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2024 (2) TMI 27 - AT - CustomsRevocation of Customs Broker license - forfeiture of security deposit - penalty - fraudulent exports - exporting goods described as Floor Covering (Braided) of Man Made Fiber under claim of Duty Drawback provisions and Focus Product Scheme - mis-declaration of description and value - existence of mens rea or not - HELD THAT - The impugned order has clearly elucidated the manner in which the appellant had contravened the provisions of the CBLR, 2018. The fact is noted that investigations have revealed that the appellant was in touch with Shri Kultar Singh and relied on him for the IEC codes. It is also found that the appellant did not independently verify the actual IECs holder of the said six firms i.e. M/s Dwarka Trading Company, M/s Aadarsh Enterprises, M/s Shree Balaji Trading, M/s Shree Durga Fashion, M/s Apex Trading and M/s Kanak Fashion. It is also established that the appellant was well aware that Shri Kultar Singh was exporting the goods through dummy firms. It is thus evident that the appellant had not verified the correctness of Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity of his client and functioning of his client at the declared address as required under the CBLR, 2018. The arguments of the learned counsel that the appellant was unaware of the nature of the goods, nor was he aware of the misdeclaration or undervaluation of the export goods, cannot be accepted. The serious contraventions of the CBLR, 2018 stand established. Existence of mens rea - HELD THAT - In the instant case, it has been noted above that the appellant had actively connived with the main player Shri Kultar Singh. It is also on record that it was the appellant who had suggested the description of the goods in the export documents. It is also on record that the appellant charged extra for clearance of the cargo, which was paid in cash without any bill. It is also on record that samples of the goods sought to be exported were shown to the appellant. However, the appellant neither advised his client correctly nor did he inform the appropriate authorities. The facts and circumstances of the case as discussed above are sufficient to establish the mensrea of the appellant. The adjudicating authority has not committed any error in holding that the Custom Broker Firm/appellant have failed in the compliance of the responsibilities cast upon them as per Regulation 10(a), (d), (e) and (n) of the Customs Broker Licensing Regulation, 2018, and the consequent action for revoking the CB license, forfeiting the security deposit and imposing penalty. Consequently, the appeal stands dismissed.
Issues Involved:
1. Legality of the order passed by the Commissioner of Customs revoking the Customs Broker (CB) license, forfeiting the security deposit, and imposing a penalty. 2. Compliance with Know Your Customer (KYC) norms. 3. Alleged misdeclaration and undervaluation of export goods. 4. Time-barred issuance of show cause notices. 5. Mens rea and the proportionality of punishment. Summary: 1. Legality of the Order: The appellant challenged the legality of the order passed by the Commissioner of Customs, arguing that it was passed ex-parte without proper appreciation of evidence and compliance with KYC norms. The Tribunal noted that the opportunity for personal hearing was granted, and representatives of the appellant did appear for the hearing. Therefore, the argument that the case was heard ex-parte does not hold water. 2. Compliance with KYC Norms: The appellant contended that they had complied with KYC norms and that the relevant documents were seized by the Directorate of Revenue Intelligence (DRI). However, the Tribunal found that the appellant did not independently verify the actual Importer Exporter Code (IEC) holders and relied on Shri Kultar Singh for the IEC codes. The Tribunal concluded that the appellant had not verified the correctness of IEC, GSTIN, identity, and functioning of the client at the declared address as required under the Customs Broker Licensing Regulation (CBLR), 2018. 3. Misdeclaration and Undervaluation: Investigations revealed that the appellant was aware of the misdeclaration and undervaluation of export goods. Statements from various individuals indicated that the appellant had suggested the description of the goods and charged extra fees in cash without issuing bills. The Tribunal found that the appellant had connived with the main player, Shri Kultar Singh, and had not advised the clients correctly nor informed the appropriate authorities. 4. Time-Barred Issuance of Show Cause Notices: The appellant argued that the revocation of the license was time-barred as the offence was reported in 2014 and 2015, and the show cause notice was issued in 2020. The Tribunal noted that the show cause notice in the instant case was issued within 90 days of the offence report received in October 2019. Hence, the argument of time-bar was not accepted. 5. Mens Rea and Proportionality of Punishment: The appellant argued that in the absence of mens rea, no penalty should be imposed for a technical breach of the law and that the punishment should be commensurate with the offence. The Tribunal found that the appellant had actively connived in the misdeclaration and undervaluation of goods, thus establishing mens rea. The Tribunal upheld the revocation of the CB license, forfeiture of the security deposit, and imposition of a penalty, finding no error in the adjudicating authority's decision. Conclusion: The Tribunal dismissed the appeal, holding that the appellant had failed to comply with the responsibilities under Regulation 10(a), (d), (e), and (n) of the CBLR, 2018, and upheld the revocation of the CB license, forfeiture of the security deposit, and imposition of a penalty.
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