D S Cargo Agency vs. Commissioner Of Customs

Held

The Court held that the Appellant was not liable for reporting the offense committed after its role in clearing the goods had ended. While acknowledging the Appellant's failure to provide KYC records, the Court found that this inaction did not justify the maximum punishment of license revocation, especially in the absence of any finding of connivance or abetment. Citing the principle of proportionality and the judgment in Ashiana Cargo Services, the Court noted that the revocation of the license for over 4.5 years constituted a severe punishment. Therefore, the Court set aside the revocation of the Appellant's license and the forfeiture of the security deposit. However, the penalty of ₹50,000 was upheld. The Court also noted that the Appellant's license had expired and granted liberty to apply for a new license, which would be considered under extant regulations. The question framed at paragraph 3 was answered in favor of the Appellant.

Facts

The Appellant, D S Cargo Agency, a Customs Broker, is appealing an order by the Customs, Excise and Service Tax Appellate Tribunal (Tribunal) which upheld an order-in-original by the Commissioner of Customs. The Commissioner had revoked the Appellant's Customs Broker License, forfeited its security deposit of ₹75,000, and imposed a penalty of ₹50,000. This action followed an investigation by the Directorate of Revenue Intelligence (DRI) which found that importer firms, for whom the Appellant had filed warehousing bills of entry between April and June 2017, were evading customs duty by diverting imported goods from bonded warehouses into the domestic market. The Appellant's proprietor's statement was recorded by the DRI. The Appellant argued that the offense occurred after its role in clearing the goods had ended and that it had no knowledge of the diversion. The Tribunal had found the Appellant in violation of specific regulations under the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018) and 2013 (CBLR, 2013).

Key Issues

1. Whether the Appellant, under the Customs Brokers Licensing Regulations, 2018 read with the Customs Brokers Licensing Regulations, 2013, is liable for reporting an offense committed in relation to goods stored in a bonded warehouse after the same have been imported and the professional role of the Customs Broker in clearance of the goods had ended? Appellant's Contention: The Appellant argued that the illegality committed by the importer firms occurred after the Appellant's role had concluded, as the goods were diverted after reaching the bonded warehouse. The Appellant contended that it had no knowledge of the importers' intent to divert goods into the domestic market and that its sole evidence, the statement of its proprietor recorded by DRI, did not admit to any wrongdoing. The Appellant also raised concerns about the proportionality of the punitive measures imposed. Respondent's Contention: The Respondent (Commissioner of Customs) argued that the Appellant failed to perform its obligations under the CBLR, 2018 and CBLR, 2013, and acted in contravention thereof. The Respondent relied on the DRI investigation report and the findings of the Inquiry Officer and the Tribunal. The Respondent also highlighted the Appellant's failure to provide KYC records despite undertaking to do so.