9911796707
TMI Blog2023 (12) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Revenue Intelligence, Kolkata Zonal Unit (DRI KZU), Kolkata had intercepted one live consignment of Black Pepper imported by M/s Bruno Exports through Nhava Sheva port using Advance Authorization for duty free import which were diverted in the local market illegally instead of using the same imported goods for manufacture of export goods, by misuse of duty exemption benefits availed through such Advance Authorization. Further investigation by DRI KZU revealed that a syndicate was involved in such modus operandi and they had imported 'black pepper' and 'dry dates' of total value of Rs.4.75 crore in the past using the above modus operandi by misuse of duty free Advance Authorization scheme and diverted the same in the local market causing huge revenue loss to the government exchequer. On the basis of such investigation conducted by DRI KZU, investigation report dated 30.06.2021 was sent to the jurisdictional Customs authorities for taking necessary action under CBLR, by informing about the involvement of appellants CB in the clearance of such illegal import of goods under above modus operandi. 2.2. On the basis of such offence report/letter received from DRI KZU, Kolkata, the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporter, and the appellants are nowhere at fault on this account. He also stated that the appellants had discharged their duties as CB diligently and during the lock down period, as an abundant caution had also made a video call with the partner of importer firm Shri Rohan Kumar to confirm that they were operating from the declared address; thus they claimed they did not contravene the Regulations 10 (d) and 10(n) ibid. 3.2. In support of their stand, the learned Advocate relied upon the decisions of the Tribunal in the case of HIM Logistics Pvt. Ltd. Vs. Commissioner of Customs, New Delhi reported in 2016 (338) E.L.T. 725 (Tri.-Del.). 4. Learned Authorised Representative (AR) reiterated the findings made by the Principal Commissioner of Customs (General) in the impugned order and submitted that both the violation under sub-regulations (d) and (n) of Regulation 10 ibid, has been examined in detail by the Principal Commissioner. The appellants CB got all the documents for import from Shri.Tushar Pokharkar, a freight forwarder, who is neither IEC holder nor importer or their representative; they never verified the authenticity of KYC documents; had they cross checked or had they co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction with Customs in connection with import and export of goods. These are as follows: "Regulation 10. Obligations of Customs Broker: - A Customs Broker shall - ... (d) advise his client to comply with the provisions of the Act and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; ... (n) verify correctness of Importer Exporter Code (IEC) number, Good and Services Tax Identification Number (GSTIN), 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 statements recorded during the investigation from Shri Sadgun Ram Kathe, Director and F-Card holder of the appellants CB, 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 10(d) and 10(n) ibid, have been deliberate act of negligence, and these not been retrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared the description of the imported goods and other details in the two B/Es for aforesaid imports as given in the invoices and documents given by the importer. Further, the appellants were not aware of the purported diversion of the imported goods as there was no evidence at the time of customs clearance of ex-bond B/Es for the same. Even at the time of customs clearance of goods in both the cases, the Customs assessing group and the concerned Customs Bond officers and section dealing with ex-bond clearances in the jurisdictional Customs Commissionerate did not find out any discrepancy. It is only on the basis of DRI, KZU investigation that the whole case of S/Shri Vipin Kumar, Rohan Kumar and Ms Anjali, acting as a syndicate in respect of the said violations under the Customs Act, 1962, were identified. The action taken under CBLR, 2018 against the appellants CB is a follow up action taken consequent to the customs offence case made out by DRI, KZU, and thus the present proceedings are only for the violations under the specific sub-regulations under CBLR, 2018. It is not the case of the Revenue that the diversion of the imported goods was planned and executed by the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /export consignments as well as the KYC documents from the importer M/s Bruno Exports, Delhi vide their authorization letter dated 20.10.2020. Further, they had verified the existence of the importer through the Certificate of Importer-Exporter Code dated 19.09.2019 issued by the Zonal Director General of Foreign Trade, Ministry of Commerce and Industry, Government of India indicating the name along with address, name of the partner; Permanent Account Number (PAN) card of the partners/importer and the GST Registration Certificate issued on 21.09.2019. Further, the appellants claimed that Shri Sadgun Ram Kathe, Director of appellants CB had personally contacted the partner Shri Rohan Kumar during his visits to Delhi by producing copies of tickets for travel by him, which the learned Principal Commissioner had turned down on the ground that the same does not serve as an evidence to establish that they had met the partner of importer firm. Thus, he 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 documents through the intermediary. 9. In this regard, we find that CBIC had iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 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 13(o)/10(n) of CHALR, 2004/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 10(n) ibid by the appellants in the impugned order on the above issue. 10.1 We find that in the case of M/s Perfect Cargo & Logistics Vs. Principal 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. "34. The basic requirement of Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the transaction. The relevant portion of the said judgement is extracted below: "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 customs house area....... It would be far too onerous to expect the CHA to inquire into and verify the genuineness 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." 12. 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 10(n) ibid. 13.1. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to cite reasons why the time schedule was not adhered to, and then leave the decision to the adjudicating authority to examine whether the explanation offered is reasonable or reflects casual attitude on behalf of the Revenue. This is the only way how the Regulation can be made effective and worthy of its existence so as to safeguard the interest of the Customs house agent, who is in a position of the delinquent and faces an inquiry 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e initiated. Though notice for inquiry was issued on 26.10.2021, the inquiry could be completed and the inquiry report could be competed on 22.07.2022. There is certain amount of delay in the above processes of inquiry proceedings. However, the learned Principal Commissioner of Customs (General), had duly followed the timelines required for completion of inquiry proceedings under CBLR, within two months of submission of inquiry report, had finally issued the adjudication order under Regulation 17(7) while the timelines prescribe a normal time of 90 days from submission of Inquiry report. This it can be accepted that there was 'reasonable grounds' which had caused delay in terms of the test laid down by the Hon'ble High Court of Bombay in the case of Unison Clearing Pvt. Ltd. (supra). Further, we donot find that there there exists any case for inordinate delay in conclusion of the inquiry proceedings in the impugned order. 14.1. The records of the case also indicate that the appellants had obtained a written authorization letter and KYC documents from M/s Bruno Exports, Delhi vide their authorization letter dated 20.10.2020. However, the same were obtained through Shri Tushar Pokha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid one". This finding is based on a presumption. Obtaining an authorisation from the importer does not mean that the same should be obtained directly; so long as the concerned import documents were signed by the importer, it amounts to authorisation by the importer and, therefore, it cannot be said that there has been a violation of Regulation 13(a). ... The question now is whether revocation of licence is warranted for such a violation. In our view, the punishment should be commensurate with the gravity of the offence. Revocation is an extreme step and a harsh punishment, which is not warranted for violation of Regulation 13(b). Accordingly, we are of the view that forfeiture of security tendered by the appellant CHA is sufficient punishment and revocation is not warranted. Accordingly, we set aside the order of the revocation and direct the Principal Commissioner of Customs (General) to restore the CHA licence subject to the forfeiture of entire security amount tendered by the CHA." 14.3. We also find that the Directorate General of Foreign Trade (DGFT), in its Policy Circular No.6 (RE-2013)/ 2009-2014 dated 16.09.2013 had clarified in the context of some of the importers/exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terests of both the importers and the Customs. A lot of trust is kept in CHA by the importers/exporters as well as by the Government Agencies. To ensure appropriate discharge of such trust, the relevant regulations are framed. Regulation 14 of the CHA Licensing Regulations lists out obligations of the CHA. Any contravention of such obligations even without intent would be sufficient to invite upon the CHA the punishment listed in the Regulations....." We approve the aforesaid observations of the CEGAT, West Zonal Bench, Mumbai and unhesitatingly hold that this misconduct has to be seriously viewed." 14.5. In view of the above discussions and on the basis of the judgement of the Hon'ble Supreme Court in the case of K.M.Ganatra (supra), we find 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 fou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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