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2019 (10) TMI 63

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..... mposition of penalty against the customs broker M/s HLPL Global Logistics Pvt. Ltd. have been quashed. The proceedings against the present appellant also cannot sustain in the present case - Appeal allowed. - Customs Appeal No. 51282 of 2018 - FINAL ORDER NO. 51280/2019 - Dated:- 1-10-2019 - SHRI ASHOK JINDAL, MEMBER (JUDICIAL) AND SHRI C.L. MAHAR, MEMBER (TECHNICAL) Shri B.L. Garg, Advocate - for the appellant. Shri Sunil Kumar, Authorized Representative (DR) - for the Respondent. ORDER The present appeal has been against the order dated 12/02/2018 passed by the learned Commissioner of Customs (General), New Custom House, Near IGI Airport, New Delhi (hereinafter referred to as the impugned order) ordering revocation of the CHA license No. R-35/2010 of the appellant herein and forfeiture of the whole amount of security deposit of ₹ 75,000/- furnished by the appellant under Regulation 18 readwith Regulation 20 (7) of the Customs Brokers Licensing Regulations, 2013 (hereinafter referred to as CBLR, 2013). 2. The appellant is holder of the aforesaid Customs Broker License issued by the Commissioner of Customs (I&G), New Delhi. The show cause notice dated 30/08/2017 was issue .....

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..... d such fraudulent scrips for effecting clearances of 37 bills of entry involving a customs duty of ₹ 1,11,98,374/-; that these duty credit scrips were purchased by the appellant and the same were used by them by debiting customs duties on behalf of various importers who were their clients and that the appellant made payments to some Kolkata based firms namely, Raj Impex, Rakesh Industries, Sunshine Global Importers, Reva Trading, Shadow Corporation, Modak Impex and Maruthi Enterprises for purchase of the said forged duty credit scrips/licenses, but the money was transferred to their Hyderabad, Chennai, Surat and Mumbai accounts; that an amount of ₹ 63,26,304/- was transferred from the account of the appellant for purchase of forged licenses to M/s Rakesh Industries, M/s Raj Impex and M/s Reva Trading which were found to be non-existent at the given addresses. In some cases payments were directly made by the importers against the purchase of these scrips. Shri Alok Mehra, the proprietor of the appellant firm in his statement admitted that he was not in possession of the hard copy of the licenses/ duty credit scrips as Shri Lalit Jain of M/s Ribs Exim through whom he purc .....

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..... of not having seen the copy of the said licenses himself, he did not advise the importers properly before making duty debit nor did he inform the custom officers about the non-availability of original scrips and, therefore, the CB (appellant) failed to perform the duties as prescribed under Regulation 11 (d) of the CBLR, it was the duty of the CB (appellant) to ensure that the duty credit scrips provided by Shri Lalit Jain were genuine before purchasing the same for their importers and that the duty credit scrips purchased were original and amount mentioned in the EDI system is available as seen in the hard copy of the license from the debit sheet and he ought to have informed the client accordingly which the appellant failed to do. Therefore, the CB (appellant) had failed to exercise due diligence in performing his duties and had contravened the provisions of Regulation 11 (e) of the CBLR. 4. Though the show cause notice was already issued on 30/08/2017 on the basis of DRI final investigation, an enquiry report was submitted on 24/11/2017 as per the provisions of CBLR. In the findings of the enquiry report it has been stated that it is the duty of the custom officer to register th .....

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..... final investigation report or show cause notice in the matter had not been received from the investigating agency. And moreover, since almost three years had already been passed when the imports took place in this case, there was no ground for immediate action against the CB. Further, as the investigation in the matter is still pending, the detailed role of the CB is yet to be ascertained. 6. In the present proceedings, the appellants submitted before the adjudicating authority that the present show cause was nothing but repetition of earlier suspension proceedings as the same had been issued to them on the basis of the same set of investigations by the DRI which had earlier been conducted by the SIIB, ICD, TKD, New Delhi and which had later been transferred to the DRI for further investigation. The appellant has only traded in part values of the scrips which already stood registered. So far as trading of the fully transferable scrips by the appellant is concerned, it is reiterated that no law, including the customs law and the CBLR, prohibits trading by a custom broker or any other person which already stood registered in the custom EDI system and the same was fully verifiable by .....

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..... hat the CB could have verified the genuineness of the licenses/duty credit scrips from the DGFT website which they failed to do and, therefore, the CB has knowingly, willfully and deliberately suppressed the fact from the custom officer that the said duty credit scrips were fake/forged and also not advised their clients accordingly; that therefore, the CB (appellant) failed to perform the duties as prescribed under Regulation 11 (d) of the CBLR; that the CB could have easily accessed the DGFT site and checked the status of the scrip/license and in case of licenses/duty credit scrips which were not issued by the DGFT at all and were fraudulently registered in the EDI system and which were later utilized for payment of duty, the CB could have asked the seller to produce the original scrip/license to cause necessary verification from the DGFT website; that as the CB failed to do so, they have failed to exercise due diligence in performing his duties and has thus contravened the provisions of Regulation 11 (e) of the CBLR. The learned Commissioner has further observed that the earlier suspension order dated 19/05/2016 was issued against the offence report received vide letter dated 28/ .....

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..... e after these were duly registered in the EDI system by the custom authorities and were being used regularly. Therefore fraud in this case if had happened, it has happened at the time of registration and not at the time of utilization for duty payment. The license holders M/s Rajkumar Impex Pvt. Ltd., and others had fraudulently got registered the licenses at ICD, TKD which were sold to unsuspecting importers and custom brokers for utilization. That the appellant has not furnished any incorrect information to its clients. As far as the duty payment on the import consignment was concerned, the same had to be paid by the importer himself or through the appellants either in cash or debit to the license. Since the importer informed the appellants that they had purchased the subject VKGUY license and duty had to be paid by debiting of these licenses which the customs authorities verified in the EDI system. The verification of scrips from the DGFT site was as reliable as the verification from the physical/hard copies of the scrips and balance against the license in the EDI system should have given the actual value available for debit and it is least expected that any fraudulent attempt b .....

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..... e submissions made by the appellant and followed the enquiry report in this case. It is evident from the records of the case that the appellants have obtained the duty free licence from M/s Him Logistics Pvt. Ltd. or through a broker Mr. Lalit Jain and utilised the same towards the payment of Customs duty for the consignment imported by their client. It was held in the inquiry report the appellant was responsible for utilisation of forged duty scrips for the payment of customs duty, and therefore, not observed due diligence in conducting their business as per the provisions of CBLR. In this regard, we find that free duty licences/ duty credit scrips have been registered at the various customs port other than ICD and available on EDI system. As per the procedure prescribed under EDI system, it is not possible for the appellant to temper with the data/ information contained in the EDI system which is foolproof and secured system is prescribed not by one or two but by five officers of the customs including the Joint and Additional Commissioner. In this regard, we place our reliance on the decision of Hon ble High Court in Writ Petition No. CRL 1338/2018 which is reproduced as under; 3 .....

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