Issuing G card to non employees – May be very costly mistake !!!
A Customs Brokers has issued G cards to two persons who were not his employees against monthly rental. They were employed with another freight forwarding company who were involved in exporting narcotics. The Customs adjudicating authority, by holding that there is no dispute that the said Customs Broker has lent overt /covert support in subletting his CB agency by obtaining G cards for such persons who were not his employees and were not eligible G card holders unabashedly indulged in fraudulent exports of narcotics drugs. Hence The Customs Dept has revoked CB licence,forfeited security deposit & also imposed 20 Lakhs penalty. Subsequently, CB appealed before CESTAT. The case has almost dragged for 6 years then CESTAT has given his final order.
Let us see the important observations of CESTAT in this case ;
1. The Proprietor of the CB firm in his statement recorded under Section 108 Customs Act, 1962 unequivocally admitted that said G card holders are not his employees and he had obtained the above mentioned G-Cards for the said persons by mis-representing the fact to the Customs for facilitating the activities of freight forwarders and he was receiving monthly monetary consideration.
2. The issue is that the job of a Customs Broker is that of trust as in the case of any agent. He is acting as agent of the Customs House as well as agent of the exporter or importer. The license granted under CBLR is for helping members of the public as well as the Customs House in activities relating to import and export within or in the vicinity of the customs area. So naturally he and his employees have apposition of trust with customs officers and also have access to sensitive places which access can be misused for smuggling of goods. The license cannot be seen as a means to earn rental income either by giving blank signed Shipping Bills or Bills of Entry for a specific consideration or to help some persons to get G cards and thereby gain trust of customs officers and also access to the customs areas so that he can do mischief. It is the bounden duty of a Customs Broker to employ persons of dependable character and to continuously supervise them and also not to authorize anybody else to represent him before the Customs House without his knowledge. In this case he has helped two persons to get G cards stating that they were his employees. He should have known the seriousness of the matter. We do not accept the argument that it was an innocent mistake. If a person is so innocent as to do such an act, it is only proper that he is not allowed to continue as a CB because it is not known what type of problems he will cause later in an innocent manner.
3. Hon’ble Andhra Pradesh High Court in the case of Commissioner v. HB Cargo cited by the learned senior Departmental Representative has held that the Tribunal while considering the appeal against the Commissioner’s order regarding cancellation of CB licence should not be swayed by the consideration of mis-placed sympathy and no sympathy can be shown in the cases where the mis-conduct is of serious nature.
4. The argument that the cancellation of his licence has denied him his means of livelihood and hence it should be restored is also is not a sound argument. Such an argument makes sense while considering an appeal against a suspension order and not while considering an appeal against a cancellation order being considered after more than 6 years. The Appellant should have been doing other jobs during these years. Even before the cancellation of his licence, he was seeking rental income from his licence. When the appellant engages his employees against payment of money instead of paying the employee, the intention is clear. A message is sent that the so called employee is given an opportunity to do whatever he wants using the identity card to earn his livelihood. Now after a break of six years, when he has to restart his business, the risk of such behaviour is higher and we are of the view that this is not a fit case where licence can be restored.
CUSTOMS BROKER VERSUS COMMISSIONER OF CUSTOMS (IMPORT & GENERAL), NEW DELHI, CESTAT, NEW DELHI order pronounced on 17.01.2012
In later review petition only against 20 lakhs penalty, during May 2013, the CESTAT held as follows ;
“We make it clear that we have not considered the penalty aspect leniently. But penal proceedings being quasi-criminal in nature, taking into consideration the civil punishment the appellant has already undergone as aforesaid and also making an overall assessment of the facts depicted above as well as finding that the Customs Broker was not an abettor to the offence committed, we consider that quantum of penalty of Rs. 5 lakhs (Rupees five lakhs) shall be reasonable.
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