TaxTMI 
TaxTMI 
2024 (8) TMI 1348
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....ppellants for acting as a Customs Broker under Regulation 14 ibid and for forfeiture of entire security deposit furnished by the appellants, on the condition that such order shall come into effect, in case of any contrary decision is taken by higher appellate authority on the Order-in-Original CAO No. 64/CAC/PCC(G)/SJ/CBS Adj. dated 30.12.2022, providing for suspension of CB license and forfeiture of security deposit, which had already been passed by him. Besides this, in the impugned order he had also imposed a penalty on the appellants under Regulation 18 ibid. 2.2 Briefly stated, the facts of the case are that the appellants herein is a Customs Broker (CB) holding a regular CB license issued by the Mumbai Customs under Regulation 7(2) of Customs Brokers Licensing Regulations (CBLR), 2018. On the basis of specific information received by Customs officers of Special Intelligence & Investigation Branch-Imports [SIIB(I)], that certain bogus IEC holders are mis-declaring the import of Mortar and are also heavily undervaluing such imported 'Mortar', have initiated investigation against such imports. Accordingly, a live consignment of imports under Bill of Entry (B/E) No. 6357327 da....
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....the Learned Advocate against the impugned order dated 24.11.2023, is that the time limit set out for inquiry and revocation of the license had not been followed, inasmuch as the inquiry officer though appointed on 08.07.2022 had taken about 13 months to submit his report on 07.08.2023, whereas the Regulations provide for 90 days period from the date of issue of notice. Thus, he stated that the inquiry was in gross violation of time limit prescribed under the Regulations and it cannot be said that such delay is reasonable in terms of the judgement delivered by the Hon'ble High Court of Bombay in Principal Commissioner of Customs Vs. Unison Clearing P. Ltd.- 2018 (361) E.L.T. 321 (BOM). 3.2 On the factual matrix of the case, learned Advocate submitted that in this case, the dispute relates to imports during December, 2018 to August, 2021, when the appellants firm was managed by Shri Shahbaz Abdul Rahman Dalvi and his spouse Smt. Rashida Abdul Rahman Dalvi, both being partners in the appellants CB firm. As the said Shri Shahbaz Abdul Rahman Dalvi had deceased on 10.10.2019, his son Shri Abdul Rahman Dalvi was inducted as partner of the appellants' firm. In terms of Regulation 12 ib....
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....Sambhaji R Bhosale, who knew the importer and they did not directly got the documents from the importers, and they had duly verified the existence of the importers through the statutory documents in the manner prescribed under CBLR. He further stated that for the acts of misdeeds done by the importers, the appellants CB cannot be held liable. Thus, he claimed that the appellants did not contravene any of the Regulations ibid. 3.5 In support of their stand, the learned Advocate had relied upon the following decisions of the Tribunal and the judgement of the Hon'ble High Court of Bombay, in the respective cases mentioned below: (i) K.S. Sawant & Co. Vs. Commissioner of Customs (General), Mumbai- 2012 (284) E.L.T. 363 (Tri.-Mumbai) (ii) Perfect Cargo & Logistics Vs. Commissioner of Customs (Airport and General), New Delhi - 2021 (376) E.L.T. 649 (Del.) (iii) Setwin Shipping Agency Vs. Commissioner of Customs (General), Mumbai- 2010 (250) E.L.T. 141 (Tri.-Mumbai) (iv) Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P. Ltd. - 2018 (361) E.L.T. 321 (Bom) 4. Learned Authorised Representative (AR)reiterated the findings made....
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....employment of persons: - (1) A person who has qualified the examination referred to in regulation 6 may engage himself in the work relating to the clearance of goods through customs on behalf of a firm or a company licensed under these regulations. ... (3) A Customs Broker may, having regard to the volume of business transacted by him, employ any number of persons other than an F card holder to assist him after verifying their antecedents and identity at the declared address by using reliable, independent, authentic documents, data or information: Provided that such an employed person shall possess the Aadhaar number issued to him and that the minimum educational qualification of such persons so employed shall be 10+2, or equivalent. (4) Employment of a person referred to in sub-regulation (3) shall be made only after obtaining the approval of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, who shall in granting approval, take into consideration the antecedents and any other information pertaining to the character of such person. ... (6) Notwithstanding anything contained in sub-regul....
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....prove that they were not careful and not diligent in undertaking the KYC verification by using reliable and independent information. Further, in respect of violations against Regulations 13(3), 13(4), 13(7) and 13(12) ibid, the learned Principal Commissioner had held that approval for employment of Shri Abdul Rahman Dalvi in the appellants CB firm was not obtained from the Deputy Commissioner of Customs nor any photo identity card was issued to him in form H, G, or F, and thus he was handling the activities of appellants CB firm unauthorizedly. Further, Shri Sambhaji R Bhosale who was not an employee of appellants CB, but a middle man acting at the behest of the importer Shri Shiv Narayan Saxena, was making all the payment through his business companies for clearance of imported goods and was allowed to operate and file the documents by the appellants CB. Thus, learned Principal Commissioner had concluded that Shri Sambhaji R Bhosale and Shri Abdul Rahman Dalvi have acted in an unauthorized manner an illegally, while processing the B/Es and conducting day to day activities of CB firm, respectively, have violated the regulations and failed to fulfill the obligations under Regulation....
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....he course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the inquiry in regard to the grounds forming the basis of the proceedings, and he may also put any question to any person tendering evidence for or against the Customs Broker, for the purpose of ascertaining the correct position. (4) 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. (5) At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall prepare a report of the inquiry and 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). (6) The Principal Commissioner or Commissioner of Customs shall furnish to the Customs Broker a copy of the report of the ....
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.... Provided further that where an order is passed against a G card holder, then he shall surrender the photo identity card issued in Form G forthwith to the Deputy Commissioner of Customs or Assistant Commissioner of Customs. Explanation . - Offence report for the purposes of 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 or a F card holder or a G card holder, as the case may be, under these regulations thereunder which would render him unfit to transact business under these regulations." 7.2 Plain reading of the above legal provisions of CBLR state in clear terms that the inquiry proceedings have to be followed as per the procedure prescribed in the Regulation 17 ibid. The following are the various steps involved therein in passing an order under Section 17 inquiry proceedings : (i) Issue of Show Cause Notice to a CB against whom action has been proposed under CBLR (ii) On the basis of written reply submitted by the CB, determine the grounds which have been accepted by him and those which have not been admitted by the CB, and appoint an In....
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....authority. It is a fact that on the date of passing of the impugned order 23.11.2023, the earlier order of the Principal Commissioner suspending the appellants was in effect and on appeal by the appellants, the Tribunal had passed an order in respect of the Order-in-Original No. 64/CAC/PCC(G)/ SJ/CBS-Adj. dated 30.12.2022 in the earlier case of the appellants only on 29.11.2023. In view of the above analysis of the legal provision under Regulation 17(7) ibid and on the facts of the case, we find that there is no legal provision for passing the impugned order and therefore on this ground alone, the impugned order is liable to be set aside. 7.3 Further, sub-regulation (1) of Regulation 17 ibid also states in clear terms that the appellants CB shall be served with a show cause notice stating the grounds on which it is proposed to revoke the license or impose penalty against the Customs Broker. In this regard, we find that the SCN dated 08.07.2022 issued in this case, propose to revoke the license and for forfeiture of security deposit and/or for imposition of penalty. From the facts of the case, it is clear that the license No.11/194 issued to the appellants CB was already revoked ....
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....n 29.11.2021. However, subsequently Shri Abdul Rehman Dalvi, partner of the appellants CB was called for participating in the investigation only on 29.11.2021 for recording his statement under Section 108 of the Customs Act, 1962. Further, the allegation against the importer is that they attempted to mis-declare the description and under valuation of imported goods. Further, it is on record that for such mis-declaration and undervaluation of imported goods separate action under the provisions of the Customs Act, 1962 was taken for demand of differential duty and for imposition of penalty against the importers, besides the appellants CB firm vide SCN dated 18.05.2022. Thus, it is seen that alleged mis-declaration and undervaluation is solely on account of the action taken by the importer, by providing incorrect information in respect of imported goods. There is no role of Customs Broker in the above activities of the importer. Further in respect of the imports that have taken place in March, 2018 to August, 2021 necessary investigation was initiated in November, 2021, but the offence report against the appellants CB was received only on 05.05.2022 and 22.07.2022. Thus, there is no g....
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....3(a). ... The question now is whether revocation of licence is warranted for such a violation. In our view, the punishment should be commensurate with the gravity of the offence. Revocation is an extreme step and a harsh punishment, which is not warranted for violation 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 Principal Commissioner of Customs (General) to restore the CHA licence subject to the forfeiture of entire security amount tendered by the CHA." In the absence of any document to prove the claim of mis-declaration and under valuation of import goods on the part of the appellants, the findings given by the learned Principal Commissioner of Customs in the impugned order that the appellants has failed to exercise due diligence to ascertain the correctness of information is difficult to prove for fastening such liability on the appellants CB for holding them responsible for violation of Regulation 10(e) ibid. 9.1 Learned Principal Commissioner of Customs (General) had come to the c....
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....cipal Commissioner to have mentioned the documents and discussed the same but all that has been stated in the impugned order is that having gone through the submissions of the Customs Broker, it is found that there is no force in the submissions. The finding recorded by the Principal Commissioner that the required documents were not submitted is, therefore, factually incorrect. 35. The Principal 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." 9.4 Further, we also find that the Hon'ble High Court of Delhi has held in the case of Kunal Travels (Cargo) Vs. Principal 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 mis-declaration 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....
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.... circumstances, I am of the considered view that the CB in the present case showed an act of carelessness which resulted in fraudulent activities. Therefore, I hold that the CB has violated the provisions of Regulation 10(n) of the CBLR, 2018. 14.6 With regard to violation of Regulation 10(q) of CBLR, 2018:- xx xx xx xx The IO in his report dated 07.08.2023 has stated that Shri Abdul Rehman Dalvi, son of the deceased working partner, though not authorised card holder, had appeared before the investigating officer to give his statement promptly hence, there is no apparent non-cooperation in the investigation on the part of CB. IO hold that charge of violation of 10(q) of CBLR 2018 is not proved. From facts of the case, I could not notice any instance of non cooperation on part of CB and hence I inclined to agree with findings of IO. Therefore, I hold that the CB has not violated the provisions of Regulation 10(n) of the CBLR, 2018. xx xx xx xx 16. I hold that the proof of charges in inquiry are acceptable and tenable based on the available evidence, the facts and circumstances of the case, which certainly warrant penal a....
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....llegally in filing, processing the B/Es and Shri Abdul Rahman Dalvi in conducting the day to day activities of CB firm. Hence, he concluded that the appellants have violated the regulations and failed to fulfill the obligations under the said Regulations. In this regard, we find that that the appellants CB firm, after the demise of the proprietor had obtained the permission of the Deputy Commissioner of Customs, CB section, New Custom House vide Notice No.177/2019-20 dated 04.11.2019 for transacting business through their employee cum G-card holder Shri Majid Patel; and later also obtained approval of the Assistant Commissioner of Customs, Customs Broker Section, New Custom House vide Notice No. 156/2020-21 dated 17.01.2022 for appointing a F category employee Shri Abdul Malik Abubakar Surty as authorised signatory for their CB firm, in order to conduct the business of customs broker in compliance with CBLR, 2018. However, we also note that besides receiving the documents through intermediary, which has been permitted in view of the order of the Tribunal in the case of K.S. Sawant & Co. (supra), the said intermediary i.e., it was alleged that Shri Sambhaji R Bhosale, who is not an ....