Under the CBLR 2013, the adjudicating authority possesses the discretion under Regulation 20(7) to impose penalties short of license revocation. If established regulatory breaches pertain to supervisory failure rather than active collusion, the decision to forfeit the security deposit instead of revoking the license is legally valid.

Per Mr. VASA SESHAGIRI RAO

The present three appeals arise out of Order-in Original No.44879/2016 dated 08.02.2016 and Order-in Original No.49570/2016 dated 30.08.2016 passed by the Commissioner of Customs (Chennai-VIII), Chennai under CBLR, 2013. Appeal No. C/42264/2016 has been filed by M/s. S. Murugan challenging forfeiture of security deposit without revocation of licence, while the departmental appeals 41158/2016 & 42425/2016 challenge revocation of suspension and non-revocation of licence despite findings of violations under CBLR, 2013.

2. Briefly stated, M/s. S. Murugan, Chennai, a licensed Customs Broker operating under Chennai and Delhi jurisdictions, came under investigation by DRI, Delhi in connection with alleged fraudulent drawback exports through dummy firms managed by Shri Vikas Sharma and Shri Sushail Sehgal. Proceedings were initiated under CBLR, 2013 alleging violation of Regulations 11(a), 11(b), 11(d), 11(e), 11(n), 17(5) and 17(9). Though the licence was initially suspended on 05.01.2016, the suspension was revoked vide Order-in-Original No.44879/2016 dated 08.02.2016 after post-decisional hearing. Thereafter, Show Cause Notice dated 22.02.2016 was issued proposing revocation of licence, forfeiture of security deposit and penalty. The Inquiry Officer, vide report dated 23.06.2016, held violations of Regulations 11(a), 11(b), 11(n) and 17(9) stand established while dropping the remaining allegations, pursuant to which Order-in-Original No.49570/2016 dated 30.08.2016 came to be passed ordering forfeiture of security deposit without revocation of licence.

3. Aggrieved by the respective orders, the Customs Broker as well as the department filed the present appeals. Since all the appeals arise out of the same investigation and involve common facts and issues, they are taken up together for disposal by this common order.

4. The Ld. Advocate Shri S. Murugappan for the Customs Broker, submitted that the proceedings were based mainly on allegations arising out of the DRI investigation without independent evidence establishing conscious involvement of the Customs Broker in fraudulent drawback activities. It was argued that export documents were processed on the basis of documents furnished by IEC holders and that the Inquiry Officer himself had dropped allegations under Regulations 11(d), 11(e) and 17(5). The learned counsel further submitted that the adjudicating authority rightly exercised discretion under Regulation 20(7) of CBLR, 2013 by ordering forfeiture of security deposit instead of revocation of licence. Reliance was placed on Commissioner of Customs v. Trishiv Logistics Pvt. Ltd. , 2019 (370) ELT 1055 (Tri.-Chennai), to contend that review authorities cannot seek harsher punishment merely on the basis of differing views regarding adequacy of penalty. The learned counsel therefore sought setting aside of forfeiture and dismissal of the departmental appeals.

5. The Ld. Authorized Representative Ms. Rajni Menon appearing for the Revenue, reiterated the findings contained in the inquiry report and review proceedings. It was submitted that the Customs Broker failed to discharge obligations under CBLR, 2013 by permitting customs clearance activities to be conducted through intermediaries without proper supervision and without adequate verification of exporters and IEC holders. It was further argued that serious violations stood established and that the adjudicating authori