No Penalty on grounds of being contrary to Principles of Natural Justice

In M/S. Seaswan Shipping and Logistics v. Commissioner of Customs [Customs Appeal No.41776 of 2019 dated September 02, 2021], M/S. Seaswan Shipping ("the Appellant") has filed a civil appeal against Order dated October 12, 2017, passed by Commissioner of Customs ("the Respondent"), which was issued against him alleging the violation of Regulation 11 (a) and (n) of the Customs Brokers Licensing Regulations, 2013 ('the CBLR, 2013') and imposing a penalty of Rupees 50, 000/-.

To substantiate the case, the Appellant contended that he had obtained the authorization required in Regulation 11 (a) of the CBLR, 2013 but did not meet the importer directly instead had obtained it from a middleman. The Appellant contended that all the documentation along with the bill of entry were proper and legitimate.

Furthermore, it was contended that the Respondent has held that the Appellant has violated Regulation 11(n) only on the ground that the person representing the importer-firm did not appear before the customs authorities. There is no case for the department that the importer-firm is a fake firm. When the importer was very much available in the address, which is mentioned in the KYC documents.

As opposed to the Appellant, the Respondent adverted to the Show Cause Notice (SCN) dated May 15, 2017 and argued that the consignment for which the bill of entry was filed by the Appellant contained undeclared goods and since the consignment contained undeclared cargo, it is very much clear that the Appellant has not been sufficiently diligent in obtaining authorization / KYC documents. The penalty imposed is therefore legal and proper.

Considering all the facts and evidence at their perusal, the Honorable Customs, Excise & Service Tax Appellate Tribunal, Chennai ('the CESTAT') opined that the finding of the Respondent is ultra vires of the principles of natural justice as it requires proper reasons that has to be supplied to the Appellant so that he is able to reply to the charges levelled against him.

Thus, the Respondent is bound to put to notice the Appellant, setting out tentative conclusions. This would facilitate and ensure the right of the Appellant to defend his case.

The finding rendered by the Respondent that the Appellant has violated Regulation 11(a) and 11(n) are without any factual or legal basis and requires to be set aside.