The revocation of a Customs Broker's license and forfeiture of security deposit is disproportionately harsh for a minor procedural lapse in KYC documentation when the financial stakes involved are minimal.

JUSTICE DILIP GUPTA

This appeal that has been filed by a Custom Broker seeks the quashing of the order dated 09.02.2024 passed by the Commissioner of Customs (Airport and General)¹the Commissioner by which the Customs Broker’s License of the appellant has been revoked and the whole amount of security deposit furnished by the appellant has been forfeited. The order also imposes a penalty of Rs.50,000/- upon the appellant.

It transpires from the records that the appellant filed a Shipping Bill dated 24.11.2020 in respect of one consignment of Durga Prasad Pandey, proprietor of M/s. S.D.Impex and the same was cleared by the Customs. The duty drawback involved is of Rs.36,562/- only.

After three years from the date of clearance, a show cause notice dated 23.08.2023 was received by the appellant mentioning therein that the appellant had contravened the provision of regulation 10 (n) of the Customs Brokers Licensing Regulations, 2018²the 2018 Regulations. The appellant filed a reply to the show cause notice and contended that the appellant had not contravened the provisions of regulations 10 (n) of the 2018 Regulations as he had produced all the KYC documents which were in his possession. The impugned order holds that in terms of the Circular dated 08.04.2010, the appellant had only produced one document namely PAN Card, instead of two documents required under the Circular.

Learned counsel for the appellant submitted that the appellant had not only submitted the PAN Card but had also submitted reference letters of the Bank and other documents also from where the address of the appellant could be verified. In the alternative, learned counsel submitted that as the appellant had submitted one document and the drawback involved in this appeal is of only Rs.36,562/-, the revocation of license is a very harsh punishment imposed upon the appellant.

Shri Girijesh Kumar, learned authorised representative of the department, however, supported the impugned order and contended that when the appellant had only produced one document out of the two documents required to be submitted under the Circular, the revocation of license is justified.

The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered.

It is not in dispute that the appellant had submitted only one Shipping Bill in the matter of M/s. S.D. Impex in 2020. It also transpires that the goods were cleared by the Customs and that the drawback involved is of only Rs.36,562/-.

The issue that arises for consideration in this appeal is whether the Customs Brokers License of the appellant could have been revoked merely because the appellant submitted only one document instead of two documents mentioned in the Circular dated 08.04.2010. This would have to be examined in the context of the fact that the goods were earlier cleared in 2010 and the duty drawback involved is only Rs.36,562/-.

In our considered opinion, the Customs Brokers License of the appellant was not required to be revoked as the duty involved is of Rs.36,562/- and the appellant had submitted one document and for the address requirements the appellant had submitted documents, though they were not mentioned in the Circular. The order revoking the license of the appellant, in such circumstances, is a very harsh punishment and needs to be set aside. The order forfeiting the security deposit would, therefore, also have to be set aside.

The imposition of penalty of Rs.50,000/- upon the appellant also appears to be very harsh and it can be reduced to Rs.20,000/-.

The order dated 09.02.2024 passed by the Commissioner is, accordingly, modified. The impugned order revoking the license and forfeiting the security deposit of the appellant is set aside. However, the penalty imposed upon the appellant is reduced to Rs.20,000/-.

The appeal is, accordingly, allowed to the extent indicated above.