MAY 20, 2024

By S K Rahman, IRS, working as AR at Delhi CESTAT

(PART -1 of The Series of Two Articles)

1. AS per Regulation 16of Customs Brokers Licensing Regulations, 2018, (herein after referred as "CBLR'18") the Principal Commissioner or Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the license of a Customs Broker where an enquiry against such Customs Broker is pending or contemplated. Further the Principal Commissioner of Customs or Commissioner of Customs, as the case maybe, shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose license 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. As per Regulation 19 of CBLR'18, appeal against such order of suspension under regulation. 16 is filed in Hon'ble CESTAT. As Custom Broker licence is a matter of bread and butter, many Custom Brokers file appeal against such order of suspension of their licence in Hon'ble CESTAT. Thus appeal No 1 is filed and pending .

2. But the Proviso to Regulation 16 (2) of CBLR'18 says that the Principal Commissioner of Customs or Commissioner of Customs, as the case maybe, passes an order for continuing the suspension, further procedure there after shall be as provided in regulation 17. As per Regulation 17(7) of CBLR'18, the Principal Commissioner or Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs Broker, pass such orders as he deems fit either revoking the suspension of the license or revoking the license of the Customs Broker within ninety days from the date of submission of the report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs.

Thus if suspension is continued, then there would be one more Order for either revocation of suspension or revocation of Licence

3. Whenever a licence is revoked the Customs Broker may file an appeal in CESTAT as his livelihood is lost . Thus Appeal No 2 would be also pending . When Appeal No 2 is pending against revocation of licence under Regulation 17 CBLR'18, then there is no need of maintaining Appeal No1, which was filed against suspension of licence under Regulation 16 of CBLR'18. In some cases, Revenue also may file a Departmental Appeal if suspension is not done under Regulation 16 if it felt it was necessary. Similarly in some cases, Revenue also may file a Departmental Appeal if Revocation of licence is not done under Regulation 17 if it felt it was necessary. When appeal against revocation of licences (Regulation 17)is pending in Hon'ble CESTAT, the appeal against suspension(Regulation 16) becomes infructuous and can be withdrawn.

4. A study conducted on Final Orders issued by Principal Bench CESTAT Delhi during the period from June 2023 to 19th May2024 on Customs Broker under CBLR'18, shows that there were, as many as 20 Orders issued pertaining to this category of "infructuous and dismissed", and, "dismissed as withdrawn". Best course of action would have been, the appellants withdraw the appeals filed against the suspension(Regulation 16) as soon as they filed appeals against revocation of licences (Regulation 17).Just to illustrate few of the latest Orders are given below:

5. The root cause of initiation of action against Custom Broker licence under CBLR'18 is registering of an offence case under Customs Act 1962. The 'offence Report' is sent by the organisation registering such Offence case to the Commissionerate in charge of Policy Section of Customs Broker license. In this regard, the 'Explanation' given at the end of Regulation 17 of CBLR'18 says "Offence report for the purposes of this regulation means a summary of investigation and prima facie framing of charges into the allegation of acts of commission or omission of the Customs Broker or a F card holder or a G card holder, as the case may be, under these regulations thereunder which would render him unfit to transact business under these regulations ".The offence report sent by the organisation booking such offence case shall clearly contain the role played by the Custom Broker in the offence case.

6. In some of the following cases illustrated below the offence report is not found to be as the Offence Report was supposed to be and was expected to be.

7. M/s. Jetset Shipping Pvt. Ltd., Vs Commissioner of Customs, Respondent (Airport and General)New Delhi in Customs Appeal No. 51001 of 2021 (DB) - 2024-TIOL-444-CESTAT-DEL, on the basis of the Analytics Report received vide email dated 17.08.2020 from Joint Director, DGARM, New Delhi, inquiry of violation under CBLR, 2018 was initiated against the appellant. During verification/identification of 'Risky Exporters' by the respective GST Commissionerate, several exporters were found to be non-existent at their registered addresses, whose export consignments were handled by the appellant. On physical verification of identification of the Risky Exporters viz. M/s. Jupiter Exports, M/s.D.N. Enterprises and M/s. Kunj Textiles were found to be non-existent. As the Customs Broker had not bothered to follow KYC guidelines as prescribed under the CBLR'18, an Order-in-Original No.48/MK/Policy/2021 dated 14.06.2021 was issued where in his licence (valid upto 09.10.2026) was revoked and the security deposit amount was forfeited along with penalty of Rs.50,000/- under Customs Brokers Licensing Regulations, 2018 (CBLR). The Hon'ble CESTAT vide its Final Order No. 55570/2024 dt 18-04-2024 - 2024-TIOL-444-CESTAT-DEL has held that the revocation of the CB licence is not justified on the ground that the several exporters whose consignments were handled by the appellant, having committed IGST fraud and were found to be un-traceable on physical verification by the DGRAM, New Delhi.

8. Thus if the Offence Report was DG ARM alert that too about role played by the Customs Broker wrt the consignments already exported where in it is alleged that the exporters do not exist, the orders of revocation Customs Broker license are not standing judicial scrutiny before Hon'ble CESTAT. Just to illustrate few of the latest Final Orders of Hon'ble Principal Bench CESTAT Delhi are given below:

9. As learnt from above, the Offence Report shall contain details proper investigation to bring out facts about role played by Custom Broker with respect to violations of provisions of Regulation 10 of CBLR'18. It shall have summary of investigation and prima facie framing of charges into the allegation of acts of commission or omission of the Customs Broker.

10. Thus the take aways from the study of Final Orders issued by Principal Bench CESTAT Delhi during the period from June 2023 to 19th May 2024 on Customs Broker under CBLR'18, are

a. The appellants to withdraw the appeals filed against the suspension(Regulation 16) as soon as they file appeals against revocation of licences (Regulation 17) under CNLR'18

b. The Offence report shall contain details of investigation and prima facie framing of charges into the allegation of acts of commission or omission of the Customs Broker

11. This is Part 1 of the series containing details of appeals against suspension of Customs Broker license becoming infructuous and what should be content of offence report. The Part 2 of the series, next week, would contain importance of certain reports/orders and role played by Custom Broker with respect to various provisions of Regulation 10 of CBLR'18.

(The views expressed are personal and not in official capacity)