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2023 (10) TMI 246 - AT - CustomsRevocation of Customs Broker License - forfeiture of security deposit - penalty - providing false, fabricated documents as a part of export bills to the banks - Violation of provisions of Regulations 10(d), (w) (m) of Customs Broker License Regulations, 2018 - HELD THAT - It is seen that the Department had initiated independent action against the appellants under CBLR, 2018 on the basis of SFIO investigation report dated 17.01.2019 about alleged irregularities on the part of CHAs/CBs and freight forwarders as they aided and assisted ABCCPL and Shri Ashish Jobanputra (AJ), Director of ABCCCPL in fraudulent export credit availment without actual export of goods and by irregularly discounting export bills with banks based on check lists and the House BLs/MTDs without completing exports. Accordingly, the jurisdictional Principal Commissioner suspended the CB license under Regulation 16(1) of CBLR, 2018 on 27.08.2019. The impugned order was passed by the jurisdictional Principal Commissioner revoking the Customs Broker license granted to the appellants for the failure on the part of appellants to fulfill the obligations cast on them under Regulations 10(d), 10(e) and 10(m) of CBLR, 2018 and also imposed penalty of Rs.50,000/- besides forfeiture of entire security deposit. In the present case, the Banks have without verification of the shipping bills and GR forms have allowed the credit facilities to the exporter ABCCPL on the basis of check lists, even before the goods are actually exported out of the country. Further, RBI have also provided for a Caution list of exporters who do not repatriate their sale proceeds to be earned from their exports in time through an Export Data Processing and Monitoring System. Thus, irrespective of the appellants not informing the Customs about the non production of export goods, the above independent system of checks and data base would have brought to the fore, the export fraud committed by the exporter ABCCPL - the appellants have not caused any violation or in any way connected with the export fraud committed by the exporter ABCCPL and other connected persons. There is definitely delay in adjudication and that for the export transactions occurred in February, 2015, the order of revocation of appellant s customs broker license has been passed on 28.05.2021. Revenue is unable to explain why there was such a long delay of 6 years in taking action against appellants, when the information about fraudulent exports was received on 17.01.2019 - The impugned order has been passed after nineteen months from the date of issue of SCN. There are no reasons recorded in detail justifying the delay in passing the impugned order by the learned Principal Commissioner. Even if an explanation that could be offered by the department for the delay in show cause proceedings and passing the impugned order is due to COVID and unspecified administrative reasons, the same cannot be accepted. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants and for forfeiture of security deposit, inasmuch as there is no violation of regulations 10(d), 10(e) and 10(m) and the findings in the impugned order is contrary to the facts on record. However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under sub-regulation 10(d), it is found that it is justifiable to impose a penalty of Rs.20,000/- against the appellants, which would be reasonable and would be in line with the judgement of the Hon ble Supreme Court in the case of K.M. Ganatra 2016 (2) TMI 478 - SUPREME COURT in bringing out the importance of crucial role played by a Customs Broker. The impugned order modified - appeal allowed.
Issues Involved:
1. Whether the CESTAT was right in ignoring the finding in the Order-in-Original regarding the violation of Regulations 10(d), (w) & (m) of Customs Broker License Regulations, 2018. 2. Whether CESTAT was right in allowing the Respondent's appeal based on an order passed in a different case under investigation. Summary: Issue 1: Violation of Regulations 10(d), (w) & (m) of Customs Broker License Regulations, 2018 The Tribunal examined the allegations against the appellants regarding their involvement in export fraud by ABCCPL. The Principal Commissioner had revoked the Customs Broker (CB) license of the appellants, imposed a penalty, and forfeited the security deposit based on the SFIO report alleging that the appellants assisted ABCCPL in fraudulent export credit without actual exports. The Tribunal noted that the appellants were not directly involved in the fraud, as they only handled the exporter once and were not aware of the fraud. The SFIO report indicated that the banks failed to follow guidelines, and the appellants were not found to be involved in any customs fraud or export benefits fraud. The Tribunal found no violation of Regulation 10(d) as the appellants' role was limited to filing shipping bills and they had no specific issue to advise the exporter. However, the Tribunal noted that the appellants could have been more proactive in informing Customs about non-compliance in export transactions. Regarding Regulation 10(e), the Tribunal concluded that the appellants verified the documents provided by the exporter and there was no mis-declaration. The Tribunal also found no violation of Regulation 10(m), as the appellants were not responsible for the continuous filing of shipping bills. The Tribunal concluded that the Principal Commissioner's findings were contrary to the factual position and not legally sustainable. Issue 2: Reliance on Order in Different Case The Tribunal addressed the High Court's concern that CESTAT relied on an order in a different case (M/s. Hiren Transport) without examining the specific issues and contentions in the present appeal. The Tribunal emphasized the importance of examining all issues and recording appropriate reasons for adjudication. Conclusion: The Tribunal modified the impugned order, revoking the license and forfeiture of the security deposit, as there was no violation of Regulations 10(d), 10(e), and 10(m). However, the Tribunal imposed a penalty of Rs.20,000/- on the appellants for not being proactive in fulfilling their obligations under Regulation 10(d). The appeal was allowed in favor of the appellants.
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