M/s.Freight Bridge International vs Principal Commissioner Of Customs

This appeal assails the impugned Order-in-Original No.75386/2020 dated 09.07.2020 vide which the appellant customs broker's licence was revoked on the grounds of contravention of Regulations 10(b), 10(d) and (10)(n) of the Customs Brokers Licensing Regulations, 2018; security deposit was forfeited and penalty was also imposed.

Briefly stated the facts of the case are that appellant filed a Shipping Bill No.6443337 dated 23.08.2019 on behalf of the exporter i.e. M/s. Syed Holdings for the purported export of glass bangles to Malaysia; examination of the consignment, on receipt of a specific intelligence, 105 kg of Ephedrine concealed in polyethylenebag/s was found concealed in the consignment; on conclusion of the investigation, the appellant's customs broker license was suspended and vide the impugned order the same was revoked.

Shri S. Murugappan, Learned Counsel for the appellant, submits that one Shri Shabie Mohammed handled the documents on their behalf; Shri Shabie Mohammed was working with the firm for seven years and left in February 2017 and joined back in 2019; he handled the documents; his H-Card has expired and remained to be re-issued ; the appellants have obtained all necessary KYC documents and the documents were not proved to be fictitious and the exporter was existing at the address mentioned therein. Learned counsel submits that the firm is not aware of the concealment; there is no evidence against them in this regard; the question of not advising the exporter to comply with the provisions of Customs Act and reporting the matter to department does not arise.

Learned Counsel further submits that it was wrongly concluded by them that there is negligence on the appellant's part; however, this cannot be a basis to stop the appellant's business permanently; revocation of licence is an extreme step and a harsh punishment; circumstances of the case do not warrant such a severe punishment. He relies upon the following cases:

(i) Falcon Air Cargo and Travels (P) Ltd. Vs UOI 2002 (140) ELT 8 (Del.)

(ii) Pandey  &   Company  Vs  CC  Kolkata  2017  (9)  TMI  1568, CESTAT Kolkata

(iii) Ace Global Logistics VS CC Chennai-VIII 2018 (3) TMI 125-CESTAT CHENNAI

(iv) Asiana Cargo Services Vs CC (Import & General), New Delhi 2014 (302) ELT 161 (Del.) which is affirmed by Hon'ble Supreme Court in 2015 (320) ELT A175 (SC).

Learned Authorized Representative for the department reiterates the findings of OIO and submits that licence of the appellant was revoked as there was no due diligence on the part of the appellant in so far as permitting an ex-employee with expired H-Card to submit documents on their behalf.

Heard both sides and perused the records of the case. We find that this is a case of misdeclaration of an export consignment. The consignment of glass bangles were declared for export to Malaysia vide the shipping bill cited above. Examination conducted on receipt of intelligence by department revealed that 105 kg of Ephedrine, a narcotic substance was concealed in the consignment. Keeping apart the omissions and commissions of the exporter in the smuggling, we are concerned with the role of the CHA is to be examined in this case. On perusal of the records, we find that the appellants have submitted copies of PAN card, GST Registration Certificate, GSTIN ID card etc. obtained from the exporter. They have also submitted a letter written by Exporter to the Assistant Commissioner of Customs, stating, inter alia, asunder:

"We also hereby declare that all our shipment including our present consignment under clearance through your notice are our legitimate import/export and without any express violation of Rules & procedures under Customs Act, 1962, Foreign Exchange Regulation Act (FERA), Foreign Exchange Management Act (FEMA) & The Foreign Trade (Development and Regulation) Act, 1962, etc.

We also further declare that our shipments dose/do not contain any contraband or prohibited articles, we shall also hold ourselves responsible for any discrepancy/Mis-declaration found in our document or goods for which we are seeking clearance through M/s.FREIGHT BRIDGE INTERNATIONAL CHA PAN No.AABFF7007KCH001. (R.No.02/08) in case of any legal discrepancy arising from our shipment in present as well as future, we shall hold ourselves responsible and Chennaishall being no way responsible including any less charges,short levy, dues of customs, port, shipping companies, transporters, Octroi etc.

This letter of Authority is issued in terms of notification No: 21/2004 Date: 23/02/2004 which is also otherwise briefly known as CHLR, 2004."

On perusal of the documents and above said letter, it is clear that exporter themselves have given a categorical submission that consignment does not contain any contraband. Under such circumstances, there is a strong case that the appellant Customs Broker had no previous knowledge of the concealment; the role of the appellant-customs broker is to be examined in this background. Agreeably, the customs broker has collected all the necessary documents to satisfy himself about the bona fides of the exporter. The only mistake or negligence on the part of the appellant-customs broker appears to be permitting an ex-employee whose H-Card has expired to file documents on their behalf. This negligence does not in itself call for a stringent action such as revocation of licence. As their negligence has resulted in admitted smuggling of narcotic substance, the penalty would have been enough deterrent wherein the prior knowledge of the customs broker about the concealment of narcotic substance in the container / consignment is neither alleged nor proved with evidence in the proceedings against the appellant. We find that this Tribunal and various High Courts have held that revocation of licence entails in loss of livelihood for not only the customs broker but also the families depend on them and recourse to revocation should be taken in extreme circumstances only and not in respect of violations for which there are other provisions to deal with them. We find that Hon'ble High Court of Delhi in the case of Asiana Cargo Services Vs CC (Import & General), New Delhi (supra) has held as follows:

"12. Learned Senior Standing Counsel for the Customs has stressed that the infraction in this case is not a routine matter, but rather, illegal smuggling of narcotics by the G card users. However, given the factual finding that the CHA was not aware of the misuse of the G cards (and thus, also unaware of the contents being smuggled), no additional blame can be heaped upon the CHA on that count alone. Rather, the only proved infraction on record is of the issuance of G cards to non-employees, as opposed to the active facilitation of any infraction, or any other violation of the CHA Regulations, whether gross or otherwise. Neither have any such allegations been raised as to the past conduct of the appellant, from the time the license was granted in January, 1996. Equally, it is important to note that the appellant has - as of today - been unable to work the license for 8 years, and thus been penalized in this manner. This is not to say that the trust operating between the Customs Authorities and the CHA is to be taken lightly, or that violations of the CHA Regulations should not be dealt with sternly. A penalty must be imposed. At the same time, the penalty must - as in any ordered system - be proportional to the violation. Just as the law abhors impunity for infractions, it cautions against a disproportionate penalty. Neither extreme is to be encouraged. In this case, in view of the absence of any mens rea, the violation concerns the provision of G cards to two individuals and that alone. A penalty of revocation of license for this contravention of the CHA Regulations unjustly restricts the appellant's ability to engage in the business of the CHA for his entire lifetime. As importantly, it skews the proportionality doctrine, substantially lowering the bar for revocation as a permissible penalty, especially given the dire civil consequences that follow. On the other hand, the minority Opinion of the CESTAT, delivered by the Judicial Member, correctly appreciates the balance of relevant factors, i.e. knowledge/mens rea, gravity of the infraction, the stringency of the penalty of revocation, the fact that the appellant has already been unable to work his license for a period of 6 years (now 8 years), and accordingly sets aside the order of the Commissioner dated 24-1-2005."

We find that the facts and circumstances of the present case are almost identical/comparable to the above case. Therefore, in view of our discussion above, we are of the considered opinion, in the facts and circumstances of the case, that the revocation of licence is an extremely harsh step. However, the act of the appellant in allowing an ex-employee and that too without a valid G-Card, is a clear violation of the Customs Brokers Regulations. The Customs Broker needs to be visited with suitable punishment. We find that it would suffice if the penalty and forfeiture of security deposit are upheld to meet the ends of justice.

In the result, the appeal is partly allowed by setting aside the revocation and upholding the penalty imposed and forfeiture of security deposit.

(Pronounced in court on 29.09.2021)