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Prabhu Shipping Systems Vs. Commissioner of Customs, Thoothukudi - (Customs, Excise and Service Tax Appellate Tribunal) (15 Nov 2021)

Mere act of removing employee after an incident does not extinguish vicarious liability on employer



The Appellant, a licensed Customs Broker, is aggrieved by the Order-in-Original passed by the Commissioner of Customs, holding that, the Appellant had contravened Regulations 10(b), 10(d), 10(k), 10(n) and 13(12) of the Customs Brokers Licensing Regulations, 2018 (CBLR)and revoking the Appellant's licence under Regulation 14 read with Regulation 17. The security deposit furnished by the Appellant was also forfeited and a penalty of Rs. 50,000 was also imposed upon the Appellant under Regulation 18 of CBLR, 2018.

The CBLR, 2018 places several responsibilities upon the Customs Broker. The Customs Broker assumes a very important role in the processing of imports and exports of goods and related documentation under the Customs Act and acts as a pivot in the operation of Customs House in supervision of imports and exports. For this reason, the license is not given to anyone and everyone but is given only after conducting an examination to verify its knowledge of the customs procedures and checking its credentials. Thereafter, the Customs Broker is expected to act responsibly. It is true that, the Customs Broker may not have the knowledge of any mis-declaration of the quantity, nature and value of the goods by the importer/exporter. However, the Customs Broker has to fulfill its obligations laid down in Regulation 10.

The Customs Broker licensed in one Customs House is also permitted to operate in other Customs Houses. However, all such operations must be directly done by Customs Broker himself or by its employees. For the acts and omissions of its employees, the customs broker is liable and this vicarious liability is explicitly indicated in Regulation 13. In this case, the Appellant chose to operate from Chennai and Mumbai and has appointed Mr. Kadam, G Card holder giving him the Power of attorney. Therefore, for any act or omission of employee, the Appellant is responsible and the mere act of removing its employee after an incident does not extinguish this vicarious liability.

In present case, the carting was done by a person who is neither a licensed customs broker nor is an employee of the appellant or is the exporter or the employee of the Customs Broker. This is a violation of Regulation 10(b).

Regulation 10(d) mandates the Customs Broker to advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, and in case of non-compliance, to bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be. The finding in the impugned order is that, the Appellant has not even seen the goods which were being exported and was not aware of the price of the goods being exported. We do not find anything in the CBLR, 2018 which requires the Customs Broker to assess or know the correct value of the goods being exported. There is nothing to show that the Appellant was aware of the violations by the exporter and has not brought them to the notice of the Assistant Commissioner/Deputy Commissioner. Thus, there is no ground to hold that, the Appellant has violated the Regulation 10(d).

Further, as the Appellant has not till date produced any documents to show that, it had obtained the KYC documents, the Appellant has not maintained its records and thereby violated Regulation 10(k). Regulation 13 mandates the Customs Broker shall exercise such supervision as may be necessary to ensure proper conduct of his employees in the transaction of business and he shall be held responsible for all acts or omissions of his employees during their employment. Therefore, for the acts and omissions of employee, the Appellant is responsible. There is no reason to interfere with the impugned order except to the extent it records that the Appellant has violated Regulation 10(d). Accordingly, the impugned order is upheld. The appeal is rejected.


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