Custom, Excise & Service Tax Tribunal
Jaiswal Import Cargo Services Ltd vs Commissioner Of Customs Airport & ... on 2 January, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
New Delhi
PRINCIPAL BENCH - COURT NO. 4
Customs Appeal No. 50251 Of 2024
[Arising out of OIO No. 18/ZR/Policy/2024 dated 23.02.2024 passed by the
Commissioner of Customs (Airport & General), New Delhi]
M/s Jaiswal Import Cargo Services Limited : Appellant
Block 'M', RZ-81B, Chanakya Place, Part-II
Opp, C-1, Janakpuri, New Delhi
Vs
Commissioner of Customs, Airport & : Respondent
General, New Delhi New Customs House, Near IGI Airport, New Delhi APPEARANCE:
Ms. Vidushi Shubham, Advocate for the Appellant Shri Mukesh Kumar Shukla, Authorized Representative for the Respondent CORAM :
HON'BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL) HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) FINAL ORDER No. 50014/2025 Date of Hearing:17.10.2024 Date of Decision:02.01.2025 HEMAMBIKA R. PRIYA The present appeal has been filed by M/s Jaiswal Import Cargo Services Limited1 to assail the OIO No. 18/ZR/Policy/2024 dated 23.02.2024 wherein the Commissioner has upheld the violations under Regulation 10(b), Regulation 10(d) & 10(n) of CBLR, 2018, and vide the impugned order revoked appellant's license, forfeiting security deposit and imposing penalty.
1 The appellant 2 Customs Appeal No. 50251 Of 2024
2. The brief facts of the case are that the appellant is a Customs Broker having CB License No. R-81/DEL/CUS/2006 issued by the Commissioner of Customs (Airport & General), New Delhi. A specific intelligence was developed by the Office of the Commissioner of Customs(P), Head Quarter Intelligence Unit, R& I Division, NCH, Mumbai that M/s. Tanu Trading (IEC-AMCPGS448G) had imported certain cosmetic items vide warehousing Bill of Entry No. 3673416 dated 09.12.2022, showing their intention for re-export of the goods under Section 69 of the Customs Act, 1962. However, instead of depositing the said goods in the bonded warehouse, the said goods were being diverted to local market for home consumption. The officers visited the custom bonded warehouse (NSAIU131) of M/s.
Akshay Logistics where the subject imported goods were destined for deposition, but the goods were not found. Meanwhile, vide letter F. No. GEN/CB/292/2023-CBS-0/ PR COMMR-CUS-GEN-Zone-1-Mumbai dated 25.05.2023 was received forwarding an offence report dated 09.05.2023, for taking appropriate action against the appellant along with the investigation report dated 06.07.2023. Accordingly, the CB license was suspended vide order-in-original No. 36/ZR/Suspension/Policy/2023 dated 16.06.2023 under Regulation 16(1) of the CBLR, 2018. A show cause notice dated 04.09.2023 was issued to the CB and on receipt of the Inquiry report dated 28.11.2023, and vide the impugned order dated 23.02.2024, the CB license was revoked. Being aggrieved by the said order, the appellant has filed the present appeal.
3. Learned counsel for the appellant submitted that the Appellant's role was limited to filing of B/E for warehouse upon submission of 3 Customs Appeal No. 50251 Of 2024 Triple Duty Bond with security duly executed by Importer, in the bond section. Since, there was neither assessment nor examination of the goods as B/E was RMS facilitated, an automatic out of charge from customs was given by the system. After out of charge, goods were handed over to the employee of Importer at the gate of CFS Apollo Logi solutions Limited. Later, it was informed by Dilip Shelar about depositing of the goods the bonded warehouse, which was supported by documents. Consequently, there was no doubt that the goods had been deposited. The ld. Counsel mentioned that the others involved have accepted their respective roles in the fraudulent diversion of goods and none of them has stated name of the Appellant alleging any connivance of the appellant in any manner whatsoever. It was revealed that two persons namely Akshay Padhale, Warehouse Operator and Mohammad Imran Ibrahim Shaikh were the mastermind and that Mohammad Imran Ibrahim Shaikh had used the documents of Sh. Amol Ghare in seeking IEC and KYC documents in the name of M/s Tanu Trading. The manner of illicit activity had been admitted by Akshay Padhale and Mohammed Imram Ibrahim Shaikh, in their respective statements. The statements of Shri Kishor Ramchandra Parhad, alias Shri Babu Wadkar, who had handed over the KYC and import documents to the employee of the appellant and submitted the fake warehousing certificate to the bond section of the Commissionerate; Shri Babu B Ithape: Shri Shekhar S. Bodake, who had visited CFS Apollo; Shri Sunil Dubey, driver of vehicle who had transported the goods from CFS Apollo to the warehouse; Smt. Tabassum Begum Shaikh, warehouse keeper of MTS Warehouse, wherein 22 cartons were stored; Shri Akshay Phadale, who had 4 Customs Appeal No. 50251 Of 2024 received the goods at the gate of CFS Apollo and carried the same to the warehouse and obtained a fake warehousing certificate from the keeper of the warehouse; Shri Sagar Bangar, the warehouse manager of public bonded warehouse; Shri Amol Jalindar Ghare, proprietor of Importer and Mohammad Imran Ibrahim Shaikh, who was beneficial owner of the instant illicit goods have accepted their roles but none of them have stated that the appellant had any knowledge about the instant illegal diversion of the goods.
3.1 The Learned Counsel further submitted that the Commissioner has given clear finding that Dilip Shelar was H-card Holder of the CB and has attended the customs formalities however, has given adverse finding that all customs formalities were not completed by him and it has been held that one Babu Ithape has approached the dock officer for clearance of the goods. It is submitted that the instant Bill of entry was filed after obtaining Triple duty Bond with surety, duly executed by the Importer, which was handled and submitted to the bond section of the Commissionerate by Dilip Shelar, H-Card Holder. Further, the bill of entry was registered under RMS informed vide ICEGATE's email dated 12.12.2022 @ 7:05pm and no assessment and examination as per RMS was prescribed for the consignment and therefore, the goods were directly allowed for warehousing and Out of Charge was given on 13.12.2022 and after out of charge, goods were handed over to the employee of Importer at the gate of CFS Apollo. It is pertinent to mention here that CB's role was limited to only filing of the B/E and he was not authorized by Importer to deposit of the goods in the warehouse and thus, the employee of the importer i.e. Balu Ithape collected the goods. Therefore, observation of Ld. Respondent that the 5 Customs Appeal No. 50251 Of 2024 Appellant did not attend the customs clearance is perverse and unreasoned.
3.2 The Learned Counsel further contended that the Regulation 10(d) stipulates that "a Customs, Broker shall advice 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, as the case may be". It has been wrongly held that the Appellant did not advice the importer about requirement of NOC from drug controller for import for home consumption. The warehousing Bill of entry for re-export purpose was filed as there was no NOC by the Drug Controller at the time of Import. However, when NOC from the Competent Authority was duly available at the ICEGATE, the Appellant submitted the copy of Release Order status print out pertaining to the B/E No.3673416 dated 09.12.2022 from ICEGATE. The Ld. Counsel contended that the same was rejected by the adjudicating authority on the ground that "the appellant neither produced the said NOC before the Investigating Authorities nor did he produce the same before the Inquiry Officer. As there has been no evidence that the appellant was involved, hence, the confirmation of violation of Regulation 10(d) was wrong and unsustainable.
3.3. The Ld. counsel for the appellant further submitted that the appellant had filed warehousing bill of entry for re-export purpose, as whenever goods are found to be restricted in nature or lack some compliance to Customs Act or Regulations, the goods can be re- exported back to the same supplier or to a third country. Thus, for such process, the goods are filed under warehouse on triple duty bond 6 Customs Appeal No. 50251 Of 2024 and when the importer has found a foreign buyer, a shipping bill is filed to that extent. In the same manner, the Warehousing Bill of Entry No. 3673416 dated 09.12.2022 was filed by the Appellant and "For re- export Purpose" was mentioned against all item entries. There is no separate bill of entry for re-export and thus, warehousing bill of entry is only filed of re-export purpose. Further, as the importer had not found a third country buyer, no shipping bills was filed in this regard. Therefore, the allegation pertaining to violation of Regulation 10(d) is completely baseless and whimsical and needs to be set-aside. 3.4 Learned counsel further contended that as regards the Regulation 10(n) of the CBLR, 2018, the Appellant had duly verified the antecedent and correctness of IEC, KYC documents, GST and other documents of the clients from government's official websites before taking up the assignment of clearance of the goods. Further, there is no requirement of physical verification of the importer by the CB under CBLR, 2018. He further contended that neither the SCN nor the impugned order has alleged that the Appellant had the knowledge of said activity and therefore, any contravention which has occurred after the clearance of the goods cannot be attributed to the CB thus, no violation of CBLR, 2018 can be invoked in such cases. 3.5 Learned counsel further submitted that there is a finding that the appellant might have been cheated by the H-card holder, but only because there was alleged delayed response to the customs, does not form a ground for revocation of CB license, as there is no finding that the Appellant in connivance with Dilip Shelar has acted in this manner. Moreover, the diversion of goods took place on 13.12.2022 right after clearance and the cancellation of H-card has not affected the said 7 Customs Appeal No. 50251 Of 2024 investigation in any manner. Therefore, the said finding is vague and ambiguous and cannot be assailed to sustain revocation CB license. In support of, learned counsel relied upon the following judgements:-
M/s R.P. Cargo Handling Services V. Commissioner of Customs (I&G), New Delhi2 Buhariwala Logistics V. Commissioner of Customs (I&G), New Delhi3 Him Logistics Pvt. Ltd. Vs. C.C. New Delhi4 Classic Strips Ltd. v/s Commissioner of Customs & Central Excise, Thane -II5
4. Learned Authorized Representative for the Department supported the impugned order and submitted as under:-
(i) Regulation 10(b) Partial Compliance: Learned AR submitted that the Customs Broker had failed to ensure that all customs transactions were conducted either personally or through an authorized employee approved by customs authorities, as stipulated in Regulation 10(b) and the arrangement between the CB and an individual named Shri Dilip Shelar did not meet the criteria of an employer-employee relationship, as no salary was paid, indicating a violation of Regulation 10(b). While the CB claimed that Shri Dilip Shelar was an employee, the evidence presented was contradictory, raising doubts about the nature of their relationship. The Customs Broker allowed another individual, Balu Ithape, to be involved in customs clearance activities, which violated Regulation 10(b).
(ii) Regulation 10(d) Non-Compliance: The Learned AR submitted that the appellant failed to advise the importer to comply 2 Customs Appeal No. 50490 of 2019 3 2016 (331) E.LT. 633 (Tri. - Del.) 4 2016 (338) ELT 725(Tri. Del.) 5 2016 (339) ELT 144 (Tri. - Mum.) 8 Customs Appeal No. 50251 Of 2024 with provisions of relevant Acts and regulations, such as the Drugs and Cosmetics Act, 1940, and the Cosmetic Rules 2020, as required by Regulation 10(d). He submitted that the import of cosmetics without obtaining necessary certificates and declarations constituted a violation of customs regulations, and the CB's failure to ensure compliance with these regulations amounted to a breach of Regulation 10(d).
(iii). Regulation 10(n) Non-Compliance: The Learned AR submitted that the appellant failed to verify the correctness of the Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), and identity of the client using reliable, independent, authentic documents, data, or information, as mandated by Regulation 10(n). The Customs Broker's lack of physical verification of the importer and reliance on third parties for KYC documents demonstrated non-compliance with Regulation 10(n).
5. Learned AR further contended that the Customs Broker's actions in the instant case revealed a failure to fulfill the obligations mandated under Regulations 10(b), 10(d), and 10(n) of the Customs Brokers Licensing Regulations, 2018. Despite evidence of violations, the appellant attempted to defend their actions, but contradictions in statements and evidence raised doubts about the appellant's credibility and compliance. The purpose of granting a license to a customs broker is to ensure responsible and compliant conduct while facilitating import and export transactions, which the CB failed to uphold in this case. Overall, the department argues that the CB's actions amounted to serious violations of customs regulations, compromising the integrity of the customs clearance process and necessitating appropriate 9 Customs Appeal No. 50251 Of 2024 disciplinary action. In support of his submissions, learned AR relied upon the following decisions:-
Baraskar Brothers vs. Commissioner of Customs (General), Mumbai6 Commissioner of Customs vs. K.M. Ganatra7 Commissioner of Customs, Jaipur vs. Naresh Kumar Meena 8 Jasjeet Singh Marwah vs. Union of India9 Skytrain Services vs. Commissioner of Customs (Airport & General), New Delhi10
6. We have heard the Ld Counsel and the Ld AR for the department and perused the case records. The issue before us is whether the alleged violations are serious and require revocation of the CB license.
7. The impugned order has revoked the CB licence holding that Regulation 10(b) (partial), 10(d) and 10(n) of the CBLR, 2018 have been violated.
8. As regards the partial violation of Rule 10(b), we note that the impugned order holds that by allowing Sh Babu Ithape to approach the Docks officer for examination of goods, the appellant had intentionally or unintentionally run afoul of Regulation 10(b) of CBLR. In this context, we note that the Ld. Counsel submitted that the appellant's role was limited to only filing of the B/E and he was not authorized by Importer to deposit of the goods in the warehouse and thus, the employee of the importer i.e. Balu Ithape collected the goods. We note that Imran Ibrahim Shaikh in his statement dated 1.6.23 has admitted that the appellant CB was not attending the further customs clearance 6 2009 (244) ELT 562 7 2016-TIOL-13-SC-CUS 8 2018 (360) ELT 60 (Raj.) 9 2009 (239) ELT 407 (Del.) 10 2019 (369) ELT 1739 (Tri.-Delhi) 10 Customs Appeal No. 50251 Of 2024 formalities, hence the documents were handed over to Babu Ithape for clearance. This statement corresponds with what the appellant has submitted. A plain reading of the said Regulation, it is apparent that the Customs Broker is required to transact the business at the Customs Station either personally or through his authorized employer. That requirement stands fulfilled as Sh Dilip Shelar, who handled the documents was an employer of the appellant. Further, it has been submitted that his responsibility ended with filing of documents which stands corroborated by the statement of Imran Sheikh. Hence, the conclusion arrived at by the adjudicating authority that the appellant has unintentionally or intentionally violated 10(b) is not correct. Consequently, we hold that there is no violation of Regulation 10(b).
8. Regulation 10(n) requires the CB to advise his client to comply with the provisions of the Act, other Allied Acts and rules and any non- compliance would have to be reported to the Assistant/Deputy Commissioner of Customs. The impugned order notes that NoC was required from the Drug Controller and a declaration under Rule 19 of the Cosmetics Rules, 2020, which the CB did not advise his client at the time of import of the goods viz., Cosmetics. The Ld Counsel has submitted before us that the importer had been advised regarding the requirement of the NoC and it is on record that the said NoC was subsequently obtained from the Competent authority. It was further submitted that the goods had been released based on the said NoC. We find that the appellant had filed the Bill of Entry for Warehouse for re-export purpose, as is evident from the copy submitted before us. This clearly evidences that the appellant was aware that as the NoC 11 Customs Appeal No. 50251 Of 2024 was not available for the imported goods, hence the goods could not be cleared for home consumption. It has also been submitted before us that subsequently, the said goods were released as the NoC for all the 133 items imported vide the said Bill of Entry. Further, we take note of the fact that the said Release Order was received from the Competent Authority after the personal hearing held by the Inquiry Officer appointed under CBLR, 2018 It is on record that the goods had received the required NoC. The impugned order has concluded that the appellant was not clear whether the B/E had been filed under Section 69 or Section 59 of the Customs Act. This cannot be the reason for revoking the CB license. The appellant filed the B/E as per procedure and same has been subsequently cleared by the Customs Department. We note that as per section 146 of the Customs Act, the role of a Customs Broker is related to the business of import or export of the goods. The obligation of the appellant was only to facilitate clearance of goods for warehousing at the Customs port. Admittedly, the appellant was not responsible for the deposition of the goods to the warehouse. We also note that the persons controlling the importer firm had acted on their own accord to defraud the revenue, and there is no allegation or evidence that the appellant had advised or aided their nefarious activity. In this context, we take support of the Supreme Court's judgment in Collector of Customs, Cochin vs Trivandrum Rubber Works Ltd., [1999 -2-SC 553] wherein the Hon'ble Court held that the Customs Broker is an agent for only limited purpose of arranging release of goods and once the goods are cleared, he has no further function and he is not liable for any action of the importer. 12
Customs Appeal No. 50251 Of 2024 Accordingly, we find that there was no violation of Regulation 10(n) of CBLR, 2018.
9. We find that the impugned order has also held that the appellant had violated Regulation 10(n) of the CBLR, 2018. It is an admitted fact that the appellant submitted the KYC documents pertaining to the importer such as IEC, GSTIN, Axis Bank letter regarding the AD code, copy of the PAN and Aadhar card of the proprietor Importer. There is nothing on record that these documents have been proved to be fraudulent or fake. It has been repeatedly held that there is no legal requirement of the CB to physically verify the premises and verification of the government issued documents can be verified from the portal. This has been done by the appellant. We note that the Delhi High Court in a similar case, (CUSAA No. 2/2022) and vide judgment dated 25.09.2023 in the case of D S Cargo Agency vs Commissioner of Customs, New Delhi, held as follows:
"18. The aforesaid Regulation requires the Customs Broker to verify the identity of his client, which includes the identification documents as well as the information provided by the client. 18.1. The Commissioner and the learned Tribunal have held that the Appellant failed to verify the identity of the importer firms and the antecedents of Mr. Sanjeev Maggu with whom the Appellant had dealt with and exchanged the documents for filing before the Customs Station. The Commissioner concluded that since the KYC documents provided by the importer firms were forged, an early 13 Customs Appeal No. 50251 Of 2024 detection by Customs Broker could have prevented the evasion of customs duty.
18.2. The Appellant has stated that he relied upon the result of verification of the original Importer Exporter Code (hereafter 'IEC'), which were mandatorily supplied on the functional address of the importer. It is stated that the IEC number was duly verified by the Appellant from the website of Directorate General of Foreign Trade (hereafter 'DGFT') and found the same to be valid. The IEC number was standing in the name of the importer firms and the physical addresses mentioned therein duly matched with the declared address furnished by the importer firms. The said fact of valid IEC has not been disputed by the Respondent. 18.3. In this regard, it would be relevant to refer to the judgment of a Coordinate Bench of this Court in Kunal Travels (Cargo ), wherein this Court held that when an importer firm holds an IEC, there is a presumption attached that the KYC of the importer by physical verification of the address would have been done by the Customs authorities. The relevant portion of the judgment in Kunal Travels (Cargo ) (supra) reads as under:
"12. Clause (e) of the aforesaid Regulation requires exercise of due diligence by the CHA regarding such information which he may give to his client 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 14 Customs Appeal No. 50251 Of 2024 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 mentioned, there is a presumption that an appropriate background check in this regard i.e. KYC etc. would have been done by the customs authorities. There is nothing on record to show that the appellant had knowledge that the goods mentioned in the shipping bills did not reflect the truth of the consignment sought to be exported. In the absence of such knowledge, there cannot be any mens rea attributed to the appellant or its proprietor. Whatever may be the value of the goods, in the present case, simply because upon inspection of the goods they did not corroborate with what was declared in the shipping bills, cannot be deemed as mis-declaration by the CHA because the 15 Customs Appeal No. 50251 Of 2024 said document was filed on the basis of information provided to it by M/s. H.M. Impex, which had already been granted an IE Code by the DGFT. The grant of the IE Code presupposes a verification of facts etc. made in such application with respect to the concern or entity. If the grant of such IE Code to a non- existent entity at the address WZ-156, Madipur, New Delhi - 63 is in doubt, then for such erroneous grant of the IE Code, the appellant cannot be faulted. The IE Code is the proof of locus standi of the exporter. The CHA is not expected to do a background check of the exporter/client who approaches it for facilitation services in export and imports. Regulation 13(e) of the CHALR 2004 requires the CHA to "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" (emphasis supplied). The CHAs due diligence is for information that he may give to its client and not necessarily to do a background check of either the client or of the consignment. Documents prepared or filed by a CHA are on the basis of instructions /documents received from its client /importer /exporter. Furnishing of wrong or incorrect information cannot be attributed to the CHA if it was innocently filed in the belief and faith that its client has furnished correct information and veritable documents. The misdeclaration would be attributable to the client if wrong information were deliberately supplied to the CHA. Hence there could be no guilt, wrong, fault or penalty on the appellant apropos the contents of the shipping bills. Apropos any doubt about the issuance of the 16 Customs Appeal No. 50251 Of 2024 IE Code to M/s. H.S. Impex, it was for the respondents 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)."
(Emphasis supplied) 18.4. The Appellant has stated that there is no dispute that importer firms exist and they have participated in the investigation conducted by DRI. It is stated that the fact that these firms are dummy firms which are controlled by third parties was a fact which was not within the knowledge of the Appellant while he was initially dealing with the said firms for clearance of cargo; and was a fact which came to his knowledge subsequently after the goods had already been cleared by the Customs Station. 18.5. Appellant also states that the reliance placed by the Commissioner on the statement of Mr. Lalit Dongra is not justified since the Aadhar Card which is alleged to have been forged has not been placed on record.
19. A perusal of the written submissions filed by the Respondent would show that the Respondents have found the Appellant 'negligent' in verifying the KYC documents of the importer firms as he failed to obtain the requisite KYC documents and/or verify the documents made available to him by the importer firms.
20. This Court has perused the record. In the facts of this case, there is no allegation of impersonation in the name of importer 17 Customs Appeal No. 50251 Of 2024 firms. The finding of DRI is that these importer firms were not being run and operated by the persons in whose name the importer firms were incorporated. The allegation is not that these firms are fictitious and do not exist. The finding is that these firms are being run and remotely controlled by Mr. Sanjeev Maggu and Mr. Ramesh Wadhera. The Regulation requires the Customs Broker to verify the identity of the client (i.e., importer firms) and in the facts of this case since the clients (i.e., importer firms) exist as is evident from the functionality of the IEC (as discussed above), it is not possible to hold that there has been a blatant violation of this Regulation, which would justify the revocation of CB license."
10. In the instant case, the KYC documents submitted by the appellant are all valid documents. There is no other requirement under Regulation 10 (n) which remains to be fulfilled by the appellant.
11. In view of the above, we hold that the revocation of CB license by the Customs authorities is not sustainable, and impugned order is set aside with consequential benefit, if any. Accordingly, the appeal is allowed.
(Order pronounced in the open Court on 02.01.2025) (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) G.Y.