TMI Blog2023 (12) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... cing it from Rs.288/per Kg. to Rs.680/- per kg. and Rs.400/per Kg. to Rs.720/- per kg., respectively - During the enquiry proceedings, as the importer had stated that a similar consignment with mis-declaration is arriving at JNCH, Nhava Sheva, the import of raw cashew nuts in B/E No. 7614852 dated 23.02.2022 with mis-declaration of goods, which was handled by another customs broker M/s Shiv Kumar Gupta, was put on hold by JNCH Customs. Detailed examination of the said imported goods also revealed that declared goods of 27,000 kgs. of Raw Cashew Nuts in shell , the physical examination of the goods by SIIB(I), JNCH Customs revealed that it actually contained 2500Kg. of raw cashew nuts and the rest of 24,500 kg. were undeclared broken cashew kernel commercially known as cashew ba by bits.The above details indicate that the said Shri Krishnat Shankar Kadam, Proprietor of importer M.s K.K. Traders, had in collusion with some persons planned about the illegal activities in import of the prohibited cashew kernel from Vietnam and one Shri Chetan Yadav, working in M/s Ninai Shipping Agency had played major role in this modus operandi, and the appellants were not involved. The mis-de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Regulation 13(12) ibid. The appeal is partly allowed. - HON BLE MR. S. K. MOHANTY , MEMBER ( JUDICIAL ) And HON BLE MR. M. M. PARTHIBAN , MEMBER ( TECHNICAL ) Shri Durgesh H. Nadkarni, Advocate for the Appellant Shri Ram Kumar, Authorized Representative for the Respondent ORDER Per : M. M. Parthiban This is an appeal filed by M/s Husain Kasam Mukadam Sons, Mumbai (herein after, referred to as the appellants for short) assailing the Order-in-Original CAO No. 64/CAC/PCC(G)/SJ/CBS Adj. dated 30.12.2022 (referred to as the impugned order ). 2. In the impugned order the learned Principal Commissioner of Customs (General), Mumbai in exercise of powers conferred upon him under Regulation 17 (7) of the Customs Brokers Licensing Regulations, 2018 (CBLR) had revoked the CB license issued to the appellants for acting as a Customs Broker under the above regulations ibid, besides imposition of penalty and forfeiture of entire security deposit furnished by the appellants. Being aggrieved against the impugned order, the appellants have filed this appeal before the Tribunal. 3.1 The brief facts of the case are that appellants had been issued wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty and forfeiture of entire security deposit furnished by the appellants vide the impugned order dated 30.12.2022. 3.2 Learned Advocate appearing for the appellants submitted that the appellants had not violated any of the Regulations under CBLR. In respect of Regulation 10(e), he stated that the appellant had exercised due diligence regarding the information to be declared in respect of imported goods. The subject bill of entry was filed on the basis of documents received from the importer and there was no misdeclaration with respect to invoice. However, the appellants were not aware of the cargo concealed behind the declared goods. Thus he claimed that the appellants have not violated Regulation 10(e). Further, he stated that all the documents relating to import were received through e-mail on 21.02.2022 from M/s Ninai shipping agency, who is the intermediary through whom they got the business. The documents such as Aadhaar card, Permanent Account Number (PAN), Import Export Code (IEC), Goods and Service Tax Identification Number (GSTIN), Certificate issued by the bankers i.e., ICICI bank; MSME Certificate have been examined, verified which enabled them to identify their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and the importer, as the importer had mentioned in his statement dated 26.02.2022, that he was not aware of the appellants. Further, the importer had given blank letterheads duly signed which are being used for appointing the appellants as Customs Broker. The appellant had failed to exercise close supervision over their employees and also used the services of one Shri Suraj Singh for examination of the imported goods, who was not authorised and without obtaining the approval of the customs authorities. In view of the above, the learned AR submitted that the impugned order is legally sustainable in the appeal filed by the appellants may be dismissed. 5. Heard both sides and perused the case records. We have also considered the additional written submissions given in the form of paper books by learned Advocate for the appellants as well as Authorised Representative for the Revenue. 6.1 On perusal of the records, it transpires that a specific information was received by Pune Customs to the effect that there is mis-declaration of description of goods in an import consignment cleared from JNCH, Nhava Sheva which had been imported by M/s K.K. Traders, Satara in Bill of Entry (B/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor of importer M.s K.K. Traders, had in collusion with some persons planned about the illegal activities in import of the prohibited cashew kernel from Vietnam and one Shri Chetan Yadav, working in M/s Ninai Shipping Agency had played major role in this modus operandi, and the appellants were not involved. Further, at the time of examination of imported goods under B/E No.7580019 dated 21.02.2022, in which the customs examination order was given as open and examine (100% at item level) and look for concealment ; the JNCH Customs officers had got the goods examined in the presence of the appellants CB, before releasing it from Customs; however, JNCH Customs did not find any concealment. It is only on specific information, when the imported goods were checked again by the Pune Customs Preventive, they identified the specific mis-declaration of the imported goods Cashew Kernel imported under the guise of raw cashew nuts . 6.3 We also find from the records that the representative samples of imported goods were sent for testing with the Director State Public Health authorities, Referral Food Laboratory to ensure whether these are fit for human consumption and to the FSSAI appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uties as customs broker in filing the declarations by properly filing the B/E and in clearance of the goods from Customs control as the mis-declaration of goods is only to the extent of MIP, and the same was not identified by the Customs examination by JNCH, Nhava Sheva; and such misdeclaration came to the fore only on the basis of examination of goods enroute by Pune Customs on the basis of specific information and the same details being shared with SIIB of JNCH, Nhava Sheva for further action to be taken in the next similar consignment of import cargo at JNCH, Nhava Sheva. 7.3. It is true that as an individual person Shri Chetan Yadav, of M/s Ninai Shipping Agency who assisted the importers in the violation, and the appellants as a Customs Broker associated with such imports may be responsible for the omission and commission which had led to import of prohibited goods in violation of the Customs Act, 1962 read with relevant Rules and Regulations. We also find that separate show cause proceedings have been initiated by the department against the importer, Shri Chetan Yadav, M/s Ninai Shipping Agency besides the appellants CB and other customs brokers M/s Shiv Kumar Gupta, M/s M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es given under the Regulations 16,17 and 18 of CBLR, 2018. 8.3 From the facts of the case and on perusal of the records, it transpires that the appellants have not handled any customs documentation or any process involving importation of goods where such mis-declaration of MIP or description of goods can be attributable to the appellants. Even the examination of goods before the JNCH, Customs officers has been done and the department did not find anything contrary to the declarations made by the importer. It is apparently evident from the documents, statements, investigation proceedings and from the factual details given in the SCN dated 08.12.2022, that there was a specific information received by Pune Customs providing details of mis-declaration of description of goods in the import consignment cleared from Nhava Sheva by the importer M/s K.K. Traders, in B/E No. 7580019 dated 21.02.2022, container No. WHLU 5762951 and that it is being transported through a trailer lorry/ vehicle Regn. No. MH 46 BB 9089, by circumventing the prohibition imposed by DGFT. On acting upon the said information, firstly the Pune Customs (Preventive) had conducted search proceedings at the residence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x xxx (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; xxx xxx xxx xxx (n) 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; xxx xxx xxx xxx (q) co-operate with the Customs authorities and shall join investigations promptly in the event of an inquiry against them or their employees. xxx xxx xxx xxx Regulation 13. Engagement or employment of persons: - 13(3) A Customs Broker may, having regard to the volume of business transacted by him, employ any number of persons other than an F card holder to assist him after verifying their antecedents and identity at the declared address by using reliable, independent, authentic documents, data or information: Provided that such an employed person shall possess the Aadhaar number issued to him and that the minimum educational qualification of such persons so employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king list etc., The appellants have accordingly filed the Bill of Entry on the basis of the data given to them and such details entered by appellants were verified during customs examination and there was no mis-declaration in these documents. It is the case of concealment of undeclared goods which could not be identified during 100% examination by customs, but could be detected only on the basis of specific information received by another Customs authority at Pune, who, on examination conducted subsequent to customs clearance at JNCH, Nhava Sheva, had identified the mis-declaration. The modus operandi identified in this case brings out clearly the role of importer, and Shri Chetan Yadav as the key players in such mis-declaration; further the appellants CB were not aware of the fraud committed by the importer 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 Regulations 10(e) ibid. 11.3 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) Vs. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the basis of instructions/documents received from its client/importer/exporter. Furnishing of wrong or incorrect information cannot be attributed to the CHA if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of documents to be verified and obtained from the client/customer is enclosed in the Annexure. It would also be obligatory for the client/customer to furnish to the CHA, a photograph of himself/herself in the case of an individual and those of the authorised signatory in respect of other forms of organizations such as company/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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the orders passed by the Tribunal, we do not find any legal basis for upholding of the alleged violation of Regulation 10(n) CBLR, 2018 by the appellants in the impugned order on the above issue. 13. In respect of the Regulation 10(q) and 13(7) ibid, the Principal Commissioner had concluded that the appellants have not violated the said Regulation, by agreeing to the conclusion arrived in the Inquiry Report dated 30.09.2022 and on the grounds that there was no evidence/document on record to show that the appellants CB had evaded inquiry/investigation; and to show that any unauthorized person had signed the declarations filed by the appellants in connection with the proceedings under the Customs Act or the rules or regulations. Thus, we do not consider it necessary to further examine this aspect, as the appellants are not aggrieved on this issue. 14. Learned Principal Commissioner had concluded that the appellants have not violated Regulation 13(3) and 13(4) ibid, on the grounds that the appellants CB had took assistance in examination of the imported goods through Shri Suraj Singh, who is an unauthorized person and the appellants could not exercise supervision over the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Customs. Further, in the statement dated 19.04.2022 given by Shri Abdul Rehman Dalvi, authorised representative of appellants CB before the Customs authorities, he had stated that Shri Mustaqeem Siddiqui (Hcard holder) of the appellants CB was present during physical examination of imported goods by Customs officers at JNCH, Nhava Sheva and the said Shri Suraj Singh, his friend was also present there with no specific official work on behalf of appellants. Hence, we find that there is no strong ground or any evidence against the appellants CB for proving that they have violated the Regulations 13(3) and 13(4) ibid. 15. Further, on careful examination of the factual records of the case, we find that the Panchnama drawn on 26.02.2022 by Pune Customs (Preventive) for detailed examination of imported goods in container No. WHLU 5762951, after cutting open the Customs seal, revealed that out of total 543 bags of declared raw cashew nuts in shell , only in 50 bags they found the declared goods and in the rest of 493 bags the goods contained were cashew kernel commercially known as cashew baby bits which were a type of processed cashew nut and the same was not declared to Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded that from the manner of presentation of imported goods in the container, concealment of undeclared goods, that the examination of imported goods at JNCH, Nhava Sheva has not been done properly as per the examination order given and any one could have very easily found out the concealment and undeclared goods, if all the goods in any one row from start to end was examined by opening the bags. Hence, to this extent there is definite an angle of collusion between the Shri Mustaqeem Siddiqui, H-card holder of the appellants CB and the concerned Customs officers who had examined the said cargo and have failed to examine the undeclared cargo. In any case, the appellants CB or his employee having found such non-compliance to the examination order or on having found undeclared goods, if any, the same should have been brought to the notice of Customs for taking necessary further action. On the other hand, the appellants CB and their employee Shri Mustaqeem Siddiqui, H-card holder have failed to act properly as laid down in the CBLR, 2018. Thus, the appellants CB has failed to fulfill the obligations under Regulation 13(12) ibid. Accordingly, we are of the considered view that to thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FT, particularly when 100% of the imported goods are required to be examined and to rule out the possibility of concealment, as in the present case. Thus, we deem it appropriate that in respect of the failure to fulfill the obligations under Regulation 13(12) ibid, the appellants are required to be imposed with a penalty of Rs.10,000/- under Regulation 18 ibid. 18. In view of the above and on the basis of our discussions, detailed analysis and the findings recorded in paragraphs 11.1 to 17 above, and on the basis of various decisions taken by the coordinate benches of the Tribunal and higher judicial forums on the adherence to obligations prescribed under CBLR, 2018, we are of the considered view that it is factually incorrect to state that the appellants had for their acts of omission and commission in dealing with importer in misdeclaration of imported goods have failed to adhere to the responsibilities expected in terms of Regulations 10(e), 10(n), 13(3) and 13(4) of CBLR, 2018. Thus, we find that the conclusions arrived at by the Principal Commissioner in the impugned order is contrary to the factual position and thus it is not legally sustainable. 19. In view of the fore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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