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TMI Blog2024 (8) TMI 1348X X X X Extracts X X X X X X X X Extracts X X X X ..... y on the appellants CB for holding them responsible for violation of Regulation 10(e) ibid. Violation of Regulation 10(n) ibid - HELD THAT:- The appellants CB had obtained the KYC documents from the importers and verified the existence of the importers through digital mode viz., Certificate of Importer-Exporter Code issued by the Additional Director General of Foreign Trade, Ministry of Commerce and Industry, Government of India; signature and account verification from bank. The inquiry authority had also accepted the same and dropped the charges against this violation in his inquiry report - CBIC had issued instructions in implementing the KYC norms for verification of identity, existence of the importer/exporter by Customs Broker in Circular No. 9/2010-Customs dated 08.04.2010, and verification of any two documents among specified documents is sufficient for fulfilling the obligation prescribed under Regulation 10(n) of CBLR, 2018. Thus, there are no legal basis for upholding the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order. Violation of Regulation 10(q) - HELD THAT:- It is interesting to note that learned Principal Commissioner had examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the appellants; for forfeiture of security deposit second time and for imposition of penalty, inasmuch as there is no violation of regulations 10(e), 10(n), 10(q) and 13(3), 13(4), 13(7) and 13(12) ibid, and the findings in the impugned order is contrary to the facts on record. Further, the impugned order is not sustainable as it has been issued in violation of Regulation 17(7) ibid. The impugned order is set aside - appeal allowed in favor of appellant. - HON BLE MR. S. K. MOHANTY , MEMBER ( JUDICIAL ) And HON BLE MR. M. M. PARTHIBAN , MEMBER ( TECHNICAL ) Shri D.H. Nadkarni , Advocate for the Appellants Shri Ranjan Kumar , Authorized Representative for the Respondent ORDER PER : M. M. PARTHIBAN This appeal has been filed by M/s Husain Kasam Mukadam Sons, Mumbai (herein after, referred to as the appellants for short) assailing the Order-in-Original CAO No. 49/CAC/PCC(G)/SJ/CBS-Adj dated 23.11.2023 (referred to as the impugned order ) passed by learned Principal Commissioner of Customs (General), New Custom House, Ballard Estate, Mumbai-I. 2.1 In the impugned order, the learned Principal Commissioner of Customs (General), Mumbai in exercise of powers conferred upon him under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t violations of CBLR as above. 2.3 Upon completion of the inquiry, a report dated07.08.2023was submitted by the Inquiry Authority concluding that all charges framed against the appellants for violation of Regulations 10(e), 10(n), 10(q) of CBLR, 2018 have been not proved and charges against Regulations 13(3), 13(4), 13(7) and 13(12) of CBLR, 2018 are held to be proved . Accordingly, the Principal Commissioner of Customs (General), Mumbai, being the licensing authority had issued a disagreement memo dated 03.10.2023 and passed the impugned order dated 24.11.2023 under Regulations 17(7), 14 and 18 ibid, for deemed revocation of CB License of the appellants and for forfeiture of entire amount of security deposit upon revival of the CB license already revoked by him by any higher appellate authorities, besides imposition of penalty on the appellants. Feeling aggrieved with the impugned order, the appellants have preferred this appeal before the Tribunal. 3.1 Learned Advocate for the appellants contends that all the allegations of violation of Regulations 10(e), 10(n), 10(q), 13(3), 13(4), 13(7) and 13(12) of CBLR, 2018 have been countered by them and inquiry authority himself has dropp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Shri Sambhaji R Bhosale is an intermediary who was bringing import work to the appellants CB and was not an employee of the appellants, and hence there was no violation in respect of Regulations 13(7) and 13(12) ibid. 3.3 Learned Advocate further submitted that the appellants CB firm had conducted all KYC verification through digital mode but have never met the importer; further all the documents verified by them through digital mode have proved to be genuine and is not forged; thus, not meeting the importer personally and procuring the documents through intermediary cannot form the grounds for alleged violation of Regulations 10(e) and 10(n) ibid. He further submitted that Shri Abdul Rahman Dalvi had co-operated with the customs investigation authorities and have given his voluntary statement on 29.11.2021; the allegation of violation against Regulation 10(q) ibid was accordingly dropped in the impugned order at paragraph 14.6, but inadvertently he confirmed the same allegation at paragraph 16 of the impugned order, thus resulting in apparent contradiction. 3.4 Further, learned Advocate stated that the appellants CB did not had any prior knowledge about the fact that the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 10(q), 13(3), 13(4), 13(7)and 13(12) of CBLR, 2018, and hence there are seven distinct charges framed against the appellants. We find that the Regulation 10ibid, provide for the obligations that a Customs Broker is expected to be fulfilled during their transaction with Customs in connection with import and export of goods. Similarly, Regulation 13 ibid provide for engagement or employment of persons by a customs broker. These regulations are extracted and given below as follows: Regulation 10. Obligations of Customs Broker : - A Customs Broker shall - (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; (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; (q) co-operate with the Customs authorities and shall join investigations promptly in the event of an inquiry against them or their employees. Regulation 13. Engagement or employment of persons: - (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puty Commissioner of Customs or Assistant Commissioner of Customs, and no new person other than 'F', 'G' or 'H' card holders, shall be allowed to work in the Customs Station as a duly authorised employee on behalf of that firm or company. (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. 6.2 We find that the Principal Commissioner of Customs had come to the conclusion that the appellants CB had violated the above stated subregulations (e), (n) and (q) of Regulation 10 ibid as they did not have any interaction with the IEC holder/importer; they did not meet the importer personally and had without the knowledge of the importer acquired the documents through the middle man; and they also did not properly verify the KYC documents, as the IEC holder/importer did not exist in the declared address as brought out in the investigation, which prove that they were not careful and not diligent in undertaking the KYC verification by using reliable and independent information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a period of ninety days from the date of receipt of an offence report, stating the grounds on which it is proposed to revoke the license or impose penalty requiring the said Customs Broker to submit within thirty days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs Broker desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs. (2) The Commissioner of Customs may, on receipt of the written statement from the Customs Broker, or where no such statement has been received within the time-limit specified in the notice referred to in sub-regulation (1), direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, to inquire into the grounds which are not admitted by the Customs Broker. (3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case maybe, shall, in the course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the inquiry in regard to the grounds forming the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here an order is passed against an F card holder, he shall surrender the photo identity card issued in Form F forthwith to the Deputy Commissioner of Customs or Assistant Commissioner of Customs. (9) Where in an offence report, charges have been framed against an F card holder in addition to the Customs Broker who has been issued a license under regulation 7, then procedure prescribed in regulations 16 and 17 shall be followed mutatis mutandis in so far as the prescribed procedure is relevant to the F card holder: Provided that where any action is contemplated against a G card holder alone under these regulations, then instead of authority referred to in subregulation (8), a Deputy Commissioner or Assistant Commissioner rank officer shall pass such order as mentioned in the said sub-regulation along with debarring such G card holder from transacting the business under these regulations for a period of six months from such order. Provided further that where an order is passed against a G card holder, then he shall surrender the photo identity card issued in Form G forthwith to the Deputy Commissioner of Customs or Assistant Commissioner of Customs. Explanation . - Offence report for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be further revoked in continuation of such suspension or the said suspension itself can be revoked. Further, such order under Regulation 17(7) ibid, has to be specific and is feasible to be implemented on the date of the issue of such an order. There is no express legal provision, for revocation of a CB license, that is already revoked by an earlier order issued under Regulation 17(7) ibid. In other words, there can be only one order for revocation of the CB license, as it purport to cancel the existing CB license. It is also to be noted that there is no legal provision under Regulation 17(7) ibid, for issue of an order as deemed revocation of CB license to take into effect on a future date, in case the earlier order of the same authority is set aside in any appellate forum, immediately with effect from such order of the appellate authority. It is a fact that on the date of passing of the impugned order 23.11.2023, the earlier order of the Principal Commissioner suspending the appellants was in effect and on appeal by the appellants, the Tribunal had passed an order in respect of the Order-in-Original No. 64/CAC/PCC(G)/ SJ/CBS-Adj. dated 30.12.2022 in the earlier case of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the impugned goods covered under various B/Es from one Shri Sambhaji R Bhosale, forwarding agent/ intermediary, who had known Shri Santosh R Bhosale, being his younger brother and IEC holder proprietor of importer firm M/s Ninai Enterprises; and the importer firm M/s Laxmi Enterprises through Shri Shiv Narayan Saxena, proprietor of M/s Asian Machine Tools and his known accomplice in the import export trade. 8.3 The impugned goods in which under-valuation and mis-declaration were alleged have been imported through thirteen B/Es during the December, 2018 to August, 2021 and the Customs investigation for the past imports was initiated based on a live B/E 6357327 dated 22.11.2021. Thereafter, search of the premises of the importers, appellants were conducted and voluntary statements from various persons were recorded on 29.11.2021. However, subsequently Shri Abdul Rehman Dalvi, partner of the appellants CB was called for participating in the investigation only on 29.11.2021 for recording his statement under Section 108 of the Customs Act, 1962. Further, the allegation against the importer is that they attempted to mis-declare the description and under valuation of imported goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held against the CHA firm to prove that the CHA licence was sub-let or transferred. Therefore, in the light of the judgments cited above, the charge of violation of Regulation 12 is not established. As regards the violation of Regulation 13(a), the adjudicating authority himself has observed that the I have no doubt to say that the CHA might have obtained the authorisation but it is surely not from the importer. Therefore, the authorisation submitted is not a 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 suffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 detailed guideline on the list of documents to be verified and obtained from the client is contained in the Annexure to the Circular dated April 8, 2010. It has also been mentioned in the aforesaid Circular that any of the two listed documents in the Annexure would suffice. The Principal Commissioner noticed in the impugned order that any two documents could be obtained. The appellant had submitted two documents and this fact has also been stated in paragraph 27(a) of the order. It was obligatory on the part of the Principal Commissioner to have mentioned the documents and discussed the same but all that has been stated in the impugned order is that having gone through the submissions of the Customs Broker, it is found that there is no force in the submissions. The finding recorded by the Principal Commissioner that the required documents were not submitted is, therefore, factually incorrect. 35. The Principal Commissioner, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercise 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; xx xx xx xx In view of the above, I am of the considered view that the CB failed to exercise due diligence to ascertain the correctness of information in respect of fraudulent exported goods and was also not in position to impart any information to the exporter with reference to any work related to clearance of cargo or baggage. Therefore, I hold that the CB has violated the provisions of Regulation 10(e) of the CBLR, 2018. 14.5 With regard to violation of Regulation 10(n) CBLR, 2018:- xx xx xx xx From the above facts and circumstances, I am of the considered view that the CB in the present case showed an act of carelessness which resulted in fraudulent activities. Therefore, I hold that the CB has violated the provisions of Regulation 10(n) of the CBLR, 2018. 14.6 With regard to violation of Regulation 10(q) of CBLR, 2018:- xx xx xx xx The IO in his report dated 07.08.2023 has stated that Shri Abdul Rehman Dalvi, son of the deceased working partner, though not authorised card holder, had appeared before the investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking such action by the licensing authority. The above casual manner of handling the customs broking license matters by the authorities below do not instill confidence with us to state that CBLR is properly implemented for the purpose for which it has been framed for carrying out the provisions of Section 146 of the Customs Act, 1962. Hence, on this account too, the impugned order is not legally sustainable. 11. In respect of the allegation against Regulations 13(3), 13(4), 13(7) and 13(12) ibid, learned Principal Commissioner had found that Shri Sambhaji R Bhosale have acted in an unauthorized manner an illegally in filing, processing the B/Es and Shri Abdul Rahman Dalvi in conducting the day to day activities of CB firm. Hence, he concluded that the appellants have violated the regulations and failed to fulfill the obligations under the said Regulations. In this regard, we find that that the appellants CB firm, after the demise of the proprietor had obtained the permission of the Deputy Commissioner of Customs, CB section, New Custom House vide Notice No.177/2019-20 dated 04.11.2019 for transacting business through their employee cum G-card holder Shri Majid Patel; and later als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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