TMI Blog2023 (11) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifically sought for examination of the goods under First Check basis, the non-compliance by the importer of declaring the correct value of the goods, could not have been brought to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs by the appellants, as the Appraising group itself got a reasonable belief of incorrect value only after examination of goods and perusal of samples - the violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable. Violation of provision of Regulation 10(e) ibid - HELD THAT:- The appellants CB has declared the value of imported goods as given in the commercial invoice, which is the transaction value. Further, submitting the declaration form (GATT valuation declaration) in terms of Rule 11, is primarily the responsibility of the importer and in case of proper authorization being given by them, then by the agent of that importer. In the present case, it is not in dispute that there was any such mis-declaration in the declaration form or in the value particulars declared in the bill of entry as compared to the commercial invoice - There are no evidence or fact indicating that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent ORDER PER : M. M. PARTHIBAN This appeal has been filed by M/s H2O Logistics (herein after, referred to as the appellants ), holders of Customs Broker License No.11/1789 AAAPT5352NCH001 assailing Order-in-Original CAO No. 71/CAC/PCC(G)/PS/ CBS(Adj.) dated 12.02.2021 (herein after, referred to as the impugned order ) passed by the learned Principal Commissioner of Customs (General), New Custom House, Ballard Estate, Mumbai-1. 2.1. Briefly stated, the facts of the case are that the appellant herein is a Customs Broker (CB) holding a regular CB license issued by the Mumbai Customs under Regulation 7(2) of Customs Brokers Licensing Regulations (CBLR), 2018. In an investigation initiated by Special Intelligence and Investigation Branch (SIIB) of Air Cargo Complex (ACC), Mumbai, a case was registered against one importer M/s M.S. Trading Company, Delhi, who had imported hearing aids' by over valuation of imported goods for the purpose of money laundering. In connection with such imports, SIIB investigation noted that the appellants CB had filed Bill of Entry (B/E) No. 5001004 dated 30.01.2018, and thus were involved with certain violations of CBLR, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the importer about the requirement of valuation as per Section 14, failed to declare the goods as unbranded , have taken no effort to ascertain the value of goods and without verifying whether the imported goods are branded/unbranded have simply filed the bills of entry. Further, it also alleged that the appellants have not verified the KYC norms and they did not meet the importer. He further submits that each of the above allegations of violation of Regulation 10(d), 10(e) and 10(n) ibid, have been countered by them. In respect of Regulation 10(d), they state that the appellants CB have always advised his clients to comply with the provisions of Customs law; they were not aware of the overvaluation of the imported goods. The request for first check assessment was made by the appellants CB and it is only during such examination, the department itself came to know about overvaluation of goods. Hence, the intention of CB is bonafide and there is no false declaration of value; as there is no specific brand name and there is no requirement to declare unbranded nature, and thus he claimed that the appellants are not at fault and it cannot be said that they have violated Regulations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. Though in the initial Inquiry Report dated 28.07.2020 all the charges are concluded as liable to dropped by the Inquiry Officer, after issue of Disagreement Memo dated 16.10.2020 and upon determination of these charges as proved, the impugned order has been issued. 5.2 We find that the Regulation 10 of CBLR 2018, provide for the obligations that a Customs Broker is expected to be fulfilled during their transaction with Customs in connection with import and export of goods. These are as follows: Regulation 10. Obligations of Customs Broker: - A Customs Broker shall - (d) advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, 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 correctness of Importer Exporter Code (IEC)number, Goods and Services Tax Identification Number (GSTIN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above examination procedure as per Customs Manual, 2018, is extracted below: 4. Examination of goods: 4.1 The imported goods, which are interdicted for examination by the RMS, are required to be examined for verification of correctness of description/ declaration given in the Bill of Entry and related documents. The imported goods may also be examined prior to assessment in cases where the importer does not have complete information with him at the time of import and requests for examination of the goods before assessing the duty liability or, where the proper officer, on reasonable belief feels that the goods should be examined before assessment, giving reasons for the same. Wherever required, samples are drawn in the examination area for chemical analysis, verification or any other purposes. 4.2 After assessment by the appraising group or for cases where examination is carried out before assessment, bill of entry needs to be presented for registration for examination of imported goods in the import shed. The proper officer of customs examines the goods along with requisite documents. The shipments, found in order are given clearance order by the proper officer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup itself got a reasonable belief of incorrect value only after examination of goods and perusal of samples. Thus, we are of the considered view that the violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable. 6.4. Learned Principal Commissioner of Customs (General) had come to the conclusion that the CB had violated the provision of Regulation 10(e) ibid, as they filed bill of entry for high value of imported goods without verifying the valuation aspect and without insisting on the declaration of brand name by the importer. In this regard, we find that the two particulars which are discussed in the impugned order which have not been verified for its correctness by the appellants are the brand name and value of goods . It is nowhere mentioned in the impugned order that there is any legal requirement of mentioning of brand name for the purpose of assessment of goods under the Customs Act, 1962 or any other law and there was a failure on the part of the appellants in this regard. We find that the definition of the term assessment under the Customs Act, 1962 during the relevant time of imports did not mention any such requirement; even the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g an invoice of the manufacturer or producer of the imported goods where the goods are imported from or through a person other than the manufacturer or producer, as considered necessary by the proper officer for determination of the value of imported goods under these rules. (2) Nothing contained in these rules shall be construed as restricting or calling into question the right of the proper officer of customs to satisfy himself as to the truth or accuracy of any statement, information, document or declaration presented for valuation purposes. (3) The provisions of the Customs Act, 1962 (52 of 1962) relating to confiscation, penalty and prosecution shall apply to cases where wrong declaration, information, statement or documents are furnished under these rules. Rule 3. Determination of the method of valuation . - (1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10; (2) Value of imported goods under sub-rule (1) shall be accepted: Provided that - (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, is primarily the responsibility of the importer and in case of proper authorization being given by them, then by the agent of that importer. In the present case, it is not in dispute that there was any such mis-declaration in the declaration form or in the value particulars declared in the bill of entry as compared to the commercial invoice. Further, any exercise in re-determination of value other than the transaction value has to be adopted step-by-step on the basis Rule 3 ibid, and after rejection of transaction value as per Rule 12 ibid. We do not find any such evidence or fact indicating that there was a mis-declaration of value and the value was re-determined as per the above legal provisions. There is only a mention that the market inquiry was conducted by the department and it revealed that the actual value of the consignment is Rs.15,000/- as against declared value of Rs.59,79,521/-. We find that such an allegation at the show cause notice stage and later at the findings stage in the impugned order requires factual details or evidence to state that there was mis-declaration and the same is attributable to the appellants CB, in order to invoke the violation of due-diligen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany/trusts etc., and any two of the listed documents in the annexure. No Form of organisation Features to be verified Documents to be obtained 1 Individual (i) Legal name and any other names used (ii) Present and Permanent address, in full, complete and correct. (i) Passport (ii) PAN card (iii) Voter s Identity card (iv) Driving licence (v) Bank account statement (vi) Ration card Note : Any two of the documents listed above, which provides client/customer information to the satisfaction of the CHA will suffice. We find that the above CBIC circular clearly explains the provision of CBLR/CHA Regulations which require the Customs Brokers to verify the antecedents, correctness of Import Export Court (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data and information. The said guidelines provide for the list of documents that is required to be verified and that are to be obtained from the client importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identify over valuation or under valuation of goods. The relevant portion of the said judgement is extracted below : The CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect to clearance of goods through customs house and in that process only such authorized personnel of the CHA can enter the customs house area....... It would be far too onerous to expect the CHA to inquire into and verify the genuineness of the IE Code given to it by a client for each import/export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard i.e. KYC etc. would have been done by the customs authorities. 6.9. We also find that as regards the timelines to be followed in the entire process of adjudication of the suspension/revocation of CB license under CBLR, 2018 by Customs authorities, the Hon ble High Court of Bombay has laid down certain guidelines for its interpretation in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P Ltd., 2018 (361) E.L.T. 321. The relevant portion of the judgement in the above case is extracted below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attitude on behalf of the Revenue. This is the only way how the Regulation can be made effective and worthy of its existence so as to safeguard the interest of the Customs house agent, who is in a position of the delinquent and faces an inquiry somehow similar to an inquiry in disciplinary proceedings on one hand and the revenue in the capacity of the administration on the other hand. 15. In view of the aforesaid discussion, the time limit contained in Regulation 20 cannot be construed to be mandatory and is held to be directory. As it is already observed above that though the time line framed in the Regulation need to be rigidly applied, fairness would demand that when such time limit is crossed, the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the time limit was not adhered to. This would ensure that the inquiry proceedings which are initiated 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l business for almost 2 years. It is also noted that the livelihood of Customs broker and the employees is dependent upon the functioning of Customs brokers business. The punishment suffered by being out of Customs broker business for about two years is enough to mitigate case of violations or contraventions of CBLR, 2018. 7.2. From the records of the case, we find that there is definitely delay in adjudication and that for the import transaction in 30.01.2018, the order of revocation of appellant s CB license has been passed on 12.02.2021. Revenue is unable to explain why there was such a long delay in taking action against appellants, when the information about over valuation of import through SIIB investigation was received vide letter dated 22.02.2019. There are no reasons recorded in detail justifying the delay in passing the impugned order by the learned Principal Commissioner. It appears that the reasons having been not quoted and if such reasons exist, the same being not specified and not explained for undue delay cannot be accepted as reasonable grounds in terms of the test laid down by the Hon ble High Court of Bombay. 8.1 In view of the above and on the basis of va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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