Shuvam Enterprises Vs Commr. of Customs (Airport & Admn) (CESTAT Kolkata)
Conclusion: Customs Broker must exercise due diligence and advise clients to comply with the law and on failure of the same attracted penal action even without intent. However, revocation of licence was justified only in serious cases of fraud or deliberate misconduct. Where lapses were procedural or of limited scope, lesser penalty was warranted.
Held: Assessee-a licensed customs broker, had facilitated clearance of four consignments for Neeraj Marble & Tiles, Siliguri, intended for export to Bhutan. Investigations later revealed that 29 consignments declared for export were never physically exported and were instead diverted into the Indian market. Four of these consignments were handled by assessee. Consequently, the Commissioner of Customs (Airport & ACC) suspended the licence in July 2021 and revoked it in February 2023, also imposing a penalty of ₹50,000 under Regulation 18 of the Customs Broker Licensing Regulations, 2018 for violation of Regulation 10(d). Assessee argued that the revocation was unsustainable in law as the consignments were cleared prior to the enforcement of the Customs Broker Licensing Regulations, 2018, which came into force on 14.05.2018. It was submitted that penal provisions could not be invoked retrospectively and emphasized that procedural lapses during enquiry had further vitiated the proceedings. It was contended that the enquiry officer took nearly six months to complete the proceedings against the stipulated time limit of 90 days under Regulation 17(5), and submitted that this delay vitiated the enquiry process. It was further submitted that the exporter had accepted liability and begun repayment of evaded GST. Revenue argued that the exporter, in conjunction with the customs broker, had availed investment exemption from Goods and Services Tax by showing goods as exported to Bhutan while actually selling them in the domestic market without issuing invoices. It was contended that the broker had violated Regulation 10(d) by failing to advise the exporter to comply with the Customs Act, 1962 and allied laws and by not bringing the wrongdoing to the attention of customs authorities. Further, it was submitted that the broker had violated Regulation 10(e) by not ascertaining the correctness of information furnished and by failing to advise the client to refrain from illegal acts of declaration. It was contended that the enquiry officer’s report highlighted that details declared in Indian shipping bills did not match data obtained from Bhutan Customs in terms of quantity, description, value, and dates. No Bank Realisation Certificates were produced for the alleged exports. Therefore, justified revocation. Tribunal observed that though discrepancies existed in the shipping bills, Bhutan Customs data, and actual consignments, the role of the Customs Broker ended after issuance of the Let Export Order (LEO). Further, the Bhutan Government’s communication indicated receipt of certain consignments of M/s Neeraj Marble & Tiles during the relevant period, which was not fully considered by the adjudicating authority. Tribunal acknowledged that the Customs Broker failed to exercise due diligence and that certain lapses occurred, but also noted- the revocation had remained in force for over two years, effectively depriving the Broker of livelihood; the Broker’s culpability was not of such grave nature as to justify permanent revocation; the punishment must be proportionate to the gravity of the infraction, as held in Asthiana Corporation Services v. Commissioner of Customs, IGI Airport (2014) 30 ELT 161 (Del.). Referring to Commissioner of Customs v. K.M. Ganatra & Co., (2008) (SC), the Tribunal reiterated that a Customs Broker was a trustee of public confidence, but penalties must reflect the degree of delinquency. Accordingly, the Tribunal ordered that: the Customs Broker’s licence be restored forthwith, subject to furnishing fresh security deposit; the forfeited security deposit of ₹50,000 be retained by the department; penalty reduced from ₹50,000 to ₹10,000.
