2022 (1) TMI 1019 - AT - Customs

Levy of penalty on Customs Broker - exporter was not possessing Export inspection Agency (EIA) Certificate as was mandatorily required by a milk product exporter in terms of Section 7 of Export (Quality Control inspection) Act, 1963 - violation of regulation 10(d), 10 (e) and 10 (n) of Customs Broker Licenses Regulation 2013 - HELD THAT - The perusal of the regulations makes it abundantly clear that the said Regulation burden the Customs Broker with the mandatory duty of exercising utmost due diligence with respect to the correctness of the information which he imparts to a client with reference to any work related to clearance of cargo or baggage and to advise his client to comply with requisite statutory provisions and to verify the correctness of antecedents and documents of his client. The appellant herein was the agent for the exporter who was exporting the products as per export quality control and inspection Act, 1963 section 7 thereof. There is no denial either of the appellant or even of the exporter that the said EIA certificate was not annexed with the Shipping Bills. There is a clear admission that the Certificate was not issued to the exporter at the time of filing of the impugned shipping bill. This is otherwise apparent from the record that the said certificate was obtained on 23.12.2019 i.e. after filing of the shipping bills and even after the initiation of the impugned investigation. The said observation is sufficient to hold the non-compliance of Regulation 10 (e) by the appellant - As per Regulation 10 (d) the appellant has another statutory duty of informing with diligence his client to comply with the provisions of the CBLR and in case of non-compliance to bring the matter to the notice of Dy. Commr. Of Customs all Asstt. Commr of Customs. The duty burdened upon the appellant vide these regulations cannot be set aside on the mere plea of ignorance by the CB/CHA There are no infirmity in the order where the reasonable benefit of the given facts and circumstances has already been extended in favour of the appellant by the adjudicating authority below by not revoking the license and by not forfeiting the security deposit - Imposition of penalty is accordingly, held to be justified - appeal dismissed.

Summary

Issues:
Violation of Regulations 10(d), 10(e), and 10(n) of CBLR 2018 by the Custom House Agent (CHA).

Analysis:
The appeal was filed by a Custom House Agent (CHA) challenging the imposition of a penalty for violating Regulations 10(d), 10(e), and 10(n) of CBLR 2018. The case stemmed from the export of milk products without the mandatory Export Inspection Agency (EIA) Certificate. The CHA was alleged to have failed in exercising due diligence by not informing the exporter about the requirement of the EIA Certificate. The appellant argued that there was no malafide intent as both the exporter and the CHA were unaware of the necessity of the certificate, citing past instances where similar shipments were cleared without the demand for the EIA Certificate. The appellant also referenced a decision involving another custom house agent to support their case.

During the proceedings, the appellant emphasized that the obligation of the CHA under Regulation 10(e) was to exercise due diligence in providing accurate information to the client regarding cargo clearance requirements. The appellant's failure to ensure the presence of the EIA Certificate with the shipping bills was admitted, and it was established that the certificate was obtained after filing the bills. The tribunal noted that the CHA had a statutory duty to inform the exporter about compliance requirements and verify the client's antecedents for proper adherence to regulations.

The tribunal referred to a Supreme Court case emphasizing the significant role of CHAs in customs procedures and the importance of upholding trust and regulations in their operations. It was held that the appellant's plea of ignorance could not absolve them of their statutory duties. The tribunal found no fault in the penalty imposed, as the adjudicating authority had already shown leniency by not revoking the license or forfeiting the security deposit. Consequently, the tribunal upheld the penalty and dismissed the appeal.

In conclusion, the tribunal affirmed the penalty imposed on the CHA for violating Regulations 10(d), 10(e), and 10(n) of CBLR 2018 related to the failure to ensure the presence of the mandatory EIA Certificate during the export of milk products. The tribunal highlighted the importance of CHAs in customs procedures and upheld the penalty, considering the statutory obligations and the need for due diligence in cargo clearance operations.