TaxTMI 
TaxTMI 
2024 (8) TMI 1746
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....in exercise of powers conferred upon him under Regulation 17 (7) of the Customs Brokers Licensing Regulations, 2018 (CBLR) had passed an order for revocation of the CB license issued to the appellants for acting as a Customs Broker under Regulation 14 ibid and for forfeiture of entire security deposit furnished by the appellants. This order is the result of adjudication process of Show Cause Notice (SCN) No. 61/2022-23 dated 31.03.2023, seeking action against the appellants CB. The impugned order dated 07.12.2023, has been passed 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. 40/CAC/PCC(G)/SJ/CBS Adj. dated 27.09.2023, 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. Being aggrieved against the impugned order, the appellants have filed this appeal being No. C/85137 of 2024 before the Tribunal. 2.2 While the inquiry proceedings, which have culminated into the order of learned Princ....
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.... The appellants were one such CB who had filed eight S/Bs for the exporter Smart International, in the past involving over valuation of export goods. From the investigation conducted by the SIIB(X) and offence report in the form of SCN dated 15.11.2022 received from SIIB(X), the jurisdictional Principal Commissioner of Customs (General), Mumbai-I had concluded that there is a prima facie case against the appellants for having contravened Regulations 10(d), 10(e) and 10(f) of CBLR, 2018. Accordingly, they had initiated show cause proceedings by issue of notice No. 61/2022-23 dated 31.03.2023 for initiating inquiry proceedings under Regulation 17 ibid, against violations of CBLR as above. 2.4 Upon completion of the inquiry, a report dated 13.10.2023 was submitted by the Inquiry Authority concluding that all charges framed against the appellants for violation of Regulations 10(d), 10(e) and 10(f) of CBLR, 2018 have been held as 'proved'. Accordingly, the Principal Commissioner of Customs (General), Mumbai, being the licensing authority had conducted the adjudication of the case, by offering a personal hearing to the appellants on 03.11.2023 and passed the impugned order dated ....
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....ipal Commissioner himself had initially revoked the suspension ordered under Regulation 16(1) ibid vide Order dated 10.03.2023. He further stated that for all 8 S/Bs, the appellants have filed the declarations as per the documents provided by the exporter; they do not have anything with respect to valuation of export goods. Further, all the exports in 8 S/Bs have been duly assessed by the Customs officers and Let Export Order permitting such exports were given for export to Mauritius under Section 51 of the Customs Act, 1962. Hence, there is no case made out by the Customs on the basis of the evidence collected from Dubai Customs authorities. He also submitted that in 3 S/Bs, drawback had not even been claimed by the exporter. In addition to this, he submitted that neither the value of the export goods has not been conducted in terms of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 nor any market inquiry was conducted to substantiate the claim of over valuation by the department. He further stated that the entire export value has been received by the exporters as realization of export proceeds duly evidenced by the DGFT's Statement of Bank Realization. ....
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....s (General) in the impugned order and submitted that all the violations under Regulation 10 ibid, has been examined in detail by the Principal Commissioner. Thus, learned AR justified the action of Principal Commissioner of Customs (General) in deemed revocation of the appellant's CB license, as well as fresh revocation of the CB license in another case and for imposition of penalty, forfeiture of security deposit in the impugned orders and stated that the same are sustainable in law. 5. We have heard both sides and perused the case records. 6.1 The issue involved herein is to decide whether the appellant Customs Broker has fulfilled all his obligations as required under CBLR, 2018 or not. The specific sub-regulations which were alleged to have been violated by the appellants are Regulations 10(d), 10(e), 10(f), 10(k) and 10(n) of CBLR, 2018, and hence there are certain distinct charges framed against the appellants in both cases. We find that the Regulation 10 ibid, provide for the obligations that a Customs Broker is expected to fulfill during their transaction with Customs in connection with import and/or export of goods. These regulations are extracted and given below as ....
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....icating authority had passed the impugned orders confirming all the allegations of violation of above Regulations of CBLR, 2018. 7.1 Before we examine the allegations of violation of various Regulations under CBLR against the appellants, firstly we would like to examine the specific impugned order dated 07.12.2023 passed by the learned Principal Commissioner of Customs (General) to see whether it is in compliance with the legal provisions. This is for the reason that when the CB license of the appellants CB was already revoked and the entire security deposit has also been already forfeited earlier vide Order-in-Original No. 40/CAC/PCC(G)/ SJ/CBS Adj. dated 27.09.2023, for which an appeal has also been filed by the appellants in C/87232/2023 and the same was pending disposal before this Tribunal, can there be another order for the same effect be passed as per Customs statute. In this regard, we find that Regulations 17 ibid provide for the detailed procedure in conduct of regular inquiry against the CB in terms of CBLR, 2018. The extract of the same is given below: "Regulation 17. Procedure for revoking license or imposing penalty : - (1) The Principal Comm....
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....f Customs, as the case may be, and shall require the Customs Broker to submit, within the specified period not being less than thirty days, any representation that he may wish to make against the said report. (7) The Principal Commissioner or Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs Broker, pass such orders as he deems fit either revoking the suspension of the license or revoking the license of the Customs Broker within ninety days from the date of submission of the report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, under sub-regulation (5): Provided that no order for revoking the license shall be passed unless an opportunity is given to the Customs Broker to be heard in person by the Principal Commissioner of Customs or Commissioner of Customs, as the case maybe. (8) Where in the proceedings under these regulations, the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, comes to a conclusion that the F card holder is guilty of grounds specified in regulation 14 or incapacitated in the meaning of the ....
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....mitted (iii) Inquiry officer to take into account all necessary evidence, oral or documentary for ascertaining the correct position (iv) opportunity for cross-examination of the persons examined in support of the evidence against the CB (v) Preparation of the inquiry report containing the findings of the inquiry officer (vi) Obtaining written representation from the CB, if he wish to submit any grounds against the inquiry report (vii) Principal Commissioner of Customs to consider the inquiry report, CB's representation and provide an opportunity of personal hearing before passing an adjudication order on the inquiry proceedings (viii) Imposition of specific penalties against 'F' card holder, in case the Principal Commissioner comes to a conclusion for such imposition, duly following the procedure as above. The specific sub-regulation (7) of Regulation 17 ibid, provides the legal authority for the Principal Commissioner/Commissioner of Customs to pass such orders as he deems fit, either revoking the suspension of the license or revoking the license of the Customs Broker within ninety days from the date of submission of the inq....
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....ering the Central Government to device a schedule of rates of drawback in lieu of engaging in computation of drawback on each incident of export. It was also held by this Tribunal, in the self-same appellants case, stating it clearly that the benefit, even if 'undue', derived by the exporter is not of such gravitas as to merit revocation of license to practice a profession and, more specifically, when the licensing authority itself appears to have discountenanced proper conjecture of the provision of law that supposedly made the impugned goods offending. Accordingly, the Tribunal had set aside the Order of the Principal Commissioner in suspending the appellants CB license. 8.2 The relevant paragraphs in the said order is extracted and given below: "2. M/s Beejay Clearing & Forwarding Agency, holder of 'customs broker' licence no. 11/707, was one among the many that came under scrutiny in investigation of value of shipments undertaken by several exporters who had allegedly secured 'drawback' in excess of eligibility by furnishing unconnected invoices with inflated prices obtained from 'bogus firms' of one Suhel Ansari. Insofar as the impugned proceeding is concerned,....
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.... of customs which are episodic, prejudice continued practice of a profession. There is no allegation of 'non-export' of goods or 'misdescription of goods' or even that taxes indicated in the invoices had not been paid. 3. The foundation of the proceedings, in which the appellant has ostensibly been fastened with such overwhelming role as to warrant termination of licence to practice a profession, is the handling of three shipping bills out of thirty one consignments involving claim of Rs.3,31,000 as drawback on 'imitation jewellery' exported by M/s World Wide Export between 2012 and 2017 that relies upon statements of M/s Moize Ahmed Ali Angoothiwala, partner in the exporting entity, on modus operandi, the report from Consulate General of India (CGI), Dubai that Federal Customs Authority of United Arab Emirates intimated clearances there at lower values on import and the statement of one Suryabhan Eknath Dhurphate, proprietor of M/s Sanket Overseas and 'logistics provider', that cost and expense of export was, generally, only 35% of drawback with 65% available to them and exporter. The exporter whose consignments were handled by the appellant admitted to procuring goods fr....
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....n computation of drawback on each incident of export and, in the framing of such delegation, emplacing caveat on eligibility of products manufactured from use of exempted goods. This is evident from the contents of the impugned rule which has been only selectively extracted to afford the impression that responsibility devolved on the 'customs broker' in relation to the impugned consignment. No evidence is forthcoming that goods procured by a merchant exporter are ineligible for drawback or that only goods exported from factory of manufacture are eligible for drawback; such inference does horrible violence to the statutorily enacted contractual obligation of the State to reimburse drawback and to the delegated authority to draw up a 'schedule of rates of drawback' for sanction of claims without researching each. The framework of Central Excise Act, 1944 does not brook assumption for its own enforcement, let alone a process under Customs Act, 1962, that goods available in the marketplace are likely to have been cleared, or imported, without payment of appropriate duty; the onus devolves on the investigation agency to establish that duties had been evaded on the impugned goods and not....
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....ion of breach of obligation to exercise due diligence in ascertainment of correctness of any information furnished to the client is not founded on any information sought for by the client and not from any accusation of the client that appellant had misinformed them. Instead we find a sweeping presumption that it was owing solely to having failed to ascertain correctness of information that client was emboldened to set out in this act of overvaluation. The licencing authority also appears to have misconstrued the nature of the obligation which is not about dissemination of incorrect information but of failure to ascertain correctness of information which must, necessarily, be built upon information given, either of own volition or on request of client, that was not only not incorrect but communicated without taking steps to ascertain correctness thereof. The notice, inquiry report and impugned order are markedly lacking in such determination. Even as saving grace, there is no factual narration of any information that led to alleged overvaluation. Thus it is that regulation 10(e) of Customs Broker Licencing Regulations, 2018 has been incorrectly held as proved. 8. The allege....
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....It would appear that the intent of the obligation has been incorrectly appreciated by the licencing authority; the allegation of having breached regulation 10(k) of Customs Broker Licencing Regulations, 2018 does not sustain. 10. It has been alleged that the appellant had failed to carry out mandated antecedent checks and verification of the client and the finding of it having been proved is founded on a statement of the exporter that such verification had not been carried out. It was incumbent on the investigation to have confronted the appellant with this accusation but no attempt was made so to do. It is also surprising that after such elapse of time, the exporter was able to recall lack of physical verification even as he was unable to recollect details of purchase channel. Not only does such selective remembrance lack verifiability but also relegates its acceptability to the periphery. In the context of limited benefits derived, and none at all in the consignments handled by the appellant, by the exporter and lack of any evidence of such negligence in the part of the appellant, we are unable to accept the conclusion of not having been diligent in antecedent verificati....
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....ation 10(n) of CBLR, 2018. Thus, we do not find any legal basis for upholding the alleged violation of Regulation 10(n) ibid by the appellants in the impugned order. 9.3 We find that in the case of M/s Perfect Cargo & Logistics Vs. Principal Commissioner of Customs (Airport & General), New Delhi 2021 (376) E.L.T. 649 (Tri. - Del.), the Tribunal had decided the issue of KYC verification of the importer/exporter by the Customs broker and the requirements specified in the CBLR, 2018. "34. The basic requirement of Regulation 10(n) is that the Customs Broker should verify the identity of the client and functioning of the client at the declared address by using, reliable, independent, authentic documents, data or information. For this purpose, a detailed guideline on the list of documents to be verified and obtained from the client is contained in the Annexure to the Circular dated April 8, 2010. It has also been mentioned in the aforesaid Circular that any of the two listed documents in the Annexure would suffice. The Principal Commissioner noticed in the impugned order that any two documents could be obtained. The appellant had submitted two documents and this fact has also....
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.... within a period of 3 to 4 months interval, successively, offering personal hearing to the same appellants CB. These could only indicate that such orders have been passed in a very mechanical way, by the licensing authority. Further, the learned Principal Commissioner was aware of the ongoing inquiry proceedings in this case when he was passing the order on 07.12.2023, that a SCN has been issued on 29.03.2023 for one another case of over valuation of exports, for the same CB, even though the inquiry report was yet to be submitted. The inquiry report thereon was submitted on 22.12.2023. Thus, in terms of Regulation 17 ibid, the learned Principal Commissioner could have waited for the entire inquiry proceedings to be completed involving two separate proceedings and then pass necessary orders as provided in the CBLR. However, it is seen that despite the CB license already under suspension as on date of passing the impugned order, again one another deemed suspension to take effect from a future event and date was prescribed. As we have already observed at paragraph 7.1 and 7.2 above, there is no legal provision under CBLR for taking such action by the licensing authority. The above cas....