CUSTOMS ACT | No One Can Be Held Guilty On Basis Of Criminal History: CESTAT
Pranav B Prem
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), consisting of Mr. A.K. Jyotishi (Technical Member) and Mr. Angad Prasad (Judicial Member), has held that no person can be found guilty merely on the basis of prior criminal history, as each case is to be adjudicated on its own facts and merits. The Tribunal also ruled that denial of the opportunity to cross-examine crucial witnesses violated principles of natural justice, necessitating a remand for fresh adjudication.
Background of the Case
The appellant, M/s Concorde Zoom, a partnership firm with partners Shri Rajendranath Bharathi and Smt. Padmaja Bharathi, holds a valid Customs Broker License issued by the Hyderabad Customs Commissionerate. The firm also conducts operations under Bengaluru Customs jurisdiction under the CBLR, 2013 (now CBLR, 2018).
The Directorate of Revenue Intelligence (DRI), Bengaluru, intercepted an export consignment from M/s TEAC Engineers, which was misdeclared as ‘industrial pipes’ but actually contained red sanders — a prohibited item. The consignment was seized from the export shed of Air India Sats at Bengaluru. The DRI report alleged that Shri C. Munikrishna, G-Card holder and employee of the appellant, had actively participated in the smuggling attempt using the appellant’s CHA credentials.
The investigation further revealed that the main accused, Shri Satish Kumar T., in his statements dated 31.07.2021 and 28.08.2021, admitted that the shipping bill dated 03.06.2021 was filed using the appellant’s credentials by Shri C. Munikrishna, who was paid Rs. 2,00,000/- in cash for facilitating the clearance. Based on these facts, a Show Cause Notice was issued to the appellant alleging violations under Regulation 10(a), (d), (e), (f), (m), (n), and 13(2) of the Customs Broker Licensing Regulations (CBLR), 2018.
The adjudicating authority, after the due process of law, revoked the Customs Broker License of the appellant under Regulation 14 read with Regulation 17 of CBLR, 2018, forfeited the security deposit, and imposed penalties on the appellant firm and Shri Rajendranath Bharathi. The appellant challenged this order before CESTAT.
Appellant’s Contentions
The appellant contended that the alleged shipping bills were not filed by them but by another CHA, M/s Sri Sai Lakshmi Logistics. They argued that the Show Cause Notice was issued beyond the statutory time limit of 90 days from the date of the offence report under Regulation 17 of CBLR, 2018. The appellant also claimed that their request to cross-examine crucial witnesses such as customs officers, Shri C. Munikrishna, Shri Satish Kumar T., and others was unjustly denied by the adjudicating authority, which violated their rights under Regulation 17(4).
The appellant cited several judgments, including M/s A.M. Ahamed & Co. v. CC (Imports), Chennai [2014 (309) ELT 433 (Mad)], and M/s Leo Cargo Services v. CC, New Delhi [2022 (382) ELT 30 (Del)], to support their contention that the time limit for issuing the SCN is mandatory, and any breach would render the proceedings void.
Department’s Stand
The Revenue submitted that the SCN was issued within the prescribed time limit since the offence report was received by the Hyderabad Commissionerate on 10.03.2023, and the SCN was issued on 03.04.2023. Therefore, the requirement under Regulation 17(1) was duly complied with.
As regards the denial of cross-examination, the Revenue contended that the adjudicating authority provided detailed reasoning and that the statements relied upon were voluntary, un-retracted, and corroborated by documentary evidence, thereby reducing the necessity for cross-examination.
Tribunal’s Findings
The Tribunal perused the records and noted that the SCN was indeed issued within the statutory 90-day period as required under Regulation 17(1) of CBLR, 2018. The Tribunal clarified that the limitation period starts from the date the offence report is received by the competent authority, not the date of the report itself.
However, the Tribunal found merit in the appellant’s grievance regarding the denial of cross-examination. Citing judgments including M/s Shasta Freight Services Pvt Ltd v. Principal CC [2019 (368) ELT 41 (Telangana)], affirmed by the Supreme Court, the Tribunal emphasized that refusal of cross-examination of witnesses whose statements form the basis of the SCN is a serious violation of natural justice under Regulation 17(4). The Tribunal rejected the Revenue's reliance on the GTC Industries Ltd v. CC, New Delhi [2011 (264) ELT 433 (Tri-Del)] decision, holding that this case was not applicable to the present facts where express procedural mandates were ignored.
The Tribunal also dismissed the department’s argument that the appellant's past misconduct (in another smuggling case involving gold) should influence the present decision. It reiterated that under established legal principles, no person can be held guilty in a fresh proceeding solely on the basis of prior offences. Each case must be determined on its own evidence and facts.
Additionally, the Tribunal took note of the admission made by Shri Rajendranath Bharathi regarding his oversight in approving the shipping bills without proper diligence. However, since the proceedings were fundamentally flawed due to denial of cross-examination, the Tribunal deemed it appropriate to remand the matter for reconsideration.
The Tribunal concluded that the denial of cross-examination and failure to comply with the mandatory procedure under Regulation 17(4) had resulted in a breach of the principles of natural justice. The impugned order revoking the Customs Broker License and imposing penalties was thus rendered unsustainable. Accordingly, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority to be decided afresh after granting proper opportunity for cross-examination of all relevant witnesses, as per law. The appeal was thus disposed of by way of remand.
Appearance
Shri A.K. Jayaraj, Advocate for the Appellants.
Shri B. Subhas Chandra Bose, Authorized Representative for the Respondent.
Cause Title: M/s Concorde Zoom V. Commissioner of Customs Hyderabad – Customs
Case No: Customs Appeal No. 30063 of 2024
Coram: Hon'ble Mr. A.K. Jyotishi [Member (Technical)], Hon'ble Mr. Angad Prasad [Member (Judicial)]
[Read/Download order]
