TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 901
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on 04.11.2025. 3. We have heard learned counsel for the appellant and learned authorized representative for the Revenue and perused the records. 4. The impugned order decided the proposals made in the show cause notice dated 09.08.2023 [SCN] issued to the appellant relying on two documents which have been called RUD-1 and RUD-2 as follows: - (i) RUD-1 : A letter dated 22.05.2023 sent by the Deputy Commissioner of Customs (Customs Broker Section), New Customs House, Mumbai; (ii) RUD-2 : Investigation report sent by the Commissioner of Customs(Imp), SIIB, JNCH, Mumbai Customs Zone II for suspension of the CB licence of the appellant. 5. Paragraph 3 of the SCN running from page 1 to 26 to reproduce the investigation report (RUD - 2) against an importer M/s Trishaa Overseas who had imported goods under Bill of Entry No. 9655434 dated 21.07.2022. 6. In paragraph 4 of the SCN, Regulations 10(a), 10(d), 10(e) and 10(n) of the Customs Broker Licensing Regulations, 2018 [CBLR, 2018] have been reproduced. 7. In paragraph 5 of the SCN it is said that it appeared that the customs broker had contravened provisions of Regulations 10(a), 10(d), 10(e) and 10(n) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5. I find that a clear-cut violation and negligence exists on the part of the Customs Broker, as made out in the RUD's and the Investigation Report issued by the Deputy Commissioner of Customs, SIIB (), JNCH, Nhava Sheva - V. But choosing not to defend himself, the Customs Broker has rendered himself liable to penal and regulatory action, as charged. Conclusion In view of the observations and finding as above, I conclude that the Customs Broker M/s Primus logistics Pvt. Ltd.: (i) Has contravened the provisions of Regulations 10(a), 10(d), 10(e) & 10(n) of Customs Broker Licensing Regulation (CBLR) 2018; as charged, and therefore, (ii) Their Broker License should be revoked and appropriate part of the security submitted at the time of issue of their License Registration, should also be forfeited in terms of Regulation 14 read with Regulation 17 of the said regulations ; (iii) Appropriate penalty should be imposed on them under the provisions of Regulation 18 of CBLR 2018 read with Regulation 17 of CBLR, 2018. 9. Thus, there is no specific finding as to how the appellant had violated each of the four regulations- 10(a), 10(d), 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ter online verification of IEC and GSTIN, the said importer seemed genuine to the CB. He further submitted that no one from the office knew the importer and never met him; that they filed the Bill of Entry No. 9655434 dated 21.07.2022 on the basis of documents received from the proprietor of freight forwarding firm namely M/s Shree Ram Logistics; that the CB admitted that it was their mistake that in greed of business neither they asked about the actual importer nor did they verify KYC properly. (iii) It is to mention here that to obtain authorization from Exporter/Importer before filing papers with the Customs authorities is the very first obligation of the Customs Broker enlisted under Regulation 10 of CBLR, 2018. I am of the view that in the instant case, the CB miserably failed to produce any such authorization. During the course of investigation, statement of Shri Mehul Chandrakant More, G card as well as Power of Attorney holder of M/s Primus Logistics Pvt. Ltd., was recorded on 30.12.2022 under Section 108 of Customs Act, 1962 wherein he inter-alia stated that the business of import & Export clearance was very less in their firm, so they were searching importer and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ile Bill of Entry on its behalf and represent it before the Customs and other allied agencies to complete all the documentation formalities up to the delivery of the import consignment. The Bill of Entry was filed on June 2013 after obtained this authorization. 13. Learned authorized representative for the Revenue vehemently supported the impugned order. 14. We have considered the findings in the impugned order and the submissions of both sides. The first defence of the appellant before the Commissioner was that the SCN does not state either that it had not obtained an authorization or that having obtained, it failed to produce it before the Assistant Commissioner or Deputy Commissioner when he asked for it. The impugned order also does not show that the SCN does, indeed, state that the appellant had not obtained an authorization or that having obtained, it failed to produce before the Deputy Commissioner or Assistant Commissioner. Learned authorized representative for the Revenue also could not show us that this was the allegation anywhere in the SCN. It is our considered view that the impugned order could not have gone beyond the SCN; it was a specific point of defence by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er had imported the goods which were not declared in the Invoices/Packing List, on the basis of which the Bill of Entry was filed by the CB firm; that there is no allegation or evidence that the CB firm or any of its employees were aware of any such mis-declared goods and the fact remains that the CB firm and its employees had come to know about the mis-declaration only at the time examination of the goods by the department; that the evidence on record in the form of statements recorded under section 108 of the Customs Act, 1962 confirm that the CB firm or its employees were not aware of any mis-declaration of the goods; that if the importer without the knowledge of the CB imports prohibited goods, the CB cannot be expected to give any advice, as advise can be given only in respect of the declared goods; that the goods declared in the invoices were not violating any provision of the Policy and there is no allegation that the CB firm mis-classified the same and thus the question of failing to give advice does not arise; that there is no evidence in the form of statement of the importer/freight forwarder or any other person or any corroborative evidence to prove that we, the CB, as t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orting documents i.e. Invoice, Packing List Bill of Lading etc. from Sh. Dhirendra Shukla, Proprietor of M/s Shree Ram logistics, a freight forwarding company that gave them business for import clearance; that it was their mistake that in greed of business neither they asked about actual Proprietor of importer i.e. Sh. Lalit Kumar Chaurasia nor they verified KYC Properly. (v) I further observe that the instant case involves mis-declaration for import of goods done in a very planned and meticulous way by the aforesaid Importer involved; that the declarations and supporting documents such as commercial invoices etc. filed before the Customs authorities were false in every respect. In this regard, I find that it was the responsibility of the CB to advise their client about the importance of authenticity and truthfulness of the documents filed before the Customs Authorities. I find that the CB did not fulfill their obligations as envisaged in the CBLR, 2018 inasmuch as they did not advise their client M/s Trishaa Overseas to comply with the provisions of Section 46 (4) of the Customs Act, 1962 wherein the importer while presenting a bill of entry shall at the foot thereof make....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... non-compliance bring the matter to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs. Regulation 10(e) requires the Customs Broker to ascertain that the information which he imparts to the client i.e., the importer or exporter is correct. Nothing in the finding of the Commissioner establishes that the appellant had not advised the importer or that the appellant was aware that the importer was violating any provision or Acts or Rules and had not brought to the knowledge of the Assistant Commissioner/ Deputy Commissioner. 23. The finding in the impugned order that the appellant had violated Regulation 10(d) is based on statements recorded of the persons under section 108 of the Customs Act, 1962 which are not relied upon in the show cause notice issued under these proceedings. In our considered view, a document which has not been relied upon in the SCN cannot be used to conclude any findings against the noticee. 24. Further, even if the importer or exporter violated some provisions of the Act or Rules, it does not prove that the Customs Broker had not advised him to follow the Act or Rules. It is perfectly possible that despite the advice of the Custo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e genuineness of the importer not existing at the given address more so when the importer was already registered with J.N. Customs House and the business of clearance was received through a known intermediary; that they have obtained authorization as well as KYC documents; that the CBLR do not mandate physical verification of the importer's/exporter's premises and thus there is no violation of Regulation 10(n) and thus the allegation is required to be dropped and prayed accordingly. (iii) I find that the Inquiry Officer in inquiry report dated 02.11.2023 had observed that the Customs Broker during the investigation inter alia submitted that they didn't verify the address of importer physically; that after online verification of IEC and GSTIN, the said importer seemed Genuine to the CB; that no one from their office knew the importer and never met him; that they filed the Bill of Entry No. 9655434 dated 21.07.2022 on the basis of documents received from the proprietor of freight forwarding company namely M/s Shree Ram Logistics; that the CB admitted their mistake that in greed of business neither they asked about the actual importer nor did they verify KYC properly. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ics on a consideration of Rs. 20,000/- per month and the said consignment actually belongs to some other person namely Mr. Rizwan. Further, Shri Mehul More, G Card of CB firm in his statement dated 30.12.2022 recorded under Section 108 of the Customs Act, 1962 admitted that for filing of BE No. 9655434 dated 21.07.2022, they received all the documents from Shri Dhirender Shukla and in greed of business neither they asked Shri Dhirender Shukla about the actual importer nor they verified KYC properly. He further submitted that they checked only GSTIN and IEC of the importer online before filing the said Bill of Entry. (vii) Although, I find that various KYC documents have now been produced by the CB vide their letter dated 25.01.2024 but those documents are not time sensitive in the sense that they did not by themselves indicate whether they were taken before the import, at the time of the import or thereafter. However, in view of confessional statement dated 30.12.2022 of Shri Mehul More, G Card and Power of Attorney holder of the CB, I am of the considerate view that it is evident that the CB has violated the provisions of the Regulation 10(n) of the CBLR, 2018 by not iden....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CHALR-04 : "13. Obligations of Customs House Agent. - A Customs House Agent shall - (a) obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs; (b) transact business in the Customs Station either personally or through an employee duly approved by The Deputy Commissioner of Customs or Assistant Commissioner of Customs; (c) not represent a client before an officer of Customs in any matter to which he, as an officer of the Department of Customs gave personal consideration, or as to the facts of which he gained knowledge, while in Government service; (d) advise his client to comply with the provisions of the Act and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs; (e) 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; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ient with reference to any work related to clearance of cargo. Clause (l) requires that all documents submitted, such as bills of entry and shipping bills delivered etc. reflect the name of the importer/exporter and the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dents to take appropriate action. Furthermore, the inquiry report revealed that there was no delay in processing the documents by the appellant under Regulation 13(n). 13. This Court in Ashiana Cargo Services v. Commissioner of Customs (I&G) - 2014 (302) E.L.T. 161 (Del.) has inter alia held : "...... 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 Regulation 13 ("Obligations of CHA") or elsewhere, leads to the revocation of license; rather, in line with a proportionality analysis, only grave a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has been committed in so many consignments over a long period of time and the same could not have happened without the connivance of the CHA'. The revocation of the license was again informed by the fact of connivance (i.e. mens rea as to the infraction) of the CHA. In Eagle Transport (supra), the CHA transferred the license altogether. As the CESTAT noted, '... the activities of the appellant firm were controlled day to day, not by Shrimankar but by employees of Amol Shipping Agency. We do not see how this does not amount to transfer of the licence in all but name. Hence, we must hold that the first and second articles of charge have been rightly held as proved.' Moreover, more than 100 blank shipping bill forms were sent to a third-party. Following these aggravating factors, the penalty of revocation was justified by the CESTAT. Similarly, in HB Cargo (supra), relied upon by the majority of the CESTAT, the case did not concern any ordinary infraction of the CHA Regulations, but 'an act of corruption', where blank shipping bills were issued by the partner and authorized representative of the CHA for a consideration of Rs. 150 per shipping bill. 11 Vie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nate penalty. Neither extreme is to be encouraged. In this case, in view of the absence of any mens rea, the violation concerns the provision of G cards to two individuals and that alone. A penalty of revocation of license for this contravention of the CHA Regulations unjustly restricts the appellant's ability to engage in the business of the CHA for his entire lifetime. As importantly, it skews the proportionality doctrine, substantially lowering the bar for revocation as a permissible penalty, especially given the dire civil consequences that follow. On the other hand, the minority Opinion of the CESTAT, delivered by the Judicial Member, correctly appreciates the balance of relevant factors, i.e. knowledge/mens rea, gravity of the infraction, the stringency of the penalty of revocation, the fact that the appellant has already been unable to work his license for a period of 6 years (now 8 years), and accordingly sets aside the order of the Commissioner dated 24-1-2005..." 14. Any act to defraud presupposes the intention to obtain something fraudulently. In the present case, the appellant (through its proprietor) has all along contended that the documents were filed unauth....