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2024 (5) TMI 280 - AT - CustomsRevocation of the Customs Broker License - forfeiture of security deposit - Penalty - mis-declaration/undervaluation - failure to apply due diligence in verifying the proper KYC documents and also failed to exercise proper supervision on the functioning of G Card employee - Violation of the provisions of Regulation 10(n) of CBLR and Regulation 13(12) - Whether the appellant had any knowledge or in any manner colluded with the importer - HELD THAT - In the light of the provisions of Regulation 10(n) and the Circulars, we find that the appellant had obtained the copy of the IEC, GSTIN, PAN card , Aadhaar card and other documents like notarised rent agreement executed between one Harish Gulshan and the proprietor of the importer firm namely, Dhirender Kumar. All these documents show the address of the importer firm. As admitted by G-card holder in his statement, on the basis of the original documents produced by Shri Mahesh Ramji Bhanushali, he tallied the same and finding them to be true processed the clearance of the consignment. Moreover, the G-card holder had acquired knowledge about the past antecedents of the importer where the earlier consignments through other CHAs were cleared and therefore believed the importer to be genuine. Verifying the earlier track record of the importer was a valid step towards discharge of his obligation under the regulations. Reliance is placed on Perfect Cargo Logistics Vs. C.C (Airport General), New Delhi 2020 (12) TMI 649 - CESTAT NEW DELHI , where it was observed that the appellant did obtain two documents and neither the Circular nor the Annexures require any physical verification of the premises. It is not the case of the Department that the documents obtained were forged. Thus, it is not a case where the CB had not obtained the requisite documents or that he did not verify the said documents in discharge of his obligations under the regulations. We are of the opinion that the appellant has carried out proper due diligence as required under Regulation 10(n) by obtaining all the documents and verifying the same from the originals. Thus the obligation on the part of the CB in terms of Regulation 10(n) stands fulfilled. According to the learned counsel for the appellant by not keeping any effective supervision on the employees of the firm, at best, it can be viewed as a procedural irregularity. In the statement of Shri Rattan Singh Bisht, he has admitted that he did not monitor the work of his G-card holder and he was not aware of the filing of these bill of entries or the importer. He has provided the G-card holder the dongle and ID for filing the papers on his behalf. Such a conduct on the part of CB has led to the violation of regulation 13(12) which requires the CB to exercise such supervision that may be necessary to ensure the proper conduct of his employees and in the event of failure to do so, he shall be responsible for all acts or omissions of his employees. We, therefore hold that the CB failed to discharge the obligation to supervise his employees in the conduct of the business and thereby violated Regulation 13(12). The Revenue has not produced any evidence which could connect the appellant with the alleged offence. The facts of the case do not reveal any intention or mens-rea on the part of the CB to act fraudulently. We are, therefore, of the considered view that the appellant cannot be held liable for any mis-declaration of the goods. CB was not aware of the entire transaction, but on the other hand, he failed to monitor the functioning of his employee and enabled him to operate independently by providing the dongle to him, he acted negligently. The act of negligence, in itself is not so grave so as to justify the revocation of license which is extremely harsh and unjustified in the given circumstances when the license of the appellant was suspended on 04.07.2022 and since then he is deprived of his livelihood. We therefore, set aside the revocation of the CB license, however uphold the forfeiture of security deposit and imposition of penalty. We therefore conclude, that the CB is not guilty of violating the provisions of Regulation 10(n) of CBLR but on his own admission has violated Regulation 13(12) and consequently, the punishment of revocation of license do not survive, however, the punishment of forfeiture of security deposit and penalty of Rs 50,000/- are affirmed. The impugned order is accordingly modified and the appeal stands partly allowed.
Issues Involved:
1. Revocation of Customs Broker License. 2. Forfeiture of security deposit. 3. Imposition of penalty. 4. Compliance with KYC and verification regulations. 5. Supervision of employees by Customs Broker. Summary: 1. Revocation of Customs Broker License: The appellant, M/s Ambe Freights Pvt. Ltd., contested the revocation of their Customs Broker License, forfeiture of security deposit, and imposition of a penalty of Rs. 50,000/- by the Commissioner of Customs. The Tribunal found that the appellant had fulfilled their obligation u/s Regulation 10(n) of the Customs Brokers Licensing Regulations, 2018 (CBLR) by obtaining and verifying all necessary documents. The Tribunal noted that the Customs Broker is not responsible for verifying the authenticity of documents issued by government authorities, such as IEC and GSTIN, and cannot be held liable for errors made by these authorities. The Tribunal cited the case of Mauli Worldwide Logistics vs Commissioner of Customs, which supported the appellant's position that physical verification of the client's address is not required. 2. Forfeiture of Security Deposit: The Tribunal upheld the forfeiture of the security deposit, as the appellant failed to exercise proper supervision over their employee, Shri Sushil Gautam, who filed the bills of entry without the appellant's knowledge. This failure to supervise was found to be a violation of Regulation 13(12) of CBLR, which requires Customs Brokers to ensure the proper conduct of their employees. 3. Imposition of Penalty: The penalty of Rs. 50,000/- imposed on the appellant was also upheld. The Tribunal found that while the appellant was not guilty of violating Regulation 10(n) or involved in the mis-declaration and undervaluation of goods, their negligence in supervising their employee warranted the penalty. The Tribunal emphasized that the appellant's failure to monitor their employee's activities led to the filing of bills of entry without proper verification, resulting in the mis-declaration of goods. 4. Compliance with KYC and Verification Regulations: The Tribunal concluded that the appellant had complied with the KYC and verification requirements u/s Regulation 10(n) by obtaining and verifying the necessary documents from the importer. The Tribunal noted that the Customs Broker is not required to physically verify the client's address and can rely on documents issued by government authorities. The Tribunal cited the case of Perfect Cargo & Logistics vs. Commissioner of Customs, which supported the appellant's position that the Customs Broker is not responsible for verifying the authenticity of government-issued documents. 5. Supervision of Employees by Customs Broker: The Tribunal found that the appellant had failed to supervise their employee, Shri Sushil Gautam, as required u/s Regulation 13(12) of CBLR. The appellant admitted that they did not monitor the work of their G-card holder and were unaware of the filing of the bills of entry or the importer's activities. This lack of supervision led to the violation of Regulation 13(12) and justified the forfeiture of the security deposit and imposition of the penalty. However, the Tribunal set aside the revocation of the Customs Broker License, considering it to be a disproportionate punishment for the procedural irregularity committed by the appellant. [Order pronounced in open court on 30th April, 2024]
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