and correct information to their clients, which should not be easily undermined without substantiated evidence.
Non-Implication in Misdeclaration: Crucially, the case did not involve any allegations that the appellant was aware of or involved in any misdeclaration, or that they provided inaccurate advice related to cargo clearance.
Significance of Well-Formulated Charges: The article emphasizes the importance of crafting charges in disciplinary proceedings that clearly establish a direct connection between the accused and the alleged violations.
Reevaluation of Disciplinary Measures: The CESTAT’s ruling underscores the necessity for meticulous consideration when disciplining customs brokers. The revocation of a customs broker’s license should not be undertaken lightly, and disciplinary actions should be proportionate to the verified breach.
Conclusion: The M/s Sainath Clearing Agency case versus the Principal Commissioner of Customs (General) highlights the vital role of customs brokers in trade and commerce. It also underscores the need for a methodical and evidence-based approach in disciplinary actions. This case serves as a significant reminder of the imperative to uphold the accountability and integrity of customs brokers within the realm of international trade and commerce.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal of M/s Sainath Clearing Agency, holder of custom broker licence no. 11/1030, stems from order1 of Principal Commissioner of Customs (General), Mumbai revoking the said licence and forfeiting security deposit under regulation 14 of Customs Broker Licencing Regulations, 2018 while imposing penalty of ₹ 50,000 under regulation 18 of Customs Broker Licencing Regulations, 2018 on the finding that acts of omission and commission on their part, in handling bill of entry no. 5126157/08.02.2018 for imports effected by M/s Twister Enterprises, had been in breach of obligations devolving on them by regulation 10 of Customs Broker Licencing Regulations, 2018.
2. The imports were found to have been misdeclared and it was revealed during investigations that documentation for entitling import by M/s Twister Enterprises had been secured in the name of one Atul Dilip Baviskar who claimed to be a helper in a construction venture and denied any knowledge of, or wherewithal for, undertaking imports. It was also ascertained that an intermediary, one Deepak Kumar, known to his acquaintance, one Manoj Koteja, and introduced by him, had handed over the documents to, and made arrangements with, Shri Dinesh P Mehta, proprietor of the appellant-entity. Thus, the appellant was charged in notice dated 14th January 2019 with contravention of regulation 10(d), 10(e) and 10(n) of Customs Broker Licencing Regulations, 2018 after having been placed under suspension near about six months after the impugned import. The inquiry was completed after more than eleven months of the notice and report, holding the three violations as proved, was furnished on 26th December 2019 to the licencing authority.
3. It has been noted in the impugned order that
‘9.4 The Inquiry Officer further stated that the subject inquiry could not be completed within the prescribed time limit under CBLR, 2018, as the Charged CB has not attended any of the hearings though he was afforded very possible opportunity by way of hearings and from his reluctant way it appeared that CB was least bothered about the Inquiry Proceedings and shown lackadaisical approach in the subject case. Further undersigned was also deputed for Election Duty (General Election 2019) held in the month of April and May 2019. Hence any delay on the part of Inquiry officers is due to administrative compulsions.’
It is contended by Learned Counsel for appellant that every notice of hearing had been responded to; we, however, note that the appellant, in response to licencing authority, had not preferred such submission as fatal to the proceedings. Accordingly, it would appear that the appellant is, at least partially, not without responsibility too for delay in conclusion of inquiry proceedings.
4. Learned Counsel also submitted that the findings in the inquiry report are incorrect insofar as each of the alleged violations are concerned. According to him, the presence of witnesses was essential to establishing that the charges were unfounded considering that the obligations, alleged to have been breached, are too broadly expressed for fitment with actual operation as customs broker. He also submitted that breach, if any, does not warrant extreme measures routinely resorted to by licencing authorities. We have heard Learned Authorized Representative at length.
5. The appellant has been charged with failure to advise the ‘client’ to comply with provisions of statutes, rules and regulations that also obliges the customs broker to bring notice of non-compliance to Deputy Commissioner of Customs, failure to exercise due diligence in ascertaining correctness of information which is imparted to the ‘client’ with reference to work of clearance and failure to verify correctness of specified details, identity of ‘client’ and place of functioning.
6. The finding against the appellant on the last of the charges is rooted in his statement testifying that one Deepak Kumar alone was the person he had dealt with and which, taken with lack of any specific detail of having carried out the necessary verifications, was held as sufficing to establish the charge as proved. Additionally, the first and second charges were also held as established on the basis of the very same set of facts and circumstances of non-verification.
7. There should have been a statement of imputation of facts which would lead to the conclusion that advise had not been rendered or wrongly rendered to a client or that the appellant was aware of noncompliance, if any, with such advice. This is lacking in the record of proceedings. There is also no record of any evidence to suggest that the appellant had imparted incorrect information, with reference to cargo clearance, to the ‘client’ during the course of handling the impugned goods.
8. The expression ‘client’ has been deployed rather loosely in Customs Broker Licencing Regulations, 2018. We do not see any reason to conclude that ‘client’ has to be the owner or consignee of the goods as such person may also well be nominee of the importer including employees. In any case, the rendering of advice to a ‘client’ or correctness of information pertaining to clearance for a ‘client’ is a matter of hearsay and the investigators have had the advantage of obtaining the purported version of the ‘client’ which, in absence of challenge, may lack validation. The notice issued to the appellant relied on statements of persons and, thereby, rendering them witnesses in support of the charge; lack of cross-examination negates the acceptability of contents of the statements which no evidence of efforts taken to secure presence of witnesses can overcome. That, probably, accounts for reliance on one set of facts to conclude that all three charges stood proved even though each obligation in regulation 10 is required to stand on its own independent set of facts; there would, otherwise, be no need to enumerate those separately.
9. The impugned goods were found to be offending for having been misdeclared. There is no allegation that the appellant was either a party to it or was aware of any transaction between shipper and client in furtherance of such intent. A case can hardly be made out that a ‘customs broker’ would, in normal course of business, be privy to misdeclaration and may, thereby, have not given proper advice or correct information to the client. It is, therefore, to be presumed, unless established to the contrary, that proper advice has been rendered to a client and that correct information has been imparted; it cannot, contrarily, be presumed upon subsequent examination of goods and hindsight that advice had not been properly rendered and that information imparted had not been verified for correctness. Even that is not the allegation here but that the importer had not been transacted with which relies on the admitted statement of the appellant which, however, did not foray into tendering of advice or verification of information furnished.
10. A tendency to be less than meticulous in drafting of charges is evident here and proceedings do acquire the characteristic of trivializing the institution of ‘custom broker’; if they are to perform the vital role expected of them, resort to Custom Broker Licencing Regulations, 2018 has to be deliberated upon by licencing authorities in the context of each incident of breach of obligation. Disciplining of ‘customs broker’ is not be entered into lightly nor receded from hastily.
11. That the appellant had not interacted with the proprietor of the importing entity is on record; consequently, it would not be wrong to conclude that the several documents of identity and location had not been verified. Though that, of itself, may not be taken as having contributed to misdeclaration, it is, nonetheless, a breach of obligation.
12. In the circumstances, it would be appropriate to modify the consequential detriment to bear proportion to the established breach. Accordingly, the revocation of licence and forfeiture of security deposit is set aside. With the penalty of ₹ 50,000 sustained, we dispose off the appeal.
(Order pronounced in the open court on 14/09/2023)
