The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) headed by Judge Dilip Gupta (President) and PV Subba Rao (technical member) reinstated the customs broker’s license because the show cause notice or investigation report lacked details of the non-existence of the exporter.
The appellant, M/s. Perfect Cargo and Logistics, is licensed as a customs broker under the Customs Brokers Licensing Regulations, 2018 (CBLR). The appellant’s license was revoked by the order, which imposed a fine of Rs. 50,000.
The General Directorate for Analysis and Risk Management (DGARM) of the Central Excise Tax and Customs Board analyzed the data, identified risky exporters involved in IGST refund fraud, obtained feedback from field trainings, and found that some exporters could not be physically verified ( they could not be found) and sent a formal email communication to the Commissioner. Among these exporters, there were approximately 24 exporters whose exports were handled by the appellant as a customs broker. The commissioner issued a “show cause notice”.
An investigator was appointed, who in his report stated that the customs broker had processed various shipping invoices for the twenty-four exporters mentioned in the investigation report who were claiming refunds from IGST. Exporters, according to information received from the DGARM, are non-existent.
The Commissioner then issued an order stating that, as so many exporters cannot be located, it appears that the customs broker failed to comply with the obligations imposed on him under CBLR Regulation 10(n). , revoked his license and imposed a Rs. 50,000 penalty on it.
The Appellant asserted that he had not only complied with the requirement of CBLR Regulation 10(n), 2018 by obtaining all required documents from exporters as per the CBEC Circular dated 8.4.2010, but that he had also submitted them to the commissioner during the adjudication process.
The Appellant argued that no document whatsoever was provided to him with the cause and effect opinion to support the allegations it contained. No document was also produced before us by the tax authorities to support the allegation in the show cause notice.
The issue was whether the Inland Revenue had established a case that the Appellant had breached CBLR Regulation 10(n), 2018, based on the evidence presented in the SCN and the evidence presented by the Appellant in defense. If so, whether the revocation of the license and the imposition of the penalty by the contested order could stand.
The CESTAT noted that the SCN was issued only on the basis of a communication from the DGARM without any document or evidence of any kind whatsoever to support them. The SCN was issued based on the letter/communication from DGARM, which was not attached to the SCN.
“We are surprised that the commissioner thought it appropriate to deprive the appellant and his employees of their livelihood in such a casual and callous manner. The contested order cannot stand and must be set aside,“ notes the CESTAT.
The Tribunal ordered the department to reinstate the appellant’s customs broker’s license within 10 days.
Case title: M/s Perfect Cargo & Logistics Versus Commissioner of Customs, New Delhi (Airport and General)
Quote: Customs Appeal No. 50875 OF 2021
Counsel for the Appellant: Lawyers Shubham Tyagi, Vartika Kashyap
Counsel for the Respondent: Authorized Representative for Nagendra Yadav Department
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