TMI Blog2023 (1) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... s) prescribed under the CBLR, 2018 is mandatory and not directory and this Court in a plethora of judgment has also repeatedly held so - In terms of regulations 17 (1), a show cause notice is to be issued within 90 days from the date of receipt of the Offence report, while regulation 17 (5) prescribes a time period of 90 days from the date of issue of Show Cause Notice for submission of an Inquiry Report. Regulation 17 (7) prescribes that within 90 days from the date of the submission of the Inquiry Report and after consideration thereof, the Principal Commissioner/Commissioner shall pass orders either revoking the suspension of license or revocation of license of the Customs Broker. Although, the said regulation does not prescribe an overall time limit for completing the inquiry, Circular No. 09/2010/Customs dated 08.04.2010 issued by the Central Board of Excise and Customs, Department of the Revenue, Ministry of Finance, Govt. of India, inter alia prescribed time limits for procedures governing the suspension/revocation of CB licenses. As per regulation 17 (4) of CBLR, 2018, if the Deputy Commissioner of Customs or Assistant Commissioner of Customs declines the permission to exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted license to operate as a Custom Broker (CB), which was valid upto 19.12.2025. The instant matter pertains to the previous exports of ball-bearings, investigation of which, was initiated by SIB, ACC, Kolkata on the basis of four live export consignments of unbranded ball-bearings on 24.09.2020 filed by M/s Gupta Vyapar (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 export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer, appointed by the respondent in the said Show Cause Notice. The Inquiry Officer submitted its report dated 04.04.2022, inter alia, holding the petitioner guilty of violating the provisions of Regulation 10 (d), 10 (m), 10 (n) 10 (q). Petitioner then submitted a detailed representation dated 09.04.2022 to the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms EDI System at the time of uploading of shipping bills in the system and if any anomaly is found in the details of such particulars of the exporter, the shipping bill cannot be successfully uploaded in the system. The successful uploading of the shipping bills of the exporters are the conclusive 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 exporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in lieu of monetary benefits. 5. With regard to the limitation, it is submitted that the documents required for initiating action against the petitioner were received by respondent on 18.11.2021, while the impugned order was passed on 29.06.2022 and thus the final order was passed within 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 whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime, it must be remembered that mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the high court under Article 226 has not pursued, would not oust the jurisdiction of the high court and render a writ petition not 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 wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t extracts of regulations 17 (1), 17 (5) 17 (7) are set forth below:- 17. Procedure for revoking license or imposing penalty:- (1) The Principal Commissioner or Commissioner of Customs shall issue a notice in writing to the Customs Broker within a 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent time limit of forty five days for reply by CHA to the notice of suspension, sixty days time for representation against the report of AC/DC on the grounds not accepted by CHA, by reducing the time to thirty days in both the cases under 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red place of business of each of the exporters thereby discharging their obligations under Regulation 10 (n) of the said Regulations, 2018. However, ongoing through the case records, I find that many of the exporters 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Shipping Bill No. 4042026 dated 24.07.2020; vi) He never met any of the representatives of the concerned CHA; vii) He had not made any payments to the CHA or the Freight Forwarder; viii) 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 fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reliance on the statements of Mr. Shyam Lal and Ms. Preeti, the partners of the importer, in support of the case made out in the SCN. The impugned order 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 reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to look into such information which may be made available to it from the exporter/importer. The CHA is not an inspector to weigh the genuineness 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 exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e generated in favour of the exporter after appropriate background check having been conducted by the customs authorities. The further details 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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