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TMI Blog2019 (2) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... ot by one or two but by five officers of the customs including the Joint and Additional Commissioner. The appellant as CHA is only required to verify the KYC norms as per the documents made available to him. And there is no requirement of physically verifying business or residential premises of the importers which also included the fraudulent obtaining of Licence/ duty credit scrips. Right of cross-examination - principles of natural justice - Held that:- The inquiry officer has denied the right to cross examination to the appellant which is not negotiable under the Regulation and also various decisions of the higher judicial fora including the Supreme Court, the High Courts and the Tribunals. Similarly, giving three personal hearing vide the same letter while adjudicating the dispute is wrong and against the principle of natural justice. The vital rights that of cross examination and three personal hearing through single letter is not legal. The proceeding is thus vitiated, which out to have been considered by the Ld. Commissioner, while passing the impugned order. The impugned order suffers inherent legal infirmities and liable to be set aside - appeal allowed - decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellant through M/s Him Logistic Pvt. Ltd. (another customs broker) in which Shri Ashok Sharma, is found to be engaged in trading of these forged duty credit scrips as per the impugned order, and this fact of trading of licences were also admitted by the officials of the appellant. It also appeared that the two CHAs have sold these licences to the importer and used them for clearance of their imported goods which were not issued by the DGFT in a real sense. It was also noticed that the CHAs have failed the verify the details these licences and also did not produce the hard copies in contravention of the various notifications under which these licences have been issued. It was also alleged that the appellant had used these duty paying scrips by purchasing themselves and using them for the payment of customs duty on behalf of the various importers, who were their clients, without their express consent and knowledge. Not only that, it was also found that the appellant and the importers made payments for such forged duty credit scrips/ licences to some Kolkata based firm but the consideration, money was transferred in their Hyderabad, Chennai, Surat, Mumbai accounts in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable with Shri Ashok Sharma, Director of the M/s Him Logistics Pvt. Ltd. Similarly, the investigation in respect of licences utilised for M/s Jackson Trading Company was conducted which lead to the finding that the nine forged licences were utilised valued at ₹ 1,48,53,698/- towards the payment of Customs duty for their import, covered by 64 Bills of Entry through ICD, Tuglakabad and New Delhi and Air Cargo Complex, New Delhi. In statement of Shri Puneet Mahendru, proprietor of M/s Chaman Lal Sons, stated that he was not having any knowledge about the import or export made in the name of the firm and that he was also not aware of the activities, which were being looked after by his uncle, Shri Rajesh Chhabra, who advised him to open the firm and told that he would be importing the goods from China; that he also informed him that he would be a sum of ₹ 5000/- to 7000/- per month; that due to financial hardship he agreed for the same in the year 2011 and incorporated the firm. Shri Mahendru also stated that Shri Rajesh Chhabra and Shri Prakash Sharma, Director of M/s Him Logistics Pvt Ltd. are behind the procurement, of forged licence/ duty scrips and their utilisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used to be deposited by Shri Prakash Sharma through his employee from time to time and was also getting his (Rajesh Chhabra) signature on the cheques whenever it was required. 7. In the statement Shri Ashok Sharma, Director of the appellant company, which was recorded on 21/03/2016, under Section 108 of Customs Act, he deposed that he was a G Card holder for the customs clearance which was issued by the New Customs House New Delhi which was subsequently converted into F Card . Thereafter, he incorporated another company, that is the appellant, along with Shri Tarun Sharma. On being asked about the debiting of duty amount using the forged scrips he stated that licences which had been utilised towards discharging of import duty were issued for the specified port and were required to be registered at designated port, and thereafter a unique registration number with date used to be generated by the system by the current customs house. On being asked that about the licence/ scrips and their registration number date and also the amount to be used in discharging of customs duty, he stated that respective importer used to provide them the details of various duty credit scrips; tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocumentation for purchase of licence/ duty credit scrips , he stated that they used to get the licence number and date of registration from the office of Shri Lalit Jain and that he used to get the same debited by customs and in such cases no hard copies were presented for manual debiting of the duty free scrips as prescribed under Notifications; that he further stated that there was no system of manual debiting in place at ICD, Tuglakabad, and also at in other ports as well; that on being asked regarding the physical copy of licences from importers or agent including Shri Lalit Jain, he stated that he had not got registration of these licences at ICD, Tuglakabad, that the details these licences could be provided by Shri Lalit Jain; that on being asked he stated that all these licences were obtained by the appellant through M/s Him Logistics Pvt. Ltd. which in turn obtained the same through the licence broker, Shri Lalit Jain. 8. Thereafter, a detailed investigation was conducted by DRI, based on the information supplied by the various persons whose statements were recorded and found that the appellant used to be involved in the procurement of licences along with other CHA firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding inquiry under the Regulations, specific procedure has been provided for in Regulation 23. When specific procedure is provided for, the general procedure provided for, for holding adjudication proceedings under the Customs Act, would not stand attracted. 13. Further reliance was also placed on the decision of Hon ble High Court of Delhi in case of Jasjeet Singh Marwaha vs Union of India [2009(239) ELT 407(Del)], wherein it is held that the Section of Customs Act is to be relied upon under CHA Regulation only on the condition when the statement is true, voluntary and un-retracted. In this case, the inquiry officer relied upon the statements of other persons recorded under Section 108 of Customs Act without permitting the cross examination and thus in violation of requirement of clause(4) of Regulation 22 of CHALR, 2004. 14. Further, it was also submitted that the statement recorded under Section 108 of Customs Act is to be relied upon in the proceedings under CBLR then the other party has vested right to cross examined the person whose statement is being relied upon placing reliance on Hon ble High Court Judge in case of M/s Him Logistic Pvt. Ltd. vs. Principal C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /licence mentioned in the Show Cause Notice. The appellant and M/s Him Logistic Pvt. Ltd. are separate legal entities and importer were aware to the fact that duty credit scrips has been traded by M/s Him Logistic. They have issued credit note for them of equivalent amount and the importer paid the said amount through cheques/RTGS. It was also submitted that based on the statements of various person as indicated above which is clear that the appellant has not violated any of the instruction received from the jurisdictional Commissioner. 17. It was also submitted that the debiting of licence in EDI system is very complex process and which cannot be done without the intervention of the Customs officer at the various level as the officer are holder of SSOID(Single sign on identification). For this reliance was placed on the judgment on Hon ble Kolkata High Court in case of Commissioner of Customs,(Preventive) West Bengal vs. Over Land Agency [2006 (204) ELT 554(Cal)]. 18. It was also submitted that the appellant and Shri Prakash and Shri Ashok Sharma are separate entities and hence for the act of M/s Him Logistic Pvt Ltd and Shri Prakash Sharma the appellant cannot be penali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. H.M. Impex, which had already been granted an IE Code by the DGFT. The grant of the IE Code presupposes a verification of facts etc. made in such application with respect to the concern or entity. If the grant of such IE Code to a non-existent entity at the address WZ-156, Madipur, New Delhi - 63 is in doubt, then for such erroneous grant of the IE Code, the appellant cannot be faulted. The IE Code is the proof of locus standi of the exporter. The CHA is not expected to do a background check of the exporter/client who approaches it for facilitation services in export and imports. Regulation 13(e) of the CHALR, 2004 requires the CHA to : exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage (emphasis supplied). The CHAs due diligence is for information that he may give to its client and not necessarily to do a background check of either the client or of the consignment. Documents prepared or filed by a CHA are on the basis of instructions/documents received from its client/importer/exporter. Furnishing of wrong or incorrect information cannot be attributed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em. As per procedure of registration of script/ license in EDI system, genuineness of scrip can be ascertained while it is registered in EDI system and once it has been registered in EDI system and duty has been debited with the said scrip, there may not be any reason to doubt about the genuineness of the said scrip. I, further find that ICD, TKD Export, New Delhi being an EDI Port, details of registered scripts are available in EDI system and debit of duty has to be made on the EDI system only, which appear to be verifiable on the system directly. As genuineness of scrip could have been ascertained at the time of registration of script in EDI system I, further, observe that in present case, as per preliminary investigation, done till now, the said CB has not been found involved in trading of CB license. I, therefore, observe that the omission/contravention, if any, on the part of CB in such a scenario does not prima facie appear to be grave enough to continue suspension of their CB license. 32. The said order further noted that the imports in question were made in the year 2012. Since the matter was more than 3 years old and also considering that the allegations of not produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the higher judicial fora including the Supreme Court, the High Courts and the Tribunals. Similarly, giving three personal hearing vide the same letter while adjudicating the dispute is wrong and against the principle of natural justice. The vital rights that of cross examination and three personal hearing through single letter is not legal. The proceeding is thus vitiated, which out to have been considered by the Ld. Commissioner, while passing the impugned order. 25. We find that the appellant has asked for making available of certain documents/statements which they felt that would prove their innocence and would be in their favour, which was not been considered by the inquiry officer. Ld. Commissioner has thus failed to observe the procedure as prescribed under CBLR and followed the order of inquiry officer which is not legal and proper due to the various infirmities discussed above. 26. In view of above, we are of the considered opinion that the impugned order suffers inherent legal infirmities and liable to be set aside. 27. Accordingly, we set aside the impugned order and allow the appeal with consequential benefit if any. (Pronounced in open court on 01/02/20 ..... 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