2024 (10) TMI 404 - AT - Customs

Customs broker license revoked for facilitating fraudulent export clearances through fake IECs and bogus IGST refund claims

M/s. Vijender Singh Versus Commissioner of Customs – New Delhi (Airport and General)

CESTAT New Delhi dismissed the appeal challenging revocation of customs broker license and forfeiture of security deposit. The customs broker's G-Card ... Revocation of the customs broker license - forfeiture of the security deposit - fraudulent activities and misdeclaration by the Customs Broker's G-Card Holder - exporters were found to be using fake IECs and have claimed huge IGST refund on later occasion - violation of provisions of Regulation 10(a), 10(e), 10(n), 10(o) and 13(12) of the CBLR, 2018 for some export clearances attended by its G-Card Holder. HELD THAT:- On checking of IEC of M/s. Della Enterprises it was found to be a dummy firm created in the name of Shri Veerchand Kisturchand Jain. The IEC holder Shri Veerchand Kisturchand Jain has denied any connection with M/s. Della Enterprise and also denied having exported any goods. It is found that the declared premises of the exporters are fake and also no business activities were found in the places of business addresses provided in GSTIN. Persons involved exporting these consignments were also found to be involved in several cases of commercial fraud in the past. Hence it is clear on record that a group of syndicate with the said bogus IECs has availed ineligible IGST refund on the basis of bogus invoices, wherein fact remains is that no IGST had been paid to the exchequer in respect of such invoices. The bogus IECs' were used to hide the identity of the actual beneficiary of such fraudulent activity and to escape detection of their direct involvement by the Customs authority. As per Rule 12 of Foreign Trade Regulation Rules 1993 'any person using someone else's Importer-Exporter Code shall be held liable for violation of this rule and shall accordingly be liable for penalty under sub-section (2) of Section 11 of the rule. The Radioactivity Measurement Laboratory, Radiation Safety System Division, Bhabha Atomic Research Centre, Trombayhas confirmed vide Ref. No. RSSD/RKL/2018 dated 17.12.2018 that “No detectable radioactivity was found in these concrete bricks’ as mentioned in the shipping bills descriptions - it is clear that G-card holder has violated the above quoted provisions of CBLR. The G-card hold is none but a customs broker of the CHA/appellant, hence appellant is responsible for the act of his agent. There are no reason to differ from the findings in the order under challenge - appeal dismissed. Issues Involved:1. Violation of Customs Broker Licensing Regulations, 2018 (CBLR, 2018) by the appellant.2. Alleged fraudulent activities and misdeclaration by the Customs Broker's G-Card Holder.3. Revocation of Customs Broker license and imposition of penalties.Detailed Analysis:1. Violation of Customs Broker Licensing Regulations, 2018:The core issue revolves around whether the appellant violated specific provisions of the Customs Broker Licensing Regulations, 2018, namely Regulations 10(a), 10(e), 10(n), 10(o), and 13(12). The Tribunal examined the responsibilities and obligations imposed on Customs Brokers under these regulations.- Regulation 10(a): This regulation mandates Customs Brokers to obtain authorization from each client they represent. The G-Card Holder, Shri Shashikant Maruti Pol, admitted to clearing exports for multiple firms without proper authorization, thereby violating this regulation.- Regulation 10(e): Customs Brokers must exercise due diligence to verify the correctness of information related to cargo clearance. The Tribunal found that the Customs Broker failed to interact directly with the exporters and did not ascertain the true nature and value of the exported goods, breaching this regulation.- Regulation 10(n): This regulation requires verification of the Importer Exporter Code (IEC), GSTIN, and the identity and functioning of clients. The Customs Broker did not verify the addresses and authenticity of the exporters, as admitted by the G-Card Holder, constituting a violation.- Regulation 10(o): Customs Brokers must inform any change in contact details to the customs authorities. The Tribunal noted discrepancies regarding the office premises, indicating non-compliance with this regulation.- Regulation 13(12): Customs Brokers are responsible for supervising their employees to ensure proper conduct. The involvement of the G-Card Holder in fraudulent exports without proper document verification highlighted a failure in fulfilling this responsibility.2. Alleged Fraudulent Activities and Misdeclaration:The Tribunal assessed the involvement of the appellant's G-Card Holder in fraudulent activities, including misdeclaration and overvaluation of exported goods to claim ineligible IGST refunds. The investigation revealed:- Admission of Irregularities: The G-Card Holder admitted to facilitating customs clearance without verifying the exporters' addresses and genuineness, indicating a disregard for regulatory requirements.- False Representation of Office Premises: The office premises were misrepresented, raising suspicions about the legitimacy of the Customs Broker's operations.- Violation of Customs Act, 1962: The Customs Broker's failure to verify the correctness of IEC numbers, GSTINs, and client identities contravened Section 50 of the Customs Act, 1962, facilitating fraudulent exports.- Habitual Offender: The Customs Broker was found to be a habitual offender, with a history of penalties for non-compliance with CBLR, 2018.3. Revocation of Customs Broker License and Imposition of Penalties:The Tribunal upheld the revocation of the Customs Broker license and the imposition of penalties based on the violations and fraudulent activities. The decision was supported by:- Previous Judgments: The Tribunal referenced previous judgments where similar violations led to revocation and penalties, reinforcing the decision in this case.- Responsibility for Employee Actions: The Tribunal emphasized that the Customs Broker is responsible for the actions of their employees, including the G-Card Holder, under the CBLR, 2018.- Impact on Livelihood: While the appellant argued that the revocation impacted their livelihood, the Tribunal prioritized regulatory compliance and the integrity of the customs clearance process.In conclusion, the Tribunal dismissed the appeal, upholding the revocation of the Customs Broker license and the penalties imposed, citing clear violations of the CBLR, 2018, and involvement in fraudulent activities. The decision underscores the importance of adherence to regulatory obligations by Customs Brokers to maintain the integrity of the customs process.