2021 (4) TMI 401 - AT - Customs

Imposition of penalty on Customs Broker - customs broker had not verified KYC and has violated Regulation 10(n) of Customs Brokers Licensing Regulations (CBLR), 2018 - HELD THAT - A show cause notice has to be issued within 90 days from the date of receipt of the offence report. In the present case, the copy of the order passed by the adjudicating authority at Mumbai Customs is dated 29.05.2019. The same was communicated to Chennai Customs. If the said order is considered as offence report, show cause notice ought to have been issued on or before 28.08.2019. In the present case the show cause notice is dated 26.11.2019. Thus there is delay in issuing the show cause notice which is clear violation of Regulation 17(1) of CBLR 2018. The jurisdictional High Court in the case of M/S. BHUVAN SHIPPING SERVICES VERSUS THE COMMISSIONER OF CUSTOMS, THE INQUIRY OFFICER AND ASSISTANT COMMISSIONER OF CUSTOMS 2021 (4) TMI 24 - MADRAS HIGH COURT has held that when the SCN is issued beyond 90 days of the offence report, the consequential order passed cannot sustain. The second violation argued by Ld. Counsel is with regard to Regulation 17 (5) of CBLR 2018. It is submitted by the Ld. Counsel that the inquiry report has been submitted with delay of 12 days. In page 31 covering letter for forwarding the inquiry report has been furnished. On perusal, it can be seen that though inquiry report is dt. 23.02.2020, the appellant has received it only on 09.03.2020 - From the records, it is seen that the appellant has received necessary documents from the importer for filing the Bill of Entry. The IEC of the importer is correct. As per the Regulation 10 (n), the customs broker has to verify correctness of IEC code of the importer, GSTIN, identity of his client using reliable information. Thus when the appellant has collected necessary documents, it cannot be said that they have violated Regulation 10 (n) of CBLR 2018 - On merits also, there are no allegation proved against the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Violation of Regulation 10(n) of Customs Brokers Licensing Regulations (CBLR), 2018.
2. Timeliness of issuing show cause notice and inquiry report under CBLR, 2018.

Issue 1: Violation of Regulation 10(n) of CBLR, 2018:
The case involved a customs broker who filed a Bill of Entry for goods imported by a company, which was later found to have undeclared goods. The customs broker was accused of not verifying KYC information and violating Regulation 10(n) of CBLR, 2018. The appellant argued that they had obtained all necessary KYC documents and were not obligated to meet the importer in person as per the regulation. The tribunal found that the appellant had collected the required documents, including the Importer Exporter Code (IEC), and had satisfied the obligations under Regulation 10(n). Citing a previous judgment (Kunal Travels), the tribunal emphasized that the customs broker's role is not to verify the genuineness of the information provided by the importer but to process documents for customs clearance. Therefore, the allegation of violating Regulation 10(n) was not proven, and the tribunal ruled in favor of the appellant.

Issue 2: Timeliness of issuing show cause notice and inquiry report under CBLR, 2018:
The appellant raised concerns regarding the timeliness of issuing the show cause notice and submitting the inquiry report as per Regulation 17 of CBLR, 2018. The tribunal analyzed Regulation 17(1) which mandates issuing a show cause notice within 90 days of receiving the offence report. In this case, the notice was issued with a delay of 87 days, violating the regulation. Referring to a High Court judgment, the tribunal held that exceeding the prescribed time limit renders the proceedings invalid. Additionally, the appellant pointed out a delay of 12 days in submitting the inquiry report, contrary to Regulation 17(5). Despite receiving the report late, the tribunal noted that the appellant had fulfilled their obligations under Regulation 10(n) and found no merit in the allegations. Consequently, the tribunal set aside the impugned order and allowed the appeal with consequential relief.

This detailed analysis of the judgment highlights the key issues of violation of Regulation 10(n) of CBLR, 2018 and the timeliness of issuing the show cause notice and inquiry report, providing a comprehensive understanding of the case and its legal implications.