9911796707
TMI Blog2023 (11) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... Purav Mehta and Pratik Mehta. Even at the time of clearance of goods for various importers in the past, the Customs assessing group and the Commissionerate did not find out any discrepancy in valuation or any misdeclaration. The action taken under CBLR, 2013 against the appellants CB is a follow up/ further action taken consequent to the customs offence case made out by DRI, MZU, and thus the present proceedings are only for the violations under the specific sub-regulations under CBLR, 2013. It is not the case of the Revenue that the description of the imported goods or classification of such goods under customs tariff was mis-declared in order to undervalue these imported goods. Further, any allegation of mis-declaration of imported goods in terms of its description or value could only be established, if the declaration in the Bill of entry has been different from the commercial invoice or other supporting documents. Violation of Regulation 11(d) ibid - HELD THAT:- There is definitely a mention that the parallel invoices which are incriminating in nature for subject goods were found out during the search proceedings conducted at the premises of S/Shri Purav Mehta and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 11(a) of CBLR, 2013 - HELD THAT:- The appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, particularly when the import documents were obtained from the importers through an intermediary in ensuring that all documents relating to imports are genuine, the KYC documents given by the importer are also genuine and that these are not fake or fabricated. Thus, to this extent we find that the appellants CB are found to have not complied with the requirement of sub-regulation 11(a) and thus forfeiture of security deposit for failure in not being proactive for fulfilling of regulation 11(a) of CBLR, 2013 alone, is appropriate and justifiable. There are no merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants; and for forfeiture of security deposit, inasmuch as there is no violation of regulations 11(d), 11(e), 11(m) and 11(n) ibid, and the findings in the impugned order is contrary to the facts on record. However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter F. No. DRI/MZU/F/16/2012/7069 dated 10.6.2013 followed by a detailed report/ letter in F. No. DRI/MZU/F/16/2012-13/7069 dated 12.12.2013, wherein it was informed about the involvement of appellants CB in the under-valuation of goods. 2.2. On the basis of such offence report/letter received from DRI. MZU, Mumbai, the jurisdictional Principal Commissioner of Customs (General), Mumbai-I had concluded that there is a prima facie case against the appellants for having contravened Regulations 11(a), 11(d), 11(e), 11(m) and 11(n) of CBLR, 2013. Accordingly, he had immediately suspended the CB license of the appellants under Regulation 19 of ibid, vide Order No. 43/2013 dated 19.12.2013; and such suspension was continued vide Order No. 45/2013 dated 13.01.2014; further the department had initiated show cause notice dated 11.02.2014 for initiating inquiry proceedings under Regulation 20 ibid, against violations of CBLR as above. However, as no inquiry proceedings have been effectively conducted within the prescribed time as per CBLR by the Inquiry Authority, the appellants have filed an appeal against the suspension order of their CB License before this Tribunal, in the first round o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y claimed that all the declarations in the various Bills of Entry (B/Es) were made on the basis of documents given by the importers, and the appellants were neither aware of the undervaluation of goods nor the fact that the IEC holders were proxy importers; they claimed that the appellants were no manner connected with the violations of the Customs law as the alleged documents regarding undervaluation etc. were recovered only from the office/residential premises of the said S/Shri Purav Mehta and Pratik Mehta and not from the appellants CB. They also stated that the appellants had discharged their duties as CB diligently and there is no delay or lack of efficiency in clearance, handling and delivery of imported goods; the total amounts received as consideration for their services included freight charges, customs duty which were paid by the appellants on behalf of the importer as reimbursement expenses, out of pocket expenses and they had obtained and verified all KYC documents, thus they claimed they did not contravene the Regulations 11 (m) and 11(n) ibid. 3.2. In respect of non-compliance to the time lines laid down in the regulations for various actions under inquiry proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proxy importers S/Shri Purav Mehta and Pratik Mehta and never met the IEC holders. Learned AR pointed out that it has also been admitted by Shri Lalit Mange, Director of appellants CB that he was well aware of the proxy nature of the imports by misuse of IECs and they had knowingly dealt with unauthorised persons acting as proxy importers and aided in clearance of under-valued goods. Thus, learned AR justified the action of Principal Commissioner of Customs (General) in revocation of the appellant s CB license and forfeiture of security deposit in the impugned order and stated that the same is sustainable in law. It is further stated by him that the impugned order viewed that the timelines specified in CBLR are directory in nature and not a mandatory factor. The delay in completing the CBLR proceedings was partly on account of failure on the part of the appellants to appear for personal hearing and due to their seeking of adjournments. 5. Heard both sides and perused the case records. We have also considered the additional written submissions given in the form of paper books by learned Advocates for the appellants as well as Authorised Representative for the Revenue. 6.1. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; (e) 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; (m) discharge his duties as a Customs Broker with utmost speed and efficiency and without any delay; (n) verify correctness of Importer Exporter Code (IEC) number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information; 6.3. We find that the Principal Commissioner of Customs had come to the conclusion that the various statements recorded during the investigation in terms of the legal provisions of Section 108 of the Customs Act, 1962 which have been used as evidence against the appellants to the extent of omissions and commissions on their part for contravention of Regulations 11 (a), 11(d), 11(e), 11(m) and 11(n) ibid, have not been retracted by the concerned. Thus, he had taken the view that these remain as substantive evidence to hold that the appellants a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents given to them by the importers. It is not the case of Revenue, that the value of imported goods indicated in the B/Es were different from the one indicated in the commercial invoices submitted to the Customs at the time of filing of B/Es. The facts indicate that S/Shri Purav Mehta and Pratik Mehta, who were the behind the scene operators in this case were involved in preparation of parallel set of invoices and illegal transfer of remittances, paving way for under valuation of imported goods. This is duly supported by the DRI s report that incriminating documents including the parallel invoices of higher value and documents for illegal remittances were recovered only from the premises of S/Shri Purav Mehta and Pratik Mehta. Thus, it is clear that these two persons were alone are involved in under-valuation of goods resulting in duty evasion. 7.2. From the above factual details, we find that the appellants CB had declared the description of the imported goods and value in the various B/Es for aforesaid imports as given in the invoices supplied by the respective importers. Further, the appellants were not aware of the under valuation of the imported goods as there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... description of the imported goods or classification of such goods under customs tariff was mis-declared in order to undervalue these imported goods. Further, any allegation of mis-declaration of imported goods in terms of its description or value could only be established, if the declaration in the Bill of entry has been different from the commercial invoice or other supporting documents. It is noticed from the factual details of the present case, that the declaration made in the Bills of Entry is the same as that is provided in the Commercial invoices, and the value declared as per invoices were fabricated by S/Shri Purav Mehta and Pratik Mehta by preparing parallel set of invoices, which could be detected only upon developing specific intelligence by DRI, MZU, subsequent to clearance of such goods. In the absence of any document to prove the claim of mis-declaration of value at the time of import, it is difficult to fasten such liability on the appellants CB. 7.3. From the above, we find that appellants have duly filed the bill of entry as per the documents given by the importers and they were not aware of the mis-declaration of description/value of the imported goods. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder these rules. (2) Nothing contained in these rules shall be construed as restricting or calling into question the right of the proper officer of customs to satisfy himself as to the truth or accuracy of any statement, information, document or declaration presented for valuation purposes. (3) The provisions of the Customs Act, 1962 (52 of 1962) relating to confiscation, penalty and prosecution shall apply to cases where wrong declaration, information, statement or documents are furnished under these rules. Rule 3. Determination of the method of valuation . - (1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10; (2) Value of imported goods under sub-rule (1) shall be accepted: Provided that - (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laration form or in the value particulars declared in the bill of entry as compared to the commercial invoice. Further, any exercise in re-determination of value other than the transaction value has to be adopted step-by-step on the basis Rule 3 ibid, and after rejection of transaction value as per Rule 12 ibid. We do not find any such evidence or fact indicating that there was a mis-declaration of value at the time of imports and the value was re-determined as per the above legal provisions. There is definitely a mention that the parallel invoices which are incriminating in nature for subject goods were found out during the search proceedings conducted at the premises of S/Shri Purav Mehta and Pratik Mehta. However, at the same time it is also on record that neither the customs authority at the time of import not the appellants were aware of such under-valuation. Thus, we are of the considered view that the conclusion arrived by the Principal Commissioner of Customs (General) on this valuation issue in the impugned order is not supported by any evidence or factual detail, to fasten the liability for such under valuation on the part of the appellants CB and thus the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion arrived on this point by the Principal Commissioner of Customs (General) in the impugned order. Thus, the conclusion that the appellants have violated Regulation 11(m) ibid is not sustainable. 11.1 We find from the records, that the appellants CB had obtained the KYC documents from the importer M/s Reds Blues vide their authorization letter dated 05.06.2012 and verified the existence of the importer through the Certificate of Registration dated 04.04.2005 issued by the Sales Tax Department, Government of Maharashtra indicating the name along with address, name of the partners; and Permanent Account Number (PAN) card of the importer. Similarly, they had obtained the KYC documents from the importer M/s Niti Traders vide their authorization letter dated 11.06.2012 and verified the existence of the importer through the Ration Card issued by the Controller of Rationing, Government of Maharashtra indicating the name and address; and Senior Citizens Identity card of the importer. However, the inquiry proceedings had concluded in the impugned order that the appellants CB has not been careful and not diligent in undertaking the KYC of the background of importer and accepted docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o of the documents listed above, which provides client/customer information to the satisfaction of the CHA will suffice. We find that the above CBIC circular clearly explains the provision of CBLR/CHA Regulations which require the Customs Brokers to verify the antecedents, correctness of Import Export Court (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data and information. The said guidelines provide for the list of documents that is required to be verified and that are to be obtained from the client importer/exporter. it is also provided that any two documents of among such specified documents is sufficient for fulfilling the obligation prescribed under Regulation 11(n) of CBLR, 2018. We find that in the present case, the appellants CB had obtained the KYC documents and submitted the same to the Customs Department. Thus, we do not find any legal basis for upholding of the alleged violation of Regulation 11(n) ibid by the appellants in the impugned order on the above issue. 11.3. We find that in the case of M/s Perfect Cargo Logistics Vs. Principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the IE Code given to it by a client for each import/export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard i.e. KYC etc. would have been done by the customs authorities. 11.5. From the above, we also find that the above orders of the Tribunal and higher judicial forum are in support of our considered views in this case in respect of the compliance with respect to Regulation 11(n) ibid. 12.1. We also find that as regards the timelines to be followed in the entire process of adjudication of the suspension/revocation of CB license under CBLR, 2013/CBLR, 2018 by Customs authorities, the Hon ble High Court of Bombay has laid down certain guidelines for its interpretation in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P Ltd., 2018 (361) E.L.T. 321. The relevant portion of the judgement in the above case is extracted below: The whole purpose of the CBLR-2013 being to frame a time line so that undue delay in the proceedings can be avoided, and the balance will have to be struck between the strict adherence to the said time schedule to such an extent that even a da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... somehow similar to an inquiry in disciplinary proceedings on one hand and the revenue in the capacity of the administration on the other hand. 15. In view of the aforesaid discussion, the time limit contained in Regulation 20 cannot be construed to be mandatory and is held to be directory. As it is already observed above that though the time line framed in the Regulation need to be rigidly applied, fairness would demand that when such time limit is crossed, the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the time limit was not adhered to. This would ensure that the inquiry proceedings which are initiated are completed expeditiously, are not prolonged and some checks and balances must be ensured. One step by which the unnecessary delays can be curbed is recording of reasons for the delay or non-adherence to this time limit by the Officer conducting the inquiry and making him accountable for not adhering to the time schedule. These reasons can then be tested to derive a conclusion whether the deviation from the time line prescribed in the Regulation, is reasonable . This is the only way by whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the records of the case, we find that there is definitely delay in adjudication and that for the import transactions for which the offence was detected in 2011, the order of revocation of appellant s CB license has been passed on 27.02.2018. Revenue is unable to explain why there was such a long delay in taking action against appellants, when the information about under valuation of import through DRI, MZU was received vide offence report dated 10.06.2013. There are no reasons recorded in detail justifying the delay in passing the impugned order by the learned Principal Commissioner except that in para 25.1 of the impugned order it is stated that out of 14 different dates for personal hearing opportunities were offered to the appellants in inquiry proceedings, and only in 5 days, the proceedings could be conducted and this had caused delay. 13.2. In this case, we find that the inquiry proceedings itself was initiated in March, 2014. Though notices for preliminary hearings were issued by the Inquiry Officer, as the same could not progress further, and he did not complete the inquiry proceedings, the Principal Commissioner of Customs (General) appointed another officer on 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... older of M/s Reds Blues, where he had stated that he had let out his IEC to Shri Pratik Mehta, Partner of M/s Clear Opaque, for monetary benefits; similarly, Shri Umesh Jayantilal Ghelani, IEC holder of M/s Niti Traders, had also given the statement that he had lent his IEC to Shri Purav Mehta, Partner of M/s Shreeji Trading Company, from June. 2012 for import of furniture for monetary consideration. However, these facts were brought to fore only during detailed investigation of the case conducted subsequently by the DRI, MZU. Hence, at the relevant time of imports, the appellants were not aware of this. 14.2. In this regard, the Tribunal in the case of K.S. Sawant Co.(supra) had held accepting the documents through logistics operator is not barred by CBLR. The relevant paragraph of the said order is extracted below: 5.1 From the records, it is clear that the business in respect of the client M/s. Advanced Micronics Devices Ltd., was brought in by Shri Sunil Chitnis, who claims himself to be a sub-agent of the appellant CHA. The statements of Shri Badrinath and Shri Sunil Chitnis amply proves this fact. The question is, merely because the appellant procured the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were effecting imports/exports by using IECs issued to others, which is a complete violation of the provisions of Foreign Trade Policy, by clarifying that use of IEC by the person other than IEC holder himself is a violation of Section 7 of the Foreign Trade (Development and Regulation) Act, 1992 (FTDR) and Rule 12 of Foreign Trade (Regulation) Rules, 1993. Accordingly, it was specifically stated in the said Circular that such misuse of IECs of other persons, would attract action under Section 8 and 11 of FTDR Act, except in case importers or exporters who are exempted from obtaining IEC and who use permanent (common) IEC Numbers under Para 2.8 of Handbook of Procedure, Vol.1, 2009-14. Thus, in harmonious reading of the above order of the Tribunal in accepting the documents from the importer directly or through intermediary and at the same time ensuring that the IEC is not being misused by any person other than IEC holder, we are of the considered view that the responsibility of a Customs Broker is to play a crucial role in protecting the interest of Revenue and at the same time he is expected to facilitate expeditious clearance of import/export cargo by complying with all legal r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found to have not complied with the requirement of sub-regulation 11(a) and thus forfeiture of security deposit for failure in not being proactive for fulfilling of regulation 11(a) of CBLR, 2013 alone, is appropriate and justifiable. 15. In view of the foregoing discussions, we do not find any merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants; and for forfeiture of security deposit, inasmuch as there is no violation of regulations 11(d), 11(e), 11(m) and 11(n) ibid, and the findings in the impugned order is contrary to the facts on record. However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under sub-regulation 11(a) ibid, particularly when they have received the documents from importer through intermediary, we find that it is justifiable to forfeit the entire security deposit given by the appellants, which would be reasonable and would be in line with the judgement of the Hon ble Supreme Court in the case of K.M. Ganatra (supra), in bringing out the importance of crucial role played by a Customs Broker. 16. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
