2018 (9) TMI 934 - AT - Customs

Tribunal overturns $50k penalty on shipping company for compliance with customs regulations

The tribunal set aside the penalty of Rs. 50,000 imposed on the appellant M/s. Carewell Shipping Pvt. Ltd. under Regulations 18 & 20 (7) of the ... Imposition of penalty under Regulations 18 & 20 (7) of the Customs Brokers Licensing Regulations, 2013 - The only infraction found against the customs broker is that they have not verified the KYC norms as per the Regulation 11 (n) ibid - Held that:- Case law of HIM Logistics Pvt. Ltd. [ 2016 (4) TMI 971 - CESTAT NEW DELHI] will apply on all fours to the case at hand - There is only so much that a customs broker can do for verification of antecedents. In fact there are many cases where fraudulent importers or exporters have used even forged documents including forged IEC and other KYC documents to avail unintended benefits in import and export, while no doubt the customs broker is expected to remain vigilant and undertake the verification of documents etc. as also comply with the other obligations cast on him under Regulation 11, he cannot be expected to cause in-depth detective investigation well that is beyond his capacity. Penalty unjustified - appeal allowed - decided in favor of appellant. Issues:Imposition of penalty under Regulations 18 & 20 (7) of the Customs Brokers Licensing Regulations, 2013.Analysis:The dispute in this appeal revolves around the imposition of a penalty of Rs. 50,000 under Regulations 18 & 20 (7) of the Customs Brokers Licensing Regulations, 2013 on the appellant M/s. Carewell Shipping Pvt. Ltd. The appellant's counsel argued that the penalty was imposed for non-compliance with Regulation 11 (n) of the CBLR, 2013, which requires customs brokers to verify antecedents, IEC number correctness, and client identification. The counsel referred to the case law of HIM Logistics Pvt. Ltd. Vs CC New Delhi, where it was held that physical verification is not mandatory if the customs broker has verified essential documents like partnership deed, IEC, PAN card, and Voter ID card. Other decisions like Kunal Travels (Cargo) Vs CC (I&G), IGI Airport, New Delhi and APS Freight & Travels Pvt. Ltd. Vs CC (General) New Delhi were also cited to support the appellant's argument.On the contrary, the respondent's representative supported the penalty and highlighted that the customs broker must independently verify details as per Regulation 11 (n) of the CBLR 2013. The adjudicating authority was commended for imposing a relatively small fine. After hearing both sides, the tribunal examined the facts and found that the customs broker had verified KYC norms during the initial customs clearance and was not aware of any concealed imports. The tribunal noted that while customs brokers are expected to be vigilant and comply with regulations, they cannot be expected to conduct extensive detective investigations beyond their capacity. The tribunal clarified that Regulation 11 (n) does not mandate independent verification by the customs broker but requires the use of reliable, authentic documents for verification. Consequently, the tribunal deemed the penalty unjustified, set aside the impugned order, and allowed the appeal with any consequential benefits as per the law.