TMI Blog2024 (1) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... date of issue of SCN. In this regard we find that the appellants had filed an appeal before the Tribunal against the order dated 10.06.2016, which was disposed by the Final Order of the Tribunal dated 11.01.2017. Even though no detailed reasons were recorded in detail justifying the delay in passing the impugned order by the learned Principal Commissioner, there were reasonable grounds for alleged delay. The appellants did not fulfill their obligation as a Customs Broker for exercising due diligence in terms of the various obligations given to them. The facts brought out in the DRI investigation and the findings in the impugned order, clearly demonstrate that when the documents relating to the export goods were fabricated and declared goods of Fabric glue/carpets was substituted with prohibited Red Sanders , a clear attempt to smuggle the goods in an illegal manner in violation of the Customs Act, 1962 and Foreign Trade Policy have been orchestrated by the appellants CB. Thus, we find that revocation of CB license, imposition of penalty and forfeiture of security deposit by the learned Principal Commissioner on account of the appellants failure in not fulfilling of Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether, on the facts and in the circumstances of the case, the important delay in completion of proceeding for revocation of license vitiates the Order-in-Original dated 28.03.2019 first by the Commissioner of Customs (General)? b) Whether on the facts and in the circumstances of the case, the CESTAT was right in holding that there is no link between the smuggling of red sanders by Shri Vijay Poojary with the activities permitted the Respondent herein was licensed? xx xx xx xx 33. With respect to the first question, we observe that the CESTAT as referred to the decision in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P. Ltd. (supra) to give a finding that the delay in commencement of the proceedings for revocation of license does not command itself is indicative of proper understanding of responsibility and that the delay in commencement of the proceedings for revocation of license was not justifiable. It has also observed that there is an implicit responsibility on the part of the competent authority to adhere to the time lines with acceptable justification for delays, if any. The Tribunal has referred to that although the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019. The matter is remanded back to the CESTAT for fresh adjudication. 43. The Appeal is accordingly disposed in the above terms. No order as to costs. 2. In the impugned order the learned Commissioner of Customs (General), 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 of Rs.50,000/- and forfeiture of entire security deposit furnished by the appellants. Being aggrieved against the impugned order, the appellants had earlier filed an appeal before the Tribunal. 3.1 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. A specific intelligence was developed by Directorate of Revenue Intelligence (DRI), Mumbai Zonal Unit (MZU), Mumbai regarding smuggling of red sanders for illegal export out of the country in an export consignment in container No. DRYU 2306380 to Jebel Ali port on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransported out of the country. He had also assisted Shri Vijay Poojary in a similar manner recently for export of goods by M/s R.N. Laboratories Private Limited, SEZ Diamond Park, Sachin, Surat for container No. DRYU 2315571 and several export consignments in the past. DRI MZU investigation revealed that Shri Vijay Poojary, Director of SC SIPL is involved in export of prohibited goods by using dummy/fake IEC holders as exporters to avoid detection of smuggling and by operating behind the scene, and fabricating all documents such as invoices of exporter, packing list, bill of lading and obtaining the prohibited goods through his own business accomplices. The total smuggling by this modus operandi in the past exports were estimated by DRI to be of 120 MTs totally valued at Rs.48 crore. An offence report of DRI, MZU vide their letter F. No. DRI/MZU/C/ Inv-111/2015 dated 16.05.2016 was received by Principal Commissioner of Customs (General), Mumbai, wherein it was informed about the involvement of appellants CB in the smuggling of prohibited goods; and that a detention order has been issued under COFEPOSA Act, 1974 for preventive detention against said Shri Vijay Poojary on 21.03.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants on 27.08.2018, 30.08.2018, 12.09.2018. Upon completion of the inquiry, a report was submitted on 30.10.2018 concluding that all charges framed against the appellants have been proved. Accordingly, the Principal Commissioner of Customs (General), Mumbai, being the licensing authority had passed the impugned order dated 28.03.2019 under Regulations 17 (7) and 18 ibid, for revoking CB License of the appellants and for forfeiture of entire amount of security deposit and imposition of penalty. 3.4 In the first round of litigation, the Tribunal had passed a Final Order No. A/87405/2019 dated 21.11.2019. The Department, being aggrieved by the said order of the Tribunal, had filed an Appeal before the Hon ble High Court of Bombay in Customs Appeal (L) No.3447 of 2020. While admitting the appeal filed by the Department, the Hon ble High Court vide its Order dated 22.10.2020 had stayed the operation of the Tribunal s order dated 21.11.2019. Subsequently the Hon ble High Court of Bombay had passed its final judgement in the above case. Presently on the basis of the final judgement of the Hon ble High Court of Bombay pronounced on 27.08.2021, remanding back the case to the Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. The said Shri Vijay Poojary had fabricated the export documents without using the name of his from for circumventing the legal provisions, for smuggling of Red Sanders, the export of which is prohibited under the Foreign Trade Policy as it is an item of CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora). The learned AR also stated that said Shri Vijay Poojary is an habitual offender and was held under preventive detention under COFEPOSA in 2006, in the present case. In view of his role as a mastermind and the key conspirator in smuggling of Red Sanders with the aid of his accomplices, by defrauding the government through fabrication of documents, the learned AR stated that it is a fit case for revocation of the customs broker license, imposition of penalty and forfeiture of security deposit. Thus, learned AR justified the action of Principal Commissioner of Customs (General) in revocation of the appellant s CB license and forfeiture of security deposit in the impugned order and stated that the same is sustainable in law. It is further stated by him that the impugned order viewed that the timelines specified in CBLR are directory in nature an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the allegations specifically framed against the appellants for having violated the CBLR ibid. From the findings of the Principal Commissioner in impugned order dated 28.03.2019, the following facts have been specifically recorded about the role of appellants in the investigation report. The extract of the same is given below: 25. During the investigations, CB Director Shri. Vijay Poojary in his statement recorded under section 108 of Customs Act, 1962 on 09.12.2015 has admitted that he got acquainted with Shri Badshah Malik while both were lodged in Mumbai Central Prison in earlier cases of violations of the provisions of the Customs Act, 1962; that Shri Badshah Malik has offered him payment of Rs.75 Lakhs per container for arranging such shipments; that in the year 2014 he had approached Shri Harshvardhan Hegde, Managing Director of M/s Emirates Shipping Agencies (India) Pvt. Ltd. with a request to arrange for freight booking of containers that were to be used for shipping wooden logs of Red Sanders to Middle East Asia; that due to his financial hardship, Shri Harshvardhan Hegde had agreed and arranged for freight booking for 18 containers in which Red Sanders were stu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Rama Creations and others) related to fraudulent exports of garments and for obtaining undue benefits under the DEPB Scheme. Consequently, his CHA license No.11/171 which was issued in the name of Kunverji Dharshi Sons was suspended vide Order No.41/ 2005 dated 14.09.2005 by Commissioner of Customs (General). The license was revoked by The Commissioner of Customs (General) vide his order dated 06.11.2012. 27.1 There is no denying that the CB has a history of being an offender and is thus as a chronic offender his continuation in business world would be detrimental to the national security, Govt. Revenue in the environmental crimes such as export of red sanders which is violative of International Convention such as CITES, 1973 ( the Convention on International Trade in Endangered Species of wild Fauna and Flora) which are major, serious and heinous crimes having both national and international ramifications. In past also Shri. Vijay Poojary has been detained under COFEPOSA Act, 1974. He has himself admitted his role in the smuggling of red sanders and the CB in this case is involved beyond doubt in the serious economic, tax-related and environment crimes. I am of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under these regulations to act as an agent on behalf of the importer or an exporter for purposes of transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station including audit; .. (g) F card holder means a person who has passed the examination referred to in regulation 6 and has been issued a photo identity card in Form F; (h) G card holder means a person who has passed the examination referred to in regulation 13 and has been issued a photo identity card in Form G; (i) H card holder means a person who has not passed the examination referred to in regulation 13 and has been issued a photo identity card in Form H; 5. Conditions to be fulfilled by the applicants. (1) The applicant for a license to act as a Customs Broker in a Customs Station, shall before applying to the Principal Commissioner of Customs or Commissioner of Customs, meet the following conditions that: (a) he is a citizen of India; (b) he is a person of sound mind; (c) he is not adjudicated as insolvent; (d) he holds an Aadhaar number; (e) he holds a valid PAN card; (f) he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of entry, bills of export, shipping bills, and other clearance documents; (b) arrival entry and clearance of vessels; (c) tariff classification and rates of duty; (d) determination of value of imported and export goods; (e) conversion of currency; (f) nature and description of documents to be filed with various kinds of bills of entry, shipping bills and other clearance documents; (g) procedure for assessment and payment of duty including refund of duty paid; (h) examination of goods at Customs Stations; (i) prohibitions on import and export; (j) bonding procedure and clearance from bond; (k) re-importation and conditions for free re-entry; (l) drawback and export promotion schemes including the Special Economic Zone scheme; (m) offences under the Act; (n) provisions of the allied Acts including the Central Goods and Services Act, 2017 (12 of 2017) and section 5 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Indian Explosives Act, 1884 (4 of 1884), the Destructive Insects and Pests Act 1914 (2 of 1914),the Dangerous Drugs Act, 1930 (2 of 1930), the Drugs and Cosmetics Act, 1940 (23 of 1940), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (b) of sub-regulation (2)of regulation 7, the photo-identity card in Form F shall be issued to the person or persons who has actually passed the examination referred to in regulation 6 . (5) The person referred to in sub-regulation (3) shall, within four attempts from the date of his appointment, pass a written examination conducted by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, and the examination shall be such as to ascertain the adequacy of knowledge of such person regarding the provisions of the Act subject to which goods and baggage are cleared through Customs and the person shall, on passing the examination, be issued a photo-identity card in Form G by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be. (6) Notwithstanding anything contained in sub-regulation (5), a G card holder who is employed under a Customs Broker may, on his employment under any other Customs Broker, with the approval or no objection of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, be exempted from passing of such examination. (7) A Customs Broker shall au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the F or G cadre holder to sign the declaration of shipping bill subscribing the truth of its contents after examining each of the aspect in detail for undertaking the responsibility of furnishing current information in the customs declaration/shipping bill. In the present case, the persons involved in the export fraud including Shri. Vijay Poojary and his accomplices, employees have adopted a modus of fabricating the documents, business entity of exporter, so that in the event of detection by the Department, they would be able to escape from the clutches of law. The findings in the impugned order clearly prove that Shri. Vijay Poojary who is a director and a majority shareholder of the appellants CB M/s Srinivas Clearing Shipping (I) Private Limited, had played an active role in devising the entire modus for smuggling of Red sanders, a prohibited item for export along with one Shri Badshah Malik. But for the detailed investigation conducted by DRI, by the purposive avoidance of use of the name of CB for filing of the export documents, Shri. Vijay Poojary, director of the appellant s CB would have escaped from the clutches of law. However, the detailed investigation by DRI a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowing that the export container has been put on hold by investigation agency, Shri Vijay Poojary had asked him to change the vessel of the said container, which appears to be clear manipulation to avoid detection by such investigation agencies. Later in his subsequent statement given on 30.11.2015, he had stated that when he was in discussion with their Chief Financial Officer visiting from Delhi on 28.11.2015, who had come to specifically to meet after the seizure of Red Sanders by DRI in container No. DRYU 23063080, he was called by one Advocate Anish Desai and later when he met him at the address given by him, he found that the office cabin was having the name place of Shri C.Subba Reddy and he had asked him regarding the questions DRI had asked him and the answers given by him. After 10 minutes Shri Vijay Poojary also entered the cabin and they had told him that he need not worry about this incident and they would handle everything. However, later upon meeting the Advocate Shri Chetan Anand, engaged by their shipping agent company, he had advised him to reveal everything to DRI investigation and thus he informed all the facts relating to the seizure of the container No. DRYU 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o was his associate and master mind in the smuggling racket of Red Sanders. The said Badshah Malik had asked him to arrange freight booking for shipments of wooden logs to be shipped to the Middle-East Asia; on his further questioning, Shri Badshah Malik confided that the wooden logs would be of Red Sanders and that the shipment would have to be made very carefully without disclosing the actual identity of the goods as export of Red Sanders was not allowed; in return for tactful handling of such shipments Shri Badshah Malik offered him an amount of Rs. 75 lakhs per container load. The description of goods and the names of the consignors and consignee for such consignments were provided to him by Shri Badshah Malik by way of Whatsapp messages on his mobile phone number 9920030007; the same were forwarded by him to one person by name Shri Noor Mohammed @ Noora, a resident of Vikhroli (East), Mumbai; he got acquainted with Noor Mohammed sometime in April 2014 and had known Shri Noor as a person who owned few trailers and who specialized in stuffing of export containers at discreet locations around Navi Mumbai. The said Shri Noor claimed that he had known lots of shut down factories ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdictional Commissioner of Customs, being the licensing authority that initially the CHA/CB firm was in the name of M/s Kunverji Dharshi Sons, which was later renamed/reconstituted as M/s Srinivas Clearing Shipping (India) Pvt. Ltd. and the same was endorsed in their CHA/CB license on 12.08.2009. At that time the said Shri Vijay Poojary became as Working Director from his earlier position as non- working partner. With subsequent changes, the said Shri Vijay Poojary took entire control of the appellants CB as he was holding 99.9% of shareholding of the appellants company. These facts goes on to prove that with the entire control of the appellants CB firm, the act of illegal export of Red Sanders was orchestrated by Shri Vijay Poojary along with his accomplices. 9. From the analysis of the foregoing evidences, we are of the considered view that the appellants have committed the export fraud of exporting prohibited Red Sanders along with other connected persons. 10. In order to further examine the specific Regulations which are alleged to have been violated by the appellants, we have examined these individually on the basis of factual matrix of the case as follows. The rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls shown as generated in SEZ were fake, inasmuch as these had never been generated from their SEZ office. Similarly verification with the Development Commissioner, SEZ, Surat, in respect of past containers was also reported by them, that the export goods were not manufactured by impugned units, shown as exporters in the respective shipping bills. The above facts clearly prove that the appellants CB have violated the obligations that are required to be complied under Regulation 10(a), 10(e), 10(n) of CBLR, 2018. Further, the employees the appellants CB firm have admitted that they had destroyed the export documents such as Invoice, Packing List, Shipping Bill etc., post shipment of the said consignments on the directions of Shri. Vijay Poojary. These facts goes to prove that the appellants CB had also violated the requirements of Regulation 10(j) and 10(k) of CBLR, 2018. 12. We further find that in respect of delay in suspension proceedings of customs broker license, the Hon ble High Court of Bombay in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P. Ltd., reported in 2012 (361) E.L.T. 321 (BOM HC) have elaborately discussed the issue and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2016, which was disposed by the Final Order of the Tribunal dated 11.01.2017. Further, during the inquiry proceedings ten opportunities for personal hearing on different dates have been given and three more opportunities for cross examination was given to the appellants CB. They were also agitated by the departmental action and the prolonged delay in inquiry proceedings was partly contributed by the appellants CB with a number of personal hearings to be given to them. Thus there was reasonable cause for delay in inquiry proceedings. Therefore, we are of the view that even though no detailed reasons were recorded in detail justifying the delay in passing the impugned order by the learned Principal Commissioner, there were reasonable grounds for alleged delay, in terms of the test laid down by the Hon ble High Court of Bombay. 13.2 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 Commissioner of Customs Vs. K.M. Ganatra Co. in Civil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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