TMI Blog2023 (10) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned order was passed by the jurisdictional Principal Commissioner revoking the Customs Broker license granted to the appellants for the failure on the part of appellants to fulfill the obligations cast on them under Regulations 10(d), 10(e) and 10(m) of CBLR, 2018 and also imposed penalty of Rs.50,000/- besides forfeiture of entire security deposit. In the present case, the Banks have without verification of the shipping bills and GR forms have allowed the credit facilities to the exporter ABCCPL on the basis of check lists, even before the goods are actually exported out of the country. Further, RBI have also provided for a Caution list of exporters who do not repatriate their sale proceeds to be earned from their exports in time through an Export Data Processing and Monitoring System. Thus, irrespective of the appellants not informing the Customs about the non production of export goods, the above independent system of checks and data base would have brought to the fore, the export fraud committed by the exporter ABCCPL - the appellants have not caused any violation or in any way connected with the export fraud committed by the exporter ABCCPL and other connected persons. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment had preferred an appeal before the Hon ble High Court of Bombay in Custom Appeal No.41 of 2022, in which the Hon ble High Court of Bombay had ordered the following: 2. On earlier occasion, this Court had admitted the present appeal on the following questions of law: a) whether the CESTAT was right in ignoring the finding in Order-in-Original whereby it is held that the Respondent has violated provisions of Regulations 10(d), (w) (m) of Customs Broker License Regulations, 2018? b) Whether in the facts and circumstances CESTAT was right in allowing Respondent s appeal relying on an order dated 25th November, 2020 passed by the Commissioner of Customs, Nagpur in the case of M/s. Hiren Transport being a case under investigation report dated 17th January, 2019? 3. It is on the above background, we have heard the learned counsel for the parties finally on the present Appeal. We have perused the impugned order passed by the Tribunal and also the show-cause notice and Order-in-Original. Considering the facts and circumstances of the case, in the limited reasons, as set out in the impugned order, we are of the opinion that with all the issues arising in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is also reported that ABCCPL being a private limited company owned in majority and controlled by one Shri Ashish Jobanputra (AJ) as its Director, he was influencing the CHAs namely, M/s RSS Shipping P Limited ( its director) and M/s Kotak Multilink Logistix (Hardik Kotak) and the employees/directors of freight forwarding companies. They had entered into a criminal conspiracy with object to misrepresent before the banks to avail credit facilities. Shri Sanjeev Verma, Director of M/s RSS Shipping P Limited (RSSSPL) were doing CHA work under the authority of M/s Ramesh Transport Co., i.e., the appellants. Thus, the department alleged that appellants have handled exports in respect of RSSSPL and ABCCPL. Whereas the department alleged that appellants knowingly assisted the above ABCCPL and RSSSPL by providing false, fabricated documents as a part of export bills to the banks, separate proceedings under CBLR was initiated by jurisdictional Principal Commissioner on the appellants by immediate suspension of the Customs Broker s (CB) license of the appellants under Regulation 16(1) ibid, vide ex-party Order No.36/2019-20 dated 27.08.2019. After giving a chance for oral and written su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus unsubstantiated. 4.2. Further, learned Counsel also stated that the SFIO report clearly brought out that the entire fraud could have averted if the Bank officials had followed the guidelines issued by their banks and RBI in letter and spirit. Thus, he stated that question of complicity of the appellants in the fraud does not arise and the consequential action taken alleging violations of CBLR does not sustain. In this regard, he relied upon the following case laws: - (a) Delta Infra logistics (Worldwide) Pvt. Ltd. Vs. C.C. Bangalore 2019 (11) TMI 621 CESTAT Bangalore (b) Kunal Travels(Cargo) Ltd. Vs. Commissioner of Customs (Import General) 2017 (3) TMI1494-Delhi High Court (c) Rubal Logistics Pvt, Ltd. Vs. Commissioner of Customs (General) , New Delhi 2019 (368) E.L.T. 1006 (Del.) 5. Learned AR appearing for the Revenue reiterated the findings recorded in the impugned order. He further submitted that the appellants had no interaction with the exporter; they have processed the shipping bills without proper verification of exporters by using any reliable means, and never brought non-filing of shipping bills to the knowledge of Customs. Hence, he pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dling the export documents on collection/negotiation/discount. The main point for clearance of merchandise for exports is the signature of customs officials and release of Shipping Bill (SB) for submission to AD Banks with LEO Date along with other documents. The Customs authorities have a portal ICEGATE which indicates the status of the shipping bill i.e., whether the concerned SB number or Checklist number is allowed for export or purged in the computer system. Apart from the above, the bank officials and internal auditors are required to verify the status of the shipping bills at random to check the veracity of the SBs tendered along with the export documents. In this regard, I further find from perusal of para 4.6.7. (page-58) banks negotiated and discounted the export bills on the basis of checklist alone in gross violation of the guidelines as discussed in para 4.10.20, page-161 of the SFIO Report above. 6.6. I also find from the SFIO that as per the guidelines of the RBI, it was incumbent upon Banks to accept only the Shipping Bills (authenticated by the Customs) evidencing physical exports. But it appears from the SFIO report that the banks accepted the checklists a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Exchange Management (Current Account) Rules, 2000, as amended from time to time. 2. This Master Circular consolidates the existing instructions on the subject of Export of Goods and Services from India at one place. The list of underlying circulars/notifications consolidated in this Master Circular is furnished in Appendix. xx xx xx xx PART 3 C. Operational Guidelines for AD Category I banks C.1 Citing of Specific Identification Numbers (i) In all applications / correspondence with the Reserve Bank, the specific identification number as available on the GR, PP and SOFTEX forms should invariably be cited. (ii) In the case of declarations made on SDF form, the port code number and shipping bill number should be cited. C.2 GR/SDF/PP/SOFTEX procedure In terms of Regulation 6 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 notified vide Notification No. FEMA.23/2000-RB dated 3rd May 2000, as amended from time to time export declaration forms should be disposed of as under: C.3 (A) GR forms i. GR forms should be completed by the exporter in duplicate and both the copies submitted to the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are now made available on-line on the Reserve Bank s website www.rbi.org.in. The above instructions clearly brings out the role of exporter to submit the GR forms to the Customs and only after examination of the export goods and certification of the goods exported by Customs, the Banks are allowed for negotiation or collection of export bills. In the case before us, the Banks have without verification of the shipping bills and GR forms have allowed the credit facilities to the exporter ABCCPL on the basis of check lists, even before the goods are actually exported out of the country. Further, RBI have also provided for a Caution list of exporters who do not repatriate their sale proceeds to be earned from their exports in time through an Export Data Processing and Monitoring System. Thus, irrespective of the appellants not informing the Customs about the non production of export goods, the above independent system of checks and data base would have brought to the fore, the export fraud committed by the exporter ABCCPL. Thus, we are of the considered view that the appellants have not caused any violation or in any way connected with the export fraud committed by the exporter AB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n these statements that the appellants M/s Ramesh Transport Co. did not know about the fraud done by ABCCPL. Thus it is clear that ABCCPL, RSSSPL and Seamax Logistics Ltd., are responsible for the exports which did not happen and the BLs were wrongly stamped as shipped on Board by these persons for obtaining irregular export credit from the banks. In respect of exports, a check list is generated for the data entry made relating to exports on the basis of invoice, packing list etc. and after verification of the correctness of the data, the check list is submitted to the Customs for generating Shipping Bill No. and for further processing by Customs. The various steps involved in Customs processing are (i) appraising of shipping bill, (ii) export duty/cess payment, (iii) examination of goods and (iv) giving Let Export Order, (v) Loading of goods into the vessel and (vi) allowing shipment for export, (vii) filing of Export General Manifest and (viii) payment of drawback/export incentives. As the shipping bills for export could be involving export goods from factories, 100% EOU units/EPZs etc., or goods which are stuffed in export containers that are self-sealed or factory stuffed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was any mis- declaration. It is the case of export goods not brought to Customs for completing the physical export and the appellants were not aware of the fraud committed by the exporter or other persons. In view of the aforesaid factual position, we are unable to find force in the legality of the conclusion arrived at the impugned order holding that the appellants have violated the Regulation 10(e). We also find that our above views are also concurred in the order of the Hon ble High Court of Delhi in the case of M/s Kunal Travels (Cargo), supra. The relevant portion of the above order is extracted below: 12. Clause (e) of the aforesaid Regulation requires exercise of due diligence by the CHA regarding such information which he may give to his client with reference to any work related to clearance of cargo. Clause (l) requires that all documents submitted, such as bills of entry and shipping bills delivered etc. reflect the name of the importer/ exporter and the name of the CHA prominently at the top of such documents. The aforesaid clauses do not obligate the CHA to look into such information which may be made available to it from the exporter/ importer. The CHA is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 the basis of instructions/documents received from its client/importer/exporter. Furnishing of wrong or incorrect information cannot be attributed to the CHA if it was innocently filed in the belief and faith that its client has furnished correct information and veritable documents. The mis-declaration would be attributable to the client if wrong information were deliberately supplied to the CHA. Hence there could be no guilt, wrong, fault or penalty on the appellant apropos the contents of the shipping bills 12. In respect of the Regulation 10(m), in the impugned order the Principal Commissioner had concluded that the appellants have violated the said Regulation, on the ground that they were not aware that the check lists was used by the exporter ABCCPL for discounting with the banks, and the appellants indulged in the practice of issue of check lists and continued this practice despite knowing the fact that actual exports were not happening, that they never verified the non- completion of exports for previously issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are completed expeditiously, are not prolonged and some checks and balances must be ensured. One step by which the unnecessary delays can be curbed is recording of reasons for the delay or non-adherence to this time-limit by the Officer conducting the inquiry and making him accountable for not adhering to the time schedule. These reasons can then be tested to derive a conclusion whether the deviation from the time line prescribed in the Regulation, is reasonable . This is the only way by which the provisions contained in Regulation 20 can be effectively implemented in the interest of both parties, namely, the Revenue and the Customs House Agent. 14. From the records of the case, we find that there is definitely delay in adjudication and that for the export transactions occurred in February, 2015, the order of revocation of appellant s customs broker license has been passed on 28.05.2021. Revenue is unable to explain why there was such a long delay of 6 years in taking action against appellants, when the information about fraudulent exports was received on 17.01.2019. Though the first order-in-original revoking immediate suspension, was passed on 04.10.2019, action against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve discussions and on the basis of the judgement of the Hon ble Supreme Court in the case of K.M. Ganatra (supra), we find that the appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, when the exports goods were not brought to Customs within 15 days time, by bringing it to the notice of the Customs department about the non-compliances in export transactions of ABCCPL. Thus, to this extent we find that imposition of penalty for failure in not being proactive for fulfilling of regulation 10(d) of CBLR, 2018 is appropriate and justifiable. 15. In view of the foregoing discussions, we do not find any merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants and for forfeiture of security deposit, inasmuch as there is no violation of regulations 10(d), 10(e) and 10(m) and the findings in the impugned order is contrary to the facts on record. However, in view of the failure of the appellants to have acted in a proactive manner in fulfillment of the obligation under sub-regulation 10(d), we find that it is justifiable to impose a penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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