TaxTMI 
TaxTMI 
2023 (4) TMI 927
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.... 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 check list was prepared by us and same was sent for approval to the exporter. On receipt ....
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....nclude 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 with regulations 1(4), 10 (a),10(b), 10(d) and 10 (e) of the CBLR, 2018. The appellant contests these findings of the Commissioner. 4. The facts which lead up to this order are as fo....
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....ances 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 how can a poor CHA licence holder come to about the ingredients of the shipments being sent by an exporter. He has no ways or means to find out the malafide intentions of Shri Ashish Sharma or any of his syndicate....
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....f 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 and collect the same. The preamble of the Act does not say so in terms it being an Act to consolidate and amend the law relating to income tax and super tax but that is the purpose of the Act as disclosed in the preamble of the First Indian Income Tax Act of 1886 (Act ....
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....ir 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 as far as the Customs Act is concerned. g) The Shipping Bill dated 17.5.2018 was filed by the appellant based on the invoice cum packing list received from the exporter, the checklist was prepared and it was sent to the exporter by email for approval and after receiving the approval, the Shipping Bill number was generated and the shipping bill number and ....
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....ence 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 further acclaimed in the inquiry report that the process of registration in ICEGATE 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 Bil....
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....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 his dealings in contraband. xi) The appellant has never transferred or sublet its licence to Ashish. Therefore, there was no violation of Regulation 1(4) of the CBLR, 2018. xii) The appellant has also not violation Regulations 10 (b) and 10 (d), 10(e) of CBLR, 2018. xiii) Heavy reliance is placed on the statement of Ashish to the police. xiv) In the chargesheet filed by the police before the court, the appellant is nowhere mentioned as an accused. Any further action will be taken by the police und....
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....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 violation of any prohibition under any law for the time being in force are liable for confiscation under section 113. Thus, in such cases, the goods can be seized and proceedings can commence under the Customs Act or under the Act under which there is prohibition on export. In serious cases such as arms and drugs, the cases are, as a matter of practice, continued under the relevant criminal laws. However, in this case, the goods were seized by the police even before the goods entered the Customs area and therefore, there was no need for the Customs to conduct any investigation. (v) The present proceedings are only under CBLR, 2018 and it only needs to be decided if the Commiss....
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....ndisputed 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 Delhi Police and four persons including Shri Ashish Sharma who is said to be the proprietor of Hindustan EXIM India, the exporter were arrested. iii) the drugs were found in the packages meant to be exported against the Shipping Bill but the goods had not yet entered the Customs area and were still in the parking lot of the export cargo shed. iv) The case under NDPS Act was booked and is being investigated by the Police and will be dealt with by the appropriate court. It is not part of the present proceedings. v) The goods were not yet in the Customs area and were not under the control of the Customs officers. Therefore, there is no case of seizure, confiscation, etc. under the Customs Act. vi) The assertion th....
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.... 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 by the carrier or its agent and such agents are approved by IATA and it was not competent to issue the airway bills. Therefore, Ashish Sharma obtained the airway bill and the goods were brought but they were not yet brought into the Customs Area and therefore, it had not violated any provisions. It is also its submission that registration is a one-time process and once the Shipping Bill is registered, anyone can access it and no credentials are required. 26. The other contradictory stand of the appellant is that Ashish Sharma impersonated it and such impersonation is an offence and it proposes to take action under section 419 of the Indian Penal Code. This section reads as follows: Section 419. Punishment for cheating by personation. Whoever cheats by personation shall be punished with imprisonment ....
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....enerated, 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 the system, assist in the examination process and once an order permitting clearance of goods for export under Section 51 which is commonly known as Let Export Order (LEO) is issued, the role of the Customs Broker comes to an end. Any role of the Customs broker in the Customs EDI system can only be played by the Customs broker and not by anybody without the credentials and his digital signature. Of course, the Customs EDI would show those actions as having been done by the Customs broker once these credentials and digital signature are used. Therefore, to impersonate a Customs broker and file papers in the Customs EDI system, one must have login credentials and the digital signature of the Customs broker which can only be given by the Customs broker. Further, as far as the Shipping Bill dated 17.5.2018 is concerned, no proces....
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....ed 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 submitted, it must be with the Deputy Commissioner and the office copy must be with the exporter not with the appellant. 35. We also find that letter is quite unusually worded and it reads as follows. May 1, 2018 To The Deputy Commissioner of Customs, New Custom House, New Delhi Sub: AUTHORITY LETTER Dear Sir, We, HINDUSTAN EXIM INDIA hereby authorize M/s PARAMOUNT CARGO & LOGISTIC SOLUTIONS our CHA for custom clearance of all our Export/Import shipment on our behalf; we shall be responsible if any declaration is found wrong other than invoice, Packing List, we shall also be responsible if found restricted/ prohibited/contraband category. Thanking You, For HINDUSTAN EXIM INDIA Signed by proprietor 36. If a letter is issued authorizing any person, it is usually addressed to the person and if it is addressed to an authority, at least a copy is ....
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....re 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 appeal are [email protected] and [email protected]. We have considered the possibility that one of the juniors of the appellant might have communicated and even if it is so, the email ID would carry its business domain name and would be addressed to the email ID of the exporter mentioned in the KYC obtained by the appellant itself. For these reasons, we find that the printouts of the emails annexed as A18 to the appeal do not support the stand of the appellant that the Shipping Bill was filed by the appellant after obtaining approval of the exporter. If that was indeed the case, there was no good reason as to why the appellant had not produced printouts of the emails before the Inquiry officer (as recorded by him). When one is faced with the possibility of the licence being revoked, it is unthinkable that one would not produce the copies of emails which would support one's case. If such emails existed, there was no r....
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....ellant 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 with the appellant's second stand (except to the extent of providing the credentials) is correct, we find that the appellant transferred its licence to Ashish insofar as the filing of the Shipping Bill dated 17.5.2018 is concerned (the other shipping bills alleged filed in the past and the exports made against them have not been brought on record by either side). We, therefore, uphold the finding of the impugned order that the appellant violated Regulation 1(4). 43. Regulation 10(a) reads as follows. Regulation 10. Obligations of Customs Broker: - A Customs Broker shall - (a) obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as a Customs Broker and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; 44. According to the Revenue, the appellant had not obtained this authorization from Ashish and instead it gave ....
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....pers 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 and do not correspond to the transaction in question. We find no good reason as to why the appellant, who is facing the revocation of its licence would not produce the printouts of the correct emails to the Enquiry officer and would produce irrelevant emails in this appeal and claim them to be the emails which pertain to the communication which lead to the filing of the Shipping Bill dated 17.5.2018. We, therefore, find that the appellant had not filed the Shipping Bill but allowed Ashish to do so and thereby violated Regulation 10(b). 47. Regulation 10(d) reads as follows. Regulation 10. A Customs Broker shall - (d) advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, and in case of noncompliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; 48. According to the Revenue, the appellant violated this regulation as it had, instead of advising its clie....
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....these are distinguishable on facts. In Marks Logistics, it was found that the Customs broker was unaware of the violations and was not involved in them and hence the appeal was allowed. In Kunal Travels, Hon'ble High Court of Delhi was seized of a matter where the client deliberately provided wrong information to the Customs broker and therefore, it was held that the Customs broker cannot be responsible for it. In KTMS Mohd., Hon'ble Supreme Court held that Income Tax Act and FERA are entirely different laws and IT officers cannot launch a prosecution for perjury on the basis of a statement made to the enforcement officers. In this appeal, while the initial information came from the seizure by the police under the NDPS Act, the proceedings are under the CBLR, 2018 which provide a procedure for taking action for violations of the Regulations and this procedure has been duly followed. The appellant's licence was not revoked only because drugs were seized under the NDPS Act by the police but based on the enquiry report and other proceedings under the CBLR. Therefore, KTMS Mohd. will not advance the case of the appellant. In Shriwin Shipping & Logistics, the tribunal found that the dep....
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.... not an authorised person) to file the Shipping Bills. Ashish, in turn, used the credentials to smuggle drugs. Therefore, the punishment is just and fair and the impugned order calls for no interference. 54. We have considered the submissions on the question of proportionality. It is true that the appellant was not involved in attempted trafficking of the drugs. Had he been involved, action would have been taken by the police under NDPS Act. It is equally true that the goods were not in the Customs area. It is for this reason, that there is no case under the Customs Act. The only case in this appeal is that the appellant violated CBLR, 2018 and we have found that the appellant violated Regulations 1(4), 10(a), (b) and (d). 55. The question which arises is how serious are the violations and if revoking the licence, forfeiting the security deposit and imposing penalty is proportionate to the offence. The role of the Customs broker is one of great responsibility in the customs operations and it is for this reason, a licence is issued only after conducting an examination and after necessary background verifications. It is true that the Customs broker is not an inspector to examine th....