2022 (5) TMI 1050 - AT - Customs

Revocation of Customs Broker License - Forfeiture of security deposit - levy of penalty - Department has alleged that the appellant-Custom Broker has violated various provisions of the CBLR inasmuch as they did not verify the credentials of their client importers - retraction of statements - HELD THAT - The appellant have not based their argument on as to how they have conformed to the KYC norms while interacting with their customers. They have not submitted any independent reliable documents to prove the genuineness of the where about of the clients. It is not their claim that they have produce so and so documents to defend their position. It is found that the appellants have also not submitted any cogent reasons as to how they permitted persons without G or H cards to handle the documents on their behalf. The proprietor of the appellant has accepted there lapses in the statement recorded before the customs officers. It is found that such statement has not been retracted. It was incumbent on the appellant-Custom Broker that they conduct all possible enquiries through independent reliable sources/ documents to verify the credentials of the clients. No such effort made by the appellant and no such document relied upon have been placed on record. Thus, they have failed to observe due diligence in this regard and thus ended up facilitating fake importers. Therefore, the appellant-Custom Broker has violated the provision of Regulation 11(a), (b), (d) and (e) of CBLR 2013 as held by the Learned Commissioner. The institution of customs brokers was created to facilitate the import export trade and at the same time to take care of the interest of Revenue. Thus, a great responsibility has been cast upon the Customs Brokers to exercise due diligence while conducting their business. There are no merits in the appeal - appeal dismissed.

Summary

Issues:
1. Forfeiture of security deposit and penalty imposed on a Custom Broker in appeal against the order of Commissioner of Customs.
2. Violation of provisions of Custom Broker CBLR, 2013/CBLR, 2018 by the Custom Broker.
3. Consideration of previous records of the Custom Broker as a habitual offender.
4. Due diligence and responsibilities of Customs Brokers in import-export trade.

Analysis:
1. The appeal was made by M/s. Sky Sea Services, a Custom Broker, against the order of Commissioner of Customs (General), Mumbai, which forfeited the security deposit and imposed a penalty. The case involved an investigation into imports made by two companies, where the Custom Broker was alleged to have not followed proper procedures for Cargo Clearance examination and failed to verify importers' credentials.

2. The Custom Broker argued that the Commissioner did not deal with the case in the spirit of CBLR, 2013, and that the enquiry report was delayed. However, the Commissioner found the Custom Broker liable for penalty and forfeiture of the security deposit. The Custom Broker failed to verify client importers' credentials properly and allowed unauthorized individuals to handle customs documents, violating CBLR regulations.

3. The Revenue representative reiterated the findings, stating the Custom Broker was a habitual offender based on past incidents. The Custom Broker had violated various regulations, failed to verify importers' details, and allowed unauthorized handling of documents. The impugned order was supported by legal precedents and correctly appreciated the facts of the case.

4. The Tribunal found that the Custom Broker did not conform to KYC norms, failed to verify clients' credentials adequately, and allowed unauthorized individuals to handle documents. Due diligence was lacking, leading to the facilitation of fake importers. The Custom Broker's previous records of sub-letting and unauthorized document filing were considered, indicating a pattern of non-compliance.

5. The Tribunal emphasized the importance of Customs Brokers in import-export trade, highlighting the responsibility to exercise due diligence. Citing legal precedents, the Tribunal upheld the penalty and forfeiture of the security deposit, considering the nature of activities by the Custom Broker and the need to safeguard the interests of both importers and Customs.

In conclusion, the Tribunal dismissed the appeal, holding that the Custom Broker violated CBLR regulations, failed to exercise due diligence, and was rightfully penalized for facilitating fake importers. The judgment underscored the significant responsibilities of Customs Brokers in ensuring compliance and safeguarding the interests of all parties involved in import-export transactions.