AI Drafter 
TaxTMI 
TaxTMI 
2022 (3) TMI 1268
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....d 17.07.2019 to M/s Falcon India, holder of CHA License no. R-22/DEL/CUS/2018 (PAN AABFF7020L) 50. I order to Revoke the CB License No. R-22/DEL/CUS/2018 (PAN AABFF7020L) of M/s Falcon India valid upto 14.11.2027 under Regulation 14(b) of CBLR, 2018 (Erstwhile Regulation 18(b) CBLR 2013). The CB M/s Falcon India is directed to surrender the original Customs Broker Licence along with all the original F/G/H cards issued to them immediately. 51. I order for forfeiture of the whole amount of security deposit of Rs. 1,10,000/- (Rupees One Lacs Ten Thousand only) furnished by M/s Falcon India holder of CHA License No. R-22/DEL/CUS/2018 (PAN AABFF7020L) under Regulation 14(b) of CBLR, 2018 (Erstwhile Regulation 18(b) of CBLR, 2013). 52. I also impose a penalty of Rs. 50,000/- (Fifty Thousand only) on M/s Falcon India holder of CHA License No. R-22/DEL/CUS/2018 (PAN AABFF7020L) under Regulation 18(1) read with regulation 14(b) of CBLR, 2018 (Erstwhile Regulations 22 read with 18(b) of CBLR, 2013) 53. The revocation of the CB licence and forfeiture of the whole amount of security deposit of the Noticee is independent and without prejudice to any other action that is or may be ta....
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....17 explained that he was not aware of any imports or exports made in the name of his firm and all his documents were with Shri Ravindra Kumar Aggrawal [R K Agarwal] of M/s Reliable Accounts and Commercial Services who maintains their accounts. Some documents related to imports by Popular were retrieved from e-mails of Abhimanyu, who, in his statement dated 28/29.03.2017 admitted that he and his father Anil had imported goods in the name of Popular. Shri R.K. Agrawal, the Accountant made a statement on 17.04.2017 before the officers that Anil and Madan Gopal knew each other and reached an agreement that Anil would use the name of Popular for imports and accordingly, he (Shri R.K. Agrawal) got an IEC issued in the name of Popular and imports were being made and that he was getting Rs. 25,000/- per month from Anil for maintaining accounts of Popular and that he was not aware as the how much Madan Gopal was getting paid. 4. It was found that the import documents were processed and the Bills of Entry were filed by the appellant in respect of these imports made in the name of Popular. Shri Vikas Gupta, partner of the appellant was summoned and his statement was recorded on 15.2.2019 i....
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....ry officer found that the appellant had violated Regulations 10(a), 10(d), 10(e) and 10(n) of CBLR, 2018. The appellant made representation against the enquiry report as per Regulation 17(6) of the CBLR 2018. A personal hearing was granted by the Commissioner to the appellant on 28.11.2019 during which Shri V.S. Negi appeared and made submissions. He also made written submissions dated 15.11.2019. 7. After considering the facts of the case, the enquiry report, the submissions made by the appellant in writing and during personal hearing, the learned Commissioner has passed the impugned order and the findings are as follows: a) As per Regulation 10(a) of CBLR, 2018 (read with erstwhile Regulation 11(a) of CBLR, 2013) "the Customs Broker shall obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as a Customs House Agent and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs." Shri Vikas Gupta, partner of the appellant, in his statement dated 3.4.2017 admitted that he got the goods cleared in the name of Popular at the behest of Anil and Abhimanyu and....
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....able, independent, authentic documents, data or information. The appellant had failed to verify the correctness of the IEC, identity and whereabouts of the firms with authentic data or information thereby violating the obligations cast upon it under Regulation 10 (n) of CBLR 2018 (read with erstwhile Regulation 11(n) of CBLR, 2013). 8. Aggrieved, the appellant filed the present appeal on various grounds which have been summarized by learned counsel during hearing as follows: (a) The allegation in the impugned order is that the Customs Broker knew about the undervaluation of the imported goods by Anil and was bound to report but it did not do so. It is also the allegation that no proper KYC documents was obtained by the appellant from the importing firm. (b) The appellant was the CHA for Shri Ram Sarup Aggarwal & sons (Shri Ram Sarup is the father of Anil) but it was not a party to the show cause notice issued by DRI in 2016 and so knew nothing about under-valuation. (c) Since the show cause notice was issued by the Department, it was in complete knowledge of the activities of Anil and therefore, the appellant, as Customs Broker, has no liability to inform what the Depar....
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....e a revocation. Reliance was placed on the judgment of KVS Cargo to assert as above. (m) The appellant has been out of work from more than three years as his license was suspended on 5.7.2019 and was revoked on 8.1.2020. Assuming, without admitting the fault of the appellant, the period of suspension and revocation is sufficient punishment. Reliance was placed on the order of Commissioner of Customs (General) Vs. Sainath Clearing Agency [2015 (326) ELT 548 (Bom.)]. 9. Learned Departmental Representative made the following submissions and opposed the appeal. (i) The appellant knew about the earlier case of under-valuation of similar goods booked by DRI against Anil and it was the responsibility of appellant not to allow such activities by channelizing imports through other firms controlled by Anil namely M/s International Fasteners and M/s Krishna Overseas. The appellant was aware about such imports by Anil using dummy importers namely M/s Popular Metal Industries, M/s K. D. Enterprises and S. S. Enterprises. Having known such illegal activities to evade duty, the appellant had obligation to report the matter to Customs which it did not do. (ii) The appellant had no prop....
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....Pat.)] (vi) Shree Venkatesh Shipping Services P. Ltd. Vs. C.C. (G), Mumbai-I [2010(261) ELT 8803 (Tri.-Mumbai) ] (vii) Multiwings Clearing & Forwarding P. Ltd. Vs. C.C. (General), New Delhi [2019(369) ELT 820 (Tri.-Del)] (viii)Commissioner of Customs Vs. K M Ganatra & Co [2016 (332) ELT 15(SC)] (ix) Commissioner of Central Excise, Madras Vs. Systems & Components Pvt. Ltd. [2004(165) ELT 136 S.C.)] (x) Evershine Customs (C&F) Pvt Ltd. Vs. Commissioner of Customs [2021-TIOL-482-CESTAT-DEL] (xi) Deepak Handa and Ors. Vs. Principal Commissioner of Customs (Preventive), New Delhi [MANU/CE/0055/2021] 11. We have considered the arguments on both sides and perused the records. The questions to be answered by us are: a) Has the appellant violated Regulation 10 (a) of CBLR 2018 (read with erstwhile Regulation 11(a) of CBLR, 2013)? b) Has the appellant violated Regulation 10 (d) of CBLR 2018 (read with erstwhile Regulation 11(d) of CBLR, 2013)? c) Has the appellant violated Regulation 10 (e) of CBLR 2018 (read with erstwhile Regulation 11(e) of CBLR, 2013)? d) Has the appellant violated Regulation 10 (n) of CBLR 2018 (read with erstwhile Regulation 11(n)....
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....s of Anil Aggarwal; that Anil Aggarwal had introduced him (Vikas Gupta) to one R K Agrawal as his (Anil's) Chartered Accountant and informed that he would also deal with the business of imports in M/s Popular Metal Industries; however, mostly Anil and Abhimanyu used to deal with them (Falcon India/Vikas Gupta) for the clearance of goods imported in M/s Popular Metal Industries; that he had never met Madan Gopal; that Anil Aggarwal and Abhimanyu Aggarwal were dealing with the firm M/s Popular Metal Industries." 13. Thus, it is evident that the appellant was dealing with the Anil and Abhimanyu for a long time and was aware that a case of under-valuation of the imported goods was booked against them by DRI. It was also aware that thereafter, they continued to import the goods by changing the suppliers and also started importing in the name of new firms including one M/s. Popular Metal Industries whose IEC is issued in the name of Shri Madan Gopal. The appellant never met Shri Madan Gopal but it had been filing Bills of Entry in the name of Popular at the behest of Anil. Not only has the appellant not brought to the attention of the department when it was fully aware that after the ....
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....uds and evidently if it exposes the frauds by its clients such clients will not come to it. We are afraid that Customs Broker's licence is not meant for those whose business is built on promoting and facilitating frauds. 17. The fourth line of defence of the appellant is that it had not benefitted from the undervaluation. It is immaterial whether the appellant had profited from the undervaluation or not. The mere fact that it has knowingly facilitated the fraud and has not brought it to the notice of the Assistant Commissioner or Deputy Commissioner of Customs and has also filed benami Bills of entry to facilitate fraud is sufficient for action against the appellant under the Customs Broker's licensing regulations. 18. We also find from the submissions of the appellant that not only has the appellant not disclosed the violations of Act by Anil to the department, it has built its business on facilitating such violations so as to get clients. It is not unreasonable to conclude that if the licence is restored, it will continue to carry on its business facilitating many more such frauds. 19. The appellant submitted that the CHA is not an inspector to weigh the genuineness of t....
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....nowingly facilitated such benami transactions. KVS Cargo does not approve of or support facilitation of benami transactions by the Customs broker. 21. The appellant relied on Kunal Travels to assert that the CHA is not the inspector to weigh the genuineness of the transaction. It is true but in the factual matrix of this case, the appellant was aware that DRI booked a case of undervaluation against Anil and thereafter, he started imported benami including in the name of Popular and facilitated these transactions. The Customs broker is not an inspector to weigh the genuineness of the transaction but the Customs Broker cannot also knowingly file Bills of Entry which are not genuine using the IEC of another person without such person's knowledge. The motive to process the Bills of Entry in this manner is evident from the submissions on behalf of the appellant before us. It is to facilitate such transactions based on which its business is built and is afraid that if it discloses the frauds to the department as it is obligated to do, it will lose its business. The appellant cannot rely on Kunal Travels to claim that it has a right to knowingly file benami Bills of Entry. 22. The n....
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....d violated Regulation 10(a) of CBLR 2018 (read with Regulation 11(a) of CBLR 2013). 25. Regulation 10(d) of CBLR 2018 (read with erstwhile Regulation 11(d) of CBLR, 2013) requires the Customs Broker to advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be. The appellant, we find, has been in this business for over a decade. Evidently, the least he can be expected to know is that true details of the importer must be indicated on the Bills of Entry. It was aware that Anil was importing goods in the name of other companies after DRI booked a case of under valuation against it. It was incumbent upon the appellant to have advised the client to follow the law and not import benami and if the client refused, it was the responsibility of the appellant to report to the Assistant Commissioner or Deputy Commissioner. The appellant did not do so and submits that it cannot spy for the department. If it cannot fulfill its obligations under the law, it is not entitled to ....
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....hat it was a modus operandi started by Anil after a case of under-valuation was booked by DRI. The appellant neither advised its clients against such benami imports nor has it informed the Assistant Commissioner or Deputy Commissioner as it was required to under the regulation 10(d) of CBLR, 2018 (read with Regulation 11(d) of CBLR, 2013) because it feels that such disclosure to the department would amount to spying for the department and it would lose its clients if it fulfils this obligation. The irresistible conclusion is that the appellant has built its business based on facilitating fraudulent transactions for its clients and wants its Customs Broker Licence restored so that it can continue in such business. All the case laws which it relied on are those where the undue burden was sought to be placed by the department on the Customs Broker beyond its obligations under the CBLR which was not upheld by the Tribunal and Courts. They cannot come to the aid of the appellant whose business is based on supporting frauds. It has been held by the Tribunal in Millenium Cargo as follows which decision was upheld by Delhi High Court. "7. The documents filed by CHA are treated with a ce....
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....s not disowned him and has, in fact, defended him in the reply filed by him before the appellant. That being so, he is clearly responsible vicariously. (emphasis added). 28. In our view, the Tribunal has committed a grave error in interfering with the decision of a domestic authority. In a departmental proceeding one has to see whether the principles of natural justice are followed and the findings are justified from material on record. Once both these aspects are satisfied if an outsider Tribunal interferes, its findings and order will be improper and perverse which is what has happened in the present case. Similarly when one comes to the disciplinary measures, one must not lose sight of the fact that the appellant-Commissioner of Customs is responsible for happenings in the Customs area and for the discipline to be maintained over there. If he takes a decision necessary for that purpose, the Tribunal is not expected to interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or his employees. The decision is best to be left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or mala fide. That is no....
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....lly interfered with. The relevant paragraphs is as follows: "28. In our view, the Tribunal has committed a grave error in interfering with the decision of a domestic authority. In a departmental proceeding one has to see whether the principles of natural justice are followed and the findings are justified from material on record. Once both these aspects are satisfied if an outsider Tribunal interferes, its findings and order will be improper and perverse which is what has happened in the present case. Similarly when one comes to the disciplinary measures, one must not lose sight of the fact that the appellant-Commissioner of Customs is responsible for happenings in the Customs area and for the discipline to be maintained over there. If he takes a decision necessary for that purpose, the Tribunal is not expected to interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or his employees. The decision is best to be left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or mala fide. That is not the case here." (emphasis supplied) 31. The judgment of Worldwide Cargo was followed by the Andhra Pr....
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....nality, is also a factor which must be borne in mind. While Tribunals constituted under the Customs Act, and this Court exercising jurisdiction under Section 130 of the Customs Act, are required to ensure that the punishment imposed is commensurate to the proved acts of misconduct, the present case which not only involves negligence on the part of the CHA in issuing blank shipping bills, but also an act of corruption in receiving Rs. 150/- as consideration for each such blank shipping bill would necessitate imposition of the maximum punishment which, under the CHALR, is of revocation of the license of the CHA. Mere suspension of license, in the facts of the present case, would be wholly unjustified. Ordinarily, matters of discipline lie in the realm of the competent authority i.e., the Commissioner of Customs who is best placed to understand the importance of the CHA in a customs area, and the trust and confidence reposed on him by the customs department. In an appeal, preferred against an order imposing punishment under the CHALR, the CESTAT should not be swayed by considerations of misplaced sympathy. Interference with the punishment imposed would be justified only when it shocks....
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....Tribunal and restore that of the Commissioner. There shall be no order as to costs". 33. The above decisions lay down that the Customs Broker (or Custom House Agent) is a very important person in the transactions in the Custom House and it is appointed as an accredited broker as per the Regulations and is expected to discharge all its responsibilities under them. Violations even without intent are sufficient to take action against the appellant. While it is true, as has been decided in a number of cases, that the Customs Broker is not expected to do the impossible and is not expected to physically verify the premises of the importer or doubt the documents issued by various Governmental authorities for KYC, it is equally true that the Customs Broker is expected to act with great sense of responsibility and take care of the interests of both the client and the Revenue. It is expected to advise the client to follow the laws and if the client is not complying, it is obligated under the Regulations to report to the Assistant Commissioner or Deputy Commissioner. Fulfilling such obligations is a necessary condition for the CB licence and it cannot be termed as 'spying for the departmen....