Custom, Excise & Service Tax Tribunal
Granada Air Services Pvt Ltd vs -Kolkata(Admn Airport) on 27 July, 2022
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
EAST REGIONAL BENCH : KOLKATA
Customs Appeal No.75410 of 2022
(Arising out of Order-in-Original No.Kol/Cus/Airport/Admn./12/2022 dated
29.04.2022 passed by Commissioner of Customs (Airport & ACC) Kolkata)
M/s Granada Air Services Private Limited
1/1A, Sambhunath Pandit Hospital Lane,Akash Building, Kolkata-700020
Appellant
VERSUS
Commissioner of Customs (Airport &Administration), Kolkata
15/1 Strand Road, Kolkata-700001
Respondent
Appearance:
S/Shri Arijit Chakraborty and R.N.Bandopadhyay, both Advocates for the
Appellant
Shri M.P.Toppo, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI SANJIV SRIVASTAVA, TECHNICAL MEMBER
HON'BLE SHRI P.DINESHA, JUDICIAL MEMBER
FINAL ORDER NO.75472/2022
DATE OF HEARING : 27.07.2022
DATE OF DECISION : 27.07.2022
Per Sanjiv Srivastava :
This appeal is directed against the Order-in-Original
No.Kol/Cus/Airport/Admn./12/2022 dated 29.04.2022 passed by the
Principal Commissioner of Customs (Airport & ACC) Kolkata. By the
impugned order, the Principal Commissioner has held as follows :
"28.1 I, hereby order for revocation of Customs Broker Licence
held by M/s Granada Air Services Pvt. Ltd., 1/1A, Sambhunath
Pandit Hospital Lane, Akash Building, Kolkata-700020, having
License No. G-67, Code No.2336 and forfeiture of full amount of
security Deposit furnished by the Customs Broker by exercising
powers conferred upon me under Regulation 14 of CBLR, 2018
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Customs Appeal No.75410 of 2022
read with Regulation 17(7) of CBLR, 2018, for violation of
Regulations 10 (d) and 10(n) of the CBLR, 2018".
2.1 The appellant herein is a Customs Broker whose Customs Broker
Licence Number is G-67, Code No.2336 issued by the Commissioner of
Customs (A & A), Customs House, Kolkata under Regulation 9(1) of
the Customs House Agent's Licensing Regulation, 2004 [Now
Regulation 7 (2) of the Customs Broker Licensing Regulation, 2018] on
07.06.2012 to transact Customs clearance work.
2.2 The appellant has filed Bill of Entries on behalf of M/s Pihu Gems
LLP for undertaking clearance of the goods as indicated in Table A, as
follows.
Table-A
Sl. No. B/E No. B/E date Goods Qty (Kg) Declared
Declaed Value
01 2309779 06.03.2019 0.400 Rs.6,46,18,046
02 2309437 06.03.2019 0.400 Rs.6,43,66,896
03 2306969 06.03.2019 "Rough 0.400 Rs.6,47,00,587
Colour
Stone
(Quartz)"
04 2307503 06.03.2019 0.400 Rs.6,47,22,161
Total 1.6 25,84,07,690
2.3 The Bill of entries filed by the Appellant on the behalf of the
importer were duly assessed in the manner as prescribed and the
goods (semi precious stones), and the goods cleared on the payment
of duty as assessed by the Custom Authorities.
2.4 Subsequently DRI undertook investigations in the imports made
by the importer and found the goods to be grossly overvalued. After
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Customs Appeal No.75410 of 2022
completion of investigations, the DRI determined the value of the
imported goods as indicated in Table B, as follows:
Table -B
Sl B/E B/E Actual Actual
Re- Re-
NO. determine determined
No. date Description Qty d unit Value
[grams] price
1. 2309779 06.03.2019 "Natural 95.77 Rs.15 Rs.1,437/-
Corundum
Non-Gem
grade"
2. 2309437 06.03.2019 100.85 Rs.15 Rs.1,513/-
3 2306969 06.03.2019 99.92 Rs.15 Rs.1,499/-
4 2307503 06.03.2019 92.62 Rs.15 Rs,1,390/-
Total 389.16 Rs.5,839/-
2.5 A show cause notice alleging importer to be indulging in trade
based money laundering by overvaluing the imported goods was
issued to the importers. Appellant Custom Broker was also made
noticee in the said show cause notice. The show cause
notice was adjudicated by the Principal Commissioner of Customs
(Airport & ACC Commissionerate) vide Order-in-Original
No.Kol/Cus/AP/Pr.Commissioner/AP/Admn/13/2021 dated 30.07.2021.
By this order, the Appellant (Customs Broker) was also penalised for
Rs.79,20,000/-.
2.6 Taking note of this order, proceedings were initiated against the
appellant for revocation of his license to function as Customs Broker.
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Customs Appeal No.75410 of 2022
This proceeding has culminated into the impugned order. Hence, the
present appeal before us.
3.1 We have heard Shri Arijit Chakraborty, Advocate along with Shri
R.N.Bandopadhyay, Advocate for the appellant and Shri M.P.Toppo,
Ld.Authorised Representative for Revenue.
3.2 Arguing for the appellant, the Ld.Counsel submits that the issue
involved in the present appeal is as indicated below :
➢ (i) The importer in the present case has been charged
for over-valuation of the imported goods and not for
under-valuation resulting into overpayment of duty. In
fact, the import undertaken by the importer, for which the
appellant had undertaken the work relating to documents
and for clearance of imported goods, were considered by
the Government approved valuers in the manner as
prescribed, who enhanced the value as declared by the
importer and also subsequently, the Customs Appraiser
had enhanced the value as determined by the valuers.
➢ This fact clearly shows that at time of assessment and
clearance of the said goods, Revenue was of the view that
the value as declared by the importer on the Bill of Entries
filed though the appellant was under-declared.
Subsequently, the DRI has sought to state that the value
was over-declared and the importer was indulging in the
Trade based money laundering.
➢ Be that as it may be the order of the Commissioner on the
notices issued for the reason that the goods have been
over-valued by the importer and for imposition of penalty
on the appellant has been challenged before the Hon'ble
High Court of Calcutta, and the order has been stayed.
➢ Appellant has undertaken the same work in respect of the
clearance of the same/ similar goods imported by another
importer, viz. M/s Discite Pvt. Ltd.. Investigations were
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Customs Appeal No.75410 of 2022
undertaken by the DRI against the said importer also and
show cause notice alleging trade based money laundering
was issued in that case also. Appellant was also made
noticee in the said show cause notice issued to M/s Discite
Pvt Ltd. This show cause notice has been adjudicated by
the Additional Commissioner of Customs, Airport & Air
Cargo Complex, Customs House, Kolkata, vide his Order-
in-Original No.Kol/Cus/Additional Commissioner/ AP/
Admin/44 dated 22.07.2021. Additional Commissioner has
dropped all charges against the appellant upon the findings
that there was no connivance or involvement of the
Customs Broker in case of trade based money laundering
alleged for the purpose of such over-valuation of the
imported goods.
➢ The license of the appellant has been revoked for the
reason that he has contravened the provision of Regulation
10 (d) & 10 (n) of Customs Broker Licensing Regulations,
2018. There has been no violation of the said Regulations
as the appellant had undertaken the complete KYC on the
basis of the information available with him from the
Government Website of GSTIN and IEC.
➢ As there was no contravention by the appellant in respect
of the said Regulation, the revocation of his license is bad
in law and cannot be sustained.
3.3 The Ld.Authorised Representative for the Revenue, reiterates the
findings recorded in the impugned order and submits that the
appellant has been found guilty of the said contravention and his
license has been correctly revoked.
4.1 We have considered the impugned order along with the
submissions made in appeal during the course of arguments. For the
revocation of license of the appellant, the Principal Commissioner of
Customs (Airport & ACC), has observed in his order as follows :
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Customs Appeal No.75410 of 2022
"23.1 In the instant case :-
i) Shri Soumen Roy of M/s Granada Air Services Pvt. Ltd.,
has consciously engaged himself and his Customs Broker
firm in smuggling of inferior quality of stones. In order to
do so, they facilitated filing of Bill of Entry with incorrect
declarations, which dis not correspond with the goods
actually imported and their respective value(s). Further,
they are also found to have influenced the valuation of the
imported stones by the Govt. approved Vauer, Shri
Abhishek Saraogi, appointed by them at the behest of Shri
Amit Bhadra alias Bubai.
ii) During the investigation, several corroborative evidences
like (a) giving intentional false declaration in the Bill of
Entry in respect of description of goods (b) submission of
false invoices, which do not match with the actual goods
found in the consignment (c) inflating the value of the
goods by influencing the Valuer, have been unearthed, as
discussed supra, which point out the complicity on part of
Shri Soumen Roy and M/s Grandada Air Services Pvt. Ltd.,
in effecting the said fraudulent imports and money-
laundering.
iii) The main office of M/s Pihu Gems LLP was found to be
non-functional/non-operational. The branch office could
not be located at the declared address. None of the two
Directors/Pariners of M/s Pihu Gems LLP appeared before
DRI against the summons issued to them.
iv) Shri Soumen Roy M/s Granada Air Servies Pvt. Ltd., in his
statement admitted that he has never met any of the
Directors/Partners of M/s Pihu Gems LLP and though the
verification of KYC is mandatory for CHA, still the KYC was
not verified physically.
23.2 In this regard, the CB submitted that:-
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Customs Appeal No.75410 of 2022
i) The instant impugned clearing job was the 3rd job, prior to that
CB undertook 1st & 2nd import clearance of same item i.e. SEMI
PRECIOUS ROUGH STONES of M/s Discite Private Ltd., Before
filing the Bill of Entry or processing the import documents, CB
duly obtained all the required documents to fulful their
obligations under the CBLR, 2018. All those documents were
verified from departmental official website by the CB and all the
documents were found to be proper and correct.
ii) They had obtained KYC and other documents of the importer
M/s Pihu Gems LLP through authorized representative of the
importer, Shri Amit Bhadra Alias Bubai („G‟ card holder) of M/s
Maxim Clearing & Shipping Forwarding Pvt. Ltd., Further, the
Customs Brokers Licensing Regulations, 2018 does not mandate
that a Customs Broker has to obtain KYC documents from the
importer/ exporter directly. It only provides that CB has to
comply with obtain KYC documents. It is also not the case that
CB had played any active role in the importation of alleged mis-
declared consignment; that Bills of Entry were filed with bona
fide belief and the CB did not have any scope of knowledge that
the goods were mis-declared in quality and/or quantity. It is the
importer who was having knowledge about the goods; that the
allegation of over-valuation of imported consignments in the
present case could not have been in the prior knowledge or
understanding of the CB. The valuation of similar import
consignments was being undertaken at the arrival of goods by
the Govt. Approved valuers in presence of SIB and Customs
Officers and there was existing contemporaneous value for the
imported consignments; that it is settled position of law that CB
cannot be held responsible for any declarations made in import
documents unless there is evidence to show that the CB had any
prior knowledge of alleged mis-declaration; that the allegation of
violation of regulation 10(d) of CBLR, 2018 against the CB does
not have any leg to stand in as much as there is no allegation
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Customs Appeal No.75410 of 2022
and/or finding that the KYC documents including authorization
were forged or incorrect in nature.
iii) Shri Amit Bhadra @ Bubai [G‟ card holder) of M/s Maxim
clearing & Shipping Forwarding Pvt. Ltd., being the authorized
representative of importer, M/s Pihu Gems LLP provided all
required documents i.e. authorization Letter from the Importer;
KYC duly filled up by the importer; Aadhar Card/ Passport of the
Directors / Proprietor/ Partners; GST registration certificate;
certificate of IE Code; PAN card; and, cancelled Cheque or Bank
Certificate of the importer; after obtaining those documents, the
CB verified the authenticity of those documents and after being
satisfied with those documents, the CB proceeded to act in filing
Bill of Entry alongwith all mandatory documents, as provided by
the importer, before the Customs Authority, After
accomplishment of clearing job, the CB reises bill for clearing job
and receives payment through Banking Channel directly from the
importer/exporter. In the instant case also, all those documents
were verified from departmental official website by the CB and
all the documents were found to be proper and correct; that the
Customs Broders Licensing Regulations, 2018 does not mandate
that a Customs Broker has to obtain KYC documents from the
importer/ exporter directly. It only provides that CB has to
comply with obtaining the KYC documents. It is also not the case
that CB had played any active role in the importation of alleged
mis-declared consignment. Therefore, allegation of contravention
of Regulation 10(n) of CBLR, 2018, is, prima facie, not
sustainable.
23.3 In this regard, the Inquiry Officer found that:-
i) Shri Soumen Roy, „G‟ Licence holder of M/s Granada Air Servifes
Pvt. Ltd., the Customs Broker, in his statement given under Section
108 of Customs Act, 1962, admitted that the CB has never been in
contact with the actual importers, never verified the identity of his
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Customs Appeal No.75410 of 2022
client and therefore, was not in a position to advise his client to
comply with the provisions of the Act. Further, the IO also found
that the CB was part of the conspiracy in collusion with Shri Amit
Bhadra alias Shri Bubai of M/s Maxim Clearing & Shipping
Forwarding Pvt. Ltd., in the subject smuggling of inferior quality
stones in the guise of imports of the "Rough coloured Stones
(Quartz)". In order to do so, they facilitated filing or Bill of Entry
with incorrect declarations, which did not correspond with the goods
actually imported and their respective values. Further, they are also
found to have influenced the valuation of the imported stones by
the Govt. approved Valuer, Shri Abhishek Saraogi, appointed by
them at the behest of Shri Amit Bhadra alias Bubai, Further, they
have also, knowingly or intentionally, submitted false invoices/
documents, which are false for the purpose of assessments and
levy of duty. Therefore, from the above facts, it is clearly
established that the Customs Broker has violated the provisions of
Regulation 10(d) of Customs Broker Licensing Regulations, 2018
inasmuch as G-Card holder of Customs Broker was himself actively
involved in the fraud and no one from the CB was ever in contact
with the exporters to advise them to with comply the provisions of
Customs Act.
ii) Shri Soumen Roy also admitted that though the verification of
KYC is mandatory for CHA, still the KYC was not verified physically.
It is also an established fact that the importer is non-existent at its
declared place of business. Further, none of the two Directors/
Partners of M/s Pihu Gems LLP appeared before DRI against the
summons issued to them. It is also established that the CB received
all the documents/ communication through Shri Amit Bhadra and
the CB was not in contact with the actual importers. These facts
clearly establish that the Customs Broker has failed to verify the
correctness of Importer Exporter Code (IEC) number, Goods and
Services Tax Identification Number (GSTIN), identity of his client
and functioning of his client at the declared address by using
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Customs Appeal No.75410 of 2022
reliable, independent, authentic documents, data or information,
thereby violated the provisions of Regulation 10(n) of Customs
Broker Licensing Regulations, 2018.
23.4 In the present case, on perusal of the Offence Report, CB‟s
submission, Inquiry Officer‟s report and facts on record and the
discussions supra, I find that the Customs Broker has violated the
provisions of Regulation 10(d) of Customs Broker Licensing
Regulations, 2018 inasmuch as G-Card holder of Customs Broker
was himself actively involved in the fraud and no one from the CB
was ever in contact with the exporters to advise them to comply
with the provisions of Customs Act. Further, the Customs Broker
has failed to verify the identity of his client and functioning of his
client at the declared address by using reliable, independent,
authentic documents, data or information, thereby violated the
provisions of Regulation 10(n) of Customs Broker Licensing
Regulations, 2018.
23.5 In view of above, I have no reason to disagree with the
Inquiry Report dated 29.01.2022 submitted by the Inquiry Officer
and find that the CB has violated provisions of Regulation 10(d) and
10(n) of CBLR, 2018.
24. Further, the CB has cited various case laws and judgements in
support of their submissions. In this regard, I find that the cited
judgements and case laws are of no help of the CB in as much as
the same were pronounced under altogether different facts and
circumstances. None of the decisions cited above have dealt with
the issue of CB being integral part of the fraud of Trade Based
Money Laundering. The case laws cited do not have an overarching,
unquestioned and blanket applicability in such cases of suspected
collusion and fraud. Such serious offences do not have sanction and
reprieve given to it by any case law. As has also been held each
and every decision of a court cannot be followed without
considering the factual background and / or the arguments
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Customs Appeal No.75410 of 2022
advanced before it. No judgement can be read as if it is a statue.
[Supreme Court judgement in the case of UOI Vs. Dhanwanti Devi -
1996 (6) SSC 44 and High Court of Calcutta in judgement of Bipin
M Pujara Vs. Commissioner of Customs 1999 (107) ELT 298 (CAL)].
Additionally, reference is also made to the judgment of Hon‟ble
Bombay High Court in the matter of Pr. Commissioner of Customs
(General), Mumbai Vs. Unison Clearing Pvt. Ltd., dated 19.04.2018,
wherein it was held that timelines under CBLR cannot be construed
to be mandatory and held to be directory.
25. Before arriving at my conclusion and delivering the present
Order, I have placed reliance, while examining the role of Customs
Broker, on observation of Hon‟ble Supreme Court of India in the
matter of Commissioner of Customs Vs. K.M. Ganatra and co, in
Civil appeal No. 2940 of 2008. The observation is as under.
"The CHA occupies a very important position in the Customs House.
The Customs procedures are complicated. The importer has to deal
with multiplicity of agencies. The importer would find it impossible to
clear his goods through these agencies without wasting valuable
energy and time. The CHA is supposed to safeguard interests of both
the importer and the Customs. A lot of trust is kept in CHP by
importers/ exporters as well as by the government agencies. To
ensure appropriate discharge of such trust, the relevant regulations
are framed. Regulation 14 of the CHA liensing regulation lists out
obligations of the CHA. Any contravention of such obligations even
without intent would be sufficient to invite upon the CHA the
punishment listed in the Regulations."
4.2 Regulations 10 (d) & 10 (n) of Customs Broker Licensing
Regulations, 2018, read as follows :
"Regulation 10. Obligations of Customs Broker - A
Customs Broker shall -
(a)........................................
(b)..........................................
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Customs Appeal No.75410 of 2022
(c)...........................................
(d) advise his client to comply with the provisions of the Act,
other allied Acts and the rules and regulations thereof, 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;
......................................................................................................................
(n) verify correctness of Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN),identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information;"
4.3 In terms of Regulation 10 (n), the appellant was required to undertake the complete KYC of the importer, on behalf of whom he is finding the documents to Customs. Admittedly, the appellant has taken such verification on the basis of the documents in respect of Importer Exporter Code (IEC), GSTIN and verified the same from the Government website. It is not the case that these have been found to be fake. These IEC and GSTIN exist at the address indicated. It has been settled in series of decisions that once the verification has been undertaken on the basis of the Government website, it is enough to comply with the requirement of Regulation 10 (n).
4.4 From the above facts as stated in the inquiry report and in the impugned order, it is quite evident that the entire case made against the appellant is on account of their failure not to properly and completely verify the antecedents of the person/ client entrusting them with the paper and consignment for import. It is now settled preposition of law that there was no need for physical visit to the premises and meeting with the client by the CB before taking the job of clearance of the goods either for import or export. Principal Commissioner has relied upon the statement recorded during the 13 Customs Appeal No.75410 of 2022 course of investigation. These statements have not been corroborated. Even the statutory documents produced by the appellant for undertaking the KYC of the importer (IEC Holder) have not been found fake during investigation. It is not even the case of revenue that these documents were not taken by the Appellant for undertaking KYC. The only allegation that has been made the ground for not complying/ discharging the obligations casted under CBLR, 2018 is that CB had not physically met and physically verified their premises. The CB was require to do the KYC on the basis of the documents prescribed. Undisputedly such KYC was done by the appellant, only what was not done was physical meeting and physical verification of the premises. In the case of Poonla & Brothers Vs. Commissioner of Customs (Preventive), Jaipur, reported in 2019 (370) ELT 1074 (Tri. Del), wherein the Hon'ble Tribunal held that:
"....................... The CHA is not supposed to verify the each and every aspect about the business of importer as the Inspector of Department or Investigating agency. From the submission made by the ld. Advocate and fact on record, it is apparent that the appellant has taken due diligence while verifying the KYC of the appellant based on the record submitted by him. We also find that the KYC is required to be done on the basis of following guidelines prescribed by the Central Board of Excise & Customs which are as under:
14 Customs Appeal No.75410 of 2022 S. Form of Features to be Documents to be obtained No organisati verified . on 1. Individual (i) Legal name (i) Passport and any (ii) PAN card other names used (iii) Voter‟s Identity card (ii) Present and (iv) Driving licence Permanent (v) Bank account statement address, in (vi) Ration card full, complete Note : Any two of the and correct. documents listed above, which provides client/customer information to the satisfaction of the CHA will suffice 2. Company (i) Name of (i) Certificate of incorporation the company (ii) principal (ii) Memorandum of place of Association business (iii) Articles of Association (iii) mailing (iv) Power of Attorney granted address of to its managers, officers or the employees to transact company business on its behalf. (iv) telephone, (v) Copy of PAN allotment fax letter number, e- mail (vi) Copy of telephone bill address. 15 Customs Appeal No.75410 of 2022
3. Partnership (i) Legal name (i) Registration certificate, if firm registered
(ii) Permanent address, in (ii) Partnership deed full, (iii) Power of Attorney granted complete to a partner or an employee and correct. of the firm to transact
(iii) Name of all business on its behalf partners (iv) Any officially valid and their document identifying the addresses, partners and the person in full holding the Power of complete Attorney and their and correct. addresses.
(iv) telephone, (v) Telephone bill in the name fax of firm/partners.
number, e-
mail
address of
the firm
and
partners
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Customs Appeal No.75410 of 2022
4. Trusts, (i) Name of (i) Certificate of Registration, if
trustees, registered.
Foundation
settlers,
s (ii) Power of Attorney granted
beneficiarie to transact business on its
s and behalf
signatories
(iii) Any officially valid
(ii) Name and document to identify the
address of trustees, settlers,
the beneficiaries and those
founder, holding the Power of
the Attorney, founders/
managers, Managers, Directors and
Directors their addresses
and the
beneficiarie (iv) Resolution of the managing s, in full, body of the complete foundation/association and correct. (v) Telephone bill.
(iii) Telephone
and fax
number, e-
mail
address of
the trust,
founder and
trustees.
These guidelines nowhere prescribes that CHA, before taking the job of Customs Clearance is required to be physically verify the existence of Importer. If the required documents as prescribed above is made available to CHA job for KYC norms, Is fulfilled. The appellant has fulfilled these requirements as is apparent from the case record".
4.5 In case of Freight & Travels Pvt. Ltd. [2016 (344) ELT 602 (Tri Delhi)] tribunal has held as follows:
"4. We have heard both the sides and examined appeal records. The license of the appellant stands revoked only on the ground that they have failed in their obligation of verifying the identity of his client and their existence in the given address. The admitted facts of the case are 17 Customs Appeal No.75410 of 2022 that the importer‟s details as available in IEC, PAN Cards, Bank Account and electricity have been checked by the appellant. No physical verification of importer‟s premises is mandated in the regulations nor it is a general requirement as per business practice. No violations have been noticed in respect of transactions with Customs with reference to consignment cleared through the appellants. As such the order of revocation of license, only on the ground that on later verification the importer was not found in the indicated premises, is not justifiable."
4.6 In case of HIM Logistics Pvt. Ltd. [2016 (338) ELT 725 (Tri Delhi)], following was observed:
"7. We find that the main focus of allegation against the appellant which resulted in the revocation of licence is their failure to verify the presence of the importers in the given address. We have perused the provisions of Regulation 11 as well as the Board‟s Circular dated 8-4- 2010. It is an admitted fact that the partnership firm involved in the import of the auto parts is an existing concern, duly registered having a deed for partnership and two existing partners. The IEC copy, PAN Card, telephone bill of the firm, Voter ID of the partners, copy of the partnership deed have been seen and verified by the appellant. The allegation that the IEC was obtained by submitting forged documents has no effect on the appellant as they could only verify the correctness of the documents submitted before taking up of the work for any importer. There is no stipulation or legal requirement to physically verify the business premises or residential premises of the importer and also to have a personal meeting with the importer before taking up the work for any importer.
8. We also note that in the present case the contravention alleged against the importer is non-declaration of retail sale price on auto parts imported by them for assessment under Section 4A of the Central Excise Act, 1944 for CVD. We find that the bill of entry was filed by the appellant after the goods were detained by the officers of DRI. The said bill of entry was filed on first check basis for verification 18 Customs Appeal No.75410 of 2022 of the goods before assessment. In such a situation, we find that no mala fide or intentional violation of any provisions of the Customs Act can be alleged on the part of the Customs broker. Regarding KYC norms and obligations under Regulation 11, we find that case as made out in the original order is neither convincing nor sustainable.
9. We find that the impugned order did not make out a sustainable case for revocation of licence. In the case of Setwin Shipping Agency v. CC (General), Mumbai - 2010 (250) E.L.T. 141 (Tri.-Mumbai), the Tribunal held that there is no requirement for the CHA to verify physically the premises of importer/exporter. The Tribunal also observed that it is a settled law that the punishment has to be commensurate and proportionate to the offence committed. In the present case, we notice that the punishment of revocation is not justifiable even if it is to be admitted that physical verification of the importer‟s premises could have avoided the filing of the bill of entry by the appellant. Even in such a situation, the violation in respect of the cargo viz. the non-declaration of the RSP on the auto parts, a debatable point of interpretation, cannot be held against the appellant to result in the revocation of their licence. Here, it is to be noted that the bill of entry was filed after the detention of the goods for inquiry by the DRI Officers and request for physical verification of the cargo before assessment has been made in the form of first check bill of entry. We find that the impugned order passed on dis-agreement with the inquiry report has not brought out clear sustainable ground for such extreme action of revocation of licence. Violation of CBLR, 2013 has not been brought out as all the points have been elaborately discussed in the inquiry report and no sustainable ground for differing with the same could be made out."
Upholding this order, Hon'ble Delhi High Court has as reported at [2017 (348) ELT 625 (Del) observed as follows:
"This appeal by the Revenue challenges an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) [2016 (338) E.L.T. 725 (Tri. - Del.)], whereby the adjudication and Appellate order 19 Customs Appeal No.75410 of 2022 revoking the respondent‟s Customs House Agent‟s (CHA) licence was set aside. The allegations levelled against the respondent were that as a customs‟ broker it had not fulfilled the obligations cast on it inasmuch as there was no proper verification of the particulars of the party which it sought to represent. The Tribunal relied upon a previous ruling Setwin Shipping Agency v. CC (General), Mumbai - 2010 (250) E.L.T. 141 (Tribunal-Mumbai), and held that in the facts and circumstances of the case, the interpretation that the respondent was under an obligation to physically verify the particulars, was misplaced.
2. This Court notices that the CESTAT construed the provisions of Regulation 11 and the Board Circular of 8-4-2010 and found that the partnership firm involved in the import of consignment was an existing concern, duly registered under a partnership deed and two existing partners and that its IEC copy, PAN Card, telephone bill of the firm, Voter ID of the partners, copy of the partnership deed have been verified by the respondent."
4.7 In terms of Regulation 10 (d), the appellant was required to investigate, educate his client in respect of Customs Procedure and Law and advise him not to indulge in any fraudulent activities that are harmful in the interest of Customs.
4.8 In the present case, the goods were imported over a considerable period of time on the basis of declared value or after loading the same as per advice of the Government Valuer or by Appraising/Assessing Officer. In the present case also, values have been enhanced since the Customs Officer and Government approved valuers themselves have found the value as declared on the Bill of Entries filed to be under-valued, the Customs Broker, who is neither an expert in the field of valuation as Government valuer or in the field of appraisement as a Customs Officer can be held guilty for not able to find out the correct value while filing these documents and advice his client accordingly. Any violation which was detected by the DRI subsequently on basis of longdrawn investigations, which goes contrary to the assessments made by the Customs officer on the Bill of 20 Customs Appeal No.75410 of 2022 Entry, cannot be the reason for holding Customs Broker to have acted for violation the Regulation 10 (d), unless and until, a specific charge of connivance with the Customs Officers is made. In the present case, the Commissioner did not find any such connivance. 4.9 Reliance placed by the Commissioner on the decision of the Hon'ble Supreme Court of India in the case of Commissioner of Customs Vs. K.M.Ganatra and Company in Civil Appeal No.2940 of 2008, cannot be justified as the facts of that case are not identical. the case of K M Ganatra was the case where the Custom House Agent had sub-let his license. In para 2 of the order Hon'ble Apex Court recorded the facts as follows:
"2. On the basis of the aforesaid information, investigations were initiated and certain firms were identified which were involved in the misuse of the licence in the aforestated manner. During the investigation it was found that an endeavour had been made to give the impression that they were bona fide exporters. The shipping bills were filed and for the said purpose, services of CHA licence of the respondent licensee was utilised. It had further come to the notice of the authorities that after due investigation and interrogation, it had allowed its licence to be used by certain unauthorised persons for monetary consideration. After the said aspect came to light, the licence was suspended under Regulation 21(2) of the 1984 Regulations and an enquiry was held against it under Regulation 23 of the 1984 Regulations. The enquiry officer held the enquiry and submitted the report on 25-10-2005 holding, inter alia, that the misconduct alleged against the respondent that it had allowed the unauthorised persons to handle the shipping bills stood proved, and accordingly opined that the articles of charge under Regulations 12, 13(b), 13(d), 20(1)(c) and 13(n) of the Customs House Agent Licensing Regulations, 2004 (for short, „the 2004 Regulations‟) were established."21
Customs Appeal No.75410 of 2022 And in para 14 and 15, Hon'ble Apex Court recorded as follows:
"14. Relying on the statutory provisions, it is submitted by learned counsel for the respondent that the Tribunal has jurisdiction to confirm, modify or annul the decision. There can be no cavil over the issue that the Tribunal can dislodge or confirm or modify the order. The vesting of jurisdiction with the Tribunal by the statute is beyond any pale of controversy. The dispute pertains to exercise of such jurisdiction. When a jurisdiction is exercised, it has to be exercised in accordance with law, regard being had to the factual matrix of the case. The Tribunal having been conferred the power to modify the order, restricting the period of revocation would definitely come within the sweep of the said power. The issue would, as stated earlier, be whether the said jurisdiction has been properly exercised in the case at hand. On a perusal of the order passed by the Commissioner, it is clearly perceptible that there has been number of violations by the respondent. The enquiry report which formed the plinth of the order of the Commissioner demonstrates that by virtue of the transfer of the licence in contravention of the Regulations, on many an occasion, immense financial loss has been caused to the revenue. As the factual matrix would exposit, it is a serious violation. The misconduct reflects a chain of acts. In such a situation, we are disposed to think that the discretion exercised by the Tribunal is inappropriate.
15. In this regard, Ms. Mohana, learned senior counsel for the appellant, has placed reliance on the decision in Noble Agency v. Commissioner of Customs, Mumbai [2002 (142) E.L.T. 84 (Tri. - Mumbai)] wherein a Division Bench of the CEGAT, West Zonal Bench, Mumbai has observed :-
"The CHA occupies a very important position in the Customs House. The Customs procedures are complicated. The importers have to deal with a multiplicity of agencies viz. carriers, custodians like BPT as well as the Customs. The importer would find it impossible to clear his goods through these agencies without wasting valuable energy and time. The CHA is supposed to safeguard the interests of both the 22 Customs Appeal No.75410 of 2022 importers and the Customs. A lot of trust is kept in CHA by the importers/exporters as well as by the Government Agencies. To ensure appropriate discharge of such trust, the relevant regulations are framed. Regulation 14 of the CHA Licensing Regulations lists out obligations of the CHA. Any contravention of such obligations even without intent would be sufficient to invite upon the CHA the punishment listed in the Regulations...."
We approve the aforesaid observations of the CEGAT, West Zonal Bench, Mumbai and unhesitatingly hold that this misconduct has to be seriously viewed."
Admittedly, the Customs Broker enjoyed a very important position in the Customs House and has been licensed to undertake the work of Customs clearance on behalf of the importer. However, he does not replace the Customs Officer. Commissioner has relied upon the observations made by the Hon'ble Apex Court in para 15, even without referring to the facts as recorded in para 2. The case of K.M.Ganatra and Company, cannot be applied in every case or every proceedings initiated against the Customs Broker.
4.10 Accordingly, in view of the above, we do not find any merit in the impugned order and set aside the same.
5.1 In the result, appeal is allowed.
(Operative part of the order was pronounced in the open Court) Sd/ (Sanjiv Srivastava) Member (Technical) Sd/ (P. Dinesha) mm Member (Judicial)