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2015 (11) TMI 1088 - AT - CustomsRevocation of CHA licence - forfeiture of whole amount of bank guarantee - illicit export of contraband were done using IECs of various firms which were either not in existence or without the knowledge of IEC holders - Held that - The case mainly deals with failure of appellant to discharge his obligations as licensed CHA. Such failure contributed to the contrabands being exported out of country. In one specific case 30 kgs of Ketamine, prohibited under NDPS Act, was found to be exported to Canada. The plea of the appellant that the duties prescribed under the Regulations are impractical and against general business practice is not acceptable. It has been established that no verification of genuineness/existence of exporters have been made by the appellant before accepting the work of handling the consignment for documentation and clearance through customs. The failure of the appellant, apparently, is one of the contributing factors in the illicit exports Though the appellant did file electronically the shipping bill, thereafter they did not do any further work relating to the export cargo - revocation of CHA licence is too harsh a consequence for the omission of appellant as they were not involved in any act of entering and presenting the cargo and processing the document with the customs. Hence, for the failure to cross check the KYC papers, we find the forfeiture of bank guarantee of ₹ 50,000/- will be sufficient penalty. This case does not warrant revocation of CHA licence itself - Decided partly in favour of appellant.
Issues:
1. Violation of provisions of Customs House Agents Licensing Regulations, 2004/Customs Brokers Licensing Regulations, 2013. 2. Failure to discharge obligations as a licensed Customs House Agent (CHA). 3. Revocation of CHA license and forfeiture of bank guarantee. 4. Allegations of involvement in illicit exports and misdeclaration of goods. 5. Compliance with KYC norms and verification of exporter credentials. Analysis: Issue 1: Violation of Regulations The appeals involved violations of Customs House Agents Licensing Regulations, 2004 and Customs Brokers Licensing Regulations, 2013. The appellants were accused of failing to adhere to Regulation 13(e) and 13(o) of CHALR, 2004 (Regulation 11(e) and 11(o) of CBCR, 2013), which require due diligence in verifying information imparted to clients and confirming the antecedents of clients and correctness of Importer Export Code (IEC) Number. Issue 2: Failure to Discharge Obligations The primary issue revolved around the failure of the appellants to fulfill their obligations as licensed CHAs. The failure to verify the genuineness and existence of exporters before handling consignments for documentation and customs clearance was a significant factor contributing to illicit exports, as evidenced by specific cases of misdeclaration and illicit export of prohibited items. Issue 3: Revocation of License and Forfeiture of Bank Guarantee The Commissioner issued orders revoking the CHA licenses of the appellants and forfeiting their bank guarantees due to the identified violations and failures in discharging duties. The appellants challenged these orders, arguing that the penalties were too harsh considering their limited involvement in the illicit export process and the actions of other conspirators. Issue 4: Allegations of Involvement in Illicit Exports The cases involved instances where the appellants were linked to illicit exports through their handling of documentation and clearance for consignments containing contraband. The findings highlighted the lack of verification and diligence in ensuring the legitimacy of exporters and the goods being exported, leading to serious regulatory breaches. Issue 5: Compliance with KYC Norms and Verification The appellants claimed to have followed normal business practices and complied with Know Your Customer (KYC) norms by collecting documents such as driving licenses, telephone bills, and PAN cards. However, the failure to cross-verify these documents and confirm the legitimacy of exporters before filing shipping bills was a critical lapse that contributed to the regulatory violations. In conclusion, the Tribunal upheld the revocation of the CHA license in one appeal but partially allowed the appeal in the second case, considering the limited involvement of the appellants in the illicit export process. The judgments emphasized the importance of diligent verification, compliance with regulations, and the consequences of failing to discharge obligations as licensed Customs House Agents.
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