TaxTMI 
TaxTMI 
2024 (5) TMI 1228
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....ding the statement from the Branch Manager of the appellant. After detailed investigation and based on the inquiry report, the Commissioner revoked the license of the appellant under Regulation 14 and 17(7) of CBLR, 2018 along with forfeiture of entire amount of the security deposit and also imposed penalty of Rs. 50,000/- under Regulation 14 read with Regulation 18 (1) of CBLR, 2018. 2. The learned counsel submits that the appellant is a Customs Broker having a licence under Regulation 7 of the CHALR, 2018, valid upto 05.01.2027 and having extended Customs broker activities at Thiruvananthapuram, Chennai, Mumbai, Bangalore and Uttar Pradesh. He submits that on 05.07.2021, the Customs Preventive officers had seized 30.245 kgs of gold from consignment declared as Diplomatic Cargo and an offence report was registered. The appellant premises was searched and statements were recorded from the Branch Manager of the appellant. It is submitted that the appellant has been undertaking the customs broker activities for the UAE Consulate from 2017 onwards for their Diplomatic Cargo and the Bill of Entry for the above consignment was also filed with the bona fide belief that it is a Diplomati....
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....tion and relied on the decisions in the case of: * Muhammad Fariz and co. Vs. Commissioner of customs, cochin 2019 (369) ELT- 218 (KER) * Sri Balaganesan Spinners versus Joint Commissioner of Customs, Tuticorin 2021 (377) ELT- 510 (Mad) 2.3 The Learned Counsel further submitted that the offence report and other relied upon documents, if any, were not provided to them and therefore, without the documents they could not submit their replies countering the allegations; hence, the order is devoid of merits. It is stated that the respondent issued show-cause notice without providing copy of the relied upon documents in spite of repeated requests which is evident from their letters dated 10.02.2022 and 24.08.2022. This Hon'ble Tribunal directed the respondent to serve the copies of the relied upon documents as per the Memo dated 26.07.2023 filed by the Counsel and the respondent provided a copy of offence report dated 30.06.2020 and a copy of the authorization letter dated 30.06.2020 was submitted to the Asst. Commissioner of Customs, Air Cargo Complex, Trivandrum. But the appellant asked for all the documents pertaining to the import taken away from the appellant's premises at the ....
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....try are genuine and no query arose at the time of clearance of those consignments. Thus, the finding regarding lack of due diligence on the part of the appellant is unsustainable, as the appellant has not contravened Regulation 10(d) as there was no failure to comply with any of the provisions of the Act/Rules/Regulations. 2.5 As per Regulation 10(e) of the CBLR, 2018 the Customs Broker shall exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage. Due diligence is a process or effort to collect and analyze information before making a decision or conducting a transaction so a party is not held legally liable for any loss or damage. There is no specific allegation or finding regarding violation of Regulation 10(e) of the CBLR, 2018. There was no allegation or evidence that Custom Broker had imparted any information to their clients, case of concealment of gold in the consignment was alleged on the basis of examination of the cargo and the Customs Broker could not have detected concealment of gold from documents supplied by exporter without examination of goods. When goods....
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....8 is unsustainable. Regulation 10(n) of CBLR, 2018 does not mandate how documents should be handed over by exporter/importer to client; only requirement is that Know Your Customer (KYC) documents must be received and verified to ensure identity of client. To substantiate his arguments relied on the following case laws: * M/s. M.K. Sha & Co. Vs CC (Airport & ACC), Kolkata: 2023 (2) Centax 34 (Tri. Cal) * Final Order No. 50561/2022 dated 04.07.2022 in the matter of M/s Mauli Worldwide Logistics in appeal No. C/50997/2021-DB * Commissioner of Customs (A & A ) Vs. BK Clearing Agency: (2024) 14 Centax 65 (Cal.) * Sinha Shipping Agency Vs. Commissioner of Customs: (2024) 14 Centax 17 (Tri.-Cal) 2.7 It is further submitted that the entire allegation is only based on the offence report and there are no other documents relied upon in the notice and since, the appellant has no opportunity to verify or cross-check the declaration filed by the importer, the allegations are not sustainable. There is no finding regarding alleged violation of Regulation 10(n) of the CBLR, 2018. Moreover, Shri Rashed Khamis Ali Masaiqri Al Shemeili who is the importer of the consignment, himself admitted ....
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....ncy Vs. Principal commissioner of Customs (A & A): (2023) 2 Centax 157 (Tri. Cal) * M/s Kunal Travels (Cargo) Vs. CC(I&G), IGI Airport New Delhi: 2017 (354) ELT 447 (Del) 2.10 It is stated that the adjudicating authority levelled an unsustainable allegation against the appellant that the appellant mis-declared the Consignor name in three Bills of Entry. It is an admitted fact that the authorisation to the appellant was given by the Consulate General UAE, Kerala under his signature which is evident in para 24 of the impugned order stating that "it appears that the allegations of breach of Regulation 10(a) of CBLR, 2018 do not survive since authorizations appear to have been obtained in cases." Further, department do not have a case that Form-7 is not filed along with any of the Bills of Entry. As per the deposition made by Shri Shafeeq, Asst. Accountant in Consulate, "that he has been entrusted with preparing documents; that the document they prepare is from a stock template called "Form - 7" which having a serial number on it ............... that the seal described above is affixed by the said diplomat Mr. Rashed personally." Moreover, it can be seen from the deposition of Shri ....
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...., Trivandrum. This has been corroborated by the voluntary statements of Shri Sarith, Smt. Swapna and Shri Shefeeq K and the gate passes issued to the vehicle of Shri Sarith at Air Cargo Complex, Trivandrum. It appeared that the Customs Broker had failed to verify the authenticity of documents received from Shri Sarith, who was not an employee of the UAE Consulate, Trivandrum and also failed to exercise due diligence to ascertain the correctness of information related to the clearance of the cargo. (ii) It is further submitted that the smuggling syndicate had smuggled a total of about 136.828 kg of gold covered under 20 Bills of Entry and also smuggled about 30.245 kg of gold, covered under one Bill of Entry, which was seized on 05.07.2020. In respect of the following Bills of Entry, the Customs Broker had mis-declared the consignor's details in the respective Bills of Entry: Sl. No. Bills of Entry/ Date Consignor details as per AWB Consignor details mentioned in the Bills of Entry 1 7987721/ 24.06.2020 Saleem Yousuf Hasan Albeshar Ministry of Foreign Affairs, Abu Dhabi 2 8019046/ 27.06.2020 Faizal Fareed, Dubai Ministry of Foreign Affairs, Abu Dhabi 3 804523....
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.... Broker had contravened the provisions of Regulations 10(e), 10(m) and 10(n) which required him to exercise due diligence to ascertain the correctness of any information which he imparted to his client, discharge his duties as Customs Broker with utmost speed and efficiency and failing to physically verify the KYC details and address of his client. The appellant had violated the above-mentioned provisions of CBLR, 2018 and there was sufficient ground for initiating proceedings under Regulation 17 of CBLR, 2018. In view of the above, the Commissioner of Customs, Cochin was justified in revoking the license and forfeiture of the security deposit under Regulation 14 of CBLR, 2018 along with imposition of penalty under Regulation 18 of CBLR, 2018. (v) From a perusal of the statements dated 14.08.2020 of Shri. Godfrey Pratap the Manager it emerged that they were aware that Shri Sarith was no longer an employee of the UAE Consulate. The appellant had filed three Bills of Entry to make it appear that the consignor was 'Ministry of Foreign Affairs, Abu Dhabi' whereas the actual consignors were private individuals. It is not in doubt that the cargo whose consignor is mis-declared as the '....
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....matic cargo. The Customs Broker had failed to verify the authenticity of documents received from Shri Sarith, who was not an employee of the UAE Consulate, Trivandrum and also failed to exercise due diligence to ascertain the correctness of information related to the clearance of cargos. In respect of three Bills of Entry, the Customs Broker had mis-declared the consignor's details as "Ministry of Foreign Affairs, Abu Dhabi, UAE" in the respective Bills of Entry when in reality, the cargo was consigned by private individuals. Further, Invoices and Packing Lists were not filed with most of the Bills of Entry. This clearly showed the mala fide intention of the noticee and collusion with the smuggling syndicate and thereby abetment in the smuggling of about 136.828 kg of gold in the consignments declared as diplomatic cargo, including the consignment from which 30.245 kg gold was seized at Air Cargo Complex, Trivandrum on 05.07.2020. (vii) The AR further stated that the Customs Broker is contracted to make sure that the customs declaration is correct, duties and taxes are provided accurately, and payment is received so that goods can transit across borders smoothly and without disru....
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....go was produced. The invoice submitted by the consignee showed items as his personal baggage consisting of foodstuffs like dates, milk powder, Maggie, butter cookies, noodles and classic cookies and the total value was declared as Rs.43,056/-. On a reasonable belief that the goods are liable for confiscation under the provisions of the Customs Act, the officers of the Customs Preventive Commissionerate in the presence of two independent witnesses and also in the presence of Shri Rashed opened the consignment after obtaining No Objection Certificate from the Ambassador of United Arab Emirates in India. The said consignment of one carton box having a total weight of 79 kgs. as mentioned in the airway bill was found to contain foodstuffs and articles such as door closers, sanitary fittings, the speakers etc. These articles other than food items were examined in detail and on examination, it was found that 30,244 grams of gold was discovered as listed in the Table below: Sl. No. Description of items Item under the said Sl. No. Size and shape of yellow metal recovered Weight of the yellow metal recovered (in gms) 1 MSM Locks - D140-SLSilvermade by lic....
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....eclared as food stuffs. It is a fact that the gold was concealed under the metal items that were sent along with the food stuffs. These facts are not in dispute. The gold is absolutely confiscated and penalties have been imposed on various persons being part of the syndicate. The appellant was also confirmed to have abetted in the crime and Rs.4 crores penalty has been imposed on him under Section 112(a) and 112(b) of the Customs Act, 1962. 6. In the present appeal, we are concerned with the allegations against the appellant as a Customs Broker who is responsible for clearing the above consignment of gold which has been smuggled by the syndicate. The learned counsel has raised various issues. Let's examine each one of these issues. 7. The first issue is whether the notice was time barred. Regulation 17 (1) of CBLR reads :- (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 Commissi....
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....ing the notices after 90 days from the date of receipt of the offence report and not applicable in the present set of facts where notice is not time barred. With regard to delay in filing the inquiry report, the Commissioner notes that the Regulation also suggests suspension of the license within 90 days of the inquiry report but no such action was taken and the appellant continued to operate for the entire period following the alleged offence being committed. In other words, his right to pursue his vocation has not been prejudiced in any way by the alleged delay beyond the period laid down under regulation 17(5). It is also noted by the Commissioner that there has been delay on the part of the appellant in furnishing response to the show-cause notice by filing only an interim reply and insisting on unjustified cross-examination of the officers who were nowhere concerned with the case. 8. The learned AR for the Revenue has rightly relied on the judgement of the Hon'ble High Court of Bombay to justify that each and every report needs not be mandatory and one such report is the inquiry report where it depends on the cooperation of the appellant and his timely submissions. The Hon'bl....
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....he salutary principle, whether statute imposes a public duty and lays down the manner and time within which the duty shall be performed, the injustice or inconvenience resulting from a rigid adherence to the statutory prescription, is a relevant factor for holding such provision only as directory has been completely overlooked. As observed by Justice Denman in Caldow v. Pixell, (1877) 2 CPD 562, "in considering whether the statute is imperative, the balance may be struck between inconvenience or sometime rigidly adhered to, or sometime departure from this direction". In that case, it was held that where a public officer was directed by statute to perform a duty within a specific time the case is established that the provisions are only directory, as already discussed above. There might be reason why such time limits cannot be adhered to and these reasons may be at times attributable to the revenue and some time to the Customs house agent. Strict adherence to the said time limit and not making it even slightly flexible would warrant a situation where even one day deviation from the time line would be equally fatal as a delay of one year. This surely is not the intention in framing t....
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....s it is already observed above that though the time line framed in the Regulation need to be rigidly applied, fairness would demand that when such time limit is crossed, the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the time limit was not adhered to. This would ensure that the inquiry proceedings which are initiated are completed expeditiously, are not prolonged and some checks and balances must be ensured. One step by which the unnecessary delays can be curbed is recording of reasons for the delay or non-adherence to this time limit by the Officer conducting the inquiry and making him accountable for not adhering to the time schedule. These reasons can then be tested to derive a conclusion whether the deviation from the time line prescribed in the Regulation, is "reasonable". This is the only way by which the provisions contained in Regulation 20 can be effectively implemented in the interest of both parties, namely, the Revenue and the Customs House Agent." In view of the above, we are of the opinion that the notice was not time barred as alleged by the Learned Counsel. 9. The Second issue is....
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....d the consignment. It may be pertinent to mention here that these officers cleared the consignment as Diplomatic Cargo based on the records filed before them and therefore, there is absolutely no role played by them. The Commissioner at Para 15 of the impugned order clearly states 'I have called for and examined the interim reply and do not. find any request let alone repeated requests for cross examination. He also admits that cross examination of witnesses is to be mandatorily given by the inquiry officer under regulation 17 (4) where they are connected to the grounds forming the basis of the proceedings. In the instant case I find that the said officers have not given statements and their conduct is in nowhere relevant to the case at hand viz; the question whether the CB has flouted any of the obligations cast upon them.' Relying on the Supreme Court's decision in the case of Harinderpal Singh Shergill vs. Commissioner: 2010 (259) ELT A 19 (SC), he states that the request for cross-examination of 7 personnel who have cleared the Bills of Entry only goes to prove that they want the proceedings to be delayed. The officers who have cleared the consignment have done so based on the ....
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....sight when the mistake is occasioned by the appellant who is well aware of the procedures. Such repeated mis-declarations which have resulted in smuggling of gold into India cannot be considered as oversight as claimed by the Branch Manager of the appellant in his statement. The appellant has also alleged that the above facts were not part of the notice issued to him. It is necessary to highlight here the fact that in dealing with the Customs broker with regard to the license first an offence report is issued which only specifies the allegations in brief. Thereafter, a notice is issued and an inquiry officer is appointed to look into the allegations and to give an opportunity to the appellants to defend himself. Hence, the inquiry report is a detailed report which provides the allegations, the documents relied upon and the defences provided by the accused and based on this, the order is issued. Therefore, in dealing with the CHALR it is the offence report and the inquiry report are the two significant documents that bring about the offence committed by the appellant. 12. The premises of the Appellant was searched and certain documents were recovered with regard to the above consig....
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....gations and various statements and from the appellants own statement, it is proved that they were aware of the fact that Shri Sarith was no more with the Consulate. The appellant had failed to verify the authenticity of the documents received from Shri Sarith who was not an employee of the UAE Consulate, Trivandrum and also failed to exercise due diligence to ascertain the correctness of information related to the clearance of the cargo. In respect of three Bills of Entry, the appellant had declared the consignor's details as "Ministry of foreign affairs Abu Dhabi UAE" wherein the airway bill clearly shows that the goods were consigned by private individuals and the invoices and packing list were also not filed with the Bills of Entry which clearly shows a mala fide intention of the appellant and collusion with the smuggling syndicate, thus, abetting in the smuggling of 136.828 kgs. of gold including the seized consignment of 30.245 kgs of gold. The appellant as a Customs Broker as per Regulation 10(d) was not only required to advise the client to comply with the provisions of the Act but also required to report such non-compliance to the Customs. As rightly argued by the Revenue, ....