Customs brokers must exercise due diligence in ensuring compliance with customs regulations; failure to do so leads to revocation of license and penalties.

Per: M.M. PARTHIBAN

This is an appeal filed by M/s Srinivas Clearing & Shipping (I) Private Limited (herein after, referred to as ‘the appellants’) assailing the Order-in-Original CAO No. 59/CAC/CC(G)/RC/CBS(Adj.) dated 28.03.2019 (referred to as ‘impugned order’) passed by the learned Commissioner of Customs (General), Mumbai Zone-I. Earlier, the Tribunal had passed a Final Order No. A/87405/2019 dated 21.11.2019 in allowing the appeal filed by the appellants by holding that there is nothing on record to arrive that the appellant ‘G’ Card– holder, who was investigated for his key role in the conspiracy to smuggle ‘red sanders’ out of India, was concerned with the activities for which appellant herein was licensed; the allegedly nefarious activities of such a pass-holder, although obtained through the licensed customs broker, cannot be visited upon the broker in the absence of a link between the two in the context of established misdemeanor. Accordingly, by following the principles laid down by the Hon’ble High Court of Bombay in the Unison Clearing P Ltd., the Tribunal held that the case does not merit continued revocation of the Customs Broker (CB) license, and ordered the CB license to be restored. The department had preferred an appeal against the above order of the Tribunal before the Hon’ble High Court of Bombay in Custom Appeal No. (L) No.3447 of 2020, in which the Hon’ble High Court of Bombay vide its Order dated 27.08.2021 had ordered the following:

“2. The appeal has been admitted by this Court on 22^nd October 2020 on the following substantial questions of law:

‘a) whether, on the facts and in the circumstances of the case, the important delay in completion of proceeding for revocation of license vitiates the Order-in-Original dated 28.03.2019 first by the Commissioner of Customs (General)?

b) Whether on the facts and in the circumstances of the case, the CESTAT was right in holding that there is no link between the smuggling of red sanders by Shri Vijay Poojary with the activities permitted the Respondent herein was licensed?’

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33. With respect to the first question, we observe that the CESTAT as referred to the decision in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P. Ltd. (supra) to give a finding that the delay in commencement of the proceedings for revocation of license does not command itself is indicative of proper understanding of responsibility and that the delay in commencement of the proceedings for revocation of license was not justifiable. It has also observed that there is an implicit responsibility on the part of the competent authority to adhere to the time lines with acceptable justification for delays, if any. The Tribunal has referred to that although the suspension was withdrawn on 11^th January, 2017, another 15 days had elapsed for inquiry proceedings to commence and, thereafter there was a lapse of more than six months in completion of inquiry and a further lapse of the more than two months in revocation of the license, whereas the incident has its origin in November 2015. We first observe that Tribunal has only dealt with delay in commencement of the proceedings but nowhere dealt with submissions on delay in conclusion of proceedings. We also observe that the Tribunal has failed to consider the submissions of timelines as canvassed by the parties nor the explanation for delay furnished by the Revenue. In any event, we are unable to agree with the CESTAT’s interpretation as from a plain reading of the decision in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P. Ltd. (supra), where after considering the provisions of CBLR in detail as well as Customs Act, the background, object and the scheme of the CBLR in particular Regulation 20, this Court had concluded that timelines contained in Regulation 20 cannot be construed to be mandatory bu