2025 (4) TMI 76 - AT - Customs

Courier company loses appeal after violating Regulations 12(1)(iii), (iv), and (v) of CIER 2010 for inadequate goods verification and KYC failures

CESTAT New Delhi dismissed the appeal filed by a courier company against a customs order. The tribunal upheld findings that the appellant violated ... Violation of principles of natural justice - failure to verify the goods at the time of booking the goods from China - failure to fulfill obligations under Regulation 12 of CIER, 2010 - failure to verify the goods before export from China as it was required to do. Violation of principles of natural justice - HELD THAT:- The Commissioner had appointed an inquiry officer whose report he reproduced in pages 17 to 26 of the impugned order. He also reproduced the appellant’s reply from pages 26 to 29. The Commissioner fixed personal hearing on 12.5.2020, 27.5.2020, 10.6.2020 and 23.6.2020 and Shri Pramod Tiwari, Operations manager of the appellant appeared on 23.6.2020 and made submissions which are recorded on page 29 of the impugned order. Thereafter, the Commissioner gave detailed findings which are recorded on pages 29 to 41 of the impugned order. He examined the submissions made by the appellant and gave his findings on them. The issue found in favour of the Revenue and against the appellant on this question. Appellant’s compliance with the KYC norms - HELD THAT:- The Customs Broker files the Bill of Entry on behalf of the importer and the importer pays the duty and after the goods are cleared from the Customs, the role of the Customs Broker ends and the importer arranges to transport the goods to his place. Courier, on the other hand, is a door to door service. The courier company not only files the Bill of Entry but also pays the duty, clears the goods and delivers them at the address of the importer consignee and collects the dues including the duty paid on the goods. Therefore, it is impossible for the courier company to NOT know the correct address and contact details of the consignee. Further, since the courier company has to first pay the duty out of its funds and it only gets reimbursed after delivery, it is a universal practice for the courier company to contact (often several times) the importer consignee before filing the Bill of Entry and again before paying the duty. If Shri Imchen had, indeed imported the goods, it is most unlikely that the appellant would not have been able to contact him - Issue found in favour of Revenue and against the appellant on this question. Regulation 12 of the CIER does not contemplate physical verification of the consignment - HELD THAT:- The Commissioner has recorded in paragraph 53.3.3 of the impugned order that as per CBEC’s Circular No. 23/2006-Cus dated 28.5.2006, “100% screening of import/export consignments” was required. Therefore, the submission in the appeal that the appellant was not required to and in fact, was prohibited from opening the consignments holds no water. The issue is found in favour of the Revenue on this question. No evidence to substantiate a charge of abetment by the appellant and undue weightage was given to the statement of the G card holder to substantiate abetment - HELD THAT:- The submissions are not relevant because there is no finding in the impugned order that the appellant had abetted. The finding is that the appellant had violated Regulations 12(1) (iii), (iv) and (v) of the CIER, 2010 - None of the regulations talk about abetment. The submissions deserve to the dismissed. Prior authorisation is needed only in case the duty exceeds Rs. 1 lakh - HELD THAT:- The requirement of authorisation is under Regulation 12(1)(i) and the proviso thereto carves out an exception to consignments of low value. However, in the impugned order, the Commissioner’s findings are only that the appellant had violated Regulations 12(iii) (iv) and (v) which do not deal with authorisation. Therefore, this submission is irrelevant. Conclusion - i) The principles of natural justice are not violated. ii) It is held against the appellant, noting the improbability of the appellant's inability to contact the consignee if the goods were genuinely imported. iii) The submission in the appeal that the appellant was not required to and in fact, was prohibited from opening the consignments holds no water. iv) he impugned order did not find the appellant guilty of abetment but rather of violating specific regulations under CIER, 2010. v) The Commissioner's findings related to violations of Regulations 12(iii), (iv), and (v), which do not pertain to authorization. There are no force in the submissions in the appeal. The impugned order is upheld and the appeal is dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:1. Whether the principles of natural justice were violated in the proceedings leading to the impugned order.2. Whether the appellant complied with the Know Your Customer (KYC) norms under the Courier Imports and Exports (Clearance) Regulations (CIER), 2010.3. Whether Regulation 12 of CIER, 2010 requires physical verification of consignments by the appellant.4. Whether there was any evidence to substantiate a charge of abetment by the appellant.5. Whether prior authorization from the consignee is necessary only for consignments where the duty exceeds Rs. 1 lakh.ISSUE-WISE DETAILED ANALYSISViolation of principles of natural justiceThe appellant argued that the impugned order was passed in violation of the principles of natural justice, as it was issued during the COVID-19 pandemic and allegedly without effective personal hearing. The Revenue countered that the appellant was given opportunities to make submissions, both in writing and in person. The Tribunal found that the Commissioner had appointed an inquiry officer, reproduced the inquiry report, and recorded the appellant's submissions. Personal hearings were scheduled, and the appellant's representative appeared and made submissions. The Tribunal concluded that the principles of natural justice were not violated.Appellant's compliance with the KYC normsThe appellant claimed compliance with KYC norms, arguing that it provided necessary documents for the consignee, Shri Sangtiba Imchen. However, the Tribunal found that the appellant failed to provide complete contact details, as summons sent to the address on the Aadhar card were returned undelivered. The Tribunal highlighted the distinct role of couriers, who must ensure accurate consignee details for delivery and reimbursement purposes. The Tribunal ruled against the appellant, noting the improbability of the appellant's inability to contact the consignee if the goods were genuinely imported.Regulation 12 of the CIER does not contemplate physical verification of the consignmentThe appellant contended that Regulation 12 does not mandate physical verification of consignments, while the Revenue argued that X-ray screening was required. The Tribunal referred to CBEC's Circular No. 23/2006-Cus, which mandates 100% screening of import/export consignments. The Tribunal found the appellant's argument unsubstantiated and ruled in favor of the Revenue.No evidence to substantiate a charge of abetment by the appellantThe appellant argued that there was no evidence of abetment. The Tribunal clarified that the impugned order did not find the appellant guilty of abetment but rather of violating specific regulations under CIER, 2010. The Tribunal dismissed the appellant's submissions as irrelevant.Prior authorization is needed only in case the duty exceeds Rs. 1 lakhThe appellant submitted that prior authorization is required only for consignments where the duty exceeds Rs. 1 lakh. The Tribunal noted that the Commissioner's findings related to violations of Regulations 12(iii), (iv), and (v), which do not pertain to authorization. Thus, this submission was deemed irrelevant.SIGNIFICANT HOLDINGSThe Tribunal upheld the impugned order, affirming the Commissioner's decision to forfeit the security deposit and impose a penalty. The Tribunal found no merit in the appellant's submissions and dismissed the appeal. The core principles established include the necessity for couriers to comply with KYC norms and the requirement for 100% screening of consignments as per regulatory guidelines. The Tribunal emphasized the importance of accurate consignee details for courier operations and rejected the appellant's claims regarding procedural violations and authorization requirements.