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TMI Blog2025 (2) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to the conclusion that mere reference to documents handed over by Shri Lokesh Bansal and Mr. Tarun Jain without knowing the exporters does not constitute diligence which was required for verification of KYC documents. The officer concerned in the impugned order came to the conclusion that it is evident that Customs Broker failed to act in accordance with their obligation as mentioned in Regulation 10(d) & 10 (n) of the Customs Broker Licensing Regulations, 2018 as they did not verify the address, or verified it and found it to be non-existing but did not report the same. It has been a serious lapse on part of the Customs brokers, which resulted in loss of revenue. Inquiry Officer has confirmed the contravention of said regulation by the CB. Thus, the CB has contravened the provisions of Regulations 10 (d) and 10 (n) of CBLR, 2018. Therefore, it is clear that the Additional Commissioner of Customs Nhava Sheva of Order-In-Original dated 29.11.2023 was not having jurisdiction to pass any order regarding violation of relevant provisions of CBLR, 2018 by the appellant. Therefore, if any observation was made by the Additional Commissioner of Customs Nhava Sheva of Order-In-Original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced by the exporter was sent for verification to FSP Cell, JNCH on 8th November, 2016 wherein it was informed that the said FSP letter was not issued by their office. Therefore, the matter was referred to the Central Intelligence Unit (CIU), JNCH on 10th November, 2016 for investigation. 1.3 The goods contained in the abovementioned containers were examined by the officers of CIU, JNCH at CONCOR DRT CFS under panchnama. During further investigation, it was found that the invoices submitted to the Central Excise Department for the subject consignments at the time of factory stuffing were different from the invoices produced for Customs clearance. Thereafter, a search was conducted at the premises of M/s. Neminath Industries situated at Gala No. 6, Bhayander Industrial Estate, CSM Road, Bhayander East, Thane on 11.11.2016 by a team of officer of CIU, JNCH and Central Excise, Thane-II office. However, it was found that Gala No. 6 does not exist in the Bhayander Industrial Estate. Further inquiry revealed that M/s. Neminath Industries used to function from Gala No. 1, Naronha Estate, near United Rubber Industries, Near Ghatak, Kashi- Mira Road, Bhayander East, Thane which was in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e summons. 1.7 A Show Cause Notice No. 2554/2022-23/ADC/CEAC/CAC/JNCH was issued by the Additional Commissioner of Customs, Nhava Sheva calling upon to show cause as to why the penalty should not be imposed under Section 114 (iii) of the Act and as to why suitable action as per Regulation 19, 20 and any other Regulation should not be taken under Customs Brokers Licensing Regulations, 2013. On 29th November, 2023, Order-In-Original No. 1077/2023-24/ADC/NS-II/CEAC/CAC/JNCH was passed by the Learned Additional Commissioner, Nhava Sheva whereby the officer ordered for confiscation of the impugned goods having total declared FOB Value of Rs. 1,38,86,625/- attempted to be exported vide shipping bills mentioned in the order. He also ordered for recovery of amount of Rs. 12,15,447/-, which was fraudulently availed as draw back by M/s Neminath Industries, against the goods attempted to be exported with respect to shipping bills mentioned in the order from the exporters. The Officer also imposed penalty of Rs. 15 lakhs on M/s. Neminath Industries under Section 114 (iii) of the Customs Act Rs. 30 Lakhs under Section 114 AA of the Customs Act, 1962, collectively on Mr. Tribhavan Budhiram Verm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Regulation 14 read with Regulation 17 for failure to comply with the provisions of Regulation 10 (d) and Regulation 10 (n) of CBLR, 2018. 1.11 The said show cause notice dated 22nd September, 2023 was adjudicated vide Order-In-Original No. KND-CUSTM-000-COM-16-2023-24, (hereinafter referred to as "the impugned order") whereby the respondent inter-alia held that the appellant failed to act in accordance with obligation as mentioned in Regulation 10(d) and Regulation 10(n) of CBLR, 2018 as they did not verify the address or if verified and found to be non-existing, did not report the same to the customs authority. 1.12 Feeling aggrieved from this order, the appellant has filed present appeal before this Tribunal. 2. Learned Counsel for the appellant argued that the learned Additional Commissioner of Customs, Nhava Sheva vide Order-In-Original No. 1077/2023/ADC/NS-II/CEAC/CAC/JNCH dated 29.11.2023 dropped the penalty proposed under Section 114 (iii) of the Act. The said order also specifies the fact that the appellant has not aided or abetted in the alleged fraudulent exports by M/s. Neminath Industries, M/s. Arihant Industries and M/s. Aadinath Industries. It was also held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Brokers had failed to comply with the "due diligence" requirement under Regulation 11 of the Customs Brokers Licensing Regulations, 2013. 2.3. The learned Counsel for the appellant also submitted that above mentioned order dated 29.11.2023 attained finality and therefore, when the officer concerned gave clean chit to the appellant then another Customs Authority proceeding under the provisions of CBLR, 2018, cannot initiate any action by clearly ignoring reasoning and findings by another Customs Authority. 2.4. The learned Counsel for the appellant also submitted that when on 24.07.2023 and 23.08.2023 Order No. KND-CUSTM-000-COM-02-2023-24 and Order No. KND-CUSTM-000-COM-06-2023-24 were passed against the appellant through which the license of the appellant was suspended and the suspension was continued in terms of Regulation 16 (2) of the CBLR, 2018, the appellant challenged the above mentioned orders before this Tribunal vide Appeal No. C/10676/2023. This Tribunal, vide Order No. 10041/2024 was pleased to quash and set aside the Order-In-Original challenged by the appellant and it was held that there is no requirement under CBLR for the customs broker to physically verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Broker has to physically go to the premises of importer/exporter to ensure that they are functioning at the declared premises. Further, it was an ongoing export under the supervision of Central excise officials and the relevant documents of previous exports were verified. Therefore, the Appellant has duly fulfilled the mandate of Regulation 11(n) of CBLR, 2013. The learned Counsel for the appellant submitted his above mentioned arguments by rulings in (a) Anax Air Services Pvt. Ltd. Vs. CC (Airport & General), New Delhi, Final Order No.50002/2022 dated 01.01.2022 passed by Hon'ble CESTAT, New Delhi. (b) S. Prakash Kushwaha & Co. Vs. CC, (Airport & General), New Delhi, 2023 (384) E.L.T. 89 (Tri. Del.) (c) Perfect Cargo & Logistics Vs. C.C. (Airport & General), New Delhi, 2021 (376) E.L.T. 649 (Tri. - Del.). 2.9. The learned Counsel for the appellant also argued that the responsibility of the Customs Broker under Regulation 10(n) does not include keeping a continuous surveillance on the client to ensure that he continues to operate from that address and has not changed his operations. Therefore, once verification of the address is complete, if the client moves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Authorized Representative and perused the record. 4. We are of the view that the impugned order has been passed by the officer concerned after taking into consideration all the peculiar facts of the case and the impugned order has been passed in accordance with the Regulation 10 (D) and 10 (N) of CBLR, 2018. 4.1. We have gone through the provisions of Regulation 10 (D) and 10 (N) of CBLR, 2018 which are as follow: "10 (d): A customs Broker shall advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, 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 10 (n): A Customs Broker shall verify correctness of Importer Exporter Code (IEC) number, Goods 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; " 4.2. While passing the impugned order the officer concerned came to the conclusion that Customs Broker M/s. Purshotam Chatrabhuj Thackar has not verified the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Neminath Industries & Others signed in advance by Mr. Tribhavan Budhiram Verma/Nath & Mr. Damer Bahadur Subba, Mr. Lokesh Bansal was operating those Bank accounts with the help of employee of Mr. Tarun Jain. Based on the forged letters submitted to Bank and impersonating as Superintendent of CIU JNCH, when the bank accounts pertaining to M/s. Neminath Industries & Others were got defreeze, and Mr. Tarun Jain sent his employee to withdraw amount from those accounts of M/s. Neminath Industries & Others. 36. It has been found in the investigation that Mr. Tribhavan Budhiram Verma was a daily wager and worked in Mr. Tarun Jain's factory for 2-3 months. If the CB has verified the identity of their client as given in the regulation 10(n) and met the IEC holder, they could see the correct picture, that a daily wager cannot be the proprietor of an export firm having regular ongoing export activity. The fact found in the Inquiry Report clearly show that the CB failed to verify the identity of their client and functioning of their client at declared address. 37. The Custom Broker are obligated under the Regulation 10 (n) of the Custom Brokers Licensing Regulations 201)) to verify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en clean chit to the appellant. We are of the view that this argument of the appellant is not proper. It is pertinent to mention here that Additional Commissioner of Customs Nhava Sheva of Order-In-Original dated 29.11.2023 has observed as follows :- "45. However, I find that Licensing Authority the Customs Broker Section has already initiated proceedings for violation of, Rule 11 of CBLR 2013 by the Customs Brokers. In the circumstances, when the inquiry has already been initiated by the Customs Broker Section, New Customs House, Mumbai for any violation of Regulation 11 of CBLR 2013against the Customs Brokers and since the alleged failure of the Customs Brokers in verifying the address of the exporters are issues which falls under the jurisdiction of CBLR, 201), I refrain from recommending any action under Regulation 19 and 20 of CBLR, 2013 against the Customs Brokers. Even otherwise as an adjudicating authority under the Customs Act, 1962, I am not authorized to carry out an Inquiry and take any action under the CBLR, 2013 for which the appropriate authority is the Principal Commissioner/Commissioner (General)." 4.10. Therefore, it is clear that the Additional Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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