2024 (11) TMI 269 - AT - Customs

Customs Broker CB licence suspension - Lot of Red Sanders (Pterocarpus santalinus) in various shapes and sizes were attempted to be exported mis-declaring them as decorative iron materials - Red sanders is an endangered species - gravity of the offence - HELD THAT - Regulation 10(a) requires the Customs Broker to obtain the authorization from each of the companies, firms or individuals which employed him as a CB and to produce such authorization if required by the Deputy Commissioner or Assistant Commissioner of Customs. The undisputed facts of this case are that the appellant never even contacted M/s Deepnidhi in whose name he filed the shipping bill, let alone, obtain an authorization. Regulation 10(d) requires the Customs Broker to advise his client to comply with the provisions of the Act, other allied acts, Rules and Regulations and in case non-compliance bring such matter to the notice of the Deputy Commissioner or the Assistant Commissioner of Customs. In this case the appellant had not even contacted the exporter in whose name he filed the shipping bill. The shipping bill was filed behind the back of the alleged exporter. Regulation 10(n) requires the CB to verify the correctness of the IEC, GSTN, identity of his client and function of the client at the declared address by using reliable, independent, authentic documents, data or information. In this case the appellant had not only not verified the identity of M/s Deepnidhi in whose name it filed the shipping bill but had filed the shipping bill behind its back to facilitate smuggling of red sanders by Mr. Mohti Taneja. We find that the appellant had clearly violated regulations 10(a), 10(d), 10(e), 10(n). These violations are not an innocent error or a careless mistake but a deliberate scheme in which the appellant sub-let his license to Shri Devender Kumar. Shri Devender Kumar, in turn, colluded with Shri Mohit Tanjea and filed shipping bill in the name of M/s Deepnidhi without their knowledge and used that shipping bill and attempted to smuggle out red sanders. If any consideration is given to such a CB, it will be a mockery of the entire system of controls by Customs. Any prohibited goods including drugs, arms, annuation etc., can be smuggled in and smuggled out very easily if the Customs Broker starts filing benami shipping bills without even the knowledge of the importer or exporter. It will be far worse, as in this case, if the CB lets out its credentials to another for a monthly fee and that person, in turn, files benami shipping bills or Bills of Entry to smuggle prohibited goods. In view of above, we find that the impugned order needs to be sustained.

Summary

Issues:
Violation of Customs Broker Licensing Regulations 2018 - Regulations 10(a), 10(d), 10(e), and 10(n) by the appellant. Proportionality of punishment imposed on the appellant.

Analysis:
The appeal was filed to challenge the Order in Original (OIO) revoking the Customs Broker's license, forfeiting the security deposit, and imposing a penalty on the appellant under Regulations 14 and 18 of the Customs Broker Licensing Regulations 2018 (CBLR). The investigation revealed that the appellant attempted to export prohibited goods (Red Sanders) mis-declared as decorative iron materials without proper authorization. The appellant filed the shipping bill in the name of another entity without their knowledge or authorization, leading to violations of CBLR regulations.

The appellant was found to have violated Regulation 10(a) by not obtaining authorization from the entity in whose name the shipping bill was filed. Additionally, Regulation 10(d) was breached as the appellant failed to advise the client on compliance and colluded in filing a benami shipping bill. Regulation 10(n) was also violated as the appellant did not verify the identity of the client and filed the bill behind their back to facilitate smuggling. The appellant's actions were deliberate, involving sub-letting the license to another individual for a monthly fee.

The judgment emphasized that such violations undermine the control system by Customs, enabling easy smuggling of prohibited goods. Allowing Customs Brokers to file benami bills without client knowledge poses a significant risk. The appellant's deliberate scheme of sub-letting the license for smuggling purposes was deemed a serious offense. Consequently, the impugned order revoking the license, forfeiting the deposit, and imposing a penalty was upheld, and the appeal was dismissed. The judgment highlights the importance of upholding regulations to prevent illicit activities facilitated by Customs Brokers.