2023 (12) TMI 194 - AT - Customs

Revocation of CB license - forfeiture of entire security deposit - levy of penalty - illegal import of cashew kernel broken/whole into India by mis-declaration of the description and value of the goods, with intention to evade the legitimate Customs duty - HELD THAT - The detailed examination under Panchnama proceedings 25/26.02.2022 revealed that imported goods in the above consignment actually contained only 2487 Kg. of declared goods i.e., raw cashew nuts and the rest of 24,753 kg. were undeclared broken cashew kernel commercially known as cashew baby bits . It is seen that DGFT had issued a notification No.08/2015-2020 dated 12.06.2019, whereby the import policy conditions in respect of Cashew Kernel, broken classifiable under Exim code 0801 3210 and Cashew Kernel, whole 0801 3220, prescribed as Free was amended to be notified as Prohibited ; along with revision of the minimum CIF value condition by enhancing it from Rs.288/per Kg. to Rs.680/- per kg. and Rs.400/per Kg. to Rs.720/- per kg., respectively - During the enquiry proceedings, as the importer had stated that a similar consignment with mis-declaration is arriving at JNCH, Nhava Sheva, the import of raw cashew nuts in B/E No. 7614852 dated 23.02.2022 with mis-declaration of goods, which was handled by another customs broker M/s Shiv Kumar Gupta, was put on hold by JNCH Customs. Detailed examination of the said imported goods also revealed that declared goods of 27,000 kgs. of Raw Cashew Nuts in shell , the physical examination of the goods by SIIB(I), JNCH Customs revealed that it actually contained 2500Kg. of raw cashew nuts and the rest of 24,500 kg. were undeclared broken cashew kernel commercially known as cashew ba by bits.The above details indicate that the said Shri Krishnat Shankar Kadam, Proprietor of importer M.s K.K. Traders, had in collusion with some persons planned about the illegal activities in import of the prohibited cashew kernel from Vietnam and one Shri Chetan Yadav, working in M/s Ninai Shipping Agency had played major role in this modus operandi, and the appellants were not involved. The mis-declaration of imported goods is limited to the extent that the CIF prices of imported goods were not conforming to the permitted higher threshold limits under the DGFT Notification. In other words, the imported goods of value below threshold limit had been imported, which is prohibited by prescribing Minimum Import Price (MIP). The Foreign Trade Policy (FTP) notified by the Ministry of Commerce Industry, Directorate General of Foreign Trade provide under para 2.07, the Principles of Restrictions for which DGFT may, through a Notification, impose Prohibition or Restriction for various purposes specified therein - the importer M/s K.K. Traders, Satara, had violated the conditions prescribed in the FTP by import of cashew kernels below the threshold MIP, and the appellants had no role in the said violations of MIP. It is true that as an individual person Shri Chetan Yadav, of M/s Ninai Shipping Agency who assisted the importers in the violation, and the appellants as a Customs Broker associated with such imports may be responsible for the omission and commission which had led to import of prohibited goods in violation of the Customs Act, 1962 read with relevant Rules and Regulations - there cannot be a case for taking action against violations of CBLR. Hence, the impugned order does not sustain on grounds of factual matrix of the case as detailed therein and also as explained in the SCN dated 08.12.2022. Thus, it is factually incorrect to state that the appellants had for their acts of omission and commission in dealing with importer in misdeclaration of imported goods have failed to adhere to the responsibilities expected in terms of Regulations 10(e), 10(n), 13(3) and 13(4) of CBLR, 2018. Thus, the conclusions arrived at by the Principal Commissioner in the impugned order is contrary to the factual position and thus it is not legally sustainable. The impugned order is modified by setting aside the same in respect of revocation of CB license of the appellants and for forfeiture of security deposit as there was no violation of Regulations 10(e), 10(n), 13(3) and 13(4) of CBLR, 2018. Further, by modifying the impugned order for imposition of penalty, a penalty of Rs.10,000/- imposed on the appellants under Regulation 18 ibid on account of their failure to supervise their employee for compliance with the law in examination of goods as per provisions of Regulation 13(12) ibid. The appeal is partly allowed.

Summary

Issues involved:
Revocation of Customs Broker (CB) license, imposition of penalty, and forfeiture of security deposit under Customs Brokers Licensing Regulations, 2018 (CBLR).

Summary:

1. Revocation of CB License:
The Principal Commissioner of Customs (General), Mumbai, revoked the CB license of the appellants under Regulation 17 (7) of CBLR, 2018, due to alleged involvement in mis-declaration of imported goods. The appellants filed an appeal against the revocation, arguing they had not violated any CBLR regulations and had exercised due diligence based on the documents provided by the importer.

2. Alleged Violations of Regulations 10(e) and 10(n):
The Principal Commissioner concluded that the appellants violated Regulations 10(e) and 10(n) by not exercising due diligence and failing to verify the correctness of the importer's details. The Tribunal found that the appellants had verified the importer's credentials through reliable documents and were not aware of any concealment. The Tribunal referenced the Delhi High Court's decision in M/s Kunal Travels (Cargo) to support that CHAs are not expected to verify the genuineness of each transaction beyond the provided documents.

3. Alleged Violations of Regulations 13(3) and 13(4):
The Principal Commissioner claimed the appellants violated Regulations 13(3) and 13(4) by employing an unauthorized person for examination of goods. The Tribunal found no strong evidence against the appellants for these violations, noting that the authorized representative of the appellants was present during the customs examination.

4. Violation of Regulation 13(12):
The Tribunal determined that the appellants failed to supervise their employee adequately, as required under Regulation 13(12), resulting in a failure to identify the mis-declared goods during customs examination. The Tribunal imposed a penalty of Rs.10,000/- on the appellants for this failure.

Conclusion:
The Tribunal set aside the revocation of the CB license and forfeiture of the security deposit, finding no violations of Regulations 10(e), 10(n), 13(3), and 13(4). However, a penalty of Rs.10,000/- was imposed for the violation of Regulation 13(12) due to inadequate supervision of the employee. The appeal was partly allowed.