The Karnataka High Court (Bengaluru Bench) ruled that revocation of the authorised courier’s registration would be arbitrary, particularly in light of the subsequent conduct of the Customs Department in accepting the ownership of the alleged goods and releasing the same upon payment of duty and penalty, thereby removing the very basis of the proceedings.
The Court clarified that the violation of the Courier Imports and Exports (Clearance) Regulations, 1998 (1998 Regulations) and the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 (2010 Regulations), once addressed by the imposition of a penalty, the revocation of the authorised courier licence would be harsh and disproportionate to the contravention alleged, and the CESTAT, having duly appreciated the factual matrix, was justified in setting aside the order of revocation.
However, since the CESTAT committed an error in setting aside the penalty levied under Section 117 of the Customs Act, 1962, the Court set aside the order of the CESTAT to that extent, and restored the penalty of Rs. 50,000 under Section 117 of the Customs Act, 1962, which was originally imposed.
The Division Bench comprising Justice S.G. Pandit and Justice K.V. Aravind noted that the proceedings against the respondent were initiated on the ground of creating a GSTIN and submitting courier bills of entry in the name of K. T. Technologies. However, the point of dispute was the ownership of the goods. Even though the proprietor, Kajal Thakur, initially disowned the same, she subsequently accepted her claim of ownership, and the Customs Department also allowed her claim and released the goods upon payment of duty and penalty.
Speaking for the Bench, Justice Aravind pointed out that by such an action of the Department, the very basis of the show-cause notice and the proceedings against the respondent ceases to subsist. Thus, once the foundational basis of the proceedings no longer exists, the imposition of suspension or revocation of the registration of the authorised courier would be disproportionately harsh.
The Bench acceded to the submission of the respondent that the misdeeds of its employee cannot form a basis for the revocation, may not, in itself, be a wholly sound ground for acceptance, in the absence of any comparable antecedents, and emphasized that the revocation would have a serious impact on the business rights of the respondent, and the violations of Custom Regulations can be adequately addressed by the imposition of penalty.
The Bench also referred to Section 117 of the Customs Act, 1962, to observe that whenever any person contravenes any provision of the Act or fails to comply therewith, a penalty is attracted, and discarded the requirement of mens rea into the provision, stating that it would amount to rewriting the statute, which is impermissible.
Briefly, in this case, an investigation conducted on the respondent, operating as an Authorized Courier at the International Courier Terminal of the Airport and Cargo Commissionerate, Bengaluru, revealed a violation of the Customs Act by one K.T. Technologies in its courier imports, whose consignments were cleared through the respondent. It was found that an employee of the respondent had created a GSTIN in the name of Kajal Thakur, whose trade name was K. T. Technologies. The same was admitted to have been done without the knowledge of Kajal Thakur, in addition to making imports in her name, filing bills of entry in the name of K. T. Technologies, and misdeclaration of the value, description, and quantity of goods.
A summons came to be issued to the authorized courier under Section 108 of the Customs Act, and proceedings were initiated against Kajal Thakur and the respondent. In the meantime, Kajal Thakur, proprietor of K. T. Technologies, claimed ownership of the seized goods and requested their release, which was allowed in her favour upon payment of duty and fine. Later, the courier license of the respondent was revoked, and a penalty was imposed under Section 117 of the Customs Act.
The matter went before the CESTAT, where the Tribunal set aside the order of revocation of the authorized courier license and enforcement of the Bond and Bank Guarantees, and also modified the penalty of Rs. 50,000 to Rs. 25,000 levied under Regulation 14 of the 2010 Regulations. The CESTAT also quashed the penalty imposed under Section 117 of the Customs Act.
Appearances:
Advocate Unnikrishnan M., for the Appellant/ Revenue
Advocate Maya Menon, for the Respondent/ Taxpayer
