2023 (11) TMI 378 - AT - Customs

Revocation of Customs Broker license - forfeiture of security deposit - levy of penalty - Import of hearing aids' by over valuation of imported goods for the purpose of money laundering - violation of Regulations 10(d), 10(e) and 10(n) of CBLR, 2018. Violation of Regulation 10(d) ibid - HELD THAT - The appellants have duly filed the bill of entry as per the documents given by the importer and they were not aware of the mis-declaration of value of the goods. As there is no specific brand name of the imported goods, nothing was mentioned and it could not be said that unbranded needs to be mentioned. In the instant case the mis-declaration was found by the department after physical examination and market inquiry of the goods, and hence the appellants CB cannot be found fault that he did not advise his client to comply with the provisions of the Act - mis-declaration was not known to the appellants CB, and when they had specifically sought for examination of the goods under First Check basis, the non-compliance by the importer of declaring the correct value of the goods, could not have been brought to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs by the appellants, as the Appraising group itself got a reasonable belief of incorrect value only after examination of goods and perusal of samples - the violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable. Violation of provision of Regulation 10(e) ibid - HELD THAT - The appellants CB has declared the value of imported goods as given in the commercial invoice, which is the transaction value. Further, submitting the declaration form (GATT valuation declaration) in terms of Rule 11, is primarily the responsibility of the importer and in case of proper authorization being given by them, then by the agent of that importer. In the present case, it is not in dispute that there was any such mis-declaration in the declaration form or in the value particulars declared in the bill of entry as compared to the commercial invoice - There are no evidence or fact indicating that there was a mis-declaration of value and the value was re-determined as per the above legal provisions. There is only a mention that the market inquiry was conducted by the department and it revealed that the actual value of the consignment is Rs.15,000/- as against declared value of Rs.59,79,521/- - such an allegation at the show cause notice stage and later at the findings stage in the impugned order requires factual details or evidence to state that there was mis-declaration and the same is attributable to the appellants CB, in order to invoke the violation of due-diligence having not been undertaken by the appellants - there exists no such evidence and on the contrary the declaration made in the bill of entry corresponds to the value declared in the commercial invoice. Thus, the conclusion arrived by the Principal Commissioner of Customs (General) in the impugned order that the appellants have violated Regulation 10(e) ibid is not sustainable. Violation of Regulation 10(n) of CBLR, 2018 - HELD THAT - In the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department. Thus, there are no legal basis for upholding of the alleged violation of CBLR, 2018 by the appellants in the impugned order. There is definitely delay in adjudication and that for the import transaction in 30.01.2018, the order of revocation of appellant s CB license has been passed on 12.02.2021. Revenue is unable to explain why there was such a long delay in taking action against appellants, when the information about over valuation of import through SIIB investigation was received vide letter dated 22.02.2019. There are no reasons recorded in detail justifying the delay in passing the impugned order by the learned Principal Commissioner. It appears that the reasons having been not quoted and if such reasons exist, the same being not specified and not explained for undue delay cannot be accepted as reasonable grounds in terms of the test laid down by the Hon ble High Court of Bombay. There is no basis for sustaining the impugned order of the learned Principal Commissioner - Appeal allowed.

Summary

Issues Involved:
1. Violation of Regulations 10(d), 10(e), and 10(n) of CBLR, 2018.
2. Sustainability of the revocation of Customs Broker (CB) license and imposition of penalty.
3. Adherence to timelines prescribed under CBLR, 2018.

Summary of Judgment:

Issue 1: Violation of Regulations 10(d), 10(e), and 10(n) of CBLR, 2018
The Tribunal examined whether the appellant Customs Broker (CB) fulfilled obligations under Regulations 10(d), 10(e), and 10(n) of CBLR, 2018. The Principal Commissioner of Customs alleged that the CB failed to advise the importer about valuation requirements, did not declare the goods as 'unbranded', and neglected to verify the value and identity of the importer.

The Tribunal found that the CB had filed the Bill of Entry based on the commercial invoice provided by the importer, which declared the goods as "Hearing Aid (High Quality Grade AAA+)" with a unit price of USD $3650. The CB requested a first check assessment, which led to the discovery of overvaluation by the Customs Appraising Group. The Tribunal concluded that the CB acted in good faith and did not violate Regulation 10(d) as they were unaware of the overvaluation and had advised the client to comply with customs laws.

Regarding Regulation 10(e), the Tribunal noted that there was no legal requirement to declare the goods as 'unbranded' and that the CB had exercised due diligence by requesting a first check assessment. The Tribunal found no evidence of misdeclaration attributable to the CB.

For Regulation 10(n), the Tribunal determined that the CB had verified the importer's identity through reliable documents such as the Importer-Exporter Code (IEC), PAN card, and bank certification. The Tribunal cited relevant case laws to support that the CB had fulfilled the KYC norms.

Issue 2: Sustainability of the Revocation of CB License and Imposition of Penalty
The Tribunal found that the Principal Commissioner of Customs' conclusions were contrary to the factual position. The CB had not violated the cited regulations, and the revocation of the license, imposition of penalty, and forfeiture of the security deposit were not legally sustainable. The Tribunal referenced several judgments, including those from the High Court of Delhi and the Tribunal itself, to support its findings.

Issue 3: Adherence to Timelines Prescribed Under CBLR, 2018
The Tribunal noted that there was a significant delay in the adjudication process. The suspension of the CB license continued for about 22 months, which was not justified. The Tribunal emphasized that the timelines prescribed under CBLR, 2018, are meant to prevent undue delays and ensure fair proceedings. The Tribunal found that the delay in passing the impugned order was not explained by the Revenue, making the prolonged suspension unjustifiable.

Conclusion:
The Tribunal set aside the impugned order passed by the Principal Commissioner of Customs (General), Mumbai, and allowed the appeal in favor of the appellants. The revocation of the CB license, imposition of penalty, and forfeiture of the security deposit were annulled.