Flyover Cargo Pvt. Ltd. Vs. Commissioner, Customs-New Delhi (Airport and General) - (Customs, Excise and Service Tax Appellate Tribunal) (24 Jul 2024)

Attempt to export Specialised Chemicals, Organisms, Machinery, Equipment and Technology (SCOMET) items without the required authorization is a serious violation

MANU/CE/0252/2024

Customs

The Appellant is a licensed customs broker and is aggrieved by the order passed by the Commissioner, Customs (Airport and General), New Delhi revoking its Customs Broker Licence, under Regulations 14 & 18 read with Regulation 17 of Customs Brokers Licensing Regulations (CBLR) 2018, forfeiting its security deposit and imposing a penalty of Rs. 50,000 on it for violating Regulation 10(d) of CBLR.

The Appellant has filed a shipping bill for its client to export certain goods including Triethanolamine. Triethanolamine is one of the SCOMET items which have dual use- several normal industrial or other uses and is used in manufacture of Weapons of Mass Destruction (WMD).

Export of SCOMET items is not prohibited but restricted under the Foreign Trade Policy and listed in Appendix 3 to Schedule 2 of ITC (HS) classification. List 1C of this Schedule lists chemicals whose export requires an export authorisation if they are exported to countries other than those listed in Table 1. Undisputedly, Triethanolamine is listed at S. No. 17 of the list as SCOMET Entry IC017 and Mozambique was not listed in Table 1. Therefore, the undisputed legal position is that during the relevant period, Triethanolamine could not have been exported to Mozambique without an authorisation and the exporter had no authorisation.

The primary issue that was raised in this matter was whether the appellant violated Regulation 10(d) of Customs Brokers Licensing Regulations (CBLR) 2018? If violating happened, then is the penalty of revocation of licence, forfeiture of security deposit and imposition of penalty of Rs. 50,000/- upon the appellant proportionate to the violation?

It was observed that Regulation 10(d) requires the Customs Broker to advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof. The customs broker is expected to be familiar with the restrictions and prohibitions on imports and exports under any law and advise the client about them.

The restriction on export in this case is evident as it was part of the Foreign Trade Policy and export of Triethanolamine to Mozambique required an authorization. Instead of advising the client, the appellant filed the Shipping Bill for its export. Therefore, the appellant had clearly violated Regulations 10(d) of CBLR 2018.

Another issue raised pertains to the question of proportionality of action against the appellant?

It was observed that an attempt to export SCOMET item without the required authorization is a serious violation. Triethanolamine was explicitly indicated as a SCOMET item. However, there is no evidence of the appellant profiting from this attempted export of Triethanolamine, and action has already been taken against the exporter and the appellant. To meet the ends of justice, penalty of Rs. 50,000/-imposed on the appellant is upheld but the revocation of license and forfeiture of security deposit are set aside. The appeal was partly allowed.

Tags : EXPORT AUTHORISATION SCOMET