Custom, Excise & Service Tax Tribunal
Ambe Freights Pvt Ltd vs New Delhi -Airport And General on 30 April, 2024
1
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO.III
Customs Appeal No.53017 of 2023 (DB)
[(Arising out of Order-in-Original No.01/ZR/POLICY/2023 dated 17.01.2023 passed by
the Commissioner of Customs (Airport and General), New Customs House, New Delhi.]
M/s.Ambe Freights Pvt. Ltd., Appellant
RZ-G-102A,Raj Nagar, Part-II,
Palam Colony,
New Delhi-110 077.
VERSUS
Commissioner of Customs, Respondent
(Airport and General), New Customs House, Near IGI Airport, New Delhi.
APPEARANCE:
Shri Rahul Krishna, Advocate for the appellant Shri Rajesh Singh, Authorised Representative for the respondent CORAM:
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MR. P.V.SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. 55718/2024 DATE OF HEARING: 05.04.2024 DATE OF DECISION: 30.04.2024 BINU TAMTA:
1. M/s Ambe Freights Pvt. Ltd. 1 Customs Broker 2 is aggrieved by the revocation of the Customs Broker License (valid upto 27.01.2031), forfeiture of security deposit and imposition of penalty of Rs. 50,000/- by the Order-in Original No. 01/ZR/Policy dated 17.01.2023 passed by the Commissioner of Customs.1
The appellant 2 CB 2
2. Shri Rattan Singh Bisht, the Director and the F Card Holder of the appellant firm had employed Shri Sushil Gautam as G card holder. In March 2022, Shri Sushil Gautam filed six bills of entry on behalf of M/s. GIGA Export Services, New Delhi3. On filing of the bill of entries, customs alert was issued leading to examination of the containers whereby the goods were found to be mis-declared and consequently seized. By Letter dated 17.05.2022 from Customs (Preventive), it was found that the firm did not exist at the registered address and the IEC was issued to the firm on the basis of fake PAN. Statement of Shri Sushil Gautam and Shri Rattan Singh Bisht were recorded on 29.03.2022 and 9.05.2022, and the relevant paras thereof are quoted below:--
Statement of Shri Sushil Gautam dated 29.03.2022:-
"I state that Shri Mahesh Ramji Bhanushali approached me, who met at ICD, Tughlakabad customs office and requested me for filing the documents for the import of said consignments and provided me the details of the said consignments viz. invoices, packing list, Bill of lading and copy of IEC etc. I further state that Shri Mahesh Bhanushali had shown me all the original documents of above-mentioned consignments before filing the bill of Entry of the same. On being asked about he KYC of the customer, I state that we have taken the KYC of the importer i.e., M/s.GIGA Export Services, New Delhi (IEC No.ETIPK3912A) from Shri Mahesh Bhanushali and tallied with the original documents. On being asked that whether I had verified the firm's address, I state that I have not personally visited the registered address of the importer as Shri Mahesh Bhanushali has shown the original documents and I got to know that earlier also they have imported some of the consignment through other CHA firms and after examination of Customs all the earlier consignments got cleared, therefore, I was of the impression that the firm was genuine and I accepted to file the Bill of Entry of the same. I further state that as I got the order for filing of 14 containers in the above 3 Importer 3 mentioned Bill of Entry, I accepted to file the same so that I and our company get more benefit in the throat cut competition and background of earlier import were neat and clean, therefore, I accept the officer of the importer and filed the Bill of Entries instantly without knowledge of our CHA, so that the importer could not go to other CHA.
On being further asked about the IEC under which the importer Shri Mahesh Ramji Bhanushali had imported the said consignment, I state that Shri Mahesh had given me a copy of IEC No.ETIPK3912A of M/s.GIGA Export Services. I have been shown a copy of the IEC No.ETIPK3912A and I put my signature on all its pages in toke of it being the same as given to me by Shri Mahesh. On being further pointed out and asked that in the said IEC the name of the proprietor is given as Shri Dinrendra Kumar and whether I have enquired from Shri Mahesh Ramji Bhanushali, whether he was authorize to use the said IEC, I state that I was given a KYC documents by shri Mahesh Ramji Bhanushali in the name of M/s.GIGA Exports, which I accepted as a acceptance of the IEC of M/s.GIGA Export Services to be used by Shri Mahesh Ramji Bhanushali. I have been shown a KYC documents in the name of M/s.GIGA Export Services which I confirm was given to me by Shri Mahesh Ramji Bhanushali and I put my signatures on the same.
On being further asked that why I did not bring it to the knowledge of Shri Rattan Singh Bisht, F-Card of CHA Firm, I state that I was about to tell our CHA about the filing of Bill of Entry but after getting the news of Customs alert on the same, I got afraid and had not told CHA. I further state that I gets a salary of Rs.18,000/- per month from our CHA company and along with the salary I also gets some incentive per container. I further state that my wife is in critical medical emergency as per both the kidney got fail and I am to take her to hospital every two days for dialysis. I was in the thought that I can earn more incentives in the order of 14 containers, I accept the order instantly and I am hiding nothing in this statement. On being asked, I state that I do not have any knowledge about the mis-declaration of the goods in the above said Bill of Entry before the examination conducted by Customs. On being asked, that why your G-Card Licence should not be proposed to revoke as the gross mis-declaration was found in the imported consignment under above said Bill of Entries, in this regard, I state that I did not have any knowledge about the mi-declaration found in the above said Bill of Entries before the examination of the said goods. I further state that the earlier track record of the importer was also good and we file the Bill of Entry only as per 4 documents provided by the importer and we do not know about the goods of the container and in the above specific case I also do not know about the goods and I filed the Bill of Entry as per documents provided by Shri Mahesh Bhanushali and past track record of M/s. GIGA Export Services. I further state that I am the sole bread earner of my family and I am to take my wife to hospital in every two days, therefore, it is requested not to propose the revoke of my G-Card licence.
Statement of Shri Rattan Singh Bisht dated 29.03.2022:-
On being asked about the consignment imported vide Bill of Entry No.7796200, 7797392 and 7797378 all dated 09.03.2022 and Bill of Entry No.7811156, 7811158 and 7811174 all dated 10.03.2022 of M/s.GIGa Export Services, New Delhi filed by our company, I state that Shri Shushil Gautam is the G-Card Holder (ID No.202/2008) of our company since September, 2021 and he had filed the above said Bill of Entries without my knowledge. I further state that I got to know about the same from Shri Sushil Gautam. On being asked, I state that did not know about the said import and Shri Sushil Gautam has also an ID to file the Bill of Entry/Shipping Bill on behalf of M/s.Ambe Freight Pvt. Ltd. I further state that as the wife of Shri Shushil Gautam has a medical problem of kidney failure and he had to take his wife to hospital every two days and he is in need of money for treatment of his wife, I have authorize him to file the paper from our CHA licence, so that Shri Sushil Gautam could earn the money for the treatment of his wife. I further state that I gave the salary of Rs.18,000/- per month to Shri Sushil Gautam along with the incentives according to paper filed by him. On being asked, I state that these above mentioned bill of entries were filed by Shri Sushil Gautam from his ID. I further state that the detail of the importer and all other details may be got from Shri Sushil Gautam. I also want to say that I do not know anything about the Bill of Entries or importer as Shri Sushil Gautam our G-Card holder has filed these papers from his IDs and I did not get any payment for the same."
Further, statement of Shri Rattan Singh Bisht dated 09.05.2022:-
"I further state that Shri Sushil Gautam,G-Card has filed the above said six Bills of Entry by his own ID (Icegate- sushilgautam 12 ande-mail ID [email protected]) and has an independent dongle for digital signature, 5 wherein the mobile number and ID of G-Card is registered and the OTP and messages for filing the Bills of Entry must be received on his ID. I further state that on faith, I have provided him the dongle and IDs for filing the papers on my behalf. On being asked that as the goods mentioned in the above said Bills of Entry were totally mis-declared and the valuation of the mis- declared goods were done by Government Empanelled Valuer/CE, which arrives at Rs.3.65 Crores approx., in this regard, I state that as I did not know about the same and Shri Sushil Gautam G-Card or Shri Mahesh Ramji Bhanushali, beneficiary owner of the goods may better comment on it. On being asked, I state that I have regularly asked my G-card holder to verify the KYC of the importer but in this case as informed, G-Card has not verified the KYC. I further state that on faith, I have given the access to file/authority to file the Bills of Entry as well as shipping Bill but in this case only he did not comply my directions and did not inform anything about either before filing of Bills of Entry or after examination of goods. I further state that Shri Sushil Gautam is regularly did his job very carefully and I was of the belief that he will never do this kind of mistake and I did not monitor his work carefully."
3. In terms of regulation 16(1) of the Customs Brokers Licensing Regulations, 2018 4 , the license of the appellant was suspended on 4.07.2022 and the same was confirmed under Regulation 16(2) by order dated 26.07.2022. Inquiry Officer was appointed as per Regulation 17(1) of CBLR who submitted his report dated 21.10.2022 observing that the appellant failed to apply due diligence in verifying the proper KYC documents and also failed to exercise proper supervision on the functioning of G Card employee and thereby contravened Regulation 10(n), 13(12) and warranted penalty under the provisions of regulation 14 and 18 read with Regulation 17 of CBLR. Show cause notice dated 16.08.2023 was issued to the appellant proposing penal action in terms of the enquiry report. On adjudication, the Commissioner of Customs passed 4 CBLR 6 the impugned order and hence the present appeal has been filed before this Tribunal.
4. We have heard Shri Rahul Krishna, the learned counsel for the appellant inter-alia submitting :
i) proper verification and KYC at the time of import of consignment was carried out and no physical verification was required. Shri Sushil Gautam obtained the IEC and GSTIN and also other documents issued by the respective government offices after duly verifying it from the originals given by one Mr. Mahesh Bhanushali. Reliance was placed on the decision of this Tribunal in Mauli Worldwide Logistic Vs. Commissioner of Customs, New Delhi5- Hence there is no violation by the Customs Broker of the provisions of Regulation 10(n).
ii) There was no contravention of the provisions of Regulation 13(12) as the documents submitted to the Card holder were tallied with the original documents and they appeared to be authentic. For issuance of the documents like IEC, GSTIN, there is an extensive requirement on the part of the person applying for the same to make available number of documents issued by the Government authorities.
ii) the appellant is not liable for any misdeclaration of the goods or its valuation which was on the part of the importer and it was not possible for the CB to have detected or prevented undervaluation in imports.
iii) the punishment awarded by way of revocation of the CB license, forfeiture of entire security deposit and penalty of Rs.50,000 was disproportionate to the alleged offence.
iv) the impugned order is a non-speaking order and has not considered the submissions made by the appellant and the decisions relied on in support thereof.5
Customs Appeal No.C/50997/2021-DB dated 04.07.2022. 7
5. Shri Rajesh Singh, the learned Authorised Representative for the Revenue reiterated the findings of the Adjudicating Authority and submitted that :-
"Statement dated 09.05.2022 of Shri Sushil Gautam, G Card and Shri Rattan Singh Bisht, F-Card holder of Customs Broke company was recorded where he stated that he did not verified the KYC and address of the importer firm. Further, Shri Rattan Singh Bisht F-card holder stated that he had not verified the KYC and address of the importer firm and failed to monitor the activities of his employee, i.e. Shri Sushil Gautam. Both Shri Sushil Gautam and Shri Rattan Singh Bisht were arrested on 09.05.2022 and produced before CMM, who granted judicial custory for both of them. The application of both Shri Sushil Gautam and Shri Rattan Singh Bisht for bail were rejected by CMM initially, Patiala House Court but later got conditional bail from Session Court.
Copy of PAN and Adhar of Shri Direndra Kumar the IEC holder, submitted by Shri Sushil Gautam is different from PAN and Adhaar submitted by Shri Dhirendra Kumar as the photograph and signature on Pan card is different and photograph on Adhaar Card is different in these two.
Due to negligence and failure to supervise his employee by Shri Rattan Singh Bisht the bills of entry was filed without verification of the documents, address physically and complete KYC of the M/s. Giga Export Services under the Customs Broker Licensing Regulations 2018, and he did not monitor the activity of his G-Card holder, Shri Suhsil Gautam due to this negligence the above mentioned goods have been filed for clearance under the above six bills of entry."
6. To examine the contravention of Regulation 10(n) by the appellant, the provisions are quoted as :
"Regulation 10(n) of CBLR, 2013 - Obligation of Customs Broker. A Customs Broker shall -
(n) verify antecedent, correctness of Importer Exporter code (IEC) number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information;"
In terms of Regulation 10(n), 'CB' is obliged to verify, identify and functioning of client at the declared address by using reliable, 8 independent, authentic documents data or information. In this regard, CBIC has issued Circular No. 09/2010 - Customs dated 8.04.2010 whereby, "Know Your Customer (KYC)" guidelines have been issued to CHAs/CB and list of documents to be verified and obtained from the client/customer have been provided, which requires the CB to verify the following features:
"a) Legal names and any other names used
b) present, and permanent address, in full, complete and correct."
Further, vide Circular No. 7/2015-Customs dated 12.02.2015 the scope of documents to be considered was extended for the purpose of KYC verification by including Aadhaar card as a valid document.
7. In the light of the provisions of Regulation 10(n) and the Circulars, we find that the appellant in the present case had obtained the copy of the IEC, GSTIN, PAN card , Aadhaar card and other documents like notarised rent agreement executed between one Harish Gulshan and the proprietor of the importer firm namely, Dhirender Kumar. All these documents show the address of the importer firm. As admitted by G-card holder in his statement, on the basis of the original documents produced by Shri Mahesh Ramji Bhanushali, he tallied the same and finding them to be true processed the clearance of the consignment. Moreover, the G-card holder had acquired knowledge about the past antecedents of the importer where the earlier consignments through other CHAs were cleared and therefore believed the importer to be genuine. Verifying the earlier track record of the importer was a valid step towards discharge of his obligation under the regulations. Reliance is placed on Perfect Cargo & Logistics 9 Vs. C.C (Airport & General), New Delhi 6, where it was observed that the appellant did obtain two documents and neither the Circular nor the Annexures require any physical verification of the premises. It is not the case of the Department that the documents obtained were forged. Thus, it is not a case where the CB had not obtained the requisite documents or that he did not verify the said documents in discharge of his obligations under the regulations.
8. From the submissions of the Revenue, we do not find that the IEC produced is incorrect/invalid rather the allegation is that IEC has been issued on the basis of fake PAN Card. Considering the judicial pronouncement which we will discuss later, no fault can be attributed on the appellant as the responsibility to issue IEC is on the DGFT and therefore, if there is an error in issuing the IEC on the basis of fake PAN card, the burden is on the DGFT and not on the CB. It is settled law that once IEC is issued, the CB is nobody to challenge its authenticity. If the DGFT having all the expertise and assistance to verify the genuineness of the documents issued by government agencies is unable to do so and wrongly issues the IEC on the basis of fake document, it is too much to expect that a CB would be able to ascertain the veracity of the document which is still valid. It has been considered that for issuing the documents like IEC, GSTIN etc., the person applying for the same has to make available number of documents which are issued by the Government Organisations after due verification and completion of the KYC norms and therefore, there is a presumption that they have been validly issued as per 6 2021 (276) ELT 649 (T-Del.) 10 Section 79 of the Evidence Act. The grant of IEC presupposes verification of facts with respect to the entity to whom IEC is issued.
9. Reliance is placed on the observations made by the Tribunal in the case of Mauli Worldwide Logistics vs Commissioner of Customs (supra):-
"18. Similarly, if the importer-exporter code issued by the Director General of Foreign Trade is wrongly issued to non-existent businesses and entities, the appellant cannot be blamed for trusting the IEC issued by the DGFT. Similar is the case with respect to other documents such as PAN card (issued by the Income Tax Department), Driving Licence (issued by the Transport Department), Voter ID (issued by the Election Commission). When a document is issued by a Government authority, it is reasonable to presume it to be valid. It is not open to the appellant to question the issue of these documents and as a Customs Broker to sit in judgment over the decisions of these officers. If the verification reports are true and none of the exporters existed at their premises, the irresistible conclusion is that all these officers of various departments have been either extremely careless or were operating under flawed systems which allowed documents to be issued to non-existing businesses.
21. We find that Regulation 10(n) requires the Customs Broker to 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. This responsibility does not extend to physically going to the premises of each of the exporters to ensure that they are functioning at the premises. When a Government officer issues a certificate or registration with an address to an exporter, the Customs Broker cannot be faulted for trusting the certificates so issued. It has been held by the High Court of Delhi in the case of Kunal 8 Travels that "the CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect of clearance of goods through customs house and in that process only such authorized 11 personnel of the CHA can enter the customs house area........ 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....." (emphasis supplied).
22. The Customs Broker is not Omniscient and Omnipotent. The responsibility of the Customs Broker under Regulation 10(n) does not extend to ensuring that all the documents issued by various officers of various departments are issued correctly. The Customs Broker is not an overseeing authority to ensure that all these documents were correctly issued by various authorities. If they were wrongly issued, the fault lies at the doorstep of the officer and not the Customs Broker.
23. It is possible that all the authorities who issued the above documents had issued them correctly and thereafter, by the time of verification, situation may have changed. If so, it is a ground for starting a thorough investigation by the officer and is not a ground to suspend/cancel the licence of the Customs Broker who processed the exports. It is not the responsibility of the Customs Broker to physically go to and verify the existence of each exporter in every location, let alone, keeping track if the exporter has moved from that address. In this case, there is no clarity whether the exporters were not available at the registered premises on the dates of export or if they ceased to operate after the export. Even if the exporters have changed their addresses and failed to intimate, it cannot be held against the Customs Broker.
25. We now proceed to examine the scope of the obligations of the Customs Broker under Regulation 10(n). It requires the Customs Broker to 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. This obligation can be broken down as follows:
a) Verify the correctness of IEC number
b) Verify the correctness of GSTIN
c) Verify the identity of the client using reliable, independent, authentic documents, data or information 12
d) Verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information
26. Of the above, (a) and (b) require verification of the documents which are issued by the Government departments. The IEC number is issued by the Director General of Foreign Trade and the GSTIN is issued by the GST officers under the Central Board of Indirect Taxes and Customs of the Government of India or under the Governments of State or Union territory. The question which arises is has the Customs Broker to satisfy himself that these documents or their copies given by the client were indeed issued by the concerned government officers or does it mean that the Customs Broker has to ensure that the officers have correctly issued these documents. In our considered view, Regulation 10(n) does not place an obligation on the Customs Broker to oversee and ensure the correctness of the actions by the Government officers. Therefore, the verification of documents part of the obligation under Regulation 10(n) on the Customs Broker is fully satisfied as long as the Customs Broker satisfies itself that the IEC and the GSTIN were, indeed issued by the concerned officers. This can be done through online verification, comparing with the original documents, etc. and does not require an investigation into the documents by the Customs Broker. The presumption is that a certificate or registration issued by an officer or purported to be issued by an officer is correctly issued. Section 79 of the Evidence Act, 1872 requires even Courts to presume that every certificate which is purported to be issued by the Government officer to be genuine. It reads as follows:
"79. Presumption as to genuineness of certified copies. The Court shall presume to be genuine every document purporting to be a certificate, certified copy or other document, which is by Law declared to be admissible as evidence of any particular fact and which purports to be duly certified by any officer of the Central Government or of a State Government, or by any officer in the State of Jammu and Kashmir who is duly authorized thereto by the Central Government.
Provided that such document is substantially in the form and purports to be executed in the manner directed by law in that behalf. The Court shall also presume that any officer by whom any such document purports to be signed or certified, held, when he signed it, 13 the official character which he claims in such paper."
27. The onus on the Customs Broker cannot, therefore, extend to verifying that the officers have correctly issued the certificate or registration. Of course, if the Customs Broker comes to know that its client has obtained these certificates through fraud or misrepresentation, nothing prevents it from bringing such details to the notice of Customs Officers for their consideration and action as they deem fit. However, the Customs Broker cannot sit in judgment over the certificate or registration issued by a Government officer so long as it is valid. In this case, there is no doubt or evidence that the IEC, the GSTIN and other documents were issued by the officers. So, there is no violation as far as the documents are concerned.
28. The third obligation under Regulation 10(n) requires the Customs Broker to verify the identity of the client using reliable, independent, authentic documents, data or information. In other words, he should know who the client is and the client cannot be some fictitious person. This identity can be established by independent, reliable, authentic:
a)documents;
b) data; or
c) information
29. Any of the three methods can be employed by the Customs Broker to establish the identity of his client. It is not necessary that it has to only collect information or launch an investigation. So long as it can find some documents which are independent, reliable and authentic to establish the identity of his client, this obligation is fulfilled. Documents such as GSTIN, IEC and PAN card issued etc., certainly qualify as such documents. However, these are not the only documents the Customs Broker could obtain;
documents issued by any other officer of the Government or even private parties (so long as they qualify as independent, reliable and authentic) could meet this requirement. While obtaining documents is probably the easiest way of fulfilling this obligation, the Customs Broker can also, as an alternative, fulfill this obligation by obtaining data or information. In the factual matrix of this case, we are fully satisfied that the appellant has fulfilled this part of the obligation under Regulation 10(n).
30. The fourth and the last obligation under Regulation 10(n) requires the Customs Broker to verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information. This responsibility, again, can be fulfilled using documents or data or 14 information so long as it is reliable, independent and authentic. Nothing in this clause requires the Customs Broker to physically go to the premises of the client to ensure that they are functioning at the premises. Customs formations are only in a few places while exporters or importers could be from any part of the country and they hire the services of the Customs Brokers. Besides the fact that no such obligation is in Regulation 10(n), it will be extremely difficult, if not, totally impossible, for the Customs Broker to physically visit the premises of each of its clients for verification. The Regulation, in fact, gives to the Customs Broker the option of verifying using documents, data or information. If there are authentic, independent and reliable documents or data or information to show that the client is functioning at the declared address, this part of the obligation of the Customs Broker is fulfilled. If there are documents issued by the Government Officers which show that the client is functioning at the address, it would be reasonable for the Customs Broker to presume that the officer is not wrong and that the client is indeed, functioning at that address. In the factual matrix of this case, we find that the GSTIN issued by the officers of CBIC itself shows the address of the client and the authenticity of the GSTIN is not in doubt. In fact, the entire verification report is based on the GSTIN. Further, IECs issued by the DGFT also show the address. There is nothing on record to show that either of these documents were fake or forged. Therefore, they are authentic and reliable and we have no reason to believe that the officers who issued them were not independent and neither has the Customs Broker any reason to believe that they were not independent."
10. In the case of Perfect Cargo & Logistics (supra), this Tribunal noted the decision of the Delhi High Court in Commissioner of Customs Vs. Shiv Khurana Manu 7 as under:-
"33. The Delhi High Court in Shiva Khurana had an occasion to examine the provisions of Regulation 13(o) of the 2004 Regulations, which Regulation is similar to Regulation 10(n) of the Licensing Regulations, and the relevant observations are as follows:7
CUSSA 45/2017 dated 14.01.2019 15 "7. This Court is of the opinion that the impugned order is justified in the facts and circumstances of the case. The reference to the verification of "antecedents and correctness of Importer Exporter Code (IEC) Number" and the identity of the concerned exporter/importer, in the opinion of this Court is to be read in the context of the CHA's duty as a mere agent rather than as a Revenue official who is empowered to investigate and enquire into the veracity of the statement made orally or in a document. If one interprets Regulation 13(o) reasonably in the light of what the CHA is expected to do, in the normal course, the duty cast is merely to satisfy itself as to whether the importer or exporter in fact is reflected in the list of the authorized exporters or importers and possesses the Importer Exporter Code (IEC) Number. As to whether in reality, such exporters in the given case exist or have shifted or are irregular in their dealings in any manner (in relation to the particular transaction of export), can hardly be the subject matter of "due diligence" expected of such agent unless there are any factors which ought to have alerted it to make further inquiry. There is nothing in the Regulations nor in the Customs Act which can cast such a higher responsibility as are sought to be urged by the Revenue. In other words, in the absence of any indication that the CHA concerned was complicit in the facts of a particular case, it cannot ordinarily be held liable."
11. The observations in the impugned order that the CB has failed to verify correctness of Importer Exporter Code (IEC) number is directly against the decisions of the High Court and the Tribunal and therefore needs to be set-aside. We are of the opinion that the appellant has carried out proper due diligence as required under Regulation 10(n) by obtaining all the documents and verifying the same from the originals. Thus the 16 obligation on the part of the CB in terms of Regulation 10(n) stands fulfilled.
12. The other ground on which the appellant has been found to be guilty is that he has failed to supervise the conduct of Shri Sushil Gautam, G- Card holder and thereby violated the provisions of Regulation 13(12) of CBLR, which reads as under:-
"Regulation 13(12) of CBLR - The Customs Broker shall exercise such supervision as may be necessary to ensure proper conduct of his employees in the transaction of business and he shall be held responsible for all acts or omissions of his employees during their employment."
13. According to the learned counsel for the appellant by not keeping any effective supervision on the employees of the firm, at best, it can be viewed as a procedural irregularity. In the statement of Shri Rattan Singh Bisht, he has admitted that he did not monitor the work of his G-card holder and he was not aware of the filing of these bill of entries or the importer. He has provided the G-card holder the dongle and ID for filing the papers on his behalf. Such a conduct on the part of 'CB' has led to the violation of regulation 13(12) which requires the 'CB' to exercise such supervision that may be necessary to ensure the proper conduct of his employees and in the event of failure to do so, he shall be responsible for all acts or omissions of his employees. We, therefore hold that the 'CB' failed to discharge the obligation to supervise his employees in the conduct of the business and thereby violated Regulation 13(12).
14. The case of the Revenue is that on examination of the containers, the goods were found to be mis-declared and undervalued for which the 17 'CB' is responsible. To hold the 'CB' liable for such mis-declaration and undervaluation by the importer, it is necessary to ascertain whether the appellant had any knowledge or in any manner colluded with the importer. The Revenue has not produced any evidence which could connect the appellant with the alleged offence. The facts of the case do not reveal any intention or mens-rea on the part of the CB to act fraudulently. We are, therefore, of the considered view that the appellant cannot be held liable for any mis-declaration of the goods. The allegations of mis-declaration of valuation has been dealt by the Tribunal in M/s. Trinity International Forwarders Vs. Commissioner of Customs (Preventive) 8 , where the observations have been as under: -
"11. Thus, while the transaction value is decided between the exporter and importer, value for determining the duty under the Customs Act is a part of assessment. The power to assess including determining the value lies with the importer/exporter (self- assessment) or with the proper officer (re-assessment). The Customs Broker has neither any authority nor any responsibility to assess the value of the imported goods or export goods.
12. In all the Shipping Bills, exports were allowed by the Customs in the normal course. It is only the subsequent intelligence and investigations by the DRI which revealed the alleged over valuation of exports. The Customs Broker is neither authorized under the Act nor is obliged under the CBLR to re- determine the value of any goods. Transaction value (be it FOB, CIF or C&F) is a matter of negotiation between the overseas buyer and the Indian Exporter. It is the consideration which is paid or payable to the Indian exporter by the overseas buyer. The Customs Broker is a stranger to this contract and has no locus standi with respect to the transaction value. Any value determined under the Customs Act is a part of assessment which is the prerogative part of the importer/exporter(self- assessment) or the proper officer(re-assessment). The Customs Broker has neither any authority nor any 8 Final Order No.50978/2023 dated 02.08.2023 18 power to determine or re-determine the value for customs purposes. The Customs Broker also has no authority to inspect or examine the goods and so the possibility of the Customs Broker suspecting that the goods may have been over valued also does not arise."
15. The learned Authorised Representative relied on the decisions of We find that in D.S. Cargo Agency Vs. Commissioner of Customs, New Delhi 9 , (ii) Bhaskar Logistic Services Pvt. Ltd. Vs. Union of India 10 , (iv) Skyline Services Vs. CC (Airport & General), New Delhi 11 . We find in D.S. Cargo Agency, the CHA admitted having knowledge that four of the importers were represented by one Shri Sanjeev Maggu, who was not the proprietor/partner/director thereof. KYC record of the importing firms were never provided by the appellant. Similarly, in Bhaskar Logistics Services Pvt. Ltd., the Executive Director of the CB facilitated clearance of the goods to an importer on the basis of IEC of another person. The facts in the case of Skyline Services are also distinguishable, where the G.Card holder was physically and actually involved in the entire transaction and the goods were diverted to the godown of the actual purchaser to which the CB had never objected or informed the Customs Authorities. Therefore, no reliance can be placed on these decisions.
16. The learned counsel for the appellant has laid much emphasis on the plea that the impugned order is bad and unsustainable since it is not a speaking order as neither the submissions made nor the decision cited have been considered. The impugned order has been passed on complete 9 2021 (376) ELT 724 (T-Delhi), 10 2016 (340) ELT 17 (Delhi), 2019 (369) ELT 1739 (T-Delhi) 11 19 non-application of mind as no reasons have been given by the learned Commissioner. We find from the impugned order that the learned Commissioner has merely quoted the findings of the enquiry officer and the reply made by the appellant and there is no discussion as to whether contraventions are justified in the facts of the case. The impugned order is therefore bad and unsustainable.
17. Having taken the view that the appellant cannot be fastened the liability of not discharging the obligation under Regulation 10(n) of CBLR and also for mis-declaration/undervaluation in view of the facts of the present case and the judicial pronouncements, we may now examine the imposition of consequential punishment since we have upheld the contravention of Regulation 13(12) by the appellant. It has been repeatedly observed that the revocation of license is a serious punishment affecting the livelihood of a person for all times to come and therefore only in extreme circumstances such serious punishment should be resorted to. The law on doctrine of proportionality of punishment on the CHA under the Regulations have been dealt in the case of Ashiana Cargo Services Vs. Customs 12 , where the Delhi High Court observed that Regulation prescribe two penalties, suspension of the licence for a particular period of time and revocation of license and for the punishment to be proportionate to the violation, revocation of the license can only be justified in the presence of aggravating factors which could be labeled as grave. There has to be an element of active facilitation of the infraction. To quote:
12
(2014) 302 ELT 161 20 "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 and serious violations justify revocation. In other cases, suspension for an adequate period of time (resulting in loss of business and income) suffices, both as a punishment for the infraction and as a deterrent to future violations."
"Learned Senior Standing Counsel for the Customs has stressed that the infraction in this case is not a routine matter, but rather, illegal smuggling of narcotics by the G card users. However, given the factual finding that the CHA was not aware of the misuse of the G cards (and thus, also unaware of the contents being smuggled), no additional blame can be heaped upon the CHA on that count alone. Rather, the only proved infraction on record is of the issuance of G cards to non-employees, as opposed to the active facilitation of any infraction, or any other violation of the CHA Regulations, whether gross or otherwise. Neither have any such allegations been raised as to the past conduct of the appellant, from the time the license was granted in January, 1996. Equally, it is important to note that the appellant has - as of today - been unable to work the license for 8 years, and thus been penalized in this manner. This is not to say that the trust operating between the Customs Authorities and the CHA is to be taken lightly, or that violations of the CHA Regulations should not be dealt with sternly. A penalty must be imposed. At the same time, the penalty must - as in any ordered system - be proportional to the violation. Just as the law abhors impunity for infractions, it cautions against a disproportionate penalty."
18. In the present case, the CB was not aware of the entire transaction, but on the other hand, he failed to monitor the functioning of his employee and enabled him to operate independently by providing the dongle to him, he acted negligently. The act of negligence, in itself is not so grave so as to justify the revocation of license which is extremely harsh and unjustified in the given circumstances when the license of the appellant was suspended on 04.07.2022 and since then he is deprived of his livelihood. We therefore, set aside the revocation of the CB license, 21 however uphold the forfeiture of security deposit and imposition of penalty.
19. Before parting with the said order, we would like to take note of the order-in-original dated 29.12.2023 relating to the present bill of entries and findings recorded revealed that Shri Mahesh Bhanushali was the master mind in importing the restricted goods and the sole beneficial owner of M/s. GIGA Export Services. He knowingly submitted false declaration in the bill of entries, authorisation letter, documents used in creating fake firm for the purpose of smuggling of impugned goods, which were restricted items and required BIS certification. On misdeclaration of goods, Shri Mahesh Bhanushali had submitted that wrong shipments have been sent by their overseas suppliers, which was found to be false as there were different overseas suppliers and it is impractical that all the five overseas suppliers would supply wrong goods. The Adjudicating Authority had also taken note of the fact that Shri Mahesh Bhanushali had previously indulged in the case of smuggling gold and detention order under COFEPOSA Act was passed against him. Also vide order-in-original dated 22.02.2021 he was penalised with penalty of Rs.12 crores. In so far as the G-Card holder and the F-Card holder were concerned, it was held that investigation has not adduced any evidence that they had prior knowledge of the import of mis-declared goods or had filed the bill of entries knowingly and intentionally using the fake documents. In the circumstances, penalty was imposed on G Card holder under Section 112(a)(i) of the Customs Act and refrained from imposing any penalty on the F Card holder of the CB. Needless to say that penalty imposed on M/s. 22 GIGA Export Services was directed to be recoverable from Shri Mahesh Bhanushali and refrained from imposing any penalty on Shri Dhirendra Kumar, Proprietor of the Importer Firm.
20. From all the facts and circumstances discussed above, we therefore conclude, that the 'CB' is not guilty of violating the provisions of Regulation 10(n) of CBLR but on his own admission has violated Regulation 13(12) and consequently, the punishment of revocation of license do not survive, however, the punishment of forfeiture of security deposit and penalty of Rs 50,000/- are affirmed.
21. The impugned order is accordingly modified and the appeal stands partly allowed.
[Order pronounced in open court on 30th April, 2024] (Binu Tamta) Member (Judicial) (P. V. Subba Rao) Member (Technical) Ckp.