TMI Blog2024 (1) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... O) VERSUS COMMISSIONER OF CUSTOMS (IMPORT GENERAL) NEW CUSTOMS HOUSE, IGI AIRPORT, NEW DELHI [ 2017 (3) TMI 1494 - DELHI HIGH COURT ] has held that Customs House Agents are only processing agent of documents for clearance of goods through Customs House. They are not inspectors to weigh genuineness of transaction, and there is no obligation to look into information from exporter/importer. It is onerous to expect CHA to inquire into and verify genuineness of IE Code given by client for each import/export transaction. When such code is mentioned, there is a presumption that appropriate background check in this regard would have been done by Customs authorities. In absence of knowledge that goods mentioned in shipping bills did not reflect truth of consignment sought to be exported, CHA or its proprietor cannot be attributed with mens rea - If goods did not corroborate with declaration in shipping bills, it cannot be deemed to be the mis-declaration by CHA. In the case of M/S. ASHIANA CARGO SERVICES VERSUS COMMISSIONER OF CUSTOMS (I G) [ 2014 (3) TMI 562 - DELHI HIGH COURT] , the Hon ble High Court of Delhi has held that revocation of CHA license is justified only in cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Thambuchetty Street, Chennai, is the holder of Customs Broker License No. R-148/CHA issued by Chennai Customs Commissionerate valid up to 15.03.2024 and Shri K.V. Prabhakaran is the proprietor of CHA. 4.1 C/40199/2020:- The appellant has acted as the Customs Broker for M/s. Aarthi International for clearance of imported goods declared as Rice Cookers and Rice Cooker Spare Parts , whereas on detailed examination of the imported consignment, contraband Cigarettes were found concealed behind the declared goods which were valued at Rs.6.82 crores. Investigations conducted revealed that the CHA has violated the provisions of Regulations 10 (b), 10(d), 10(e) and 10(n) of the CBLR, 2018. The CHA was found to have not exercised due diligence to ascertain the correctness of information regarding the importer and also deliberately not verified the antecedents of GST holder, correctness of Importer Exporter Code (IEC) number, identity of the client and the declared address by using reliable, independent, authentic documents, data or information as mandated in the Regulations, 2018. It was found that the documents were handled by one Shri Kalaivanan who was not an employee of the CHA fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of CBLR, 2018, the Customs Broker is required to verify correctness of Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity of the client and functioning of the client at the declared address by using reliable, independent, authentic documents, data or information. The Customs Broker failed to verify the identity of the client and functioning of the client at the declared address. Shri Prabhakaran, Proprietor of M/s. Souparnika Shipping Services had narrated that he received the documents from one Shri Kukan Rajavelu. All attempts were made to search the premises of the exporter firm when it was found the proprietor of the premises of the export firm company was unaware of the operation of the firm and also about export consignments. Implying that the documents handed over to the Customs Broker were forged. Thus, CHA has failed to verify the authenticity of the documents. Shri Kukan Rajavelu who handed over the documents and the proprietor of the export firm could not be traced. Shri Kukan Rajavelu was allegedly introduced by the CHA s ex-employee Shri Prabhakaran. Shri Kukan Rajavelu gave him the phone number of Smt. Lalitha Shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Broker license has been already revoked in terms of earlier Order-in-Original No. 74163/2020 dated 28.02.2020). Further, a penalty of Rs.50,000/- was imposed on the appellant under Regulation 18(1) of CBLR, 2018. The adjudicating authority has ordered for forfeiture of whole amount of the Security Deposit of Rs.25,000/- furnished by the licensee under Regulation 14 of CBLR, 2018. 6.1 The Ld. Advocate Shri B. Sathish Sundar representing the appellant have submitted that the enquiry report dated 06.12.2019 has concluded that all the charges levelled against the appellant were not proved. In the impugned order by the adjudicating authority, no reasons were mentioned for non-acceptance of the said enquiry report. He has drawn our attention to the decision rendered in the case of Accrete Shipping Services Vs. Commissioner of Customs, Cochin [2021 (375) ELT 613 (Ker.)] wherein the Hon ble High Court of Kerala has held that when an enquiry report furnished before the Commissioner in proceedings under the CBLR, 2018 and the enquiry report is in favour of the petitioner, then the notice subsequently issued by the respondent ought to have indicated very clearly as to whether the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He has referred to the smuggling cases of Cigarettes which were valued at Rs.6.83 crores in the consignment of Rice Cookers and Rice Cookers Spare Parts and attempted illegal IGST refund by over valuation of export goods of Decorative Wall Papers. The appellant/CHA was also involved in the case of export of Potash Feldspar by M/s. Rubicon Mineral Process where DRI, Chennai seized Red Sanders valued at Rs.3.6 crores. In all the above cases, the Customs Broker was found not complying with the provisions of the CBLR, 2018. He has justified revocation of the Customs Broker License, imposition of penalty and forfeiture of Security Deposit. 8. Heard both sides and we have carefully considered the documents available in both the appeals. 9.1 In Customs appeal No. 40199/2020, the CHA was issued with a Show Cause Notice for contravention of:- i. Regulation 10 (b) of CBLR, 2018, in as much as they had not transacted business in the Customs Station either personally or through an authorised employee duly approved by the Deputy Commissioner of Customs or Assistant Commissioner of Customs. ii. Regulation 10 (d) of CBLR, 2018 had been violated in as much as they had deliberately not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned, there is a presumption that appropriate background check in this regard would have been done by Customs authorities. In absence of knowledge that goods mentioned in shipping bills did not reflect truth of consignment sought to be exported, CHA or its proprietor cannot be attributed with mens rea - If goods did not corroborate with declaration in shipping bills, it cannot be deemed to be the mis-declaration by CHA. 9.5 In the case of Ashiana Cargo Services Vs. Commissioner of Customs (I G) [2014 (302) ELT 161 (Del.)], the Hon ble High Court of Delhi has held that revocation of CHA license is justified only in cases of aggravating factors that allow infraction to be labelled as grave. Though it is not possible to make exhaustive list of such aggravating factors, precedent cases show that revocation of licence has been upheld where there was an element of active facilitation of infraction, i.e., a finding of mens rea, or a gross and flagrant violation of CHA Regulations. In line with proportionality analysis, only grave and serious violations justify revocation. In other cases, suspension for adequate period of time resulting in loss of business and income suffices, both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 is not accepted by the adjudicating authority. In compliance with the judicial discipline as held by the Hon ble High Court of Kerala in the case of Accrete Shipping Services supra, we have to hold that the impugned order No. 74163/2020 dated 28.02.2020 is not legally maintainable and so ordered to be set aside. 10.1 Further, in the first impugned order No. 74163/2020 dated 28.02.2020, whole amount of the Security Deposit was forfeited under Regulation 14 of CBLR, 2018. Again ordering for forfeiture of whole amount of the Security Deposit in the second impugned order No. 74601/2020 dated 18.03.2020 is not legally correct or valid. The Customs Broker failed to verify correctness of IEC, GSTIN and identity of his client by adopting any reliable means, thus, contravening the Regulation 10(n) of CBLR, 2018. The persons who have handed over the documents could not be traced and Customs Broker s negligence was evident. His repeated involvement in facilitating fraudulent import and export transaction reflect directly or indirectly that the Customs Broker has not done due diligence in handling Customs work. 10.2 The Customs Broker license was suspended vide F.No. R-498/CHA dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disproportionate penalty. Neither extreme is to be encouraged. In this case, in view of the absence of any mens rea, the violation concerns the provision of G cards to two individuals and that alone. A penalty of revocation of license for this contravention of the CHA Regulations unjustly restricts the appellant s ability to engage in the business of the CHA for his entire lifetime. As importantly, it skews the proportionality doctrine, substantially lowering the bar for revocation as a permissible penalty, especially given the dire civil consequences that follow. On the other hand, the minority Opinion of the CESTAT, delivered by the Judicial Member, correctly appreciates the balance of relevant factors, i.e. knowledge/mens rea, gravity of the infraction, the stringency of the penalty of revocation, the fact that the appellant has already been unable to work his license for a period of 6 years (now 8 years), and accordingly sets aside the order of the Commissioner dated 24-1-2005. ( Emphasis supplied ) 11. Appreciating the above judicial precedents and having regard to the facts of these appeals, we are of the view that revocation of Customs Brokers License is too harsh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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