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2021 (9) TMI 456 - AT - CustomsSmuggling of export goods - Red Sanders - prohibited goods or not - breach of the Foreign Trade Policy 2009-2014 - penalty on customs broker and agent of customs broker - HELD THAT - The appellant M/s CSB Logistic (Custom Broker) was duty bound as a Custom Broker under the Regulation of 2014 to verify antecedents and genuineness of the importer exporter code, IEC number, identity of their client and functioning of their client at the declared address by using reliable, independent and authentic documents/ data/ information. As per the facts on record, the Custom Broker did not meet the exporter or the owner of the said Fashion World or the master mind Reyaz Ahmed alias Rajbir alias Dharmendra, the person who originated the goods for exporter, which were prohibited. Thus, their negligence have facilitated the mischievous exporter in attempting to export prohibited goods. Further, they have similarly facilitated the export of about eight consignments in the recent past and there is reasonable belief that such consignments also had prohibited goods. Other three appellants (other than custom broker/agent of customs broker) - HELD THAT - The other three appellants are freight forwarder, evidently they have acted as the facilitator of export of prohibited goods. They have acted as an agent of the Custom Broker M/s CSB Logistics, directly or indirectly. Thus, these three appellants were also duty bound to observe the KYC norms and to assist the Custom Broker in complying with his obligation under Customs Broker Licensing Regulation, 2013. Penalty - HELD THAT - As per the evidence on record, these appellants have not made any profit and/or participated in any profit in the export of prohibited goods. Rather these persons have acted on normal remuneration basis as a freight forwarder - appeal allowed in part by reducing the quantum of penalty. Appeal allowed in part.
Issues Involved:
1. Mis-declaration and attempted export of prohibited goods (red sanders) under the guise of clutch plates. 2. Involvement and negligence of various freight forwarders and customs brokers in the export process. 3. Violation of Foreign Trade Policy and Customs Act provisions. 4. Imposition of penalties on the involved parties. Issue-wise Detailed Analysis: 1. Mis-declaration and Attempted Export of Prohibited Goods: The case involved the export of prohibited red sanders under the guise of clutch plates. M/s Fashion World, through its Customs Broker M/s CSB Logistics, declared the goods as clutch plates. Upon examination, only 80 clutch plates were found, and the rest were red sanders, whose export is prohibited. The goods were seized by Customs. 2. Involvement and Negligence of Various Freight Forwarders and Customs Brokers: The investigation revealed a chain of freight forwarders and customs brokers involved in the export process without proper verification of the exporter or the consignment. M/s Cargo Specialist Inc. handed over the consignment to M/s Info Capital Logistic Ltd., which further forwarded it to M/s Blue Bell Logistics, who then handed it over to M/s CSB Logistics for customs clearance. None of these entities verified the genuineness of the exporter or the documents. Statements from involved parties indicated a lack of due diligence and compliance with KYC norms, facilitating the attempted export of prohibited goods. 3. Violation of Foreign Trade Policy and Customs Act Provisions: The Revenue noted breaches of the Foreign Trade Policy 2009-2014 and violations of the Customs Act under Sections 50(2), 110, and 113(d). The export of wood and wood products, including red sanders, is prohibited. The appellants were found to have violated shipping bill regulations and Customs House Agent Licensing Regulations (CHALR), 2004, making them liable for penalties. The red sanders and the goods used to conceal them were liable for confiscation. 4. Imposition of Penalties on the Involved Parties: The Additional Commissioner issued a show cause notice proposing to confiscate the seized goods and impose penalties under Section 114 of the Customs Act. The seized red sanders (1004 kg) were valued at ?10,04,000/- and were absolutely confiscated under Section 113(d), (h), and (i) of the Customs Act. The clutch plates were also confiscated under Section 119. Penalties were imposed on the involved parties as follows: - M/s Fashion World: ?10,00,000/- - M/s CSB Logistics: ?8,00,000/- - M/s Cargo Specialist Inc.: ?8,00,000/- - M/s Info Capital Logistic Co.: ?3,00,000/- - M/s Blue Bell Logistics Pvt. Limited: ?8,00,000/- Appeals and Tribunal's Decision: The appellants contested the penalties, arguing a lack of knowledge of the prohibited nature of the goods and compliance with KYC norms. The Tribunal found that M/s CSB Logistics failed to verify the antecedents of the exporter, facilitating the export of prohibited goods. However, the other appellants acted on normal remuneration basis without participating in profits from the prohibited goods. The Tribunal reduced the penalties as follows: - M/s CSB Logistics: Reduced to ?1,00,000/- - M/s Cargo Specialist Inc.: Reduced to ?80,000/- - M/s Info Capital Logistic Co.: Reduced to ?30,000/- - M/s Blue Bell Logistics Pvt. Limited: Reduced to ?50,000/- Conclusion: The appeals were partly allowed, with penalties reduced for the freight forwarders while maintaining the penalty for the customs broker due to their negligence in verifying the exporter’s credentials. The Tribunal emphasized the importance of due diligence and compliance with regulations to prevent the export of prohibited goods.
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