2019 (9) TMI 1032 - AT - Customs

Responsibility of CB/CHA - diversion of goods with the connivance of the G-card holder of the appellant and his associate - Whether the Custom Broker can be held responsible for the alleged mis-delcaration and under valuation of goods, for infringement of Intellectual Property Rights due to the mobile accessories of Samsun brand to also be present in the consignment and also for the alleged diversion of the goods? HELD THAT - Perusal of Regulation 14 of Customs Broker License Regulation 2013/2018 makes it clear that the CHA is created as a link between Customs Authorities and the importers with an object of facilitating the clearances at Customs as the Custom procedures are complicated. The CHA is thus supposed to safeguard the interests of both the Customs as well as the importers. CHA is not supposed to be a formal agent either of Custom House or of the importer. But the utmost due diligence in ascertaining the correctness of the information related to clearance of cargo is the CHA s duty. He not only is supposed to advise the importer/exporter about the relevant provisions of law and the mandate of true compliance thereof but is also responsible to inform the Department if any violation of the provisions of the Customs Act appears to or have been committed by his client at the time of the clearances - There is no dispute about the settled law that CHA is not an inspector to weigh the genuineness of the transaction. It is merely a processing agent of documents with respect to clearance of goods through the Custom House either himself or through his authorized personnel. Penalty as that of revocation of license cannot be imposed upon the CHA in absence of any active or passive facilitation by the appellant. There is sufficient oral evidence in the form of statements of all concerned, that too in corroboration, about the consignment received vide the impugned Bill of Entry to contain mis-declared and under-valued mobile accessories and to also have the mobile accessories of Samsung brand infringing the Intellectual Property Rights which despite seizure and the permission of being warehoused under Section 49 of Customs Act, 1962 were diverted to the premises of the actual purchaser of the consignment, Mr. Ramu Chettry with the connivance of the G-card holder of the appellant and his associate - Nexus between Shri Chaman Kumar Verma, Shri Aakash Sharma, Shri Ramu Chhetry and Shri Raman Kumar Jha stands well established upon the record. Admittedly, Shri Chaman Kumar Verma is the G-Card holder of the appellant who was physically and actually involved in the entire series of acts. Apparently and admittedly his activities had never been objected by the appellant nor ever had been questioned nor even been informed to the competent authorities. The appellant is otherwise bound by the act of his G-Card holder. Otherwise also, without the knowledge of the Custom Broker, the goods could not have been diverted. He is equally bound by the act of his authorised representative/agent - the violation of relevant Regulations is so grave that principle of proportionality is not opined to have been compromised as is impressed upon by the appellant. The failure thereof invites the penalty as that of revocation of license. Appeal dismissed.

Summary

Issues Involved:
1. Mis-declaration and under-valuation of imported goods.
2. Infringement of Intellectual Property Rights (IPR).
3. Alleged diversion and disappearance of seized goods.
4. Violation of Customs Broker License Regulations (CBLR), 2013/2018 by the Customs Broker (CB).

Detailed Analysis:

1. Mis-declaration and Under-valuation of Imported Goods:
The appellant, a Customs Broker, facilitated the import of mobile accessories by M/s. Arun Enterprises. The consignment was intercepted based on intelligence indicating mis-declaration and under-valuation. The goods were seized on 20.12.2017, and the G-Card holder of the appellant was present during the examination and seizure. The appellant argued that they had no knowledge of the mis-declaration and were not informed about the seizure. However, the Tribunal noted that the appellant's G-Card holder was present during the examination and should have exercised due diligence in verifying the correctness of the information provided by the importer.

2. Infringement of Intellectual Property Rights (IPR):
The seized consignment included mobile accessories of the Samsung brand, which infringed IPR rules. The authorized representative of the brand confirmed the counterfeit nature of the goods. The appellant contended that they were not responsible for the IPR infringement as they were not informed about the seizure. However, the Tribunal found that the appellant, through their G-Card holder, was aware of the contents of the consignment and failed to report the IPR violation to the Customs authorities, thus breaching their obligations under the CBLR.

3. Alleged Diversion and Disappearance of Seized Goods:
The seized goods were permitted to be warehoused, but they never reached the designated warehouse. Instead, they were diverted to a godown and replaced with bricks and stones. The appellant's G-Card holder and his associate, Aakash Sharma, were involved in this diversion. The Tribunal found that the appellant was aware of the diversion and failed to inform the Customs authorities, thereby violating CBLR regulations. The Tribunal also noted the involvement of the seizing officer and ordered an inquiry to investigate the handling of the seized goods.

4. Violation of Customs Broker License Regulations (CBLR), 2013/2018:
The Tribunal examined the obligations of a Customs Broker under Regulation 14 of CBLR, 2013/2018, which includes exercising due diligence, advising clients to comply with the law, and reporting any violations to the Customs authorities. The appellant failed to verify the authenticity of the importer, M/s. Arun Enterprises, which was found to be a dummy company. The appellant also failed to monitor the warehousing of the seized goods and report the diversion. The Tribunal concluded that the appellant violated multiple regulations under CBLR, including failing to exercise due diligence, not reporting violations, and not ensuring proper conduct of their employees.

Conclusion:
The Tribunal upheld the revocation of the appellant's Customs Broker license and the forfeiture of the security deposit. The Tribunal found that the appellant violated the obligations under CBLR, 2013/2018, by failing to exercise due diligence, not reporting the IPR infringement, and being involved in the diversion of seized goods. The Tribunal also ordered an inquiry to investigate the role of the seizing officer in the illegal diversion of the seized goods. The appeal was dismissed.