9911796707
TMI Blog2023 (5) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... xport consignment was detained by SIB (AirPort) for undervaluation. On verification, it was found that M/s. S. S. Impex, Hyderabad was not available at the address declared in the IE Code and GSTIN Certificate. On the basis of the investigation report of SIB, proceedings under Regulation 17 of CBLR, 2018 was initiated against the Appellant and a Notice was issued for violation of Regulations 1 (4), 10(d), 10(m), 10(n) and 13(12) of the Customer Broker Licensing Regulation 2018, in connection with the past exports of M/s. S. S. Impex, Hyderabad during the period of June 2019 to December, 2020. The Principal Commissioner of Customs (Airport & ACC) adjudicated the Notice and ordered for revocation of the CB license of the Appellant and ordered for forfeiture of security deposit under regulation 14 of CBLR 2018 and imposed penalty of Rs 50,000 under Regulation 18 of CBLR 2018. The Appellant is before us against the above said Order dated 23/11/2021 (hereinafter referred as the Impugned Order) passed by the Principal Commissioner of Customs. 3. From the Impugned Order it is observed that the Appellant has cleared 81 Shipping Bills of Raw Human Hair, classifiable under CTH0501, of M/s S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts made during the period June 2019 to December 2020. (b) All the 81 Shipping Bills were allowed for export by the proper officer under Section 51 0f the Customs Act, 1962 and no irregularities were noticed while processing the documents submitted for export of the said consignments. (c) There is no involvement of the Appellant in the alleged undervaluation of human hair, as the export of the said goods were allowed by the Customs Department without any objection. (d) Mr. Arup Ghosh, owner of Just Logistic-1, only acted as an Intermediary to procure export jobs. Transfer of money from the Account of L G Enterprises to the Appellant, for attending the Customs Clearance work of S.S. Enterprises, was only a mutual agreement between them. This arrangement cannot be considered as transfer of License by the Appellant to Mr. Arup Ghosh. Hence, there is no violation of Regulation 1 (4) of CBLR 2018. (e) The Shipping Bill No 7926810 dt 15/01/2021, for export of Human Hair by the Exporter S S Impex, Hyderabad, was filed by Just Logistic-1 and they are only responsible for undervaluation or any other violation in the said shipping bill. The Appellant cannot be held responsible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard Circular 9/2010 dated 08/04/2010 and hence fulfilled all responsibilities entrusted to them in the capacity of a CHA. Accordingly, they requested to set aside the Impugned Order and restore their license. 7. Heard both sides and perused all the documents submitted by both sides. The questions which need to be answered here are: (a) Given the factual matrix of the case and the evidence available on record, whether the Ld Principal Commissioner was correct in holding that the appellant Customs Broker has violated Regulation 1(4),10(d),10(m),10(n) and 13(12) of CBLR 2018? (b) If the answer to (a) above is affirmative, can the revocation of licence of the appellant customs broker be sustained? (c) If the answer to (a) above is affirmative, then whether the forfeiture of security deposit is correct? (d) If the answer to (a) above is affirmative, is the imposition of penalty of Rs.50,000/- upon the appellant Customs broker correct? 8. The Impugned Order alleges that the Appellant has violated the Regulations 1(4),10(d),10(m),10(n) and 13(12) of CBLR 2018. We will examine each of the violations based on the submissions made by the Appellant and the material evidences ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Mr. Arup Ghosh. It is an internal arrangement between them. Thus, we hold that there is no merit in the allegation of violation of Regulation 1 (4) by the Appellant. 10. Regarding the allegations of violation of Regulations 10 (d) of CBLR 2018, we find that this Regulation obliges a Customs Broker to advise his clients to comply with the provisions of Customs Act, 1962. In case of failure by his clients, it is the responsibility of a Customs Broker to immediately bring this non-compliance to the notice of DC or AC of Customs. Shri Arup Ghosh, G-card Holder of the Appellant has been advising them for clearance of export of human hair for more than a year. 81 shipping bills have been cleared during the period June 2019 to December 2020. No objection was raised by the Department about these clearances. In fact, the present shipping bill in question was filed by Just Logistic-1 and not by the Appellant. For any violation in this shipping bill, only Arup Ghosh and the CB Just Logistic-1 need to answer and not the Appellant. We find that there is no evidence available on record to substantiate the allegation that the Appellant has not advised their client properly. Thus, we find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 08/04/2010. . We find that the CB has taken the documents such as IEC, GSTIN etc. These documents were issued by Government Agencies, which substantiate the existence of the exporters at the relevant time of issue of these documents. 14. We find that paragraph 6 of the Circular 9/2010-Cus dated 8.4.2010 requires the client to furnish to the CHA, a photograph of himself / herself, in the case of an individual and those of the authorized signatory in respect of other forms of organization such as company/trusts, etc. and any two of the listed documents in the annexure to the said Circular. Thus, it is evident that even as per the Circular, obtaining a photograph and any two of the documents listed in the Annexure to the circular is sufficient compliance of Regulation 10(n) of CBLR, 2018. The most important documents in these cases are the IEC and the GSTIN - one issued by the same department and the other by the DGFT. The IEC issued by the DGFT has not been disputed at all without which the goods could not have been exported . The Appellant has obtained these documents as prescribed in the said Circular. 15. We observe that the Customs Brokers play an important role in the Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Broker to satisfy himself that these documents or their copies given by the client were indeed issued by the concerned government officers or does it mean that the Customs Broker has to ensure that the officers have correctly issued these documents. In our considered view, obligations under Regulation 10(n) of CBLR cannot be read to mean the latter as it would amount to treating the Customs Broker as one who is responsible to oversee and ensure the correctness of the actions by the Government officers who issued these documents. It would also mean that the Regulations under the Customs Act will prevail over the actions under the Foreign Trade (Development and Regulation) Act, 1992 under which the IEC is issued by DGFT and the Central Goods and Services Tax Act (or state GST Act) under which the GSTIN is issued by the GST officers which is not a correct construction of the legal provisions. Therefore, the verification of certificates part of the obligation under Regulation 10(n) on the Customs Broker is fully satisfied as long as it satisfies itself that the IEC and the GSTIN were, indeed issued by the concerned officers. This can be done through online verification, com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employed by the Customs Broker to establish the identity of his client. It is not necessary that it has to only collect information or launch an investigation. So long as it can find some documents which are independent, reliable and authentic to establish the identity of his client, this obligation is fulfilled. If a document is issued by any other person not interested in the relationship of the client and the Customs Broker, it can be called independent. But it should also be reliable and authentic and not one issued by any Tom, Dick and Harry. Documents such as PAN card issued by the Income Tax, driving licence issued by the RTO, Election voter card issued by the Election Commission, the passport issued by the Passport Officer, etc., certainly qualify as such documents as none of these departments have any interest in the relationship between the client and the Customs Broker and these documents are presumed to be authentic and reliable having been issued by the Government officers. However, these are not the only documents the Customs Broker could obtain; documents issued by any other officer of the Government or even private parties (so long as they qualify as independent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe that they were not independent. In two of the cases, the GST officers have also received some GST returns from the clients. 28. The responsibility of the Customs Broker under Regulation 10(n) does not include keeping a continuous surveillance on the client to ensure that he continues to operate from that address and has not changed his operations. Therefore, once verification of the address is complete as discussed in the above paragraph, if the client moves to a new premises and does not inform the authorities or does not get his documents amended, such act or omission of the client cannot be held against the Customs Broker. Of course, if the Customs Broker was aware that the client has moved and continues to file documents with the wrong address, it is a different matter. 29 When a Government officer issues a certificate or registration with an address to an exporter, it is not for the Customs Broker to sit in judgment over such a certificate. The Customs Broker cannot be faulted for trusting the certificates issued by a government officer. It is a different matter if documents are not authentic and are either forged by the Customs Broker or the Customs Broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsuring that all the documents issued by various officers of various departments are issued correctly. The Customs Broker is not an overseeing authority to ensure that all these documents were correctly issued by various authorities. If they were wrongly issued, the fault does not lie at the doorstep of the Customs Broker and it is not up to the Customs Broker to doubt the documents issued by the authorities and he cannot be faulted for believing them to be correct. 33. It is possible that by efflux of time, when the GST officers went for verification, situation changed. If so, it is a ground for starting a thorough investigation by the officer and is not a ground to suspend/cancel the license of the Customs Broker who processed the exports. We also find that there is nothing in the SCN to prove that the exporters did not exist or operate from the addresses when the Shipping Bills were filed. 34. On a query from the bench as to how the Custom Broker can be fouled when he relied on the IEC, GST Registration and several documents issued by the Government and if the exporter did not exist at all at the premises how these documents were issued by several Government officers, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o police verification so that the passports are not issued incorrectly or misused. Similarly, if a poor hut-dweller wants a Ration Card which entitles him and his family to subsidized or free food from the State worth a few thousand rupees, such a card is issued only after verifying his address, the number of his family members, etc. so that the scheme may not be misused by those who are not entitled to the benefits. 40. On the other hand, anybody, even the very hut-dweller living below the poverty line wants to export goods and claim export incentives, neither his means nor his capability can be either checked or held against him. The Shipping Bills are processed by the Customs solely based on the fact that an IEC is issued to the exporter by the DGFT. Nothing in the Customs Act empowers the Customs officers to stop an export or import based on who the importer or exporter is or what his antecedents are. Even if the person is convicted of a criminal offence under the Customs Act itself, the Act does not enable the officers to stop his imports or exports. Means of the person cannot be questioned either. The same hut-dweller, who gets his ration card after due verifications can g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decides which shipping bill should be assessed and/or which export consignment must be subjected to physical 25 examination. The National Time Release Study12 by the CBIC reports as follows: "7. Exports - procedure, methodology and scope 7.1 Export procedure requires filing of electronic self-declaration (shipping bill) by exporter before the goods move from exporter's premises. The RMS allows the lowest risk category to be cleared as facilitated without subjecting the cargo to assessment or examination. In this study, facilitation level for shipping bills at seaports/ICDs was seen to be 80%, and at air cargo complexes at 95%. Thus, there is a 80 to 95% probability of a fraudulent export not being detected by the Customs. Even if an exporter is caught and is being investigated for such an export, the Customs officers cannot legally stop his future exports." 43. The third level of check is through the banks when the remittances pertaining to the exports are received. The export data is transmitted by the Customs to the Reserve Bank of India online where it is matched with the remittance data obtained from the banks. Remittances have to be received within one year and so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng exports without assessing the documents or examining the goods), the Customs Broker's responsibility ends with fulfilling his responsibilities under Regulation 10 of the CBLR, 2018. In dispute in this case is CBLR 10(n) which, as we have discussed above, does not require any physical verification of the address of the exporter/importer and the appellant has fully met his obligations under Regulation 10(n). 47. To sum up, the only allegation against the appellant in the impugned order is that it violated Regulation 10 (n) which we find is not true. 48. In view of the above, we proceed to answer the questions framed by us in paragraph 4 above. The answer to question (a) is that in the factual matrix of the case and evidence available on record, the Commissioner was not correct in holding that the appellant Customs Broker has violated Regulation 10(n) of CBLR, 2018. Consequently, the answer to questions (b), (c) and (d) are negative. 49. The impugned order cannot be sustained and is set aside and the appeal is allowed with consequential relief, if any." 20. We find that the ratio of the above said order of the Tribunal is squarely applicable in this case. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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