TMI Blog2020 (6) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid by him. Also, appellant raised the bill of service charges on M/s. Alfa Exim and not on the actual importers. Also, the stand of the appellant that Shri Damodhar Moddiboina was not the authorized person by the appellant to handle the KYC verification and the same was done by Shri Bahusali, is not tenable because Shri Damodhar Moddiboina in his statement given before the Customs authority during the investigation never stated that Shri Bahusali is the KYC person. Moreover, all the documents were submitted by him. The appellant has violated the Regulations as alleged in the show-cause notice and are guilty of gross negligence in performance of their duties as Customs Broker - the revocation of Customs Broker licence is a harsh punishment which will deprive the appellant from their livelihood along with livelihood of all those people working with them - revocation is set aside - forfeiture of security deposit upheld - penalty also upheld - appeal allowed in part. - Customs Appeal No. 21038 of 2019 - Final Order No. 20359 /2020 - Dated:- 12-6-2020 - HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI P. ANJANI KUMAR, TECHNICAL MEMBER Appearance: Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir submissions before the Commissioner of Customs, Bangalore. After considering the findings of the Inquiry Officer, the Commissioner passed the impugned order. Hence the present appeal. 3. Heard both sides and perused the records. 4.. Learned counsel for the appellant submitted that the impugned order is not sustainable as the same has been passed without appreciating the entire facts, evidences and law. He further submitted that the Commissioner has failed to appreciate that the Custom Broker Licence has already been revoked and security deposit has been forfeited in another proceedings and therefore the proposal in the present proceedings ought to have been dropped as no purpose will be served by continuing the proceedings. He further submitted that the Commissioner has failed to discuss the question of not following the statutory procedure prescribed under Section 128B of the Customs Act, 1962. He further submitted that the Inquiry Officer as well as the Commissioner has only relied upon the statement of Shri Damodhar Maddiboina who was only employee looking after the marketing area of the firm and was not concerned with the KYC verification being done by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the companies, firms or individuals by whom he is for the time being employed as a Customs Broker and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; (d) advise his client to comply with the provisions of the Act 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; (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 antecedent, correctness of Importer Exporter Code (IEC) number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information; 6.2. Further we find that in the present case there are serious allegations against the appellant regarding the violation of various Regulations as to not properly authorized by the importer and not advised the importer regarding the compliance of Customs Act and also not verified the IE code, antecedents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e front man for fraudster Shri. Sarfarz and Shri. Majid. The authorisations were falsely obtained by the fraudsters from gullible people on whose names the duo opened IECs to carry out the fraudulent imports, The Customs Broker having no regard to his role and obligations under the Regulations, prolifically allowed the fraudster by the callous approach towards customs clearance work. Concurring fully with the IO I hold that the Noticee had failed to comply with the Regulation 11(a)/10(a) of CBLR, 2013/2018. 18.1 The second allegation of failure is that the Noticee having interacted with third persons without interacting with the actual IEC holders for whom the filed the Bills of Entry were in no position to comply with Regulations, Regulation 11(d)/10(d) of CBLR 2013/2018. The Inquiry Officer held the charge of failure to comply with Regulation 11(d)/10(d) on the ground that it is admitted by Shri. Damodar that they have never verified the identity of the exporter; that this is fortified by the fact that the IEC holders were not aware of imports in their name. Thus, JWFF were in no position to comply with the requirement of compliance under Regulation 11(d)/10(d). The Noticee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incharge of imports, or the Director/ Partner of a small company/firm or Proprietor in case of Proprietorship. Now, the Noticee as held by the IO has not identified or verified identity of the importer. The documents were received through Shri. Dinesh Joshi pf M/s. Alfa Exim who Is neither the importer nor their authorized representative. No other person was ever got in touch either by phone or by email. Given the situation, it is hard to accept that the CB has discharged the obligation of giving a general advise. The CB vehementy argued that there is no requirement to verify the premises as held by Tribunal In HIM Logistics case. While the CB was not required to physically verify the premises, in HIM Logistics case, Tribunal nest held that the general advise which is mandated in Regulation 11(d)/10(d) also is not required. Tribunal also not held that the CB need not verify identity of Exporter and file documents for clearance of imports/exports of any exporter without ensuring whether such consignments belong to the importer/exporter. Such an interpretation of case law and application of it universally will create a havoc where fraudsters will have their way of importing/ exportin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.2 I have examined the rival contention above. Firstly, Shri. Damodar Maddiboina during his examination by the Inquiry Officer, rendered the following answer to question No. 3. 3. Have you obtained Authorisation? Have you verified whether Shri. Dinesh is an employee/authorized representative of importer? How is this ensured? Shri. Damodar Maddiboina stated that Shri. Dinesh know the importer. He stated that Shri. Dinesh is his friend and is in the business for some time. He submitted all the documents to him. However, he stated that he never met any importer as Shri. Dinesh managed everything. He also stated that head office is in Bangalore was not aware of this fact. He admitted that he failed to ensure that the actual importers are identified and he completely relied on Shri. Dinesh. Shir. Jagadish concurred with the reply of Shir. Damodar Maddiboina. 19.3 As per the above averment of Shri. Damodar Maddiboina has taken the documents from Shri. Dinesh Joshi. This fact is corroborated by Shri. Jagadish. Shri. Dinesh Joshi has in statement admitted to have given the documents to Shri. Damodar Maddiboina. The documents were all received by Shri. Dinesh Joshi fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due diligence in any manner. I completely concur with the IOs finding that the charge of failure to comply with Regulation 11(e)/10(e) is sustained against the Customs Broker. 20.1 The next charge is that of failure to comply with Regulation 11(n)/10(n) of CBLR, 2013/2018 which requires that the CB shall verify correctness of Importer Exporter Coder (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. The Show Cause Notice alleged that all the Importers/IEC holders have stated that they were not aware of the imports being done in their name/IEC. In as much as M/s. JWFF did not verify the identity of the importers, existence and funcationing at the declared addresses, they have filed to comply with Regulation 11(n)/10(n) of CBLR, 2013/2018. The Inquiry Officer held that the charge is sustainable on the ground that the facts of the case which were not disputed by M/s. JWFF are that two persons Shri. Majid and Shri. Sarfaraz whom the customs broker never met obtained IECs from gullible people and started importing g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and examine every person especially when one of the partners is examined. The Partner has the responsibility under the Regulations to act on behalf of the CB firm. In any case, even without the statement of Shri. Damodar Maddiboina, it is a fact that the identity of lmporters was not verified by the nodes as can be elicited from the statements of Shri. Dinesh Joshi, Shri. Sarfaraj, Shri. Majid and all the IEC holders. Shri. Jagadish, Partner of Noticee during examination has not claimed anything contrary to what has been admitted by Shri. Damodar and other persons who have rendered their statements under Section 108 of Customs Act, 1962. Even while contending the IOs findings, the Noticee have not produced any evidence that they have ever verified the identity of importers and their existence of at declared promises. On the otherhand, the IEC holders have stated that they were not aware of any imports by them. They have stated that for petty money they lent their credentials to some people who turned out to be the fraudsters. Had the CB carried out this basic verification of identity of IEC holders and whether they are sending the import documents, the duty evasion would not have o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... misconduct calls for exemplary punishment. 6.3. Further from the Inquiry Report, we find that the appellant has admitted that they have not verified the identity of the importer. All the documents were received from Shri Dinesh Joshi of M/s. Alfa Exim who is neither the importer nor their authorized representative. Further we find that during the investigation, statement of Shri Sarfraz and Shri Majid were recorded and they have admitted that they have imported the goods and paid the duty by cash to Shri Dinesh Joshi which was paid by him. We also find that appellant raised the bill of service charges on M/s. Alfa Exim and not on the actual importers. We also find that the stand of the appellant that Shri Damodhar Moddiboina was not the authorized person by the appellant to handle the KYC verification and the same was done by Shri Bahusali, is not tenable because Shri Damodhar Moddiboina in his statement given before the Customs authority during the investigation never stated that Shri Bahusali is the KYC person. Moreover, all the documents were submitted by him. Even in the second statement made by Shri Damodhar Moddiboina dt. 28/06/2018, he did not name Shri Bahusali as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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