License of Customs Broker can’t be Revoked without Granting an Opportunity for Cross-Examination, CESTAT

The Customs, Excises, Service Taxes Appellate Tribunal (CESTAT) held that the license of Customs Broker cannot be revoked without granting an opportunity for Cross-Examination.

The appellant, M/s Perfect Cargo and Logistics has filed the appeal for setting aside the order passed by the Commissioner of Customs (Airport and General), by which the Customs Broker Licence of the Appellant which was valid up to November 07, 2027, has been revoked. The order also forfeits the security deposit of Rs. 5 lakhs and imposes a penalty of Rs. 50,000.

The records indicate that the Deputy Director, DRI, DZU, New Delhi, by a letter, informed the office of the Commissioner that the Appellant had undertaken customs clearance for export of goods of two firms, namely, M/s Impex Trading and M/s Global Trading, without verifying the existence of the exporters and without even meeting the partners of the said firms and investigation also revealed that the said firms and their partners did not exist at the addresses given in their Import Export Code/ Bank Accounts and that the Bank Realisation Certificates were not received against the exports made by them.

The investigation report and copies of the statement of Virender Kumar Saraswat, a G-Card holder of the Appellant, were forwarded to the office of the Commissioner for action under the provisions of the Customs Brokers Licensing Regulations, 2018.

The Commissioner has placed much emphasis on the statements made by Virender Kumar Saraswat, who is a G-Card holder. The Commissioner noted that he had made a statement that he had never visited the firms nor he had met any of the partners of the said firms and that it was Shashank Sharma who used to meet the G-Card holder on behalf of the two firms to hand over the papers. Emphasis has been also placed on his statement that he had asked Shashank Sharma for verification of the two firms.

The Commissioner, therefore, concluded that the Customs Broker and his G-Card holder were conscious of the fact that the two firms, for whom they were making customs clearance, were fictitious or non-existing.

The contention of the appellant is that the G-Card holder acted strictly in accordance with the guidelines issued in the Circular dated April 8, 2010. According to the appellant, the G-Card holder exercised due diligence by procuring all independent and authentic documents.

The coram headed by Justice Dilip Gupta noted that if the documents that were submitted to the G-Card holder, prima-facie appeared to be authentic, there was no reason for the G-Card holder to verify the contents of the documents.

The Tribunal observed that the statement of the Customs Broker in the present case was not recorded and only the statement of his G-Card holder was recorded by the Investigating Agency. It was necessary to record the statement of the Customs Broker as allegations have been made against the Customs Broker.

Therefore, the CESTAT held that the Commissioner was not justified in revoking the License of the appellant or forfeiting the security deposit, or imposing penalty.