TaxTMI 
TaxTMI 
2023 (4) TMI 927
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.... as follows: 9. The appellant has projected the following question for consideration of this Court: "Whether the CESTAT is right in law in allowing the appeal and to set aside the Order-in-Original No. 12/MK/Policy/2019 dated 13.02.2019 passed by Commissioner of Customs (Airport & General), NCH New Delhi in terms of Regulation 18 and 22 read with Regulation 20(7) of the Custom Broker Licensing Regulations, 2013". 10. After some arguments, it is noticed that the learned CESTAT has not examined various aspects of the matter including whether there was an admission on the part of the respondent that it had not examined some of the aspects of the matter. 11. There is a controversy whether in fact the respondent had used the portal itself as has been stated by the respondent in its letter dated 09.11.2018 sent in response to the Show Cause Notice dated 30.08.2018 (annexed as part of Annexure R-5 to the counter affidavit filed by the respondent). 12. In the said response, the respondent had inter alia stated as under: "In reference to SB No. 4933845 dated: 17/05/2018 we had received invoice cum packing list from the exporter, the chec....
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....e learned CESTAT to decide afresh. 19. It is clarified that all rights and contentions of the parties are reserved. 20. Learned CESTAT is requested to conclude the fresh proceedings as expeditiously as possible preferably within a period of four months from today. (emphasis supplied) 2. We have heard learned counsels for the appellant and the learned authorised representative for the Revenue and perused the records. We now proceed to examine the facts of the case and the submissions advanced on behalf of the parties and decide the appeal. Facts of the case 3. The appellant is a Customs Broker with customs brokers' licence which was valid till 24.10.2027 but the Commissioner of Customs (Import & General) revoked it by order [Impugned order] dated 13.02.2019 issued under Regulations 14 & 18 read with Regulation 17 of Customs Brokers Licensing Regulations, 2018 [CBLR, 2018]. The Commissioner also forfeited the security deposit of Rs. 75,000/- made by the appellant and imposed penalty of Rs. 50,000/-. Aggrieved, the appellant filed this appeal. In the impugned order, the Commissioner found that the appellant found that the appellant had not complied ....
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....ein. 7. It appeared to the respondent that the appellant had allowed Ashish, who is not their authorised person, to mis-utilise its licence to smuggle narcotic drugs and psychotropic substances and the appellant's Customs Broker licence was suspended by an Order dated 7.6.2018. The appellant gave written submissions dated 19.6.2018 through its advocate in which the appellant's stand was as follows: STAND OF THE NOTICEE From the investigation conducted by the investigators of Delhi Police (Special cell), it is apparent on the record that the CHA licence holder Shri Rajesh Pant has nothing to do with the alleged offence. It is Shri Ashish Sharma, who fraudulently used, misused and abused the process of law. He impersonated himself as a Custom House Agent and thereby committed an offence under section 419 of the Indian Penal Code. It is a matter of record that the Drug Syndicate, unearthed by the special cell of Delhi Police, including Shri Ashish Sharma were sending certain consignments, with the help of some government official posted at the X-ray machines and elsewhere, thereby, defying all the security measures taken by the Government of India. Then h....
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....t it is quintessential to conduct independent investigation by the concerned investigating agency, in order to level and hold the charges. For this, reliance has been placed upon the decision of the Apex Court in KTMS Mohd. v Union of India, (1992) 3 SCC 178:1992 SCC (Cri) 573 at page 193, wherein the Hon'ble Supreme Court while relying, on a judgment delivered by the Constitutional bench of the Court in Shanti Prasad Jain v Directorate of Enforcement, 1962 AIR 1764, held as under: 25. Needless to emphasise that the FERA and the I.T. Act are two separate and independent special Acts operating in two different fields. 26. This Court in Ravula Subba Rao v. CIT [AIR 1956 SC 604 : 1956 SCR 577 : (1956) 30 ITR 163] has pointed out: "The Indian Income Tax Act is a self-contained Code exhaustive of the matters dealt with therein, and its provisions shown an intention to depart from the common rule, qui facit per alium facit per se." 27. Further, in Pannalal Binjraj v. Union of India [AIR 1957 SC 397 : 1957 SCR 233 : (1957) 31 ITR 565] it has been observed thus: "It has to be remembered that the purpose of the Act is to levy income tax, assess a....
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....ppellant's reply was, in brief, as follows: a) The shipping bill was filed on 17.5.2018 and on 18.5.2018, Delhi Police seized drugs from 4 cartons out of the 27 which were brought to be exported under this Shipping Bill. These cartons were brought in a Mahindra Champion Tempo which was in the parking lot of the air cargo complex before the goods were to move for customs clearance. b) Four persons including Ashish Sharma were arrested by the Delhi Police and investigations showed that Ashish Sharma had prepared customs clearance documents as 'Custom House Agent' (Custom House Agent or CHA is an expression used in the regulations earlier which was replaced by the term Customs Broker or CB and these two are often loosely used interchangeably). c) Based on this statement, the appellant's CB licence was suspended for allowing Ashish Sharma, who is an unauthorized person to misutilise its licence. d) No independent investigation was done by the Customs. e) Ashish impersonated as the appellant and hence committed an offence under section 419 of the IPC. f) Since the drugs were seized outside the Customs area, no offence was committed a....
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....nt did not transact business personally or through its employees but through an unauthorized person- Shri Ashish. d) The appellant did not advise its client, the exporter to comply with the provisions of Act and Rules and several NDPS were attempted to be exported in this case and were also exported in the past through several shipping bills. e) The appellant did not exercise due diligence to ascertain the correctness of information which it had provided to its client. f) The appellant had transferred the licence to Ashish by allowing him to use its credentials to file the Shipping bills. g) For all the reasons, it is amply proved that the appellant had contravened Regulations 1(4),10(a), 10(b), 10(d) and 10(e) of CBLR, 2018 14. After the Inquiry report was submitted, the appellant submitted a letter dated 25.1.2019, paragraphs 34 and 35 are as relevant and these are as follows: 34. It is mentioned in para 9 that "no email communications" regarding the exports between the noticee and the exporter has been presented. However, the same has already been submitted by the noticee during the adjudication proceedings. 35. It is furt....
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....e information provided by the exporter to examine if the transaction is genuine or to check the actual contents of the goods brought by the exporter. vii) The IEC of Hindustan EXIM India mentioned on the Shipping Bill was issued by the DGFT and the appellant had no reason to doubt it. The appellant also obtained a KYC form from the exporter which is at Annexure 19. A copy of the authority letter dated 1.5.2018 is Annexure-20. viii) The impugned order is arbitrary and simply accepted the inquiry report without examining the submissions. ix) In paragraph 20.4.2 of the impugned order, the Commissioner has erred in observing that it would not have been possible for Ashish to file the Shipping Bill dated 17.5.2018 and the previous shipping bills using the licence of the appellant unless the appellant allowed it. However, the Commissioner failed to appreciate that the appellant had no knowledge of the malafide intentions of Ashish. x) In paragraph 20.4.3, the Commissioner placed reliance on the statement of Ashish without initiating any independent enquiry. There is not a single document to show that the appellant was aware of what Ashish was doing and....
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....ns on behalf of the respondent 17. Learned authorised representative for the Revenue vehemently supported the impugned order and submitted as follows: (i) In the first round of this appeal, the appeal was allowed on the ground that the principles of natural justice were violated in not allowing the appellant to cross-examine Ashish but the fact that the appellant himself has repeatedly stated that Ashish has impersonated him and filed the papers was not considered. (ii) In view of this and on account of some submissions of the respondent, the Hon'ble High Court remanded the matter to this Tribunal. (iii) There are three different sets of laws to be considered NDPS Act, 1985, Customs Act, 1962 and the CBLR, 2018. Police booked the case and arrested Ashish and others under the Narcotic Drugs and Psychotropic Substances Act, 1985 and that matter will be dealt with by the appropriate court. Therefore, there is no reason for the Customs officers to also investigate the matter as per NDPS Act; as far as this Act is concerned, Delhi Police is the investigating agency. (iv) As far as the Customs Act is concerned, goods attempted to be exported in viol....
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....se misuse the licence sublet by the licence to smuggle drugs, arms or any contraband. Therefore, a strict view must be taken and the impugned order must be upheld. Findings 18. We have considered the submissions on both sides and perused the records. This case was remanded by the High Court of Delhi for the reason that in the first round the appeal was allowed only on the ground that principles of natural justice were violated in not allowing cross-examination of Ashish without appreciating all the evidence on record and also for the reason that the appellant's submission regarding proportionality of punishment to the alleged offence was also not considered. 19. We now proceed to record the undisputed facts and the disputed facts and the evidence available on record to establish them and if those facts confirm the alleged violations and if so, whether the punishment is proportionate to their gravity. 20. The undisputed facts of this case are: i) the Shipping Bill dated 17.5.2018 was filed on the Customs EDI system with the appellant as the Customs Broker and Hindustan as the exporter. ii) narcotic drugs and psychotropic substances were seized by the De....
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....he case which it could not have done because the Customs Broker should operate by himself ('F' card holders) or through its employees ('G' card holders). The case of the Revenue is that by allowing Ashish to use its credentials, the appellant violated several provisions of the CBLR, 2018 and hence the impugned order taking action under CBLR, 2018. 24. According to the Revenue, the appellant allowed Ashish Sharma to use its credentials using which he filed the Shipping Bill dated 17.5.2018. According to the statement of Ashish Sharma, he had similarly filed shipping bills in the past using the credentials of the appellant. In the absence of any details of the past Shipping Bills being produced by either side, we confine ourselves to examining the Shipping Bill dated 17.5.2018. 25. The appellant has two contradictory stands on this issue. The first is that the appellant itself filed the Shipping Bill on behalf of Hindustan whose proprietor is Ashish Sharma and had communicated the shipping bill number along with the checklist by email and was awaiting further instructions regarding shipping. According to the appellant, as far as the airway bill is concerned, it has to be issued....
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....CEGATE which requires Digital Signature, PAN card and any form of identity proof which can only be done by the 'F' and 'G' card holders of the CHA firm. Thus, Ashish Sharma could not have impersonified as CHA holder. However, registration is a onetime process and filing of documents does not require login ID and password of the CHA holder to obtain the Shipping Bill No. and the same was done by Ashish Sharma in the present case. Therefore, such allegations are baseless and liable to be set aside. 29. During hearing learned counsel for the appellant asserted forcefully that once the Shipping Bill number is generated, anybody can present any papers and export goods against them if one has the Shipping Bill number and the appellant has no control over it. This is a rather unusual assertion that once a Shipping Bill number is generated, anybody can present any papers to the Customs and export any goods against that shipping bill. The role of the Customs Broker does not end with generation of the Shipping Bill number. Thereafter, the Customs Broker has to get the goods carted (entered in the Customs area), get the Shipping Bill registered, get the examination or inspection order from....
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....t, the appellant sent a letter dated 25.1.2019 to the enquiry officer refuting paragraph 34 of his report in which it was recorded that the appellant had not submitted any emails to him. It reads as follows. 34. It is mentioned in para 9 that "no email communications" regarding the exports between the noticee and the exporter has been presented. However, the same has already been submitted by the noticee during adjudication proceedings. 33. In the appeal before us, copies of the emails said to have been exchanged are enclosed as Annexure A18 (pages 239 to 241 of the appeal). A Know Your Customer (KYC) form said to have been obtained from the exporter is enclosed as Annexure A19 (page 242 of the appeal) and the authority letter said to have been given by the exporter is enclosed as Annexure A 20 (page 247 of the appeal). We have carefully examined these documents. 34. As pointed out by the learned authorised representative for the Revenue, the 'Authority Letter' enclosed as Annexure A 20 is dated 1 May 2018 and is addressed to the Deputy Commissioner of Customs, New Custom House, New Delhi and was neither addressed to or copied to the appellant. So, if it was submitte....
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....o have been sent (date is not mentioned) from [email protected] to [email protected]. It reads 'Plz file the paper under dbk scheme and send me the check list'. The second email was a reply signed by Farman Tomar and sent on 17 May 2018 at 2.44 PM from the email of mohan dobhal, [email protected] and it reads 'Dear Sir, Please find attd. Checklist for approval. Regards, Farman Tomar'. The reply to this email (date is not mentioned) is sent from [email protected] which says 'OK process and send me sb nmbr'. The fourth email (date is not mentioned) is sent from mohan dobhal [email protected]. to Ashish and says 'Dear Sir, Please find attd. Checklist with Sb No. Regards, Farman Tomar.' Evidently these were some email communications between Shri Farman Tomar using the email ID of Mohan Dobhal of rozelogisticsindia and one Ashish Sharma who has the email ID [email protected]. These were not communications between the appellant who has a proper email ID with its own firm name as the domain name and whose email ID according to the appeal is [email protected] and the email IDs of the exporter which, according to the ....
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....in credentials as well as the digital signature. Violation of the CBLR, 2018 41. The finding of the Commissioner in the impugned order is that the appellant violated Regulations 1(4), 10(a), 10(b), 10(d) and 10(e) of the CBLR, 2018 and the appellant disputes that it violated these. These regulation and our findings on the allegations of their violation are as follows: Regulation 1(4) Every license granted or renewed under these regulations shall be deemed to have been granted or renewed in favour of the licensee, and no license shall be sold or otherwise transferred. 42. According to the Revenue, the appellant allowed Ashish to use its licence to file the Shipping bill and thus, transferred/sublet its licence. According to the appellant, it has not transferred its licence to Ashish or allowed him to file the Shipping Bill or other papers before the Customs and the shipping bill was filed by the appellant itself. The other stand of the appellant is that Ashish impersonated as the appellant and filed the papers. As we have found that Revenue's position that Ashish filed the Shipping Bill using the credentials provided by the appellant which is consistent wi....
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.... through an authorized employee duly approved by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; 46. According to the Revenue, instead of transacting the business by itself or through its employees, the appellant allowed Ashish to transact the business by providing its credentials to him. According to the appellant, it had filed the Shipping Bill dated 17.5.2018 based on the documents received from Ashish, who is the proprietor of the exporter firm and prepared a checklist, got it approved by Ashish, generated the Shipping Bill number and conveyed it to Ashish. All this correspondence was through email and it claims to have produced copies of the email before the Inquiry Officer. The Inquiry Officer recorded in his report that no emails were produced. The appellant contends that it had, indeed produced the emails and also enclosed copies printouts of these emails as Annexure A 18 (3 pages) to this appeal. We have already recorded our findings above that the papers which were enclosed were neither from the email ID of the appellant or to the email ID of Ashish as declared in the appeal itself. Thus, these printouts were only misleading....
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.... 49. Regulation 10(e) reads as follows. Regulation 10. Obligations of Customs Broker: - A Customs Broker shall - (e) exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage; 50. According to the Revenue, the appellant violated this Regulation for the same reason as given for alleged violation of Regulation 10(d). According to the appellant it had not violated this regulation. We do not find anything in the record to show that any information has been provided by the appellant to its client Ashish at all. Therefore, the allegation that the appellant had not provided correct information is not proved. 51. Thus, we find that the findings of the impugned order that the appellant had violated Regulations 1(4), 10(a), 10(b) and 10(d) must be sustained but the finding that it violated Regulation 10(e) cannot be sustained. 52. We have considered the case laws cited by the learned counsel for the appellant and find that these are distinguishable on facts. In Marks Logistics, it was found that the Customs broker was unaware of the violations a....
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.... the doctrine of proportionality requires the penalty to be proportionate to the violations. In this case, there is no evidence or even any allegation that the appellant was in any way involved in the narcotic drugs and psychotropic substances. The chargesheet filed by the police also does not suggest any role of the appellant in the drugs. In fact, the appellant's statements to the police were to be used by the police to establish the case against the accused. As far as the Customs is concerned, there is no case under the Customs Act at all, because the goods were not even brought into the Customs area and they were seized by the police in the parking lot itself. The appellant had no role even in obtaining the airway bill for export which was obtained by the exporter itself through an IATA agent. Learned authorised representative asserts that a great responsibility is cast on the Customs broker to protect the interests of its clients as well as that of the Revenue. The appellant shirked all its responsibilities by simply giving its credentials to Ashish (who is not an authorised person) to file the Shipping Bills. Ashish, in turn, used the credentials to smuggle drugs. Therefore, ....