TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 1202
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....eafter 'the CB License'); (ii) directed forfeiture of the security deposit of Rs. 75,000/- furnished by the Appellant; and (iii) imposed a penalty of Rs. 50,000/- on the Appellant. 3. The question that arises for consideration before this Court is that whether the Appellant, under Customs Brokers Licensing Regulations, 2018 (hereafter 'the CBLR, 2018') read with Customs Brokers Licensing Regulations, 2013 (hereafter 'the CBLR, 2013'), is liable for reporting an offence committed in relation to goods stored in the bonded warehouse, after the same have been imported and the professional role of the Customs Broker in clearance of the goods had ended. 4. The aforesaid question arises for consideration in this appeal in the following context: 4.1. The Appellant is a proprietorship firm of Mr. Diva Kant Jha, who was a Customs Broker and at the material time was holding the CB License, which was then valid up to 09.03.2019. The said license was issued under Regulation 9(1) of Customs House Agent Licensing Regulations, 2004 (hereafter 'CHALR, 2004'). 4.2. The Appellant, in normal course of trade, was authorized by (i) M/s Accturists Overseas (OPC) Pvt. Ltd., (ii) M/s Spark Exports, and....
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....re proved against the Appellant and recommended action. 4.9. That on receipt of the Inquiry Report, the Appellant submitted its reply dated 28.01.2019 stating that there is no violation of the provisions of CBLR 2018 read with CBLR 2013. The Commissioner however, did not accept the Appellant's contention and passed the order-in-original dated 04.02.2019, revoking the Appellant's CB license, forfeiting the security deposit of Rs. 75,000/- as well as imposing a penalty of Rs. 50,000/-. 4.10. The Appellant thereafter filed the Customs Appeal bearing No. 50618/2019 against the said order dated 04.02.2019 passed by the Commissioner before the learned Tribunal. However, the learned Tribunal vide its impugned order dated 26.03.2021 confirmed the order-in-original dated 04.02.2019 passed by the Commissioner and held that the Appellant herein has violated Regulation Nos. 10(b), 10(d), 10(e) and 10(n) of CBLR, 2018 read with Regulation Nos. 11(b), 11(d), 11(e) and 11(n) of CBLR, 2013. 5. The Appellant has impugned the order dated 26.03.2021 passed by the learned Tribunal, inter alia, on the ground of limitation and on the ground that the Appellant had not violated any Regulations under CB....
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....n view of the inculpatory admissions made by Mr. Diva Kant Jha i.e., proprietor of Appellant in his statement record before the DRI on 14.07.2017, the violation of the obligations cast upon him under the CBLR, 2018 read with CBLR, 2013 stands proved. 8.1. She states that the failure of the Appellant to obtain the requisite KYC documents and/or verify the documents made available to him by the importer firms is a clear violation of the mandatory obligations under the CBLR, 2018 read with CBLR, 2013. 8.2. The Respondent has filed written submissions dated 11.09.2023 and submitted that in view of the concurrent opinions of the Commissioner and the learned Tribunal, no interference is warranted in this appeal. She states that the punishment handed down to the Appellant is proportionate and just, in view of the gravity of the case. Analysis and findings 9. This Court has considered the submissions of the counsel for the parties and perused the record. 10. At the outset, it would be pertinent to refer to the relevant sub-regulations of Regulation 10 of the CBLR, 2018 and Regulation 11 of the CBLR, 2013 referenced by the Commissioner in the order-in-original dated 04.02.2019. The sa....
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....approval from the New Custom House, New Delhi. The Commissioner held that the Appellant had become aware that the importer firms were dummy firms being (illegally) run by Mr. Ramesh Wadhera in connivance with Sh. Sanjeev Maggu and yet he allowed Sh. Sanjeev Maggu to transact business with Customs authorities; and this act and omission of the Appellant was in contravention of this Regulation. 11.1. The Tribunal while upholding the said finding of the Commissioner opined that the said Regulation has been contravened since Mr. Sanjeev Maggu transacted business at the Customs Station despite not being the authorized representative either of the importer firms or the Appellant herein. 12. In the facts of this case admittedly, Mr. Sanjeev Maggu never acted on behalf of the Appellant but was acting only on behalf of the importer firms. There is no material placed on record to show that Mr. Sanjeev Maggu ever acted on behalf of the Appellant at the Customs Station. 12.1. On a plain textual reading of the Regulation, it is apparent that a Customs Broker is required to transact the business at the Customs Station either personally or through his/her authorized employee. In the facts of th....
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....port. 14.2. The imported goods meant for the re-export were stored at the public bonded warehouses and the illegality by the importer firms was committed when the said goods were diverted by them into the domestic market without payment of the applicable custom duty. It is stated by the Respondent that the said importer firms filed fabricated documents to falsely show the re-export of the goods. However, admittedly, the Appellant herein had no role to play at this stage when the false documents of re-export were filed by the importer firms with the Customs authorities. 14.3. In the facts of this case, it has come on record that the persons controlling the importer firms acted on their own accord when they conspired to defraud the revenue; there is no allegation that they were acting on the aid or advice of the Appellant. There is admittedly no allegation against the Appellant that he abetted the diversion of the imported goods. 14.4. The proprietor of Appellant, in reply to question no. 8 in the statement recorded by DRI on 14.07.2017, stated that he 'subsequently' learnt that the goods which had been imported for re-export were being sold in the domestic market. In this stateme....
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....al contract under which a clearing agent is authorised to perform various functions under the Customs Act for the purpose of clearing the goods from the Customs. Once he has discharged all his duties and functions as such agent and the goods in question have been cleared and delivered to the importer/owner, his work as a clearing agent in respect of the goods ordinarily comes to an end. Any notice served on him thereafter in respect of goods already cleared cannot be construed as a notice given in the course of business of clearing the goods concerned, transacted by him for the principal." (Emphasis Supplied) 15.3. The obligation of the Customs Broker under this Regulation has to be read in the context of the duties discharged by him/her under Section 146 of the Act. There is no duty imposed on the Customs Broker under the parent Act to report commission of acts or omissions of its principal, which are in violation of the provisions of the Act. Since the CBLR, 2018 have been made under Section 146(2) of the Act and are intended to regulate the grant of license to a Customs Broker, the scope of this Regulation cannot be enlarged to read into it a general duty to report violatio....
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....njeev Maggu on behalf of the importer firms in clearance of the cargo, failed to exercise due diligence and thereby causing loss to the revenue. The learned Tribunal referred to the answer given by the Appellant to question no. 8 in the statement dated 14.07.2017 to uphold this finding of the Commissioner. 16.1. The said Regulation casts a duty on the Customs Broker to exercise due diligence in communicating correct information to a client with reference to any work related to clearance of cargo. The said Regulation has no concern/application with the acts or omissions of the importer firms itself. (Re: Kunal Travels (Cargo) v. Commissioner of Customs (Import & General), 2017 SCC OnLine Del 7683) 17. There is no finding in the order of the Commissioner that the Appellant had given any incorrect information to the importer firms in the process adopted for the clearance of the goods at the Customs Station or in any manner abetted the importer firms in the diversion of the goods from the public bonded warehouse to the domestic market. In the opinion of this Court, the findings of the Commissioner and the learned Tribunal do not furnish any ground for alleging contravention of this ....
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....he name of the CHA prominently at the top of such documents. The aforesaid clauses do not obligate the CHA to look into such information which may be made available to it from the exporter/importer. The CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect to clearance of goods through customs house and in that process only such authorized personnel of the CHA can enter the customs house area. What is noteworthy is that the IE Code of the exporter M/s. H.M. Impex was mentioned in the shipping bills, this itself reflects that before the grant of said IE Code, the background check of the said importer/exporter had been undertaken by the customs authorities, therefore, there was no doubt about the identity of the said exporter. It would be far too onerous to expect the CHA to inquire into and verify the genuineness of the IE Code given to it by a client for each import/export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard i.e. KYC etc. would have been done by the customs authorities. There is nothing on record to show that the appellant had knowledge ....
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....tated that there is no dispute that importer firms exist and they have participated in the investigation conducted by DRI. It is stated that the fact that these firms are dummy firms which are controlled by third parties was a fact which was not within the knowledge of the Appellant while he was initially dealing with the said firms for clearance of cargo; and was a fact which came to his knowledge subsequently after the goods had already been cleared by the Customs Station. 18.5. Appellant also states that the reliance placed by the Commissioner on the statement of Mr. Lalit Dongra is not justified since the Aadhar Card which is alleged to have been forged has not been placed on record. 19. A perusal of the written submissions filed by the Respondent would show that the Respondents have found the Appellant 'negligent' in verifying the KYC documents of the importer firms as he failed to obtain the requisite KYC documents and/or verify the documents made available to him by the importer firms. 20. This Court has perused the record. In the facts of this case, there is no allegation of impersonation in the name of importer firms. The finding of DRI is that these importer firms were....
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....ent of customs duty, which led to the loss to the revenue. There is no finding that the Appellant earned extra commission for the assignment for clearance of imported goods from the Customs Station or has partaken in the illegitimate gains made by the importer firms. 21.2. In this regard, it would be instructive to refer to the Division Bench of this Court in Ashiana Cargo Servies v. Commissioner of Customs (I & G) 2014 (302) E.L.T. 161 (Del) ".... 10. Beginning with the facts, there is virtually no dispute. There is a concurrent finding of fact by the Commissioner and the CESTAT that the appellant did not have knowledge that the illegal exports were effected using the G cards given to VK's employees. There was no active or passive facilitation by the appellant in that sense. Undoubtedly, the provision of the G cards to non-employees itself violated the CHA Regulations. This is an admitted fact, but it is not the Revenue's argument (nor is it the reasoning adopted by the Commissioner or the CESTAT) that this violation in itself is sufficiently grave so as to justify the extreme measure of revocation. Not any and every infraction of the CHA Regulations, either under Regu....