TMI Blog2023 (12) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... d 30.06.2021, much later after the clearance of ex-bond warehoused goods, and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. Further, as the purported diversion of imported goods was not known to the appellants, the non-compliance by the importer of license/Advance Authorisation conditions in respect of imported goods could not have been brought to the notice of the Deputy Commissioner of Customs (DC) or Assistant Commissioner of Customs (AC) by the appellants CB - violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable. Violation under Regulation 10(n) - HELD THAT:- Circular No. 9/2010-Customs dated 08.04.2010 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, it is justifiable to impose a penalty of Rs.10,000/-, which would be reasonable. Appeal allowed in part. - HON BLE MR. S. K. MOHANTY , MEMBER ( JUDICIAL ) And HON BLE MR. M. M. PARTHIBAN , MEMBER ( TECHNICAL) Shri Ranjeet Singh , Advocates for the Appellants Shri D. S. Mann , Authorized Representative for the Respondent ORDER PER : M.M. PARTHIBAN This appeal has been filed by M/s Shlok Logistics Private Limited (herein after, referred to as the appellants ), holders of Customs Broker License No. 11/2262 assailing Order-in-Original CAO No. 45/CAC/PCC(G)/SJ/CBS dated 23.09.2022 (herein after, referred to as the impugned order ) passed by the learned Principal Commissioner of Customs (General), New Custom House, Ballard Estate, Mumbai-I. 2.1. Briefly stated, the facts of the case are that the appellants 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. Acting on a specific intelligence the Directorate of Revenue Intelligence, Kolkata Zonal Unit (DRI KZU), Kolkata had intercepted one live consignment of Black Pepper imported by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gations of violation of Regulations 10(d) and 10(n) of CBLR, 2018 have been countered by them. In respect of Regulation 10(d), learned Advocate stated that all the declarations in the ex-bond Bills of Entry (B/Es) were made on the basis of documents given by the importers, and the appellants were neither aware of the likely diversion of imported goods nor the fact that the IEC holders were proxy importers; they claimed that the appellants were no manner connected with the violations of the Customs law as the alleged documents regarding diversion into domestic market etc. were happened subsequent to the customs clearance and these are not in the knowledge of the appellants CB. Further, he stated that there was no mis-declaration or any suppression in clearance of imported goods noticed by the department at the time of assessment of B/Es, examination and grant of customs out of charge. He stated that any action taken by importer in respect of imported goods leading to any violation, subsequent to customs clearance of the goods, should be the responsibility of importer, and the appellants are nowhere at fault on this account. He also stated that the appellants had discharged their dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant Customs Broker has fulfilled all his obligations as required under CBLR, 2013 or not. The specific sub-regulations which were violated by the appellants are Regulations 10 (d) and 10(n) ibid, and hence there are two distinct charges framed against the appellants. We also find that the impugned order dated 23.09.2022 has been passed by the Principal Commissioner of Customs (General) after taking into consideration the written submissions made by the appellants and the record of oral submission made at the time of personal hearing on 29.08.2022, for considering the charges of violations against them, before passing the impugned order. Thus, we are of the considered view that sufficient and reasonable opportunity was given to the appellants before passing an order, in respect of charges framed against them and there is no infirmity of the impugned order in not following the principles of natural justice in this regard. 6.2. We find that the Regulation 10 of CBLR, 2018, provide for the obligations that a Customs Broker is expected to fulfill during their transaction with Customs in connection with import and export of goods. These are as follows: Regulation 10. Obli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently, those goods which have been stored in the customs bonded warehoused were cleared by filing the ex-bond Bills of entry by the appellants CB in terms of Section 68 ibid. The legal provisions under Section 72 ibid provide for taking necessary action by the department in case of any contravention in removal of goods from warehouse is noticed, against the owner of goods. We also find that it is not the case of Revenue, that there was any mis-declaration at the time of customs clearance of ex- bond B/Es, for taking action against importer. Hence, it is clear till the imported goods were delivered to the appellants from ex-bonding of B/E, there was no violation and the act of importer in diversion of the goods, had arisen after the customs clearance process of the warehoused goods was completed. Thus, it is clear that the importers alone were involved in mis- use of imported goods, by diverting the same for unauthorized purpose, after its clearance from customs control, resulting in duty evasion. 7.2. Further, from the above factual details, we also find that the appellants CB had declared the description of the imported goods and other details in the two B/Es for aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal Commissioner of Customs (General) had come to the conclusion that the appellants CB had violated the provision of Regulation 10(n) ibid, as established in the inquiry proceedings and on the basis that the appellants had never met the importers/IEC holders, and had only interacted with Shri Tushar Pokharkar, who is not representative of the importer and had filed the documents on the basis scanned photocopies without original documents. Thus he concluded that the appellants CB did not make any serious efforts to verify the antecedents, correctness of actual IEC Number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information for want of business through intermediary. Therefore, the learned Principal Commissioner of Customs had concluded that the appellants have failed to discharge their obligations cast on him under Regulation 10(n) ibid. 8.2 We find from the records, that the appellants CB had obtained their authorization to act as a Customs House Agent/Broker for the purpose of clearance of import/export consignments as well as the KYC documents from the importer M/s Bruno Exports, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent/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 3 Partnership firm (i) Legal name (ii) Permanent address, in full, complete and correct. (iii) Name of all partners and their addresses, in full complete and correct. (iv) telephone, fax number, e-mail address of the firm and partners (i) Registration certificate, if registered (ii) Partnership deed (iii) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf (iv) Any officially valid document identifying the partners and the person holding the Power of Attorney and their addresses (v) Telephone bill in the name of firm/ partners We find that the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents were not submitted is, therefore, factually incorrect. 35. The Principal Commissioner, therefore, committed an error in holding that the appellant failed to ensure due compliance of the provisions of Regulation 10(n) of the Licensing Regulations. 10.2. We also find that in the case of M/s HIM Logistics Private Limited (Supra), the Tribunal had decided the issue of KYC verification of the importer/exporter by the Customs broker and the requirements specified in the CBLR, 2018. The relevant portion of the said order is extracted below: 9. We find that the impugned order did not make out a sustainable case for revocation of licence. In the case of Setwin Shipping Agency v. CC (General), Mumbai - 2010 (250) E.L.T. 141 (Tri.-Mumbai), the Tribunal held that there is no requirement for the CHA to verify physically the premises of importer/exporter. The Tribunal also observed that it is a settled law that the punishment has to be commensurate and proportionate to the offence committed . 11. Further, we also find that the Hon ble High Court of Delhi has held in the case of Kunal Travels (Cargo) Vs. Principal Commissioner of Customs (I G), IGI Airport, New Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder suspension should be Reasonable period , depending on the facts and circumstances of each case. There cannot be any absolute principle, which can be laid down to determine as what would be reasonable period but it would be dependent on the facts and circumstances of each case since on one hand, the purpose of prescription of the time limit by the Regulation is to cast a duty on the Revenue Authorities to act within the time frame since it adversely affects the interest of the licensee and on the other hand the licensee should not be permitted to take an advantage of some delay at the instance of the Revenue, which is beyond its control since the revenue administration needs to be granted certain concessions which may be on account of administrative exigencies, and the department working at different levels through different persons. The principles of fairness and equity demands that when there is deviation from the time schedule prescribed in the Regulation, the Revenue enumerates the reasons and attributes them to an officer dealing with it and also accounts for every stage at which the delay occurs. Every endeavour should be made to adhere to the time schedule but in except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21-22 dated 22.10.2021. Simultaneously, inquiry proceedings against the appellants for violations of CBLR, 2018 due to failure of the appellants to comply with Regulations 10(d) and 10(n) ibid was initiated by issue of SCN dated 26.10.2021. Upon completion of the inquiry, vide Inquiry report submitted on 22.07.2022, and the Principal Commissioner of Customs (General), Mumbai, being the licensing authority under Regulations 17 of CBLR, 2018 had passed the impugned order dated 23.09.2022. The above timelines indicate that the suspension was continued during the inquiry proceedings for about 12 months till the completion of inquiry proceedings and revocation of CB license by the impugned order. 13.3. From the records of the case, we find that the order of revocation of appellant s CB license has been passed on 23.09.2022 i.e., about 14 months and 23 days from the date of offence report. Though the time lines indicated in the CBLR, 2018 provide for completion of the inquiry proceedings, if calculated from the date of receipt of offence report, would require such an order under Regulation 17(7) ibid to be issued within 270 days, we find that there is no case for inordinate delay as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent of the appellant CHA. The statements of Shri Badrinath and Shri Sunil Chitnis amply proves this fact. The question is, merely because the appellant procured the business through an intermediary who is not his employee, can it be said that he has sub-let or transferred the business to intermediary. The Tribunal in the case of Principal Commissioner of Customs v. Chhaganlal Mohanlal Co. Ltd. [2006 (203) E.L.T. 435 (Tri. - Mum.)], held that if the Customs clearance has been done through intermediary and business was got through intermediary, the same is not barred by the provisions of CHALR, 2004 and it cannot be stated that the appellant has sub-let or transferred his licence. In the case of Krishan Kumar Sharma v. Principal Commissioner of Customs, New Delhi reported in 2000 (122) E.L.T. 581 (Tri.), this Tribunal held that the mere fact of bills raised on the intermediary cannot be held against the CHA firm to prove that the CHA licence was sub-let or transferred. Therefore, in the light of the judgments cited above, the charge of violation of Regulation 12 is not established. As regards the violation of Regulation 13(a), the adjudicating authority himself has observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a crucial role in protecting the interest of Revenue and at the same time he is expected to facilitate expeditious clearance of import/export cargo by complying with all legal requirements. 14.4. Furthermore, in order to appreciate the importance of the role of Customs Broker/Custom House Agent and the timely action which could prevent the export frauds, we rely on the judgement of the Hon ble Supreme Court in affirming the decision of the Co-ordinate Bench of this Tribunal in the case of Principal Commissioner of Customs Vs. K.M. Ganatra Co. in Civil Appeal No.2940 of 2008 reported in 2016 (332) E.L.T. 15 (S.C.). The relevant paragraph of the said judgement is extracted below: 15. In this regard, Ms. Mohana, learned senior counsel for the appellant, has placed reliance on the decision in Noble Agency v. Principal Commissioner of Customs, Mumbai 2002 (142) E.L.T. 84 (Tri. - Mumbai) wherein a Division Bench of the CEGAT, West Zonal Bench, Mumbai has observed:- The CHA occupies a very important position in the Customs House. The Customs procedures are complicated. The importers have to deal with a multiplicity of agencies viz. carriers, custodians like BPT as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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