2022 (5) TMI 877 - AT - Customs

Tribunal overturns penalties against transport company, ruling checklists by customs broker not fraudulent.

The Tribunal found the Principal Commissioner's order unsustainable due to inconsistent outcomes in similar cases, breaching the uniformity principle ... Revocation of Customs Broker License - forefeiture of security deposit - levy of penalty - applicability of Regulation 14 of the CBLR, 2018 - allegation of fraud by availing export finance by submission of export bills without making exports - HELD THAT:- It is an admitted fact that the appellant has issued the checklists to the exporters. Even investigation report recorded that ABCCPL owned and controlled by Shri Ashish Jobanputra was exporting cotton since the year 2009 mainly to China under Letter of Credit. Since ABCCPL was a regular exporter exporting goods since 2009, they did not find any difficulty in getting the export documents for availing the fraudulent export credits from the Banks. These documents have been issued by M/s. RSS Shipping Pvt. Ltd. who was operating the CHA licence in the name of M/s. Ramesh Transport Co. (the appellant herein) and M/s. Harin Transport. In para 11 of the impugned order, the only ground on which the Commissioner proceeded against the appellant is that Shri Ramesh Mange had not met or contacted ABCCPL while filing the checklists for export in their name and has thus allowed his CB licence to be used by M/s. RSS Shipping Pvt. Ltd. which was involved in uploading the shipping bill data prepared by them on ICEGATE portal. On the basis of above, the Commissioner concluded that the evidence on record clearly indicated that the Customs Broker was working in a manner to facilitate fraud and had violated the obligation casted upon them under the CBLR,2018. On the same set of evidences, two different findings have been recorded by the Commissioners at Nagpur and Mumbai. Such a discrimination which leads to revocation of licence of one Customs Broker and permits them to operate without any hindrance is nothing but discrimination contrary to Article 14 of the Constitution - Further the procedure for export starts with filing of checklists on ICEGATE portal. If the same is not backed by the proper shipping bill within 15 days, the checklist gets purged. It is not understood how the issuance of checklist by the Customs Broker was a fraud under the Customs Act. Even if the same was an offence under some other Acts, the appellant needs to be tried in terms of those Acts and should not have been inflicted with the punishment sought to be inflicted in terms of CBLR, 2018. Appeal allowed - decided in favor of appellant. Issues Involved:1. Penalty imposition under Regulation 18 of CBLR, 2018.2. Forfeiture of security deposit under Regulation 14 of CBLR, 2018.3. Revocation of Customs Broker (CB) Licence under Regulation 14 of CBLR, 2018.4. Alleged violations of Regulations 10(d), 10(e), and 10(m) of CBLR, 2018.5. Discrimination in treatment of similar cases under Article 14 of the Constitution.Issue-wise Detailed Analysis:1. Penalty Imposition under Regulation 18 of CBLR, 2018:The Principal Commissioner of Customs (General) imposed a penalty of Rs. 50,000 on the appellant, M/s. Ramesh Transport Company, under Regulation 18 of the CBLR, 2018. The appellant was accused of facilitating fraudulent activities by issuing checklists and House Bills of Lading (BL) without ensuring the receipt of merchandise at the port, which were then used by M/s. ABC Cotspin Pvt. Ltd. (ABCCPL) to defraud banks.2. Forfeiture of Security Deposit under Regulation 14 of CBLR, 2018:The Principal Commissioner ordered the forfeiture of the entire security deposit furnished by the Customs Broker (CB) under Regulation 14 of the CBLR, 2018. This action was based on the findings that the CB allowed its licence to be misused by M/s. RSS Shipping Pvt. Ltd., which was operating under the appellant’s licence and involved in fraudulent activities.3. Revocation of CB Licence under Regulation 14 of CBLR, 2018:The CB Licence No. 11/1018 was revoked under Regulation 14 of the CBLR, 2018. The Principal Commissioner concluded that the CB failed to advise their client to comply with the provisions of the Act and did not inform the Customs Authorities about the non-compliance by the exporter, thus violating the regulations.4. Alleged Violations of Regulations 10(d), 10(e), and 10(m) of CBLR, 2018:- Regulation 10(d): The CB did not advise their client to comply with the provisions of the Act and did not bring the matter to the notice of the Customs Authorities. The investigation revealed that the CB knowingly allowed their licence to be misused, which facilitated the fraudulent activities.- Regulation 10(e): The CB unlawfully allowed M/s. RSS Shipping Pvt. Ltd. to use their licence for uploading shipping bills data, without exercising due diligence to verify the correctness of the information. This showed connivance and deliberate facilitation of fraud.- Regulation 10(m): The CB failed to use requisite knowledge and skill, as they did not verify the IEC holder and allowed the misuse of checklists and House BLs, which were used for fraudulent activities.5. Discrimination in Treatment of Similar Cases under Article 14 of the Constitution:The appellant argued that in a similar case involving M/s. Harin Transport, the Commissioner of Customs, Nagpur, dropped the proceedings against the CB. The Tribunal noted that on the same set of evidence, two different findings were recorded by the Commissioners at Nagpur and Mumbai, which amounted to discrimination contrary to Article 14 of the Constitution. The Tribunal referenced the case of Damodar J. Malpani, where the Supreme Court emphasized the need for uniformity, equity, and justice in similar cases.Conclusion:The Tribunal found that the Principal Commissioner’s order was not sustainable, as the same set of evidence led to different outcomes in similar cases, violating the principle of uniformity under Article 14. The Tribunal also noted that the issuance of checklists by the CB, which get purged if not backed by proper shipping bills within 15 days, did not constitute fraud under the Customs Act. Consequently, the appeal was allowed, and the impugned order was set aside.