TaxTMI 
TaxTMI 
2024 (5) TMI 1228
X X X X Extracts X X X X
X X X X Extracts X X X X
....ive persons involved in the offence including the statement from the Branch Manager of the appellant. After detailed investigation and based on the inquiry report, the Commissioner revoked the license of the appellant under Regulation 14 and 17(7) of CBLR, 2018 along with forfeiture of entire amount of the security deposit and also imposed penalty of Rs. 50,000/- under Regulation 14 read with Regulation 18 (1) of CBLR, 2018. 2. The learned counsel submits that the appellant is a Customs Broker having a licence under Regulation 7 of the CHALR, 2018, valid upto 05.01.2027 and having extended Customs broker activities at Thiruvananthapuram, Chennai, Mumbai, Bangalore and Uttar Pradesh. He submits that on 05.07.2021, the Customs Preventive officers had seized 30.245 kgs of gold from consignment declared as Diplomatic Cargo and an offence report was registered. The appellant premises was searched and statements were recorded from the Branch Manager of the appellant. It is submitted that the appellant has been undertaking the customs broker activities for the UAE Consulate from 2017 onwards for their Diplomatic Cargo and the Bill of Entry for the above consignment was also filed with ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pugned order is unsustainable for the reason that no opportunity extended for cross examination and relied on the decisions in the case of: • Muhammad Fariz and co. Vs. Commissioner of customs, cochin 2019 (369) ELT- 218 (KER) • Sri Balaganesan Spinners versus Joint Commissioner of Customs, Tuticorin 2021 (377) ELT- 510 (Mad) 2.3 The Learned Counsel further submitted that the offence report and other relied upon documents, if any, were not provided to them and therefore, without the documents they could not submit their replies countering the allegations; hence, the order is devoid of merits. It is stated that the respondent issued show-cause notice without providing copy of the relied upon documents in spite of repeated requests which is evident from their letters dated 10.02.2022 and 24.08.2022. This Hon'ble Tribunal directed the respondent to serve the copies of the relied upon documents as per the Memo dated 26.07.2023 filed by the Counsel and the respondent provided a copy of offence report dated 30.06.2020 and a copy of the authorization letter dated 30.06.2020 was submitted to the Asst. Commissioner of Customs, Air Cargo Complex, Trivandrum. But ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ge such declaration while filing the Bill of Entry for the UAE Consulate. Hence, it reliably construed as the documents submitted with the Bills of Entry are genuine and no query arose at the time of clearance of those consignments. Thus, the finding regarding lack of due diligence on the part of the appellant is unsustainable, as the appellant has not contravened Regulation 10(d) as there was no failure to comply with any of the provisions of the Act/Rules/Regulations. 2.5 As per Regulation 10(e) of the CBLR, 2018 the Customs Broker shall 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. Due diligence is a process or effort to collect and analyze information before making a decision or conducting a transaction so a party is not held legally liable for any loss or damage. There is no specific allegation or finding regarding violation of Regulation 10(e) of the CBLR, 2018. There was no allegation or evidence that Custom Broker had imparted any information to their clients, case of concealment of gold in the consignment was alleged on the basis of examination of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rson to collect goods on behalf of Hon'ble Charge d' Affairs Shri Rashed Khamis Ali Musaiqri Al Shemeili and to allege violation of 10(n) of the CBLR, 2018 is unsustainable. Regulation 10(n) of CBLR, 2018 does not mandate how documents should be handed over by exporter/importer to client; only requirement is that Know Your Customer (KYC) documents must be received and verified to ensure identity of client. To substantiate his arguments relied on the following case laws: • M/s. M.K. Sha & Co. Vs CC (Airport & ACC), Kolkata: 2023 (2) Centax 34 (Tri. Cal) • Final Order No. 50561/2022 dated 04.07.2022 in the matter of M/s Mauli Worldwide Logistics in appeal No. C/50997/2021-DB • Commissioner of Customs (A & A ) Vs. BK Clearing Agency: (2024) 14 Centax 65 (Cal.) • Sinha Shipping Agency Vs. Commissioner of Customs: (2024) 14 Centax 17 (Tri.-Cal) 2.7 It is further submitted that the entire allegation is only based on the offence report and there are no other documents relied upon in the notice and since, the appellant has no opportunity to verify or cross-check the declaration filed by the importer, the allegations are not sustainable....
X X X X Extracts X X X X
X X X X Extracts X X X X
....premises of clients to ensure functioning of his clients at the declared address but supposed to verify the same by using authentic documents. • M/s Perfect Cargo & Logistics Vs CC (Airport & General): 2021 (376) E.L.T 649 (Tri. Del) • Advent Shipping Agency Vs. Principal commissioner of Customs (A & A): (2023) 2 Centax 157 (Tri. Cal) • M/s Kunal Travels (Cargo) Vs. CC(I&G), IGI Airport New Delhi: 2017 (354) ELT 447 (Del) 2.10 It is stated that the adjudicating authority levelled an unsustainable allegation against the appellant that the appellant mis-declared the Consignor name in three Bills of Entry. It is an admitted fact that the authorisation to the appellant was given by the Consulate General UAE, Kerala under his signature which is evident in para 24 of the impugned order stating that "it appears that the allegations of breach of Regulation 10(a) of CBLR, 2018 do not survive since authorizations appear to have been obtained in cases." Further, department do not have a case that Form-7 is not filed along with any of the Bills of Entry. As per the deposition made by Shri Shafeeq, Asst. Accountant in Consulate, "that he has been entrus....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... arrived in the guise of Diplomatic Cargo from Shri Sarith and allowed Shri Sarith to take delivery of two trial cargos covered under two Bills of Entry dated 15.07.2019 and also 21 consignments from Air Cargo Complex, which contained smuggled gold, even after Shri Sarith's resignation from UAE Consulate, Trivandrum. This has been corroborated by the voluntary statements of Shri Sarith, Smt. Swapna and Shri Shefeeq K and the gate passes issued to the vehicle of Shri Sarith at Air Cargo Complex, Trivandrum. It appeared that the Customs Broker had failed to verify the authenticity of documents received from Shri Sarith, who was not an employee of the UAE Consulate, Trivandrum and also failed to exercise due diligence to ascertain the correctness of information related to the clearance of the cargo. (ii) It is further submitted that the smuggling syndicate had smuggled a total of about 136.828 kg of gold covered under 20 Bills of Entry and also smuggled about 30.245 kg of gold, covered under one Bill of Entry, which was seized on 05.07.2020. In respect of the following Bills of Entry, the Customs Broker had mis-declared the consignor's details in the respective Bills of Entry....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies of the Customs Establishment, thereby had contravened the provisions of Regulation 10(a) and (d) of CBLR, 2018 i.e. to advise his client to comply with the provisions of the Customs Act, 1962 and in case of non-compliance bring the matter to the notice of the higher authorities of Customs. Further, by the act of omission, it also appeared that the Customs Broker had contravened the provisions of Regulations 10(e), 10(m) and 10(n) which required him to exercise due diligence to ascertain the correctness of any information which he imparted to his client, discharge his duties as Customs Broker with utmost speed and efficiency and failing to physically verify the KYC details and address of his client. The appellant had violated the above-mentioned provisions of CBLR, 2018 and there was sufficient ground for initiating proceedings under Regulation 17 of CBLR, 2018. In view of the above, the Commissioner of Customs, Cochin was justified in revoking the license and forfeiture of the security deposit under Regulation 14 of CBLR, 2018 along with imposition of penalty under Regulation 18 of CBLR, 2018. (v) From a perusal of the statements dated 14.08.2020 of Shri. Godfrey Prata....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4 dated 31.10.2023. in this order the Commissioner observed that the Appellant had cleared 21 consignments on behalf of UAE Consulate as Diplomatic Cargo. On investigating it was found that these consignments contained gold which were smuggled by a syndicate including Smt. Swapna, S/Shri Sandeep, Sarith, Ramees K.T etc., concealing in the consignments in the guise of diplomatic cargo. The Customs Broker had failed to verify the authenticity of documents received from Shri Sarith, who was not an employee of the UAE Consulate, Trivandrum and also failed to exercise due diligence to ascertain the correctness of information related to the clearance of cargos. In respect of three Bills of Entry, the Customs Broker had mis-declared the consignor's details as "Ministry of Foreign Affairs, Abu Dhabi, UAE" in the respective Bills of Entry when in reality, the cargo was consigned by private individuals. Further, Invoices and Packing Lists were not filed with most of the Bills of Entry. This clearly showed the mala fide intention of the noticee and collusion with the smuggling syndicate and thereby abetment in the smuggling of about 136.828 kg of gold in the consignments declared as diplomati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uantity of the cargo was declared as 79 kgs claiming the benefit of exemption under Notification No.3/1957 dated 08.01.1957 from payment of customs duty in respect of import of Diplomatic Cargo. Form-7 meant for claiming the exemption was duly signed by Shri Rashed Khamis Ali Masaiqri Al Shemali. A letter dated 30.06.2020 was addressed to the Asst. Commissioner of Customs, Air Cargo Complex, Trivandrum requesting release of the cargo was produced. The invoice submitted by the consignee showed items as his personal baggage consisting of foodstuffs like dates, milk powder, Maggie, butter cookies, noodles and classic cookies and the total value was declared as Rs.43,056/-. On a reasonable belief that the goods are liable for confiscation under the provisions of the Customs Act, the officers of the Customs Preventive Commissionerate in the presence of two independent witnesses and also in the presence of Shri Rashed opened the consignment after obtaining No Objection Certificate from the Ambassador of United Arab Emirates in India. The said consignment of one carton box having a total weight of 79 kgs. as mentioned in the airway bill was found to contain foodstuffs and articles such as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder in original No. COC-CUSTM-PRV-COM-04-2023-24 dated 31.10.2023 and order in original No. COC-CUSTOMS-000-COM-09/2022-23 dated 25.10.2022. The present appeal is filed by the appellant challenging the Order-in-Original No. COC-CUSTOMS-000-COM-09/2022-23 dated 25.10.2022 against revocation of his license, forfeiture of the security deposit and imposition of penalty. From the order dated 31.10.2023 referred above, it is very clear that a syndicate was operating in smuggling gold in the guise of Diplomatic Cargo and this gold was being concealed in those articles which were declared as their personal effects and most of them was declared as food stuffs. It is a fact that the gold was concealed under the metal items that were sent along with the food stuffs. These facts are not in dispute. The gold is absolutely confiscated and penalties have been imposed on various persons being part of the syndicate. The appellant was also confirmed to have abetted in the crime and Rs.4 crores penalty has been imposed on him under Section 112(a) and 112(b) of the Customs Act, 1962. 6. In the present appeal, we are concerned with the allegations against the appellant as a Customs Broker who is re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd after recording his findings thereon submit the report within a period of ninety days from the date of issue of a notice under sub-regulation (1). As seen from the above sub-clauses of the CBLR, 2018, an inquiry officer has to be appointed and the inquiry officer needs to submit the report within 90 days from the date of issue of the notice. The appellant is referring to the inquiry report which needs to be submitted within 90 days from the date of issue of the notice. What is relevant here is the whether the notice is issued within 90 days from the date of the receipt of the offence report and the decisions relied upon by the Counsel is regarding the delay in issuing the notices after 90 days from the date of receipt of the offence report and not applicable in the present set of facts where notice is not time barred. With regard to delay in filing the inquiry report, the Commissioner notes that the Regulation also suggests suspension of the license within 90 days of the inquiry report but no such action was taken and the appellant continued to operate for the entire period following the alleged offence being committed. In other words, his right to pursue his vocation has not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....import and export of goods. By relying on a celebrated principle, when a statute prescribes a thing to be done in a particular manner, it must be performed in such a manner, the use of the word "shall" in the Regulation has been construed as mandatory. With due respect to the finding so recorded in the judgment of the Madras Court in case of Masterstroke Freight Forwarders P. Ltd. v. C.C.(I), Chennai-I, reported in 2016 (332) E.L.T. 300 (Madras) delivered by the Learned Single Judge, the parameters of construing a provision as mandatory or directory, when it deals with a discharge of a public duty and a resultant consequence has not been specifically taken into consideration. The salutary principle, whether statute imposes a public duty and lays down the manner and time within which the duty shall be performed, the injustice or inconvenience resulting from a rigid adherence to the statutory prescription, is a relevant factor for holding such provision only as directory has been completely overlooked. As observed by Justice Denman in Caldow v. Pixell, (1877) 2 CPD 562, "in considering whether the statute is imperative, the balance may be struck between inconvenience or some....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore us, the CESTAT has taken a view contrary to its earlier view in Unison Clearing Pvt. Ltd. (supra) and after referring to certain precedents where a view was taken that the regulations are mandatory delivered by the Tribunal itself, the Tribunal was pleased to quash and set aside the impugned order being not sustainable and allowed the appeals. It is to be noted that the Member Judicial (Ramesh Nair) who is a party to the judgment delivered by the said CESTAT in Unison Clearing Pvt. Ltd. v. Commissioner of Customs (General), Mumbai. 15. In view of the aforesaid discussion, the time limit contained in Regulation (20) cannot be construed to be mandatory and is held to be directory. As it is already observed above that though the time line framed in the Regulation need to be rigidly applied, fairness would demand that when such time limit is crossed, the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the time limit was not adhered to. This would ensure that the inquiry proceedings which are initiated are completed expeditiously, are not prolonged and some checks and balances must be ensured. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ination by the Commissioner. Regulation 17(4) reads: "The Customs Broker shall be entitled to cross-examine the persons examined in support of the grounds forming the basis of the proceedings, and where the Deputy Commissioner of Customs or Assistant Commissioner of Customs declines permission to examine any person on the grounds that his evidence is not relevant or material, he shall record his reasons in writing for so doing." 10.1 With reference to cross-examination, the appellant in their interim reply did not ask for any cross-examination, however, in their final reply dated 24.8.2022 to the notice, the appellant had requested for cross-examination of Customs Officers and staff who had cleared the consignment. It may be pertinent to mention here that these officers cleared the consignment as Diplomatic Cargo based on the records filed before them and therefore, there is absolutely no role played by them. The Commissioner at Para 15 of the impugned order clearly states 'I have called for and examined the interim reply and do not. find any request let alone repeated requests for cross examination. He also admits that cross examination of witnesses is to be mandatoril....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2020 Faizal Fareed, Dubai Ministry of Foreign Affairs, Abu Dhabi 3 8045238/ 01.07.2020 Faizal Fareed, Dubai Ministry of Foreign Affairs, Abu Dhabi As seen from the Table, the Bills of Entry were filed to make it appear as if the consignor in these cases was 'Ministry of Foreign Affairs Abu Dhabi' whereas the actual consignor was Shri Saleem, Shri Yousuf Hasan Albe and Shri Faizal Fareed, Dubai. This was clearly evident from the airway bills relating to the respective Bills of Entry No.7987721 dated 24.06.2020, No.8019046 dated 27.06. 2020 and No.8045238 dated 01.07.2020. The cargo whose consignor is mis-declared as the 'Ministry of Foreign Affairs' to make it appear genuine for automated system for clearance as Diplomatic Cargo cannot be considered as oversight when the mistake is occasioned by the appellant who is well aware of the procedures. Such repeated mis-declarations which have resulted in smuggling of gold into India cannot be considered as oversight as claimed by the Branch Manager of the appellant in his statement. The appellant has also alleged that the above facts were not part of the notice issued to him. It is necessary to highlight here the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... online showing the consignor as 'Ministry of Foreign Affairs Abu Dhabi UAE' instead of what was mentioned in the airway bill on the instructions of Shri Sarith. He also stated that one of his clearing staff Shri Raveendran had informed him that Shri Sarith is not working for UAE Consulate but is engaged for personal work for the diplomats and there was no written communication regarding the fact that Shri Sarith is no longer employed with the Consulate and the payments used to be received by the Consulate through their bank account. 13. From the investigations, it is proved that the appellant had cleared 21 consignments on behalf of UAE Consulate as Diplomatic Cargo and further, the investigations proved that there was a syndicate operating for smuggling the gold. From the investigations and various statements and from the appellants own statement, it is proved that they were aware of the fact that Shri Sarith was no more with the Consulate. The appellant had failed to verify the authenticity of the documents received from Shri Sarith who was not an employee of the UAE Consulate, Trivandrum and also failed to exercise due diligence to ascertain the correctness of information re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Director, DRI, BZU, Mumbai wherein it was mentioned that certain units based in Moradabad and Rampur area were misusing DEEC and DEPC Scheme and submitting fictitious or forged shipping bills either with a view to obtain inadmissible Duty Entitled Pass Books (DEPBs) or for fulfilling the export obligations against advance licences under Duty Exemption Entitlement Certificate (DEEC) Scheme, and to obtain waiver of BG conditions against the DEEC Licence as per the Exim Policy, though in reality no physical export of goods was taking place. In essence, the communication was to the effect that documents were fabricated to show that goods were exported. 3. On the basis of the said enquiry report, the Commissioner of Customs (General), New Customs House Ballard Estate, Mumbai on 22-8-2006, after affording appropriate opportunity of hearing to the respondent and analysing the facts and the material brought on record, came to hold that there had been misuse of the licence issued in favour of the respondent and further the violation was serious in nature and it did tantamount to involvement in fraudulent activity affecting the revenue. Being of this view, it cancelled the licence ....