TMI Blog2020 (1) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation is not evident. In these circumstances, the findings of the enquiry officer do not appear to have any basis. The conclusion arrived at by the licensing authority that verification of antecedents would have led to detection of the undervaluation does not appear to be founded on logic. Appeal allowed - decided in favor of appellant. - CUSTOMS APPEAL NO: 86336 of 2019 - A/87212/2019 - Dated:- 26-8-2019 - HON BLE MR C J MATHEW, MEMBER (TECHNICAL) AND HON BLE DR SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Shri Sanjeev Nair, Advocate for the appellant Shri Bhushan Kamble, Assistant Commissioner (AR) for the respondent ORDER PER: C J MATHEW This appeal has been filed by M/s Omkar Freight Forwarders Pvt Ltd who had been issued with a licence under the erstwhile regulation 7(1) of Customs Brokers Licensing Regulations, 2013 and had handled a single consignment, out of the total of seven, imported by M/s Asia Impex, whose import of electronic goods was found to have been undervalued with consequent differential duty liability of ₹ 20,32,002. The licensing authority, Commissioner of Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of negotiations, or dealings, with the shipper. A custom broker deals with the cargo intended for presentment and with the documents required for clearance. It is virtually impossible to deduce undervaluation from either the physical verification or documentary scrutiny implicit in this role and the difference between the declared value and the finally assessed value is barely 15%. It is, therefore, not determinable that the appellant had failed to advice the client to comply with the provisions of Customs Act, 1962. There is no evidence, except the statement said to have been recorded from a former Director of the appellant-company, that the antecedents were not verified. While the Director would not have been concerned with such verification, there is no evidence on record that such obligation under regulation 11(n) of Customs Broker Licensing Regulations, 2013 had not been undertaken by an employee of the licensee. We gather strength for this proposition from the non-issue of notice under Customs Act, 1962 to the customs broker or to the Director. Therefore, the role of the appellant in the alleged undervaluation is not evident. In these circumstances, the findings of the enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the shipping bills, cannot be deemed as misdeclaration by the CHA because the said document was filed on the basis of information provided to it by M/s. H.M. Impex, which had already been granted an IE Code by the DGFT. The grant of the IE Code presupposes a verification of facts etc. made in such application with respect to the concern or entity. If the grant of such IE Code to a non-existent entity at the address WZ-156, Madipur, New Delhi - 63 is in doubt, then for such erroneous grant of the IE Code, the appellant cannot be faulted. The IE Code is the proof of locus standi of the exporter. The CHA is not expected to do a background check of the exporter/client who approaches it for facilitation services in export and imports. Regulation 13(e) of the CHALR, 2004 requires the CHA to : 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 (emphasis supplied). The CHAs due diligence is for information that he may give to its client and not necessarily to do a background check of either the client or of the consignment. Documents prepared or filed by a CHA are on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on this aspect. In cases where revocation of license has been upheld (i.e. the cases relied upon by the Revenue), there has been an element of active facilitation of the infraction, i.e. a finding of mens rea, or a gross and flagrant violation of the CHA Regulations. In Sri Kamakshi Agency (supra), the licensee stopped working the license, but rather, for remuneration, permitted his Power of Attorney to work the license, thus in effect transferring the license for money. As the CESTAT noted, 9 [a]pplicant instead of discharging his functions as a Custom House Agent in accordance with the Regulations, in flagrant violation of those Regulations went to the extent of encashing the facilities made available to him as a CHA by selling it for a price . Moreover, the Power of Attorney was - as a matter of fact - actively involved in the fraudulent act in connivance with the importers and others and that as per the Power of Attorney Bond executed by Sri K. Natarajan, all acts, deeds and things done by Sri D. Sukumaran were to be construed as if they were done by himself. Therefore CUSAA 1-2016 12-2016 Page 11 of 15 virtually all the fraudulent activities carried out by the Power of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he misuse if the said G cards , but do not give adequate, if any weight, to this crucial factor. There is no finding of any mala fide on the part of the appellant, such that the trust operating between a CHA and the Customs Authorities (as a matter of law, and of fact) can be said to have been violated, or be irretrievably lost for the future operation of the license. In effect, thus, the proportionality doctrine has escaped the analysis. 12. Learned Senior Standing Counsel for the Customs has stressed that the infraction in this case is not a routine matter, but rather, illegal smuggling of narcotics by the G card users. However, given the factual finding that the CHA was not aware of the misuse of the G cards (and thus, also unaware of the contents being smuggled), no additional blame can be heaped upon the CHA on that count alone. Rather, the only proved infraction on record is of the issuance of G cards to non-employees, as opposed to the active facilitation of any infraction, or any other violation of the CHA Regulations, whether gross or otherwise. Neither have any such allegations been raised as to the past conduct of the appellant, from the time the license ..... X X X X Extracts X X X X X X X X Extracts X X X X
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