2023 (5) TMI 614 - AT - Customs

Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - Shipping Bills were exported with a malafide intention - goods highly undervalued as no genuine exporter can continue exporting goods without getting money from foreign buyers - allegation of the Department is that the Appellant has transferred all the works related to clearance of under-invoiced Raw Human Hair to Mr. Arup Ghosh who misused the license to clear the consignments of Raw Human Hair through Air Cargo Complex, Kolkata. HELD THAT - The Customs Brokers play an important role in the Customs administration and have to fulfill their responsibilities and obligations under the law. The law in question in this case is Regulation 10(n) of CBLR, 2018. The allegation against the appellant is based on a report received from the CGST authorities of Telengana. Their report indicate that the exporter S S Impex , Hyderabad were not available at the address declared in the IE Code and GSTIN - physical verification of the business premises is not an obligation cast upon the CB, under Rule 10(n) of CBLR, 2018. The Tribunal has examined the scope of these obligations in the case of M/S Anax Air Services Pvt Limited vs Commissioner of Customs, (Airport and General), New Delhi 2022 (1) TMI 115 - CESTAT NEW DELHI where it was held that the Registrations are issued by the officers based on online applications. They are not mandated to ensure that the exporter(s) exist and are functioning from these premises but the Customs Broker is so mandated by Regulation 10(n) of the CBLR, 2018 which obligation does not get obliterated or diluted by the fact that officers of various departments have issued these documents - the Tribunal in the above said Order further examined the reliability of these documents issued by various Government agencies and analyzed the scope of the Custom Broker in relying on these documents to fulfill their obligations under CBLR 2018. The ratio of the above said order of the Tribunal is squarely applicable in this case. In the present case also, the appellant has collected the documents such as IEC, GSTIN etc. submitted by the exporter S S Impex, Hyderabad before processing their shipping bills. Later if they were not found to be existing in the said addresses, the appellant cannot be held responsible for their non existence at the address specified, as held by the Tribunal, New Delhi in the case of Anax Air Services - the allegation against the appellant in the impugned order that they have violated Regulation 10 (n) is not sustainable. The Ld. Principal Commissioner was not correct in holding that the appellant Customs Broker has violated Regulations 1(4) ,10(d),10(m),10(n and13(12) of CBLR , 2018 - Appeal allowed.

Summary

Issues Involved:
1. Violation of Regulation 1(4) of CBLR, 2018.
2. Violation of Regulation 10(d) of CBLR, 2018.
3. Violation of Regulation 10(m) of CBLR, 2018.
4. Violation of Regulation 10(n) of CBLR, 2018.
5. Violation of Regulation 13(12) of CBLR, 2018.
6. Revocation of CB license.
7. Forfeiture of security deposit.
8. Imposition of penalty.

Summary:

1. Violation of Regulation 1(4) of CBLR, 2018:
The Department alleged that the Appellant transferred all clearance works to Arup Ghosh, who misused the license. Evidence showed payments were routed through LG Enterprises, owned by Arup Ghosh's wife. The Appellant argued that Arup Ghosh acted as an intermediary and there was no license transfer. The Tribunal found merit in the Appellant's argument, stating that the internal payment arrangement does not constitute a license transfer. Thus, no violation of Regulation 1(4) was established.

2. Violation of Regulation 10(d) of CBLR, 2018:
This regulation requires a Customs Broker to advise clients to comply with Customs Act provisions. The Department claimed the Appellant failed to do so. The Tribunal found no evidence to support this claim, noting that the shipping bill in question was filed by Just Logistic-1, not the Appellant. Therefore, the allegation of violating Regulation 10(d) was not sustainable.

3. Violation of Regulation 10(m) of CBLR, 2018:
The Department alleged the Appellant did not perform duties with efficiency and speed. The Tribunal found no evidence supporting this claim, as the Appellant had cleared 81 shipping bills without any objections from the Department. Thus, the allegation of violating Regulation 10(m) was unsubstantiated.

4. Violation of Regulation 10(n) of CBLR, 2018:
This regulation obligates the Customs Broker to verify the correctness of IE Code, GSTIN, and the functioning of the client at the declared address. The Appellant argued they had obtained all necessary documents. The Tribunal referred to the Anax Air Services Pvt Limited case, concluding that the Customs Broker is not required to physically verify the client's address. The Appellant's reliance on government-issued documents was deemed sufficient. Hence, the allegation of violating Regulation 10(n) was not sustainable.

5. Violation of Regulation 13(12) of CBLR, 2018:
This regulation holds the Customs Broker responsible for the conduct of their employees. The Department alleged the Appellant failed in this duty. The Tribunal found that Arup Ghosh, a G-card holder, attended the clearance work without objections from the Department. Therefore, the Appellant could not be held responsible for any violations committed by Just Logistic-1. Thus, the allegation of violating Regulation 13(12) was not proven.

6. Revocation of CB License:
Given the findings that the Appellant did not violate the cited regulations, the Tribunal concluded that the revocation of the CB license was not justified.

7. Forfeiture of Security Deposit:
Since the Appellant was found not to have violated the regulations, the forfeiture of the security deposit was deemed incorrect.

8. Imposition of Penalty:
Similarly, the imposition of a penalty of Rs. 50,000 was found to be unwarranted.

Conclusion:
The Tribunal set aside the impugned order, concluding that the Appellant did not violate Regulations 1(4), 10(d), 10(m), 10(n), and 13(12) of CBLR, 2018. Consequently, the revocation of the license, forfeiture of the security deposit, and imposition of a penalty were not sustained. The appeal was allowed with consequential relief.