TaxTMI 
TaxTMI 
2023 (11) TMI 486
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....r Preventive Unit (APU) of R&I Division of the office of the Principal Commissioner of Customs (Preventive), New Custom House, Mumbai on 04.03.2017 regarding mis-declaration of description of goods and its value in import of 'Button Tips' covered under MAWB No.21756155842 and HAWB No. TSI 1702084 dated 01.03.2017 by M/s V.B. Exports, Bhayander-East, Thane for which corresponding Bill of Entry (B/E) No. 8726253 dated 01.03.2017 was filed by one Customs Broker M/s P.Cawasji & Co. (CB License No.11/319). Accordingly, the imported goods were subjected to detailed examination by a chartered engineer M/s. Gattini & Co. and representative samples were drawn on 07.03.2017 for ascertaining the composition of the goods. The test report dated 10.03.2017 indicated that the main ingredient of the imported goods namely 'Button Tips' are "Tugsten-W" which is a rare metal having higher economic value. The chartered engineer's report also suggested that the minimum average price of imported goods, purchased in bulk, would be US $35 per Kg. indicating that there is undervaluation of imported goods as the said minimum average price of Tungsten is 7.7 times more of the declared value of imported goods....
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.... appear before the Inquiry Authority. Further, an Inquiry officer was appointed by jurisdictional Commissioner for the purpose of Inquiry proceedings vide Order dated 30.05.2018. However, as he could not complete the said inquiry, one another officer was appointed subsequently as Inquiry Officer vide order dated 08.01.2019 which was received by the said inquiry officer on 06.05.2019. Upon completion of the inquiry, a report was submitted on 14.11.2019, and the Commissioner of Customs (General), Mumbai-I, being the licensing authority under Regulations 14 ibid had passed the impugned order dated 28.08.2020 for revoking CB License of the appellants and, at the same time, forfeited the entire amount of security deposit and imposed penalty of Rs.50,000/- on the appellants. Feeling aggrieved with the impugned order, the appellants have preferred this appeal before the Tribunal. 3.1. Learned Advocate for the appellants contends that the impugned order has not taken into account the inquiry report wherein out of four charges leveled against the appellants, in three charges the case has been dropped in favour of the appellants and in one charge due to signature mismatch, the inquiry offic....
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.... In support of their grounds the appellants cited the following decisions: (i) K.S.Sawant & Co. Vs. Commissioner of Customs (General), Mumbai - 2012 (284) E.L.T. (Tri.- Mumbai) (ii) Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P Ltd. - 2018 (361) E.L.T. 321 (Bom.) (iii) Perfect Cargo & Logistics Vs. Commissioner of Customs (Airport & General), New Delhi - 2021 (376) E.L.T 649 (Tri. Del.) (iv) Delta Logistics Vs. Union of India - 2012 (286) E.L.T. 517 (Bom.) In view of the above, they requested that impugned order be set aside and consequential relief be granted to them. 4. Learned Authorised Representative (AR) reiterated the findings made by the Commissioner of Customs (General) in the impugned order and submitted that each of the violation under sub-regulations (a), (d), (f) and (n) of Regulation 10 of CBLR, 2018 has been examined in detail by the Commissioner. The appellants CB got all the documents for import from one Sunil Kalbhor who is neither IEC holder nor importer's representative; they never verified the authenticity of KYC documents; had they cross checked or had they conducted verification at their level, by calling over phone o....
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....f natural justice in this regard. 6.2 We find that the Regulation 10 of CBLR 2018, provide for the obligations that a Customs Broker is expected to be fulfilled during their transaction with Customs in connection with import and export of goods. These are 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; ... (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 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; ... (f) not withhold information contained in any order, instruction or public notice relating to clearance of cargo or baggage issued by the Customs authorities, as the case may be, from a client who is entitled to such information; ... (n) verify correctne....
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....he imported goods and value in the bill of entry exactly matching with the details as given in the invoice supplied by the importer. Similarly, in respect of the second B/E dated 27.08.2016, the appellants had declared the description of the goods as "Button Tips Bore well Parts Size: 16.8 * 28 *.88" with the unit price being declared as "USD $5.00" as per commercial invoice No. ULT/191056 dated 20.08.2016. From the above factual details, we find that the appellants CB had declared the description of the imported goods and value in the aforesaid two B/Es exactly matching with the details as given in the invoices supplied by the importer. Further, the appellants were not aware of the under valuation of the imported goods as there was no such issue in the past imports of their client, and they were regular importer in the customs port. 7.2. It is also a fact that the Customs APU, R&I Division had come to a reasonable belief that the imported goods are of higher economic value due to the presence of Tungsten and the value declared is not commensurate with the average market price of the goods only during examination of subsequent imports in another B/E No. 8726253 dated 01.03.2017 fi....
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.... conducting physical examination of goods on 07.03.2017 which were imported subsequently, upon receipt of test report, and hence the appellants CB cannot be found fault for the reason that they did not advise their client importer to comply with the provisions of the Act. Further, as such mis-declaration was not known to the appellants, the non-compliance by the importer of declaring the alleged incorrect value of imported goods, could not have been brought to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs by the appellants, as the Appraising group itself got a reasonable belief of incorrect value only after examination of goods and obtaining test report of samples in subsequent imports. Thus, we are of the considered view that the violation of Regulation 10(d) ibid, as concluded in the impugned order is not sustainable. 8.1. Further, in order to examine on the aspect of valuation of imported goods, and whether the appellants had failed to exercise any due diligence or not, the legal requirement as per the Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 made there under could be perused in de....
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....ds; (b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of rule 10 of these rules; and (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3) below. (3) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price. (b) In a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time. (i) the transaction value of identical goods, or of similar goods, in sales to unrelated buyers ....
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....ion of value of imported goods. We find that there is no such evidence and on the contrary the declaration made in the bill of entry corresponds to the value declared in the commercial invoice. Thus, we are of the considered view that the conclusion arrived by the Commissioner of Customs (General) on this valuation issue in the impugned order is not supported by any evidence or factual detail, and thus the impugned order stating that the appellants have violated Regulation 10(d) ibid is also not sustainable. 9. Learned Commissioner of Customs (General) had come to the conclusion that the CB had violated the provision of Regulation 10(f) ibid, as the appellants had 'never met the importer/IEC holder, which indicated that they withheld the information contained orders, instructions or public notices relating to clearance of cargo from the importer of the goods, which led to the duty evasion in the said case'. Even for an argument sake, if it is accepted that the appellants had not met the importer/IEC holder in person, it is not clear how such an act would automatically would tantamount to non-supply of information relating to Customs law & procedures to the importer for compliance ....
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....of CHALR, 2004, has been suitably amended to provide that certain obligations on the CHAs to verify the antecedent, correctness of Import Export Code (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data or information. In this regard, a detailed guideline on the list of documents to be verified and obtained from the client/customer is enclosed in the Annexure. It would also be obligatory for the client/customer to furnish to the CHA, a photograph of himself/herself in the case of an individual and those of the authorised signatory in respect of other forms of organizations such as company/trusts etc., and any two of the listed documents in the annexure. No Form of organisation Features to be verified Documents to be obtained 1 Individual (i) Legal name and any other names used (ii) Present and Permanent address, in full, complete and correct. (i) Passport (ii) PAN card (iii) Voter's Identity card (iv) Driving licence (v) Bank account statement (vi) Ration card Note : Any two of the documents listed above, which provides client/customer information to the satisfaction ....
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....ere not submitted is, therefore, factually incorrect. 35. The Commissioner, therefore, committed an error in holding that the appellant failed to ensure due compliance of the provisions of Regulation 10(n) of the Licensing Regulations." 10.4. Further, we also find that the Hon'ble High Court of Delhi has held in the case of Kunal Travels (Cargo) Vs. Commissioner of Customs (I&G), IGI Airport, New Delhi reported in 2017 (354) E.L.T. 447 (Del.), the appellants CB is not an officer of Customs who would have an expertise to identify over valuation or under valuation of goods. The relevant portion of the said judgement is extracted below: "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....... 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....
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....ng at different levels through different persons. The principles of fairness and equity demands that when there is deviation from the time schedule prescribed in the Regulation, the Revenue enumerates the reasons and attributes them to an officer dealing with it and also accounts for every stage at which the delay occurs. Every endeavour should be made to adhere to the time schedule but in exceptional circumstances, which are beyond the control of the revenue if the time schedule is not adhered to, an accountability be fastened on the Revenue, to cite reasons why the time schedule was not adhered to, and then leave the decision to the adjudicating authority to examine whether the explanation offered is reasonable or reflects casual attitude on behalf of the Revenue. This is the only way how the Regulation can be made effective and worthy of its existence so as to safeguard the interest of the Customs house agent, who is in a position of the delinquent and faces an inquiry somehow similar to an inquiry in disciplinary proceedings on one hand and the revenue in the capacity of the administration on the other hand. 15. In view of the aforesaid discussion, the time limit contained i....
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....r inquiry, while license of Customs broker is in operation, for taking a decision on the suspension or revocation of the license. If the entire process of suspension proceedings is unduly delayed, then the very purpose of prescribing specific time limits in relation to conduct of inquiry proceedings is nullified and to such extent the actions of the authorities is not really sanctioned by law. We also find that the Customs broker has already suffered a lot, as they were out of his normal business for almost 5 years and 5 months as of now. It is also noted that the livelihood of Customs broker and the employees is dependent upon the functioning of Customs broker's business. The punishment suffered by being out of Customs broker business for about five years is more than sufficient to mitigate the case of violations or contraventions of CBLR, 2018. 13. From the records of the case, we find that there is definitely delay in adjudication and that for the import transaction that occurred in August, 2016, the order of revocation of appellant's CB license has been passed on 28.08.2020. Revenue is unable to explain why there was such a long delay in taking action against appellants, when ....
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....shipment documents. The conclusion of the Commissioner of Customs (General) in respect of sub-regulation 10(a) ibid is on the basis of the statement dated 20.05.2017 given by Shri Naresh Jay Kumar Udeshi, Proprietor of appellants CB firm, which state that on being shown the GATT declaration annexed with the docket of B/E No.6447009 dated 22.08.2006 he stated that the signature of the importer in the GATT value declaration did not tally with that in the authorization letter obtained by the appellants. Thus, on this basis the Commissioner of Customs (General) had held that the authorization is null and void, thereby violating the obligation under sub-regulation 10(a) ibid. It is also on record that Shri Soni Bipin Damodar Jinadra, IEC holder of M/s V.B. Exports, Thane had let out his IEC to various persons such as S/Shri. Mohan Singh Fartiyal alias Mannu Bhai, Deepak Sharma, for monetary benefits. However, these facts were brought to fore only during detailed investigation of the case conducted subsequently by the Customs APU, R&I Division. Hence, at the relevant time of imports under two B/Es, the appellants were not aware of this. 14.2. In this regard, the appellants had relied up....
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....on of Regulation 13(b). Accordingly, we are of the view that forfeiture of security tendered by the appellant CHA is sufficient punishment and revocation is not warranted. Accordingly, we set aside the order of the revocation and direct the Commissioner of Customs (General) to restore the CHA licence subject to the forfeiture of entire security amount tendered by the CHA." We also find that the Directorate General of Foreign Trade (DGFT), in its Policy Circular No.6 (RE-2013)/ 2009-2014 dated 16.09.2013 had clarified that use of IEC by the person other than IEC holder himself is a violation of Section 7 of the Foreign Trade (Development and Regulation) Act, 1992 (FTDR) and Rule 12 of Foreign Trade (Regulation) Rules, 1993 and would attract action under Section 8 and 11 of FTDR Act, except in case importers or exporters who are exempted from obtaining IEC and who use permanent (common) IEC Numbers under Para 2.8 of Handbook of Procedure, Vol.1, 2009-14. Thus, in harmonious reading of the above order of the Tribunal in accepting the documents from the importer directly or through intermediary and at the same time ensuring that the IEC is not being misused by any person other than I....