2021 (5) TMI 835 - AT - Customs

Suspension or revocation of registration of authorised courier - failure in exercising due diligence - receipt of bills of entry under the cover of letters - case of appellant is that appellant was only a courier agent who filed bills of entry of the importers - HELD THAT - The job of an authorized courier agent is somewhat similar to the job of a customs broker. He is required to file declarations before the customs officers in respect of all the consignments, which were imported by him based on the documents. He has no authority to open the consignment. Further he is also required to verify the identity of the importers through KYC documents. In other words, he needs to verify whether the importer actually exists or otherwise which is part of the due diligence process. In this case, the appellant received the KYC documents of all the three alleged importers under the cover of their letters but they were received through Balvinder Singh. Having received the documents, the appellant verified the KYC documents and found the importers to be genuine - The second set of documents which the appellant received is in the form of invoices along with the consignments. These are received from the overseas exporter. Based on these documents, the appellant filed declarations with the customs. On investigation, customs officers found that the shoes which were imported were counterfeit Nike shoes. The fact that they were counterfeit was ascertained after an expert evaluation by Nike Creations, the brand holder. The appellant, as an authorized courier, is prohibited from opening the packages. It would have been a difference case, if there was sufficient evidence that the appellant was aware that the goods were counterfeit shoes or if the appellant had a role to play in the scheme to import them - The only fault of the appellant is that instead of receiving the KYC documents directly from the hands of the owners of M/s Legend Creations and M/s. Personal Creations, it received the documents with covering letters handed over by Balvinder Singh. This action of the appellant does not constitute not exercising due diligence to ascertain the correctness and completeness of any information which he submitted to the proper officer with reference to any work related to the clearance of imported goods as required under Regulation 12(1)(v). The appellant has not violated Regulation 12(1)(v) and therefore, revocation of the registration and forfeiture of security deposit under Regulation 13(1) and imposition of penalty under Regulation 14 cannot be sustained - Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Revocation of the appellant's registration under the Courier Imports and Exports (Electronic Declaration & Processing) Regulations, 2010.
2. Forfeiture of the security deposit of ?10 lakhs.
3. Imposition of a penalty of ?50,000 on the appellant.
4. Alleged failure to exercise due diligence under Regulation 12(1)(v).
5. Mis-declaration of imported goods as "sample shoes" instead of counterfeit branded shoes.

Detailed Analysis:

1. Revocation of Registration:
The appellant, an authorized courier under the Regulations, had their registration revoked by the Commissioner of Customs (Airport & General), New Delhi. The revocation was based on the appellant's alleged failure to comply with Regulation 12(1)(v), which mandates the exercise of due diligence to ascertain the correctness and completeness of any information submitted to the proper officer. The appellant was accused of not verifying the identity of the importers directly and instead relying on documents provided by a third party, Balvinder Singh.

2. Forfeiture of Security Deposit:
The entire security deposit of ?10 lakhs furnished by the appellant was forfeited. This action was taken under Regulation 13(1), which allows for the forfeiture of the security deposit if the authorized courier fails to comply with any provisions of the Regulations. The Commissioner found that the appellant did not exercise due diligence in verifying the KYC documents of the importers, which were handed over by Balvinder Singh.

3. Imposition of Penalty:
A penalty of ?50,000 was imposed on the appellant under Regulation 14, which allows for penalties if an authorized courier contravenes any provisions of the Regulations. The penalty was based on the conclusion that the appellant failed to exercise due diligence in verifying the KYC documents and the correctness of the information submitted to the customs authorities.

4. Alleged Failure to Exercise Due Diligence:
The appellant was accused of not exercising due diligence as required under Regulation 12(1)(v). The appellant received KYC documents from Balvinder Singh instead of directly from the importers, M/s Legend Creations and M/s Personal Creations. The customs authorities argued that this constituted a failure to verify the authenticity of the importers. However, the appellant contended that they had verified the KYC documents with available data and found them to be genuine. The appellant also argued that they acted in a bona fide manner and had no knowledge of the fraudulent intentions of Balvinder Singh.

5. Mis-declaration of Imported Goods:
The appellant filed declarations for 15 consignments of shoes described as "sample shoes." Upon examination, the customs authorities found the goods to be counterfeit Nike shoes, imported in commercial quantities. The importers, M/s B.S. Imports, M/s Legend Creations, and M/s Personal Creations, denied importing the goods, except for Balvinder Singh of M/s B.S. Imports, who admitted to importing six consignments. The customs authorities concluded that Balvinder Singh had misused the IEC codes of the other importers without their knowledge.

Judgment:
The Tribunal found that the appellant had not violated Regulation 12(1)(v). The appellant had verified the KYC documents and filed the Bills of Entry based on the invoices received. There was no evidence that the appellant was aware of the counterfeit nature of the goods or that they were involved in the mis-declaration. The Tribunal noted that the appellant had no authority to open and examine the consignments, which was the responsibility of the customs officers. The Tribunal concluded that the appellant had exercised due diligence to the extent possible within their authority.

Conclusion:
The revocation of the appellant's registration, forfeiture of the security deposit, and imposition of the penalty were set aside. The appeal was allowed with consequential relief. The Tribunal emphasized that the appellant had acted in good faith and had complied with the requirements of the Regulations to the best of their ability. The order dated May 22, 2019, was thus not sustained.

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