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TMI Blog2024 (1) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... IEC CTGPG 6543A). These four consignments were highly over-valued for export to defraud to the exchequer by way of getting very high Input Tax Credit (ITC) Refund and other export related incentives. Thereafter, data pertaining to export of ball-bearings was analyzed for the period 01.01.2020 to 12.09.2020, wherein, it was found that a total of 35 consignments of similar/identical description had been exported, out of which, 23 consignments had been cleared by M/s Naman Gupta & Associates (hereinafter referred to as Custom Broker). The total ITC claimed by such exporters was Rs. 3.3 crores approximately, while total drawback claimed was to the tune of Rs. 36.62 lakhs. It was seen that petitioner was involved in the clearance of 23 shipping bills of ball-bearings filed by nine different exporters. Out of nine exporters, five were found to be non-existent. Two exporters i.e. M/s National Auto Parts and M/s Beam International were admitted to have been involved in the export unintentionally. Two other exporters M/s Theism Tradecom Private Limited and M/s Nitya Enterprises did not appear to record their statements. Statements of Md. Ishtiyaque Ahmad, Proprietor of M/s Beam Internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent controverting each and every finding made by the Inquiry Officer in its report dated 04.04.2022. He was granted personal hearing by the respondent. Respondent agreed with the findings of the Inquiry Officer that CB has failed to comply with the provisions of Regulation 10 (d), 10 (m), 10 (n) & 10 (q) of the CBLR, 2018 and accordingly passed the following order dated 29.06.2022:- (i) I hereby revoke the CB License No. R-36/DEL/CUS/2016 (PAN:AURPG7276R) valid upto 19.12.2025 of M/s Naman Gupta & Associates; (ii) I direct the CB to immediately surrender the Original CB License No. R-36/DEL/CUS/2016 (PAN: AURPG7276R) valid upto 19.12.2025 along with all 'F/G/H' Cards issued there under; (iii) I order for forfeiture of the whole amount of security deposit furnished by them; (iv) I impose a penalty of Rs. 50,000/- on M/s Naman Gupta & Associates. 3. GROUNDS OF CHALLENGE The impugned order dated 29.06.2022 passed by the Commissioner of Customs has been assailed, inter alia, on the ground that the same is patently illegal and ex-facie violative of fundamental principles of natural justice, inasmuch as, it ignored the fact that petitioner was not granted the right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usive proof of the facts that the Importer-Exporter Code Number, GSTIN, Permanent Account Number and Authorized Dealer Code of the exporters were genuine and they were very much in existence on the date of the export. It has also been submitted that the KYC documents submitted by the exporters are public documents issued by the statutory authorities functioning under the Government of India. Such documents were verified from the portal of the authorities and petitioner had no reasons to disbelieve such documents as there is a statutory presumption of its genuineness under Section 79 of the Indian Evidence Act, 1872. It is submitted that the impugned order is an outcome of the purported exercise to save the proper officer of customs, inasmuch as, the proper officer of customs assessed the shipping bills and issued "Let Export Orders" without raising any objection against the value of the exported goods in any manner whatsoever and the customs authorities are hell-bent to penalize the petitioner for the fault of the proper officer of customs, despite the fact that as a Custom Broker, petitioner has no role to assess the value of the goods in any manner whatsoever. It is thus argued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the stipulated time-line of nine months. It is thus submitted that the impugned Order- in-Original is in accordance with the regulations laid down under CBLR, 2018 and is within the ambit of reasonable restrictions and not violative of Article 14 of the Constitution. ANALYSIS & DECISION 6. Commissioner of Customs vide order dated 29.06.2022, revoked the CB License of M/s Naman Gupta & Associates. Regulation 19 of CBLR, 2018 provides that the Custom Broker, aggrieved by any such order passed by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, under Regulation 16 or 17 may prefer an appeal under Section 129A of the Customs Act, 1962 to the Customs Central Excise & Service Tax Appellate Tribunal. Admittedly, in this case, instead of filing an appeal, petitioner has preferred to file writ petition before this court. Thus, the foremost question for consideration is whether the writ petition is maintainable, as an alternative remedy of appeal was available to the petitioner under Section 129 A of the Customs Act, 1962 before CESTAT. 7. In the case of Godrej Sara Lee Ltd. Vs. Excise and Taxation Officer-cum-Assessing Authority and Others 2023 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintainable". In a long line of decisions, this Court has made it clear that availability of an alternative remedy does not operate as an absolute bar to the "maintainability" of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and discretion rather than a rule of law. Though elementary, it needs to be restated that "entertainability" and "maintainability" of a writ petition are distinct concepts. The fine but real distinction between the two ought not to be lost sight of. The objection as to "maintainability" goes to the root of the matter and if such objection were found to be of substance, the courts would be rendered incapable of even receiving the lis for adjudication. On the other hand, the question of "entertainability" is entirely within the realm of discretion of the high courts, writ remedy being discretionary. A writ petition despite being maintainable may not be entertained by a high court for very many reasons or relief could even be refused to the petitioner, despite setting up a sound legal point, if grant of the claimed relief would not further public interest. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of ninety days from the date of receipt of an offence report, stating the grounds on which it is proposed to revoke the license or impose penalty requiring the said Customs Broker to submit within thirty days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs Broker desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs. (5) At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall prepare a report of the inquiry and after recording his findings thereon submit the report within a period of ninety days from the date of issue of a notice under sub-regulation (1). (7) The Principal Commissioner or Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs Broker, pass such orders as he deems fit either revoking the suspension of the license or revoking the license of the Customs Broker within ninety days from the date of submission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Regulations." 12. On a perusal of the record, it is evident that the offence report against the Customs Broker M/s Naman Gupta & Associates was issued on 11.08.2021 (Annexure P-5). Once an offence be put is received, the time period as provided in the CBLR commences. The Order-in- Original dated 29.06.2022 takes note that copy of the offence report dated 11.08.2021 against the subject CB was received from the Special Investigation Branch on 18.11.2021 and Show Cause Notice was issued on 05.01.2022. Inquiry was completed on 01.04.2022 and was forwarded to the Commissioner of Customs vide letter dated 04.04.2022 (Annexure P-11). FINDINGS OF COMMISSIONER (AIRPORT & GENERAL) WITH REGARD TO REGULATION 10 (d), 10 (m), 10 (n) & 10 (q) 13. The Commissioner of Customs in his order dated 29.06.2022, returned the following finding:- "26. Now I proceed to discuss the violations of CBLR, 2018 by the Customs Broker firm: Regulation 10(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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters were found to be non -existent during investigation and few of them were nowhere related to export business. If an exporter procures IEC, GSTIN, PAN , Authorised Dealer Code fraudulently, then Shipping Bills can be filed even if the exporter is non - existent. I find that the two exporters who appeared for tendering statement under Section 108 of the Customs Act, 1962 stated that they were not involved in the export of the subject goods. Shri Sanjit Ghosh, so called proprietor of M/s National Auto Parts Ltd. clearly mentioned in his statement that "He does not operate the firm. However, the address given was his home address and no such firm was existing at that address". The CB in his defence in an attempt to dis-credit the statement of Shri Sanjit Ghosh, has sought refuge in various technicalities like as to why did not Shri Ghosh get his IEC registered if he had no role in issuance of IEC. Similarly, if Sanjit Ghosh was threatened, then why did he not file complaint. These arguments may be valid but are not the subject matter of these proceedings. CB cannot expect an exoneration of failure to carry out proper identity check of the exporter by resorting to fault finding in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He admitted his mistake and stated that he was willing to return the drawback and IGST refund that he received in his account. 15. Similarly, Sanjit Ghosh, Proprietor of M/s National Auto Parts in his statement recorded under Section 108 of the Customs Act, 1962, stated as under:- i) He did not have any idea about the issuance of his IEC; ii) He works as an employee in a sweet shop; iii) One person named as Lakhan Mondal whom he met in a birthday party of his friend took all his KYC details such as Aadhar card, PAN card, Voter card in the guise of making arrangements for him to go abroad for work; iv) He does not operate the firm M/s National Auto Parts Ltd. However, the address given was his home address and no such firm was existing at that address; v) He does not know any Customs Broker; vi) He did not meet any representative of Customs Broker M/s Naman Gupta & Associates in order to export consignment of ball bearing covered under Shipping Bill No. 3781573 dated 13.07.2020; vii) He did not file any shipping bill. viii) In October 2020, initially an amount of Rs. 1,18,000 and next day an amount of Rs. 13,30,000 was deposited in his account (these amounts were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the AA does not indicate that any prejudice would be caused to the Department by providing the Petitioner the right of cross-examination. On the other hand the denial of such right would prejudice the Petitioner since the said statements are adverse to the Petitioner. In the circumstances, the denial of the Petitioner's right of cross-examination is held contrary to the law explained in Basudev Garg (supra)." 18. In the present case, the petitioner questioned the integrity of the statements of the two exporters recorded under Section 108 of the Customs Act, 1962. Such statements were required to be tested through cross examination. Despite specific request by the petitioner to cross examine such witnesses, no attempt was made to secure their presence in the adjudication proceedings. As per regulation 17 (4) of CBLR, 2018, if the Deputy Commissioner of Customs or Assistant Commissioner of Customs declines the permission to examine any person on the ground that his evidence is not relevant or material, he needs to record the reasons in writing for doing so but the Inquiry Officer assigned no reason what so ever. The Commissioner of Customs ignored the error on the part of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. What is noteworthy is that the IE Code of the exporter M/s H.M. Impex was mentioned in the shipping bills, this itself reflects that before the grant of said IE Code, the background check of the said importer/exporter had been undertaken by the customs authorities, therefore, there was no doubt about the identity of the said exporter. 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. There is nothing on record to show that the appellant had knowledge that the goods mentioned in the shipping bills did not reflect the truth of the consignment sought to be exported. In the absence of such knowledge, there cannot be any mens rea attributed to the appellant or its proprietor. Whatever may be the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that may have been captured and form part of IEC Registration of an importer are aspects which have to be verified by the customs authorities themselves. Moreover, it is also not the case of the Department that IEC, GSTIN, PAN & Authorized Dealer Code of the exporters were not genuine. In the aforesaid backdrop the Court in Kunal Travels (supra) held that the obligation of the CHA under Section 13 (e) of the CHALR, 2004 cannot be stretched to it being obliged to undertake a further background check of the client. As such, as a Customs Broker, the petitioner cannot be held liable because exporters were not traceable, after the issuance of 'Let Export Orders' and export of the goods out of the country.
21. In our considered opinion, the Commissioner of Customs erred in accepting the findings of the Inquiry Officer regards the failure of Customs Broker to comply with the provisions of Regulation 10(d), 10 (m), 10 (n) & 10 (q) of the CBLR, 2018.
22. The Writ Petition shall stand allowed. The impugned order dated 29.06.2022, insofar as, it revokes the CB License of the petitioner and levies penalty upon the petitioner shall stand quashed and set aside. X X X X Extracts X X X X X X X X Extracts X X X X
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