2024 (1) TMI 98 - AT - Customs

Revocation of Customs Broker License - forfeiture of entire security deposit - levy of penalty - mis-declaration of imported goods - the physical examination of imported goods showed that mostly these were electronic toys attracting higher IGST - undeclared cosmetics were also found in the imported goods - Violation of Regulations 10(d), 10(e) and 10(n) ibid - HELD THAT - The appellants have not been involved as a customs broker in the violation of mis-declaration of description and non-declaration of details on the packages of imported goods in the aforesaid import transaction in B/E No.8090119 and No.8090120 both dated 21.02.2022. Thus, there cannot be a case for taking action against violations of CBLR, for the mis-declaration caused by the importers. Hence, the impugned order does not sustain on grounds of factual matrix of the case as detailed therein. Violation of Regulations 10(d) and 10(e) ibid - HELD THAT - The modus operandi identified in this case brings out clearly the role of importer, and Shri Jamail Ahmed Shaikh, Proprietor of M/s Pemex Enterprises and Shri Nagesh Shyamsundar Malik, proprietor of M/s Nagresh Overseas, as the key players in such mis-declaration; further the appellants CB were not aware of the fraud committed by the importers or other persons. In view of the aforesaid factual position, there are no force found in the legality of the conclusion arrived at the impugned order holding that the appellants have violated the Regulations 10(d) and 10(e) ibid. The views are also concurred in the order of the Hon ble High Court of Delhi in the case of KUNAL TRAVELS (CARGO) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI 2017 (3) TMI 1494 - DELHI HIGH COURT holding that the appellants CB is not an officer of Customs who would have an expertise to identify mis-declaration in respect of imported/export goods. Violation of Regulation 10(n) of CBLR, 2018 - HELD THAT - In the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department - the appellants CB besides obtaining the requisite documents should have been more careful as a prudent Customs Broker to have conducted cross verification to ascertain the genuine nature of such documents, to avoid any illegality. Thus, the appellants CB has failed to fulfill the obligations under Regulation 10(n) ibid to a limited extent - to this limited extent, the appellants CB are liable for penal action under CBLR, 2018. 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(d), 10(e) and 10(n) of CBLR, 2018. Further, by modifying the order of penalty, a penalty of Rs.20,000/- imposed on the appellants under Regulation 18 ibid. - appeal allowed in part.

Summary

Issues Involved:

1. Revocation of Customs Broker (CB) license.
2. Imposition of penalty and forfeiture of security deposit.
3. Alleged violations of Regulations 10(d), 10(e), and 10(n) of the Customs Brokers Licensing Regulations, 2018 (CBLR).

Summary:

1. Revocation of Customs Broker (CB) license:
The appellants, M/s M. K. Enterprises, Navi Mumbai, challenged the revocation of their CB license by the Principal Commissioner of Customs (General), Mumbai, under Regulation 17(7) of CBLR, 2018. The revocation followed an investigation by the Central Intelligence Unit (CIU) of Jawaharlal Nehru Custom House (JNCH), which found mis-declared imported goods and non-existent importers. The Tribunal noted that the appellants had filed the Bill of Entry based on documents provided by the importers and were unaware of any concealed cargo. It was concluded that the appellants were not involved in the mis-declaration and thus, the revocation of the CB license was not justified.

2. Imposition of penalty and forfeiture of security deposit:
The Principal Commissioner also imposed a penalty and forfeited the entire security deposit furnished by the appellants. The Tribunal found that the appellants had exercised due diligence as required under Regulation 10(d) and 10(e) by relying on the documents provided by the importers. The Tribunal held that the appellants were not aware of any fraudulent activities by the importers and thus, the penalty and forfeiture of the security deposit were not warranted. However, the Tribunal imposed a reduced penalty of Rs. 20,000 under Regulation 18 for limited non-fulfillment of obligations under Regulation 10(n).

3. Alleged violations of Regulations 10(d), 10(e), and 10(n) of CBLR:
The Tribunal examined the alleged violations of Regulations 10(d), 10(e), and 10(n). It found that the appellants had verified the importers' existence through various documents, including the Importer-Exporter Code, GST Registration Certificate, and other identification documents. The Tribunal referred to the CBIC Circular No. 9/2010-Customs, which outlines the KYC norms for Customs Brokers, and concluded that the appellants had complied with these requirements. The Tribunal cited the case of M/s Kunal Travels (Cargo) vs. Commissioner of Customs, which held that a Customs Broker is not expected to verify the genuineness of every transaction but to act based on the documents provided by the client. Thus, the Tribunal found no violation of Regulations 10(d) and 10(e) and only a limited violation of Regulation 10(n).

Conclusion:
The Tribunal modified the impugned order by setting aside the revocation of the CB license and the forfeiture of the security deposit. It imposed a reduced penalty of Rs. 20,000 on the appellants under Regulation 18 of CBLR, 2018. The Principal Commissioner's conclusions were found to be contrary to the factual position and not legally sustainable.