2024 (7) TMI 74 - AT - Customs

Revocation of the Customs Broker License - forfeiture of security deposit - levy of penalty - fraudulent export has been committed for wrong availment of IGST refund by dubious exporters - violation of the provisions of Regulation 10(a), 10(d), 10(e), 10(m) and 10(n) of Customs Broker Licensing Regulations, 2018 - HELD THAT - It is apparent that CB has failed to discharge his duties with utmost speed and efficiency and without any delay. As per his own statement, the CB had knowledge of the illegal exports conducted by some other persons and the proprietors shown were merely on paper having no knowledge of the actual activity of exports. Despite that CB did not act with due diligence or with utmost efficiency in advising the firms or bringing this fact to the knowledge of the department. Consequently, the CB contravened Regulation 10(m) of the CBLR. Without multiplying too many decisions on the role played by the CB in clearance of goods at the customs house, reference made to the decision in COMMISSIONER OF CUSTOMS VERSUS M/S K.M. GANATRA CO. 2016 (2) TMI 478 - SUPREME COURT , where the Apex Court affirmed the view of the Bombay High Court in NOBLE AGENCY VERSUS COMMISSIONER OF CUSTOMS, MUMBAI 2002 (2) TMI 171 - CEGAT, MUMBAI , where it was held that 'The CHA is supposed to safeguard the interests of both the importers and the Customs. A lot of trust is kept in CHA by the importers/exporters as well as by the Government Agencies. To ensure appropriate discharge of such trust, the relevant regulations are framed. Regulation 14 of the CHA Licensing Regulations lists out obligations of the CHA. Any contravention of such obligations even without intent would be sufficient to invite upon the CHA the punishment listed in the Regulations.' The appellant has not only failed to comply with the provisions of CBLR, 2018, but have abetted the illegal exports and, therefore, no interference is called for. The misconduct is of the nature, which renders him unfit to transact the business of CB. The allegations made out are grave enough to justify the action initiated against him and, therefore, the punishment imposed is just and proper. The appeal is dismissed - impugned order is upheld.

Summary

Issues Involved:
1. Revocation of Customs Broker License (CBL)
2. Forfeiture of security deposit
3. Imposition of penalty
4. Violation of Customs Broker Licensing Regulations, 2018 (CBLR, 2018)

Detailed Analysis:

1. Revocation of Customs Broker License (CBL):
The appellant's Customs Broker License was revoked due to involvement in fraudulent export activities aimed at wrongful availment of IGST refunds by dubious exporters. The investigation revealed that the Customs Broker, represented by Shri M.K. Arora, was complicit in the fraudulent exports conducted by M/s Aero Exports and M/s Yellowsky Exports. Statements from key individuals, including Shri Mithilesh Kumar Jha and Shri Satyaprakash Kushwaha, indicated that the appellant was aware of and facilitated these dubious exports. The Tribunal found that the appellant had violated multiple provisions of CBLR, 2018, including Regulation 10(a), 10(d), 10(e), 10(m), and 10(n), which justified the revocation of the license.

2. Forfeiture of Security Deposit:
The security deposit was forfeited as a consequence of the appellant's involvement in the fraudulent activities. The inquiry report concluded that the appellant had contravened several regulations under CBLR, 2018, and acted irresponsibly, abetting illegal exports to avail ineligible IGST refunds. The Tribunal upheld the forfeiture of the security deposit, emphasizing the severity of the appellant's misconduct.

3. Imposition of Penalty:
A penalty of Rs. 50,000 was imposed on the appellant for the violations. The Tribunal found that the appellant had failed to exercise due diligence and had not complied with the duties and obligations imposed by the CBLR, 2018. The penalty was deemed appropriate given the appellant's role in facilitating the fraudulent exports.

4. Violation of Customs Broker Licensing Regulations, 2018 (CBLR, 2018):
- Regulation 10(a): The appellant failed to obtain valid authorization from the exporters, who were found to be dummy proprietors acting on behalf of Shri M.K. Arora.
- Regulation 10(d): The appellant did not advise the clients to comply with the Act and failed to bring the matter of non-compliance to the notice of the department.
- Regulation 10(e): The appellant did not exercise due diligence to ascertain the correctness of information related to the clearance of cargo, actively abetting illegal exports.
- Regulation 10(m): The appellant did not discharge duties with utmost speed and efficiency, knowing about the illegal exports but failing to act diligently.
- Regulation 10(n): The appellant did not verify the correctness of the Importer Exporter Code (IEC), GSTIN, and identity of the clients, as the compliance of KYC norms was found to be superficial.

The Tribunal distinguished the present case from a previous decision relied upon by the appellant, noting that the earlier case involved a violation of only Regulation 10(n), whereas the present case involved multiple violations. The Tribunal affirmed the impugned order, finding no merit in the appellant's arguments and dismissing the appeal.

Conclusion:
The Tribunal upheld the revocation of the Customs Broker License, forfeiture of the security deposit, and imposition of a penalty of Rs. 50,000, concluding that the appellant had violated multiple provisions of the CBLR, 2018, and abetted fraudulent export activities. The appeal was dismissed, and the impugned order was affirmed.