Advisory emphasises avoiding routine penalties against customs brokers in interpretive disputes, stressing adherence to CBIC instructions and recent judgements.
An advisory has been issued regarding the implication of customs brokers in show cause notices involving interpretative disputes. Advisory No. 01/2022-JNCH, dated December 2, 2022, advises that penal provisions under the Customs Act, 1962, should not be routinely proposed against Customs Brokers without evidence of specific acts of omission or commission found during audits. The advisory emphasises that the scope of audits is limited and often does not reveal such facts.
Following this, a letter from CCO, JNCH, dated February 20, 2023, urged adjudicating authorities to consider this advisory when dealing with past show cause notices where penal provisions were invoked based on audit reports. The Hon’ble CESTAT’s judgement in the case of M/s Suji Kuriakose v. Commissioner of Customs was referenced.
In recent years, several judgements have reiterated that customs brokers cannot be penalised without evidence of complicity or prior knowledge of violations. The CBIC has taken note of practices in field formations, issuing Instruction No. 24/2023, which mandates personal hearings before suspending a Customs Broker’s license, and Instruction No. 20/2024, which directs that implicating Customs Brokers as co-noticees in routine interpretative disputes must be avoided unless evidence of abetment is established.
It has been observed that despite these directives, many adjudicating authorities continue to impose penalties on customs brokers. The CBIC reiterates that making Customs Brokers co-noticees in Show Cause Notices or imposing penalties for interpretative disputes is a violation of the instructions.
Examples of when Customs Brokers should not be made co-noticees include ongoing litigation in similar cases, lack of evidence linking Customs Brokers to wrongdoing regarding export incentives, accurate goods descriptions accepted by Customs, and audits that do not support penal action.
Adjudicating Authorities and proper officers are advised to adhere to this guidance, maintaining judicial discipline and refraining from routine penalties against Customs Brokers in the absence of clear evidence of wrongdoing. This advisory has been issued with the approval of the Pr. Chief Commissioner of Customs, Mumbai Zone II.
