AI Drafter 
TaxTMI 
TaxTMI 
2023 (9) TMI 144
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....ogistics and Shyam Singh, the appellant herein, in relation to gross mis-declaration and undervaluation in import of electronic goods by various importers, where the value of the imported goods declared before Customs was roughly 5% of the actual value of the goods. In fact, on many occasions, the declared value of the goods imported from Hong Kong was less than even the freight amount and it was admitted by the accused that the under-declared portion of the value of the goods including the prepaid freight was remitted abroad through hawala and non-banking channel. 3. The statement of various Proprietors of the Customs Broker was recorded under Section 108 of the Customs Act, 1962 (hereinafter referred to as the Act). Sh. Sanjeev Kumar in his voluntary statement dated 18.10.2021 accepted that the imported goods were highly undervalued and that he had used the Customs Broker Licenses of the above referred CHAs for clearing such undervalued and mis-declared import in the names of different proxy firm owned and controlled by one Zakir Khan. Sh. Sanjeev Kumar was arrested on 19.10.2021 and soon thereafter detention order dated 26.11.2021 was passed against him under COFEPOSA. 4. ....
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....ometimes Shri Deepak Kumar also used to visit the office of Shri Atul Kapoor, In October, 2021, Shri Atul Kapoor informed me that his business partner, Shri Sanjeev Kumar Yadav has been arrested by DRI. On being asked, I stated that I do not know his complete address but he resides in Krishna Park area near Vikaspuri, New Delhi. Question-9 Please inform about the Proprietors of the above mentioned firms. Please also inform whether KYC documents of the said firms were collected by you and physical verification was done by you. Answer-9 I state that I do not know anything about the firms- M/s. A & O Exim, M/s. Alfa Overseas, M/s. Meena Prints, M/s. R & J Overseas, M/s. R.K. Overseas, M/s. Vijay Overseas, M/s. Globle Enterprises, M/s. Goodluck Exports, M/s. S.M. International, M/s. Sanjay International, M/s. Sharma Overseas and M/s. Z.K. Overseas nor do I know anything about their proprietors. I state that I have not collected any KYC documents of these firms and have not physically verified the address of any of these firms. Shri Atul Kapoor (Mobile No.98106962222) used to file the documents. Question-10 Please inform how you know Zakir Khan and Jitender. Please ....
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.... state that I used to receive approx. Rs.50,000/- per month in cash from Shri Atul Kapoor for providing my customs broker license for affecting imports clearance. On being asked, I state that I charge approx. Question-14 Please inform how do you know Sanjeev Kumar alias Sanjeev Yadav. Answer-14 I state that I know Sanjeev Kumar alias Sanjeev Yadav since 2018. I was introduced to Sanjeev Kumar through Atul Kapoor. Shri Atul Kapoor informed me that Shri Sanjeev Kumar will also use my customs broker license for effecting imports in various firms and promised me a monetary consideration of approx. Rs.25,000/- per month. I state that I did not provide any separate dongle to Shri Sanjeev Kumar. I was informed that Sanjeev Kumar is a partner of Atul Kapoor. Shri Sanjeev Kumar used my dongle, which I had provided to Atul Kapoor for filing documents on ICEGATE. 5. On the basis of the statement of the appellant, it was noticed that the Customs Broker has violated the various provisions of the Customs Broker Licensing Regulations, 2018 (CBLR) and observing that continuation of business transaction by the Customs Broker would be prejudicial to the interest of the Revenue....
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....learned Counsel for the appellant and also the learned Authorised Representative for the Revenue and have examined the case records including the various judgements cited at the bar. The learned Counsel for the appellant and also the Authorised Representative for the Revenue have filed detailed written submissions and also compilation of judgements. In view of the submissions made by both sides following issues arise for our consideration: (i) whether the statement recorded under section 108 of the Customs Act though retracted is binding on the appellant? (ii) whether absence of cross examination of the witnesses who made confessional statement has lead to violation of principles of natural justice? (iii) whether the appellant has failed to discharge the obligation cast on him under the Regulations and thereby violated the provisions thereof ? (iv) whether the charge of mis-declaration and undervaluation of the illegal imports against the appellant is maintainable? (v) whether imposition of punishment on the appellant under the provisions of CBLR is proportionate to the charges proved against him? 8. The main allegation against the ap....
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....efore, the statement under Section 108 of the Customs Act, though retracted is an admission and is binding. The relevant para of the said decision is as under:- "3. It is true that the petitioner had confessed that he purchased the gold and had brought it. He admitted that he purchased the gold and converted it as a Kara. In this situation, bringing the gold without permission of the authority is in contravention of the Customs Duty Act and also FERA. When the petitioner seeks for cross-examination of the witnesses who have said that the recovery was made from the petitioner, necessarily an opportunity requires to be given for the cross-examination of the witnesses as regards the place at which recovery was made. Since the dispute concerns the confiscation of the jewellery, whether at conveyor belt or at the green channel, perhaps the witnesses were required to be called. But in view of confession made by him, it binds him and, therefore, in the facts and circumstances of this case the failure to given him the opportunity to cross-examine the witnesses is not violative of principle of natural justice." (Emphasis laid) From the records of the case, we find that ....
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....ce, the burden need not to be discharged anymore by the Department in the cases of admissions by the concerned. It was observed by Hon'ble High Court of Delhi in the case of Jasjeet Singh Marwaha v. Union of India reported as [MANU/DE/1201/2009 = 2009 (239) ELT 407 (Del.)] that CHA's licence can be suspended based on confession made under Section 108 of Act, 1962 provided it is voluntary and statement is truthful and is not result of such inducement, threat or promise as mentioned in Section 24 of Indian Evidence Act, 1872. In the present case, there is no retraction by the appellant of the said statement nor it is the submission before us. We have no reason to ignore the said admission". 12. Similarly, referring to series of decisions of various Courts, this Tribunal in M/s Mittal Impex vs. Principal Commissioner, Customs, (ICD, TKD) New Delhi 2022 (4) TMI 143 (Tri. Del.) held that the adjudicating authority has not committed any error while denying the opportunity of cross examination of investigating officers and the panch witnesses. The Authorised representative for the revenue have also relied on the decision in the case of Silicon Concepts International Pvt. Ltd., vs. Prin....
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.... has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded. (See Pon Adithan v. Deputy Director, Narcotics Control Bureau, (1999) 6 SCC 1: 1999 SCC (Cri 1051]" The aforesaid case was a case under the Foreign Exchange Regulation Act, 1973 and the Hon'ble Apex Court has held that evidence brought on record by way of confession, which stood retracted must be substantially corroborated by other independent and cogent evidence, which would lend adequate assurance to the Court that it may seek to rely thereupon. In the present case, the authorities are at the stage of investigation. The evidence is being collected and therefore, at this stage, the judgment relied upon by Learned Counsel for the petitioner is of no help." (Emphasis laid) 14. The learned counsel for the appellant has referred to a latest decision of this Tribunal in Customs Appeal No. 75414 of 2022 titled as Shri Balwant Raj Soni and Ors. vs. Commissioner of Customs, Preventive, Patna, Fi....
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....f 'H-Card' and 'G-Card' issued to Sh. Atul Kapoor and Sh. Anil Kumar showing that 'previously' they were his employees. It is also submitted by him that the facilitation of unscrupulous import by Sh. Atul Kapoor and Sh. Anil Kumar have been committed without his knowledge or involvement and he learnt about the same only when the DRI has initiated the investigation of the imports made under CB License owned by him. In so far as Sh. Sanjeev Kumar is concerned, the appellant submitted that he never dealt with him directly. We also do not agree with the said submission of the appellant and relying on the statement made by the appellant under section 108 that since he did not have much business in his Customs Broker firm and Sh. Atul Kapoor had contacts with various importers but since he did not have the 'F-Card' therefore, he provided Customs Broker License to him for monetary consideration. This is sufficient to hold that the appellant had sublet his Customs Broker License for monetary gain and thereby violated the provisions of Regulation 1(4) of CBLR, 2018. 18. The other contention relates to the violation of the provisions of Regulation 10(a), 10(d), 10(e) and 10(n) of CBLR, 20....
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....rseas, 17, Gali No. 3, Raj Nagar, Panipat, Haryana-132103; vi. M/s R and J Overseas, H-38 A, Basement, Kalkaji, New Delhi-110019; vii. M/s SM International, H. No. 232, Raj Nagar, Gali No. 2, Panipat, Haryana; viii. M/s Sharma Overseas, Raj Nagar, Gali No. 3, Near Shiv Mandir, Panipat, Haryana; ix. M/s Vijay Overseas, 3328, First Floor, Bank Street, Karol Bagh, New Delhi. I state that I will submit the documents for these M/s Alfa Overseas, M/s Meena Prints and M/s Z. K. Overseas on a later date. I will also submit the other import documents viz. Invoice, packing list and AWB for the above firms later. 19. The allegations under Regulation 10(a) and 10(n) are being considered together. From Question No. 8, it is clear that on the date when the appellant appeared to give his statement, he did not produce the relevant documents. We would like to point out the statement made by the appellant on issue No. 9 where he was asked about the KYC documents of the said firms and he categorically stated that he does not know anything either about the firms (importers) or their proprietors and also he had not collected any KYC documents of the firm and ha....
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....by evading the customs duty, that they with malafide intention and knowingly abetted illegal import of the consignments involving gross mis-declaration and undervaluation and therefore the role of accomplice played by the Customs Broker and their employees is clearly proved. We are constrained to say that the observations made are absolutely without any material on record and are infact premature as pointed out by the learned AR during the course of hearing and also stated in their additional submissions dated 14.08.2023 that they have enquired from DRI that investigation has not completed but is still going on as yet and therefore no show cause notice has been issued either to the importers or Zakir Khan. No material has been shown to us from the statement of the appellant to even remotely suggest that he was privy to the actual activity of facilitating the import. In this scenario, on what basis the adjudicating authority has arrived on the findings of mis-declaration and undervaluation against the appellant is missing. We are of the considered view that such findings are unsustainable in the absence of any material and therefore deserves to be set aside. 23. Coming to the que....
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....artment has not produced any evidence to show active connivance of the appellant with the said Sanjeev Kumar. Similarly, Atul Kapoor who was earlier working with him was now working independently except that he used his license on payment of remuneration to the appellant. The statement of the appellant on which all the authorities relied and on that basis arrived at the conclusion that the appellant had violated the Regulations, only points out to the allegation of subletting of the licence for monetary gains. We can safely conclude that there was no active or passive role of the appellant and no aggravating circumstances have been pointed out by the department that would justify the infraction to be as grave. The imposition of the punishment of revocation of the licence in that situation is not justifiable as the gravity of the infractions alleged cannot be said to be so serious so as to warrant such a grave and harsh punishment which would mean that his licence will be permanently inoperative for all times to come. Repeatedly, it has been emphasised by the Tribunal as well as by superior Courts that penalty as that of revocation of license cannot be imposed upon the CHA in absenc....
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....infraction to be labeled grave. It would be inadvisable, even if possible, to provide an exhaustive list of such aggravating factors, but a review of case law throws some light on this aspect. In cases where revocation of license has been upheld (i.e. the cases relied upon by the Revenue), there has been an element of active facilitation of the infraction, i.e. a finding of mens rea, or a gross and flagrant violation of the CHA Regulations." The decision of the Delhi High Court in Ashiana Cargo Services (supra) has been affirmed by the Apex Court in the order reported in 2015 (320) ELT A175 (SC). 26. We may also refer to the decision of the Andhra Pradesh High Court in Commissioner of Customs & C Ex. HYD-II vs. H.B. Cargo Services 2011 (268) ELT 448 (A.P.) which referred to "balancing test" and "necessity test" and in the context of doctrine of proportionality observed:- "11. While issuance of signed blank shipping bills would, by itself, amount to negligence on the part of the CHA, their doing so for a consideration of Rs. 150/- per shipping bill is an act of corruption. It is in this context that the proportionality of punishment imposed on the respondent, and the ....
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....on, as the case may be, has to be directed looking to the gravity of the situation in the background of the facts. For minor infraction, or infractions which are not of a serious nature, an order of suspension may suffice. On the contrary, when revocation is directed it has to be only in cases where the infraction is of a serious nature warranting exemplary action on the part of the authorities for, otherwise, two types of actions would not have been provided for. Primarily it is for the Commissioner to decide as to which of the actions would be appropriate but, while choosing any one of the two modes, the Commissioner has to consider all relevant aspects, and draw a balance sheet of the gravity of the infraction and the mitigating circumstances. The difference in approach for consideration of cases warranting revocation or suspension has to be borne in mind while dealing with individual cases. The proportionality question is of great significance as action is under a fiscal statute, and may ultimately lead to a civil death. [Falcon Air Cargo and Travels (P) Ltd. - 2002 (140) E.L.T. 8]." 27. The adjudicating authority have neither referred to nor applied its mind on the doctrine....
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....misconduct and the charges against the appellant are not so grave that extreme punishment of revocation of license is called for. Thus, the impugned order in so far it has ordered for revocation of the licence of the appellant deserves to be set aside, however the forfeiture of the security deposit and penalty of Rs. 50,000/- imposed under Regulation 18 of CBLR, 2018 needs to be maintained. 30. There is one aspect which needs our attention as regards the provisions of Regulation 17(1) where under a notice is required to be issued to the Customs Broker within 90 days from the date of receipt of the offence report and the Explanation attached thereto provides that 'offence report' under this regulation means a summary of investigation and prima facie framing of charges into the allegation of acts of commission or omission of the Customs Broker etc. During the course of hearing we enquired from the learned Authorised Representative for such offence report in the present case and surprisingly he referred to the letter dated 25.02.2022 as the offence report, the said letter reads as:- "The Commissioner of Customs, Airport & General New Customs House, Near I....