TMI Blog2023 (6) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... ther things. Therefore, the impugned order based upon such an enquiry report is contrary to the procedure prescribed by Regulation 20(4) and clearly in violation of the principles of natural justice. The proceedings under the Customs Act, 1962 emanated from alleged conspiracy to export cut and polished diamonds through entities existing only on paper for the sole purpose of receiving proceedings for evading oversight and control by the agencies of the State. There is no dispute that the exports did occur; non-receipt of remittance in foreign exchange fall outside the obligation devolving customs brokers whose functioning, under the Regulations, is limited to filing of shipping bills and securing of let export orders before outward transmission beyond customs area. In such circumstances, the sole responsibility that may be laid at the door of customs broker pertains to ascertainment of identity of the exporters. The want of diligence in doing so has been held against the customs broker herein by relying upon the admissions of several of the importer-exporter code (IEC) holders that denied connection with the export consignments and, more particularly, on that of an empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , notwithstanding shipping bills having been filed to enable 14 entities in export of cut and polished diamonds o which only four alleged to be existing, their role in the narrative did not justify revoking of customs broker licence, along with forfeiture of security deposit, and further imposition of penalty of ₹ 50,000/- under regulation 18 of Customs House Broker Licensing Regulations, 2018. Besides the statement of several persons whose identity had been allegedly misused to secure importer exporter code (IEC) numbers and claimed to have nothing to do with the consignments., those of the representatives, including the proprietor and manager, of the appellant herein had been relied upon to impose the detriments on the appellant, formed the basis for initiating proceedings mandated by regulation 17 of Customs House Broker Licensing Regulations, 2018. 2. Before proceeding to deal with the submissions, on merit and on procedure, preferred on behalf of the appellant by Learned Counsel, it may not be amiss to tarry awhile on the substantive distinction between penal proceedings arising directly from infringement of provisions of Customs Act, 1962 and that which is in pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent that these are relatable to identified breaches. Narration facts, sometimes even before confirmation in adjudicatory proceedings, to be drawn upon by inquiry authority or licencing Commissioner in any order without respect for causal linkage is akin to a buffet that is oblivious to the sequence of courses or even palatability. 6. The cavil about the shipments is that sale proceeds of exports were not received through formal banking channels and that effecting such exports, nominally through holders of importer-exporter code (IEC) numbers, enabled diversion of sale proceeds received from abroad. On the other hand, the primary submissions of the customs broker is that, as far as cut and polished diamonds are concerned, their responsibility is restricted with the goods, in accordance with prevailing special procedure, are personally handed over to customs officers for assessment and that the time-lines in Customs House Broker Licensing Regulations, 2018, prescribed for completion of each stage of proceedings under regulation 17 therein, have not been adhered which remained untenable even within the framework laid down by the Hon ble High Court of Bombay in Principal Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would appear that, in relation to some of those, the appellant herein had sought cross-examination which was denied thus 15. In respect of Regulation 10(n) of CBLR, 2018, it has been alleged that the CB did not 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. 15.1 The defense submission stated that not even one IEC or GSTIN were fake; that every statutory document is genuine; that the identity and functioning of each exporter was verified by using reliable documents and the allegations based on statements, which were not tested in the inquiry, do not hold water; that denial of cross-examination on the ground that there is no retraction is illegal and unlawful; that retraction can never be a precondition for cross-examination. The Customs Broker relied on following judgements wherein it is held that cross- examination is mandatory: (1) Thakkar Shipping Agency-1994 (69) ELT 90 (Tribunal) (2) Smita International - 2008 (225) ELT 439 (Tribunal) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings under Customs Act, the right to compliance to the principles of natural justice does not cover the right to cross examination witnesses. Relevant Para 12 is reproduced wherein the Hon'ble Supreme Court observed as follows - In our opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. Accordingly, I hold that there is no force in the third contention of the appellant. ii. In the case of Fortune Impex Vs. Commissioner of Customs, Calcutta [2001(138) E.L.T.556 (Tri. -Kolkata)], Hon'ble Tribunal observed at Para 12 that: ...it is not required that in each and every case, crossexamination should necessarily be allowed. There is no absolute right of cross-examination provided in the Customs Act. The Advocate had given a list of 26 persons for cross-examination without indicating the specific reasons for cross-examining the...it cannot be said that there was violation of principles of natural justice by not allowing the cross-ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral procedure provided for, for holding adjudication proceedings under the Customs Act, would not stand attracted. Clauses 3 and 4 of Regulation 23 of the Regulations read thus : - (3) The Assistant Collector of Customs shall, in the course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the enquiry in regard to the grounds forming the basis of the proceedings and he may also put any question to any person tendering evidence, for or against the Customs House Agent, for the purpose of ascertaining the correct position. (4) The Customs House Agent shall be entitled to crossexamine the persons examined in support of the grounds forming the basis of the proceedings and where the Assistant Collector of Customs declines to examine any person on the grounds that his evidence is not relevant or material, he shall record his reasons in writing for so doing. From this, therefore, it is very clear that for the purpose of making use of any oral evidence, in these proceedings, such evidence has to be recorded by the Enquiry Officer, and the person giving such oral evidence has to be offered to the delinquent for cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars. and, in S mita International v. Commissioner of Customs (General), Mumbai [2008 (225) ELT 439 (Tri.-Mumbai)], that 2. We have heard both sides. We find force in the appellants' submission that statements relied upon against them were recorded under the provisions of Sec. 108 of the Customs Act, 1962, which cannot be relied upon in proceedings under the Customs House Agents Licensing Regulations, 2004, in the light of the ratio of the Tribunal s decision in Thakkar Shipping Agency v. CCE, Bombay [1994 (69) ELT 90], wherein it has been held that statement recorded under Sec. 108 of the Customs Act, 1962 cannot be used as evidence under CHALR and that recording of evidence and offering the persons for cross-examination is mandatory under Clauses 3 and 4 of the Regulation 23 of the CHALR, 1984 (the relevant provision is Regulation 22 of 2004 which is reproduced herein below and pari materia with the earlier Regulation 23 of the CHALR, 1984 Regulations :) 22. Procedure for suspending or revoking licence under Regulation 20 - (1) The Commissioner of Customs shall issue a notice in writing to the Customs House Agent stating the grounds on which it is proposed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n devolving customs brokers whose functioning, under the Regulations, is limited to filing of shipping bills and securing of let export orders before outward transmission beyond customs area. In such circumstances, the sole responsibility that may be laid at the door of customs broker pertains to ascertainment of identity of the exporters. 13. The want of diligence in doing so has been held against the customs broker herein by relying upon the admissions of several of the importer-exporter code (IEC) holders that denied connection with the export consignments and, more particularly, on that of an employee of the appellant on the specifics of the verification undertaken by the customs broker. As the case revolves around beneficiary exporter, operating under the cover of entities existing on paper and evidence of existence of such operator being hearsay, it was behoved the licensing authority to allow cross-examination rather than deny solely on the ground that the statements had not been retracted. It would appear that the licensing authority has not appreciated that cross-examination in the event of retraction is one way of restoring the contents of the statement which may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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