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TMI Blog2023 (12) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... . Being aggrieved against the impugned order, the appellants have filed this appeal before the Tribunal. 3.1 The brief facts of the case are that appellants had been issued with a Customs Broker (CB) license No. 11/194 granted by jurisdictional Principal Commissioner of Customs (General), Mumbai, under Regulation 7(1) ibid. An offence report dated 08.03.2022 was received from Special Intelligence & Investigation Branch (SIIB) of Jawaharlal Nehru Custom House, Nhava Sheva (JNCH) stating that the Customs authorities at Pune had initiated an enquiry against an importer namely M/s K.K. Traders, Satara for having illegally imported cashew kernel broken/whole into India by mis-declaration of the description and value of the goods, with intention to evade the legitimate Customs duty and to circumvent the prohibition in force. The appellants, on behalf of the importer M/s K.K. Traders, had filed the Bill of Entry (B/E) No.7580019 dated 21.02.2022, in which the customs examination order was given as "open and examine (100% at item level) and look for concealment"; the appellants CB had got the mis-declared imported goods cleared from JNCH, Customs by misrepresentation during examination; h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice Tax Identification Number (GSTIN), Certificate issued by the bankers i.e., ICICI bank; MSME Certificate have been examined, verified which enabled them to identify their client at the declared address, and this was acceptable as having done verification of the client by using reliable, independent, authentic documents, data or information. Further, Shri Abdur Rehman Dalvi, authorized representative of the appellants along with one agent/sub-agent Shri Sambhaji Bosale have also personally visited the importer's premises at Satara, Maharashtra on 13.02.2022 before accepting the client by the appellants. The appellants had cooperated with customs investigation and the importer had also given his statement before the customs authorities explaining the concealment planned with the help of one Shri Chetan Yadav, working in M/s Ninai Shipping Agency and the appellants were not aware of the said concealment. He further stated that the Shri Abdul Rehman Dalvi, authorised representative of the appellants had given his statement before customs authorities mentioning that Shri Mustaqeem Siddiqui, 'H' card holder of the appellants CB was present before whom 100% Customs examination of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mis-declaration of description of goods in an import consignment cleared from JNCH, Nhava Sheva which had been imported by M/s K.K. Traders, Satara in Bill of Entry (B/E) No.7580019 dated 21.02.2022, container No. WHLU 5762951 and it is being transported through a trailer lorry/vehicle Regn. No. MH 46 BB 9089, by availing incorrect 'country of origin' certificate in order to circumvent the prohibition imposed by DGFT. On the basis of such specific information, the said container was intercepted by Pune Customs enroute near Lonavala on 25.02.2022 and detailed physical verification of imported goods was done at ICD, Talegaon, Pune in the presence of importer i.e., Shri Krishnat Shankar Kadam, Proprietor of M/s K.K. Traders, Satara. The said detailed examination under Panchnama proceedings 25/26.02.2022 revealed that imported goods in the above consignment actually contained only 2487 Kg. of declared goods i.e., 'raw cashew nuts' and the rest of 24,753 kg. were undeclared broken cashew kernel commercially known as 'cashew baby bits'. 6.2 It is seen that DGFT had issued a notification No.08/2015-2020 dated 12.06.2019, whereby the import policy conditions in respect of 'Cashew Kernel, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or testing with the Director State Public Health authorities, Referral Food Laboratory to ensure whether these are 'fit for human consumption' and to the FSSAI approved/ NABL approved lab to see whether the imported goods meets the requirements and the parameters for compliance with FSSAI Rules and Regulations, 2018. The test reports received from the laboratories indicated that the samples meets the requirements for the quality parameters specified as per provisions of said Food Safety Standards Rules and Regulations, 2018. 7.1 From the perusal of the records and above factual matrix, we find that the mis-declaration of imported goods is limited to the extent that the CIF prices of imported goods were not conforming to the permitted higher threshold limits under the DGFT Notification. In other words, the imported goods of value below threshold limit had been imported, which is prohibited by prescribing Minimum Import Price (MIP). The Foreign Trade Policy (FTP) notified by the Ministry of Commerce & Industry, Directorate General of Foreign Trade provide under para 2.07, the Principles of Restrictions for which DGFT may, through a Notification, impose 'Prohibition' or 'Restriction' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department against the importer, Shri Chetan Yadav, M/s Ninai Shipping Agency besides the appellants CB and other customs brokers M/s Shiv Kumar Gupta, M/s MRB Logistics under the Customs Act, 1962 for their individual role played in omission and commission in the illegal import of goods vide SCN in F.No. SG/Misc.-846/2022-23/Gr.I&IA/JNCH dated 08.12.2022. In view of the above factual details, we are of the considered view that the appellants have not been involved as a customs broker in the violation of mis-declaration of description and MIP of imported goods in the aforesaid transaction in B/E No.7580019 dated 21.02.2022. Thus, there cannot be a case for taking action against violations of CBLR. Hence, the impugned order does not sustain on grounds of factual matrix of the case as detailed therein and also as explained in the SCN dated 08.12.2022. 8.1 We also find that legal provisions governing the issue of customs brokers in contained in Section 146 of the Customs Act, 1962, which provide that no person shall carry on business as a customs broker relating to the entry or departure of a conveyance or the import or export of goods at any customs station unless such person holds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohibition imposed by DGFT. On acting upon the said information, firstly the Pune Customs (Preventive) had conducted search proceedings at the residence of Shri Krishnat Shankar Kadam, Proprietor of M/s K.K. Traders, Satara on 25.02.2022; after such search proceedings the said Shri Krishnat Shankar Kadam had taken the help of the Pune Customs for generating E-way bill for his consignment in the laptop belonging to the Customs officers; then when the officers told that they are going to verify the contents of the imported goods in the container on its way to Satara, then Shri Krishnat Shankar Kadam, Proprietor of the importer at his request, had accompanied the Pune Customs officers and participated in the entire proceedings starting from interception of imported goods at 10.30 PM on 25.02.2022 near Lonavala at the expressway and continued to be present during the detailed examination of the imported goods on 26.02.2022 at ICE, Talegaon. Further, he also gave his voluntary statement before the Pune Customs investigation authorities on 26.02.2022 at 22.30-23.45Hrs., continued it again on 27.02.2022 at 13.00-23.00Hrs., and gave another statement on 28.02.2023 at 12.00-22.00Hrs. In such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l possess the Aadhaar number issued to him and that the minimum educational qualification of such persons so employed shall be 10+2, or equivalent. 13(4) Employment of a person referred to in sub-regulation (3) shall be made only after obtaining the approval of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, who shall in granting approval,take into consideration the antecedents and any other information pertaining to the character of such person. xxx xxx xxx xxx 13(7) A Customs Broker shall authorise only such employee who has been issued a photo identity card in Form F or Form G as the case may be to sign the declaration on the bills of entry, shipping bills, annexure thereof or any other document generated in connection with the proceedings under the Act or the rules or regulations made thereunder. xxx xxx xxx xxx 13(12) The Customs Broker shall exercise such supervision as may be necessary to ensure proper conduct of his employees in the transaction of business and he shall be held responsible for all acts or omissions of his employees during their employment." 11.1 In respect of the obligation under Regulation 10(e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the order of the Hon'ble High Court of Delhi in the case of M/s Kunal Travels (Cargo) Vs. Commissioner of Customs (I&G), IGI Airport, New Delhi reported in 2017 (354) E.L.T. 447 (Del.), holding that the appellants CB is not an officer of Customs who would have an expertise to identify over valuation or under valuation of goods. The relevant portion of the above order is extracted below: "12. Clause (e) of the aforesaid Regulation requires exercise of due diligence by the CHA regarding such information which he may give to his client with reference to any work related to clearance of cargo. Clause (l) requires that all documents submitted, such as bills of entry and shipping bills delivered etc. reflect the name of the importer/ exporter and the name of the CHA prominently at the top of such documents. The aforesaid clauses do not obligate the CHA to look into such information which may be made available to it from the exporter/ importer. The CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect to clearance of goods through customs house and in that process only such authorized personnel of the CHA can enter the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r/exporter. Furnishing of wrong or incorrect information cannot be attributed to the CHA if it was innocently filed in the belief and faith that its client has furnished correct information and veritable documents. The mis-declaration would be attributable to the client if wrong information were deliberately supplied to the CHA. Hence there could be no guilt, wrong, fault or penalty on the appellant apropos the contents of the shipping bills..." 12.1 We further find from the records, that the appellants have verified the existence of the importer through the certificate of Importer-Exporter Code issued by the Ministry of Commerce, DGFT indicating the name of the importer along with address, name of the proprietor; Permanent Account Number (PAN) card of the proprietor; GST Registration Certificate GST REG-06 indicating the GST Registration No. and address of the principal place of business having been verified by Sales Tax Officer, Maharashtra State VAT/Sales Tax authorities; Aadhaar Card of the proprietor Shri Krishnat Shankar Kadam; UDYAM Registration certificate issued by the Ministry of Micro, Small and Medium Enterprises; letter of ICICI bank dated 17.11.2021, in their letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 10(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. 12.3 We also find that in the case of M/s Perfect Cargo & Logistics Vs. Commissioner of Customs (Airport & General), New Delhi 2021 (376) E.L.T. 649 (Tri. - Del.), the Tribunal had decided the issue of KYC verification of the importer/exporter by the Customs broker and the requirements specified in the CBLR, 2018. The relevant paragraphs in the said order are extracted below: "34. The basic requirement of Regulation 10(n) is that the Customs Broker should verify the identity of the client and functioning of the client at the declared address by using, reliable, independent, authentic documents, data or information. For this purpose, a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under Regulation 13(12) ibid. From plain reading of the provisions contained under Regulation 13, it transpires that the same provide for the manner of regulating the employment of persons by a Customs Broker, verification of the antecedents of individuals before their engagement under employment with CB, minimum educational qualifications of such persons, passing of examination conducted by Customs to prove the adequacy of knowledge in handling goods or baggage for customs clearance, issue of ID cards, restriction of unauthorized persons etc., and holds the Customs Broker for failure for proper supervision and for any act of omission or commission done by its employees. It is also seen that such provisions under Regulation 13 (9) ibid, provide for the employees of CB, who did not pass the requisite examination to be issued with a photo-identity card in Form H for a period of five years, to be issued by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case maybe. Thus, the essential requirements of the employment of persons by a Customs Broker is that having regard to the volume of business transacted by a CB, they employ any number of persons other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , after it being taken out from container was weighed and found to be of 2487 Kgs. in net weight and the rest of 493 bags of undeclared processed cashew kernel found to be of 24753 Kgs. net weight. From the manner of destuffing the entire cargo from the container, the said Panchnama also mentioned that the declared 'Raw cashew nuts in shell' was used for concealment of the mis-declared goods and thus both were seized for further action under the Customs Act, 1962. We also find from the statement given on 19.04.2022 by Shri Abdul Rehman Dalvi, authorised representative of the appellants CB he had admitted that 100% examination of the subject cargo was carried out by Customs Docks officers at 'Take Care Logistics' CFS in the presence of Shri Mustaqeem Siddiqui, H-card holder of the appellants CB. In practice 100% destuffing of the cargo was not possible so the cargo at one end was removed and a gully/small narrow pathway was made from start to end and the inspection was done. However, it seems that the undeclared cargo could have been on the other side of the container, which was completely unknown. In order to appreciate the facts of the specific issue that despite the customs exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the various facts and evidences in the present case, also appreciate the importance of the role of Customs Broker/Custom House Agent and the timely action which could prevent the frauds being committed by unscrupulous persons/ importers/ exporters taking the gullible CBs/CHAs, by relying on the judgement of the Hon'ble Supreme Court in affirming the decision of the Co-ordinate Bench of this Tribunal in the case of Commissioner of Customs Vs. K.M. Ganatra & Co. in Civil Appeal No.2940 of 2008 reported in 2016 (332) E.L.T. 15 (S.C.). The relevant paragraph of the said judgement is extracted below: "15. In this regard, Ms. Mohana, learned senior counsel for the appellant, has placed reliance on the decision in Noble Agency v. Commissioner of Customs, Mumbai2002 (142) E.L.T. 84 (Tri. - Mumbai) wherein a Division Bench of the CEGAT, West Zonal Bench, Mumbai has observed:- "The CHA occupies a very important position in the Customs House. The Customs procedures are complicated. The importers have to deal with a multiplicity of agencies viz. carriers, custodians like BPT as well as the Customs. The importer would find it impossible to clear his goods through these agencies without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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