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2024 (2) TMI 315 - AT - CustomsRevocation of the Customs Broker License - forfeiture of security deposit - Levy of penalty - evasion of customs duty by way of diverting the goods stored in customs bonded warehouse into the domestic market without payment of customs duty - documents were forged/fabricated to show re-export warehoused goods. The allegations levelled by the Revenue in nutshell are that the appellant knew that Sh. Sanjeev Maggu is the actual owner but he never informed this fact to the department and thus he connived with Shri Sanjeev Maggu in the fraud. HELD THAT - The fraud alleged here is of diverting the goods from the warehouse instead of re-exporting, which had occurred after the role of the appellant had come to an end as the goods had reached the customs bonded warehouse. Hence the appellant cannot be linked to the fraud and the same cannot be stretched to contravention of the provisions of the Regulations. It is found from the records of the case that the appellant in order to verify the existence of the premises of the two importer firms had sent letters by speed post asking them to submit the requisite documents and in response thereto he received the KYC documents. It has been repeatedly held that it is not the legal requirement to physically verify the business premises or the residential premises of the importer, i.e., SETWIN SHIPPING AGENCY VERSUS COMMISSIONER OF CUS. (GENERAL) , MUMBAI 2009 (9) TMI 759 - CESTAT MUMBAI , M/S. HIM LOGISTICS PVT. LTD. VERSUS CC, NEW DELHI 2016 (4) TMI 971 - CESTAT NEW DELHI and COMMISSIONER OF CUSTOMS VERSUS YOGESH KUMAR 2017 (3) TMI 162 - DELHI HIGH COURT . The fact that the appellant had sent the letter by speed post at the given address and M/s Spark Exports had responded and the KYC documents were submitted by both the importers shows that the appellant had fulfilled the obligation under the Regulations. The appellant verified the IEC number from the site of the DGFT and personally met Sh. Lalit Dogra and Sh. Samar Arora, proprietors of the two firms. As noted, the High Court in KUNAL TRAVELS (CARGO) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI 2017 (3) TMI 1494 - DELHI HIGH COURT held that grant of IEC Code presupposes a verification of facts etc. made in such application with respect to the concern or entity. Proportionality of imposing the punishment - HELD THAT - Guidance taken by the decision of the Delhi High Court in D.S. CARGO AGENCY VERSUS COMMISSIONER OF CUSTOMS 2023 (9) TMI 1202 - DELHI HIGH COURT where the Court took note of the fact that the revocation of the license came into effect on 4.2.2019 and more than 4 1/2 years had lapsed which itself is a severe punishment and will serve as a reprimand to the appellant to conduct its affairs with more alacrity, the same order needs to be maintained - In the present case also, the order of revocation came into effect on 4.2.2019 and almost more than five years have lapsed since the appellant has been out of work on that account and which is a sufficient punishment for him to be cautious in future. In the facts of the present case, the punishment by way of revocation of license and forfeiture of security deposit is too harsh. The decision of the High Court in D.S. Cargo clarifying that the illegal actions of the importer firms subsequent to the clearance of the cargo from the Customs Station do not attract the violation on the part of the Customs Broker is binding on us and we do not find any reason to differ from the same as the controversy had arisen in the same set of facts in both the cases. Hence the impugned order upholding the revocation of the license and also the forfeiture of the security amount is set aside, however the penalty imposed is upheld. Appeal allowed in part.
Issues Involved:
1. Barred by Limitation 2. Violation of Regulation 10(b) of CBLR, 2018 3. Violation of Regulation 10(d) of CBLR, 2018 4. Violation of Regulation 10(e) of CBLR, 2018 5. Violation of Regulation 10(n) of CBLR, 2018 6. Proportionality of Punishment Summary: Barred by Limitation: The appellant argued that the show cause notice was barred by limitation, a contention previously upheld by the Tribunal but overturned by the Delhi High Court. The High Court ruled that the Commissioner was only required to issue notice within 90 days, not serve it within that period. Violation of Regulation 10(b) of CBLR, 2018: The Tribunal found no violation of Regulation 10(b) as Sanjeev Maggu never acted on behalf of the appellant (Customs Broker) but on behalf of the importer. The appellant or his employees transacted with Customs authorities, fulfilling the regulation's requirement. Violation of Regulation 10(d) of CBLR, 2018: The Tribunal held that the appellant's duty ended once the goods reached the customs bonded warehouse. The fraud of diverting goods occurred after this point, thus the appellant could not be linked to the fraud. The appellant had no role in the illegal diversion of goods, and therefore, there was no violation of Regulation 10(d). Violation of Regulation 10(e) of CBLR, 2018: The Tribunal found no evidence that the appellant provided incorrect information to the importer firms or abetted the diversion of goods. The illegal actions of the importer firms did not attract a violation of Regulation 10(e) by the appellant. Violation of Regulation 10(n) of CBLR, 2018: The Tribunal noted that the appellant had verified the IEC number from the DGFT website and sent letters to verify the premises of the importers. The appellant met the proprietors and received KYC documents, fulfilling the regulation's requirements. The High Court in Kunal Travels held that the grant of IEC Code presupposes verification of facts, supporting the appellant's actions. Proportionality of Punishment: The Tribunal found the punishment of revocation of license and forfeiture of security deposit too harsh, considering the appellant had been out of work for over five years. The Tribunal upheld the penalty but set aside the revocation and forfeiture, modifying the impugned order accordingly. Conclusion: The appeal was partly allowed, setting aside the revocation of the license and forfeiture of the security deposit, but upholding the penalty imposed.
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