Customs broker licence revoked for facilitating imports through dummy IEC holder without proper KYC verification under Regulation 11(n) CBLR 2013

CESTAT New Delhi upheld revocation of customs broker licence and forfeiture of security deposit for violation of Regulation 11(n) of CBLR, 2013. The broker failed to conduct proper KYC verification, facilitating imports through dummy IEC holder over 60-70 consignments. Despite goods being cleared in one party's name, actual importer was different party who controlled documentation, payments, and goods receipt. Tribunal found broker's connivance evident and rejected proportionality challenge, noting violations without intent suffice for action. Appeal dismissed.

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Issues Involved:
1. Revocation of Customs Broker Licence
2. Forfeiture of Security Deposit
3. Violation of Customs Broker Licence Regulations, 2013
4. Verification of Importer Exporter Code (IEC) and Client's Address

Summary:

1. Revocation of Customs Broker Licence:
The appellant, a Customs Broker (CB), challenged the Order-in-Original dated 15.11.2018, which revoked their Customs Broker Licence and ordered the forfeiture of the security deposit of Rs.75,000, without imposing any penalty.

2. Forfeiture of Security Deposit:
The consignment imported by M/s. Royal International through the appellant was mis-declared in terms of quantity and branding, leading to under-valuation and evasion of customs duty. Statements were recorded u/s 108 of the Customs Act, 1962, revealing that the actual importer, Rajesh Bansal, used the IEC of Praveen Singh Patwal, who was merely a dummy IEC holder.

3. Violation of Customs Broker Licence Regulations, 2013:
The appellant was found guilty of violating Regulation 11(n) of the Customs Broker Licence Regulations, 2013 (CBLR), which requires verifying the correctness of the IEC number, identity of the client, and the client's functioning at the declared address. The Inquiry Officer's report confirmed the infringement, leading to the revocation of the licence and forfeiture of the security deposit.

4. Verification of Importer Exporter Code (IEC) and Client's Address:
The appellant argued that they adhered to KYC norms by obtaining two IDs and the IEC certificate and verifying them from the Income Tax Department and DGFT websites. However, the Tribunal found that the appellant failed to verify the correct address of the IEC holder, as the importer was not operating from the given address when the appellant undertook the work. The Tribunal also noted that the appellant cleared around 60 to 70 consignments without verifying the importer's functioning at the declared address, indicating connivance.

Conclusion:
The Tribunal upheld the impugned order, stating that the Customs Broker failed to verify the antecedents of the importer and allowed the use of a dummy IEC holder. The revocation of the licence and the forfeiture of the security deposit were justified, and the appeal was dismissed. The Tribunal emphasized the importance of the Customs Broker's role and the need for strict adherence to regulations to prevent misuse and ensure compliance with customs laws.

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