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TMI Blog2024 (1) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... t herein was licensed; the allegedly nefarious activities of such a pass-holder, although obtained through the licensed customs broker, cannot be visited upon the broker in the absence of a link between the two in the context of established misdemeanor. Accordingly, by following the principles laid down by the Hon'ble High Court of Bombay in the Unison Clearing P Ltd., the Tribunal held that the case does not merit continued revocation of the Customs Broker (CB) license, and ordered the CB license to be restored. The department had preferred an appeal against the above order of the Tribunal before the Hon'ble High Court of Bombay in Custom Appeal No. (L) No.3447 of 2020, in which the Hon'ble High Court of Bombay vide its Order dated 27.08.2021 had ordered the following: "2. The appeal has been admitted by this Court on 22nd October 2020 on the following substantial questions of law: 'a) whether, on the facts and in the circumstances of the case, the important delay in completion of proceeding for revocation of license vitiates the Order-in-Original dated 28.03.2019 first by the Commissioner of Customs (General)? b) Whether on the facts and in the circumstances of the case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out on behalf of the parties and without even dealing with the detailed explanation as well as the necessary facts, allowed the appeal of Respondent. In our view, the Tribunal ought to have discussed each of the submissions before coming to any conclusion. xx xx xx xx 41. In our view, reliance by the CESTAT on the decision in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P. Ltd. (supra) to restore the license of the Respondent is completely misplaced and a complete non-application of mind. 42. In accordance with the above discussion, we are of the view that the findings of the Tribunal are unsustainable and the matter is required to be sent back for reconsideration by the Appellate Authority taking into account all the aspects to arrive at a proper decision. We, therefore, set aside the order of the Tribunal dated 21st November, 2019. The matter is remanded back to the CESTAT for fresh adjudication. 43. The Appeal is accordingly disposed in the above terms. No order as to costs." 2. In the impugned order the learned Commissioner of Customs (General), in exercise of powers conferred upon him under Regulation 17 (7) of the Customs Broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n address. Preliminary enquiry conducted in the operations division of ESA, revealed that the freight booking for the said export consignment was done by one person namely Shri Vijay Poojary, who is also a Freight Forwarder and a customs broker by profession operating those business entity in the name of M/s Marine Trans India Private Limited and M/s Srinivas Clearing and Shipping India Private Limited (SC&SIPL). Further investigation of the case with ESA (through Shri Shivdas Ramesh Tandel, Deputy Manager) revealed that the said Shri Vijay Poojary is a good friend and close associate of Shri Harshavardhan Hegde, Managing Director of ESA, and on his directions, he had facilitated booking of containers for Shri Vijay Poojary without any KYC verification of the business entity which is sending the request for containers in which the export goods are to be stuffed and transported out of the country. He had also assisted Shri Vijay Poojary in a similar manner recently for export of goods by M/s R.N. Laboratories Private Limited, SEZ Diamond Park, Sachin, Surat for container No. DRYU 2315571 and several export consignments in the past. DRI MZU investigation revealed that Shri Vijay Pooj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted the respondent Commissioner to implement the said final order and report compliance report the bench on 29.01.2018 by issue of Order No. I/2/18 dated 15.01.2018. On the basis of the directions given by the Tribunal, the CB license of appellants was restored by the Department vide Notice No.234/2017-18 dated 24.01.2018. Further, show cause notice dated 14.05.2018 was also issued for initiating inquiry proceedings under Regulation 20 ibid, against violations of CBLR as above. 3.3 Subsequently, during the inquiry proceedings conducted by the Inquiry Officer, he gave personal hearing opportunities to the appellants on 09.07.2018, 17.07.2018, 23.07.2018, 27.07.2018, 02.08.2018, 08.08.2018, 13.08.2018, 14.08.2018, 23.08.2018, 24.08.2018 and also conducted examination of evidences of witnesses and cross examination of witnesses by the Advocate representing the appellants on 27.08.2018, 30.08.2018, 12.09.2018. Upon completion of the inquiry, a report was submitted on 30.10.2018 concluding that all charges framed against the appellants have been proved. Accordingly, the Principal Commissioner of Customs (General), Mumbai, being the licensing authority had passed the impugned order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of inquiry report. As there was gross delay in the conclusion of inquiry proceedings for which there is no explanation, without prejudice their submission on merits, they stated that on the ground of non- adherence with the time limits, the impugned order is liable to be set aside. In view of the above, they requested that impugned order be set aside and consequential relief be granted to them. 5. Learned Authorised Representative (AR) reiterated the findings made by the Principal Commissioner of Customs (General) in the impugned order and submitted that each of the violation under sub- regulations (a), (e), (j), (k) and (n) of Regulation 10 ibid, has been examined in detail by the Principal Commissioner. The appellants CB is a private limited company, in which 99.9% of the shares is held by its director Shri Vijay Poojary, who is also a "G" card holder. The said Shri Vijay Poojary had fabricated the export documents without using the name of his from for circumventing the legal provisions, for smuggling of Red Sanders, the export of which is prohibited under the Foreign Trade Policy as it is an item of CITES (Convention on International Trade in Endangered Species of Wild Faun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Regulation 17(1) ibid [earlier 20(1) of CBLR, 2013], by issue of show cause notice No.11/2018-19 dated 14.05.2018, specifying the grounds on which the appellants have alleged to have been violated CBLR, 2018. In conclusion of these proceedings, the impugned order was passed by the jurisdictional Principal Commissioner revoking the Customs Broker license granted to the appellants for the failure on the part of appellants to fulfill the obligations cast on them under Regulations 10(a), 10(e), 10(j), 10(k) and 10(n) of CBLR, 2018 [earlier 11(a), 11(e), 11(j), 11(k) and 11(n) of CBLR, 2013] and also imposed penalty of Rs.50,000/- besides forfeiture of entire security deposit. 8.1 In order to examine the above issues, and the divergent stand taken by both the parties, we would like to firstly examine the facts contained in the DRI investigation and the allegations specifically framed against the appellants for having violated the CBLR ibid. From the findings of the Principal Commissioner in impugned order dated 28.03.2019, the following facts have been specifically recorded about the role of appellants in the investigation report. The extract of the same is given below: "25. . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing cash payments. Employees of the firm further admitted that they had destroyed the export documents such as Invoice, Packing List, Shipping Bill etc., post shipment of the said consignments on the directions of Shri. Vijay Poojary. 27. Examination of the present consignment revealed that the container was containing 7.8 MTs of Red Sanders valued at Rs. 3.12 Crores. The estimated quantity of Red Sanders that have been smuggled out in past seventeen consignments booked by Shri. Vijay Poojary by using bogus names of Freight Forwarders as well as shippers works out to 120 MTs valued at Rs.48 crores. DRI has also reported that Shri. Vijay Poojary was earlier detained under COFEPOSA Act, 1974 under PSA-1205/18(1)/SPL-3(A) dated 17.02.2006 during the period 17.02.2006 to 20.10.2006 a new case investigated by DRI, MZU (F. No. MZU/D/PSA-12/2005 - M/s Rama Creations and others) related to fraudulent exports of garments and for obtaining undue benefits under the DEPB Scheme. Consequently, his CHA license No.11/171 which was issued in the name of Kunverji Dharshi & Sons was suspended vide Order No.41/ 2005 dated 14.09.2005 by Commissioner of Customs (General). The license was revoked by T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall make entry thereof by presenting electronically on the customs automated system to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export 3 [in such form and manner as maybe prescribed: ..... Section 146. Licence for customs brokers- (1) 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 a licence granted in this behalf in accordance with the regulations......." Customs Brokers Licensing Regulations, 2018 (CBLR) 2. Definitions.- (1) In these regulations, unless the context otherwise requires, ....... .... (d) "Customs Broker " means a person licensed under these regulations to act as an agent on behalf of the importer or an exporter for purposes of transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station including audit; ..... (g) "F card holder" means a person who has passed the examination referred to in regulation 6 and has been issued a ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be conducted on specified dates in the month of January of each year for which intimation shall be sent individually to applicants in advance before the date of examination and the result of the said examination shall be declared by end of May each year. (3) The applicant who is declared successful in the written examination shall be called for an oral examination on specified dates in the month of June of each year, the result of which shall be declared in the month of July of each year. (4) The applicant shall be required to clear both the written examination as well as corresponding oral examination. xx xx xx xx xx (7) The examination may include questions on the following: (a) preparation of various kinds of bills of entry, bills of export, shipping bills, and other clearance documents; (b) arrival entry and clearance of vessels; (c) tariff classification and rates of duty; (d) determination of value of imported and export goods; (e) conversion of currency; (f) nature and description of documents to be filed with various kinds of bills of entry, shipping bills and other clearance documents; (g) procedure for assessment and payment of duty including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not be compulsory and knowledge of Hindi shall be considered as desirable qualification. xx xx xx xx xx 13. Engagement or employment of persons.- (1) A person who has qualified the examination referred to in regulation 6 may engage himself in the work relating to the clearance of goods through customs on behalf of a firm or a company licensed under these regulations. (2) A Customs broker who has been issued a license under sub-regulation (2) of regulation 7 shall be issued a photo-identity card in Form F by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be: Provided that in the case of the license issued under clause (b) of sub-regulation (2)of regulation 7, the photo-identity card in Form F shall be issued to the person or persons who has actually passed the examination referred to in regulation 6 .... (5) The person referred to in sub-regulation (3) shall, within four attempts from the date of his appointment, pass a written examination conducted by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, and the examination shall be such as to ascertain the adequacy of knowledge of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, environmental protection, import/export restrictions, conformity with the quality and standards, financial/foreign exchange compliances in relation to enforcement of customs law and allied Acts concerning import/export of goods. The above requirements under CBLR clearly brings out the role of a Customs Broker who files the documents on behalf of the exporter, shall examine all aspects of the transaction to rule out that the export of goods are not in violation of any of the Acts, Rules or Regulations. 8.3 Thus, the above independent system of checks of documents before the same is filed in the form of checklist for shipping bill, require the 'F' or 'G' cadre holder to sign the declaration of shipping bill subscribing the truth of its contents after examining each of the aspect in detail for undertaking the responsibility of furnishing current information in the customs declaration/shipping bill. In the present case, the persons involved in the export fraud including Shri. Vijay Poojary and his accomplices, employees have adopted a modus of fabricating the documents, business entity of exporter, so that in the event of detection by the Department, they would be able to escap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manifesting the export container to the terminal operator and got it de-manifested on the directions of Shri Vijay Poojary, having got alerted that the said container was put on hold by Customs investigation agency; he had deleted all call records and messages from his mobile as per the directions of Shri Vijay Poojary. 8.6 Similarly, Shri Harshavardhan Hegde, Managing Director of shipping agent M/s Emirates Shipping Agencies (India) Pvt. Ltd. had also given voluntary statement dated 28.11.2015, stating that he knew Shri Vijay Poojary from 2001 and he had handled more than 200 export containers through their shipping agent company; upon knowing that the export container has been put on hold by investigation agency, Shri Vijay Poojary had asked him to change the vessel of the said container, which appears to be clear manipulation to avoid detection by such investigation agencies. Later in his subsequent statement given on 30.11.2015, he had stated that when he was in discussion with their Chief Financial Officer visiting from Delhi on 28.11.2015, who had come to specifically to meet after the seizure of Red Sanders by DRI in container No. DRYU 23063080, he was called by one Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding. Meanwhile, intelligence was received by DRI that on 09.12.2015, the said Vijay Poojary would come to meet his accomplice Shri Badshah Majid Malik, who was his close associate in the smuggling of Red Sanders, at Starbucks Coffee, Bandra-Kurla Complex, Mumbai. A discreet watch was kept at the said location and the said S/Shri Vijay (Subbanna) Poojary and Badshah Majid Malik were identified while they were in a meeting and their voluntary statements under Section 108 of the Customs Act, 1962 under summons proceedings. On enquiry by DRI officers, Shri Vijay Poojary informed that he had come there to meet Shri Badshah Majid Malik who was his associate and master mind in the smuggling racket of Red Sanders. The said Badshah Malik had asked him to arrange freight booking for shipments of wooden logs to be shipped to the Middle-East Asia; on his further questioning, Shri Badshah Malik confided that the wooden logs would be of Red Sanders and that the shipment would have to be made very carefully without disclosing the actual identity of the goods as export of Red Sanders was not allowed; in return for tactful handling of such shipments Shri Badshah Malik offered him an amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adshah Malik, as the last consignment was caught by DRI. 8.11 The DRI investigation further revealed that the appellants CB M/s SC&SIPL (CHA/CB no. 11/171) through its Director Shri Vijay (Subbanna) Poojary, had rendered services of their employees for filing of forged documents for illegal export and got the export consignments of Red Sanders cleared by mis-declaring them as "Fabric Glue/Assorted Acrylic colours/Radiators". The company's Director had also floated factious business entities as freight forwarders, exporters to facilitate such illegal export. 8.12 We also find from the CHA/CB license No.11/171 issued by the jurisdictional Commissioner of Customs, being the licensing authority that initially the CHA/CB firm was in the name of M/s Kunverji Dharshi & Sons, which was later renamed/reconstituted as M/s Srinivas Clearing & Shipping (India) Pvt. Ltd. and the same was endorsed in their CHA/CB license on 12.08.2009. At that time the said Shri Vijay Poojary became as Working Director from his earlier position as non- working partner. With subsequent changes, the said Shri Vijay Poojary took entire control of the appellants CB as he was holding 99.9% of shareholding of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned order at paragraph No. 26 that the CB forged all documents concerning the export in the present consignment and all earlier 17 past consignments. The detailed investigation conducted by DRI had revealed that in respect of past consignments in which by adopting similar modus, smuggling of red Sanders were exported, one container was detained by customs authorities at port of Jebel Ali; similarly one another container had been lying uncleared at Ajman port. Further in respect of verification with the Development Commissioner, SEZ, Vadodara, it was revealed that the purported shipping bills shown as generated in SEZ were fake, inasmuch as these had never been generated from their SEZ office. Similarly verification with the Development Commissioner, SEZ, Surat, in respect of past containers was also reported by them, that the export goods were not manufactured by impugned units, shown as exporters in the respective shipping bills. The above facts clearly prove that the appellants CB have violated the obligations that are required to be complied under Regulation 10(a), 10(e), 10(n) of CBLR, 2018. Further, the employees the appellants CB firm have admitted that they had destroyed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Though Revenue has not explained why there was such a long delay of 3 years and ² months in taking action against appellants, when the information about fraudulent exports was received on 16.05.2016. Though the first order-in-original revoking immediate suspension, was passed on 10.06.2016, action against the appellants under CHALR/CBLR vide Show Cause Notice was issued on 14.05.2018. The impugned order has been passed after almost nine months from the date of issue of SCN. In this regard we find that the appellants had filed an appeal before the Tribunal against the order dated 10.06.2016, which was disposed by the Final Order of the Tribunal dated 11.01.2017. Further, during the inquiry proceedings ten opportunities for personal hearing on different dates have been given and three more opportunities for cross examination was given to the appellants CB. They were also agitated by the departmental action and the prolonged delay in inquiry proceedings was partly contributed by the appellants CB with a number of personal hearings to be given to them. Thus there was reasonable cause for delay in inquiry proceedings. Therefore, we are of the view that even though no detailed rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate that when the documents relating to the export goods were fabricated and declared goods of 'Fabric glue/carpets' was substituted with prohibited 'Red Sanders', a clear attempt to smuggle the goods in an illegal manner in violation of the Customs Act, 1962 and Foreign Trade Policy have been orchestrated by the appellants CB. Thus, we find that revocation of CB license, imposition of penalty and forfeiture of security deposit by the learned Principal Commissioner on account of the appellants' failure in not fulfilling of Regulations (a), (e), (j), (k) and (n) of Regulation 10 ibid CBLR, 2018 is appropriate and justifiable. 15. In view of the foregoing discussions, we do not find any infirmity 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 the violations had arisen on account of alleged nefarious activities of 'G' card pass holder who is a director of the appellants CB. 16. Therefore, we do not find any reason for interfering with the impugned order, and accordingly dismiss the appeal filed by the appellants. (Order pronounced in open co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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