Monday, December 5 2022

Delhi’s CESTAT Bank granted partial relief to Falcon India (customs broker) by removing the penalty order while upholding the revocation of license and order forfeiture of full amount of security deposit of Rs. 1 ,10,000/-.

The applicant held a customs broker’s license valid until 14.11.2027. Tax Intelligence Branch 2 officers have been informed that some importers are underestimating iron screws/self-drilling screws/particle board screws and power tools. After investigation, the DRI found that the appellants began importing screws on behalf of fictitious companies to avoid detection and that they were importing goods on behalf of M/s Popular Metal Industries5 , M/s KD Enterprises and M/s SS Enterprises. During searches carried out on 28.03.2017, cash of Rs. 5,41,14,400/- was also recovered from the residence of Anil and Abhimanyu.

The tribunal composed of CESTAT Chairman, Mr. Justice Dilip Gupta and Technical Member, Mr. PV Subba Rao, relied on a series of decisions and ruled that the customs broker (or customs agent ) is a very important person in customs transactions. and is appointed as a licensed dealer under the Regulations and must discharge all of its responsibilities thereunder.

“Breaches, even without intent, are sufficient to prosecute the appellant. While it is true, as has been decided in a number of cases, that the customs broker is not expected to do the impossible and is not expected to physically check the importer’s premises or question documents issued by various government authorities for KYC, it is also true that the customs broker is expected to act with a great sense of responsibility and look out for the interests of the client and the tax administration. He is expected to advise the client to follow the laws and if the client does not comply, he is obligated under the Regulations to report to the Assistant Commissioner or Deputy Commissioner. Compliance with these obligations is a necessary condition for the CB license and it cannot be qualified as “espionage on behalf of the ministry” as argued by the appellant before us. »

The Tribunal bench disagreed with the Appellant’s arguments that the revocation of the Appellant’s license should be reversed in view of the seriousness of the matter and also considering that he constructed his business in such a way that if he fulfills his obligations to report breaches by his customers to customs authorities, he will lose his business and therefore facilitate those customers instead.

“Therefore, we conclude that in view of the limitation provided in Section 18 of the CBLR, 2013, the penalty of Rs. 50,000/- should be set aside while maintaining the revocation of license and forfeiture of his security deposit,” the court said.

While concluding, the Court held that “in light of the foregoing, we conclude that the revocation of the Appellant’s license under CBLR 2018 Rule 14(b) (read with Rule 18(b) of the former CBLR 2013), forfeiture of the full amount of security deposit of Rs. CBLR 2013) calls for no interference. The penalty of Rs. 50,000/- imposed on the Appellant under Regulation 18(1) read with Regulation 14(b) of CBLR 2018 (read with former Regulation 22 read with 18(b) of CBLR 2013 ) shall be canceled in view of the limitation under Regulation 18 of the CBLR, 2013.”

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M/s Falcon India vs Commissioner of Customs

Counsel for the Appellant: Shri VSNegi

Counsel for the Respondent: Shri Sunil Kumar



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