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2021 (11) TMI 666 - AT - CustomsRevocation of Customs Broker License - forfeiture of security deposit - levy of penalty - overvaluation of the goods between 8 to 20 times of the market value in the name of an exporter - violation of Regulations 10(b) 10 (d) 10(k) and 10(n) of CBLR 2018 - HELD THAT - Under consideration was whether the suspension of the licence of the Custom House Agent was warranted or otherwise. It was not a case of final decision on the licence after inquiry. The G-Card holders of Ashiana were involved in a different business of smuggling narcotics abroad on their own account. This was not the activity of Ashiana. If any serious crime is committed by one of the employees (say theft assault murder etc.) of a Customs Broker the Customs Broker cannot be held responsible. The vicarious liability of the Customs Broker extends only to such activities as are done by the employees as such employees. In the case on hand the export documents were filed by Shri Kadam on behalf of the appellant and therefore vicarious liability applies. This case does not advance the case of the appellant any further. Reliance was placed in the case of M/S. JAI AMBE LOGISTICS VERSUS COMMISSIONER OF CUSTOMS (GENERAL) NCH MUMBAI 2015 (12) TMI 313 - CESTAT MUMBAI - In this case we find that the appellant had no idea who the exporter was. Its employee Shri Kadam also had no contact with the exporter. The appellant or its employee has not conducted any due diligence measures. They claimed to have obtained KYC documents through email but have failed to produce them either before the Inquiry officer or at any stage including before us. The irresistible conclusion can only be that they have no such documents and also no idea of who the exporter was and simply filed a Shipping Bill heavily over-invoicing the goods. In this factual matrix Jai Ambe does not advance the case of the appellant. There are no reason to interfere with the impugned order except to the extent it records that the appellant has violated Regulation 10(d) - appeal dismissed.
Issues Involved:
1. Violation of Regulation 10(b) of CBLR, 2018 2. Violation of Regulation 10(d) of CBLR, 2018 3. Violation of Regulation 10(k) of CBLR, 2018 4. Violation of Regulation 10(n) of CBLR, 2018 5. Violation of Regulation 13(12) of CBLR, 2018 Issue-wise Detailed Analysis: 1. Violation of Regulation 10(b) of CBLR, 2018: The appellant, a licensed Customs Broker, was found to have contravened Regulation 10(b) as it did not transact business in the Customs station either personally or through its authorized employee. Instead, the carting of goods was done by Shri Inder Prakash Kohli, who was neither an employee nor authorized by the appellant. This action was deemed a violation because it bypassed the requirement that only the Customs Broker or its authorized employee should handle such tasks, ensuring accountability and preventing fraud. The Tribunal upheld this finding, emphasizing that allowing unauthorized persons to transact business in the Customs House opens the door to potential fraud and undermines the regulatory framework. 2. Violation of Regulation 10(d) of CBLR, 2018: Regulation 10(d) mandates that the Customs Broker must advise his client to comply with the provisions of the Act and report any non-compliance to the Customs authorities. The Commissioner found that the appellant failed to advise the exporter against gross over-invoicing of goods. However, the Tribunal noted that the Customs Broker is not required to assess or know the correct value of the goods being exported. There was no evidence that the appellant was aware of the exporter's violations and failed to report them. Consequently, the Tribunal did not uphold the finding of a violation of Regulation 10(d). 3. Violation of Regulation 10(k) of CBLR, 2018: Regulation 10(k) requires the Customs Broker to maintain up-to-date records of documents related to their business. The appellant failed to produce KYC documents for the exporter, which were allegedly received via email. This failure indicated that the appellant did not maintain the necessary records, violating Regulation 10(k). The Tribunal upheld this finding, stressing the importance of maintaining accurate and complete records to ensure compliance and accountability. 4. Violation of Regulation 10(n) of CBLR, 2018: Regulation 10(n) requires the Customs Broker to verify the correctness of the Importer Exporter Code number, GST identification number, identity, and functioning of the client at the declared address using reliable documents. The appellant did not verify the exporter's details and relied solely on documents provided by Mr. Kohli. The Tribunal found that the appellant failed to conduct due diligence, resulting in the filing of documents with grossly overvalued goods. This lack of verification was deemed a violation of Regulation 10(n). 5. Violation of Regulation 13(12) of CBLR, 2018: Regulation 13(12) holds the Customs Broker responsible for the acts or omissions of its employees. The appellant's employee, Shri Kadam, acted without proper authorization and failed to verify the exporter's details. The Tribunal emphasized that the Customs Broker is vicariously liable for the actions of its employees. The appellant's failure to supervise and ensure proper conduct of its employees constituted a violation of Regulation 13(12). Conclusion: The Tribunal upheld the findings of violations of Regulations 10(b), 10(k), 10(n), and 13(12) of CBLR, 2018, but did not find sufficient grounds to uphold the violation of Regulation 10(d). The appeal was rejected, and the impugned order was largely upheld, reinforcing the importance of due diligence, accurate record-keeping, and proper supervision by Customs Brokers.
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