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2021 (12) TMI 350 - AT - CustomsRevocation of Customs Broker License - forfeiture of security deposit - levy of penalty - clerical, arithmetical or typographical mistake in the original adjudication order or not - rectification of mistake u/s 154 of Customs Act - Has the Customs Broker violated Regulations 10(b), (d), (e) and (n)? - HELD THAT - There are no reason to doubt the cross-examination and hold that Shri Babul Dey did the export work of the disputed consignment with the Customs because if he was an employee of another Customs Broker, his G-card would say so. In this case, besides the paper work, samples have also been drawn at the time of provisional assessment. If Shri Dey was unauthorisedly representing the exporter in the Shipping Bills filed in the name of the appellant Customs Broker, the Customs officers would not have entertained him. It would not be unreasonable to assume that if the shipping bill is filed by Customs Broker X and the person representing the Custom Broker has a G-Card of Customs Broker Y, officers would not entertain or deal through him because he would have no locus standi - it is found that the balancing the evidence available on both sides, it is found in favour of the Customs Broker and hold that it has not been established that the Customs broker has violated Regulation 10(b) of CBLR, 2018. Regulation 10(d) - HELD THAT - After the provisional assessment was done which appears to have not been appealed against and hence still valid, DRI intervened and examined the same goods again and came to a different conclusion that the goods were heavily overvalued with a fraudulent intent to claim ineligible drawback. Simply because DRI came to a different conclusion in an export which was already provisionally assessed, it does not mean that the exporter had committed a fraud and that the appellant Customs Broker has colluded with the exporter in such a fraud. At any rate, valuation of the goods is to be done by the exporter (self assessment) or proper officer (re-assessment). there are nothing found remotely in the Customs Act, Rules and Regulations which gives the Customs Broker any power with respect to valuation of imported or export goods - there is no evidence to establish that appellant has violated Regulation 10(d). Regulation 10(e) - HELD THAT - The learned Principal Commissioner has mis- read the provision of this clause. It only requires the Customs Broker to exercise due diligence to ascertain the correctness of information which he imparts to his client. In this case, the client is the exporter and we do not find anything in the allegation, let alone any evidence that the appellant has provided any incorrect information to the exporter. There is no evidence or even an allegation that the appellant customs broker had provided to the exporter any wrong information regarding any laws, procedures, instructions or anything else. The entire case of the DRI was the exporter has overvalued the goods. It is therefore found that the appellant has not violated Regulation 10(e) of CBLR, 2018. Regulation 10(n) - HELD THAT - It appears that the appellant Customs Broker has not verified the KYC and export documents and has violated Regulation 10(n). It is found that the identity and functioning of the exporter was not in doubt and in fact, the officers have recorded the statement of the exporter. It has also been alleged in the SCN and the impugned order that the Customs Broker was present at the time of stuffing of the container at the exporter s godown. The only allegation is that there is a discrepancy between the statement of the appellant Customs Broker (who said that the KYC and export documents were given to him by the exporter at his office) and the statement of the exporter (who said that the Customs Broker, i.e., the appellant, was arranged through some other persons) - there are nothing in Regulation 10(n) that mandates how the documents should be handed over by the exporter/importer to the client. All that is required is that the KYC documents must be received and verified to ensure the identity of the client which is not in doubt even according to the SCN itself. Therefore, the charge of violation of Regulation 10(n) against the appellant Customs Broker cannot sustain. The findings in the impugned order that the appellant Customs broker has violated Regulation 10(b), 10(d), 10(e) and 10(n) cannot be sustained and need to be set aside - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Violation of Regulations 10(b), (d), (e), and (n) by the Customs Broker. 2. Imposition of penalty of ?50,000 under Regulation 18. 3. Forfeiture of the entire security deposit under Regulation 14. 4. Non-cancellation of the Customs Broker's license by the Principal Commissioner. Detailed Analysis: 1. Violation of Regulations 10(b), (d), (e), and (n) by the Customs Broker: - Regulation 10(b): This regulation requires the Customs Broker to conduct operations personally or through employees approved by the Assistant Commissioner or Deputy Commissioner of Customs. The allegation was that Shri Babul Dey, an employee of another Customs Broker, filed the Shipping Bills without approval. The Customs Broker argued that Dey was only a marketing agent. During cross-examination, Dey confirmed he was never an employee of the appellant Customs Broker but did business promotion. The Tribunal found no reason to doubt the cross-examination and held that the Customs Broker did not violate Regulation 10(b). - Regulation 10(d): This regulation mandates the Customs Broker to advise clients to comply with the law and report non-compliance. The Revenue alleged that the Customs Broker failed to advise the client and assisted in fraudulent activities. The Tribunal found no evidence of what advice was given or not given. Since the goods were provisionally assessed and allowed for export, the Tribunal concluded there was no violation of Regulation 10(d). - Regulation 10(e): This regulation requires due diligence in imparting correct information to clients. The Principal Commissioner held that the Customs Broker failed to scrutinize the export documents properly. The Tribunal found that the regulation pertains to the information given to clients, not the authorities, and there was no evidence of incorrect information provided to the exporter. Hence, there was no violation of Regulation 10(e). - Regulation 10(n): This regulation requires verification of the client's identity and documents. The Revenue's case was based on conflicting statements about who provided the KYC documents. The Tribunal found that the identity of the exporter was not in doubt, and there was no requirement on how documents should be handed over. Thus, there was no violation of Regulation 10(n). 2. Imposition of Penalty of ?50,000 under Regulation 18: Given that the Tribunal found no violation of Regulations 10(b), (d), (e), and (n), the imposition of a penalty under Regulation 18 could not be sustained. 3. Forfeiture of the Entire Security Deposit under Regulation 14: Similarly, since there were no violations of the specified regulations, the forfeiture of the security deposit under Regulation 14 was also not justified. 4. Non-cancellation of the Customs Broker's License by the Principal Commissioner: The Revenue's appeal argued that the Principal Commissioner erred by not canceling the license. However, since the Tribunal found no violations, the question of canceling the license did not arise. Conclusion: The Tribunal concluded that the Customs Broker did not violate Regulations 10(b), (d), (e), and (n). Consequently, the penalty and forfeiture of the security deposit were set aside. The Revenue's appeal was rejected, and the Customs Broker's appeal was allowed, providing consequential relief to the Customs Broker. (Order pronounced on 07/Dec/2021).
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