Custom, Excise & Service Tax Tribunal
Ramesh Transport Company vs Commissioner Of Customs -Mumbai - ... on 28 February, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Customs Appeal No. 86442 of 2021
(Arising out of Order-in-Original No. 13/CAC/PCC(G)/PS/CBS(Adj) dated
28.05.2021 passed by the Commissioner of Customs (General), Mumbai-I)
M/s. Ramesh Transport Company Appellant
A 301, Devi Classic, Balaji Mandir Marg,
Off Tilak Road, Ghatkopar (E),
Mumbai 400 077.
Vs.
Commissioner of Customs (G), Mumbai Respondent
New Custom House, Ballard Estate, Mumbai 400 001.
Appearance:
Shri Hans Raj Garg, Advocate, for the Appellant Shri Bhushan Kamble, Assistant Commissioner, Authorised Representative for the Respondent CORAM:
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) Date of Hearing: 28.02.2022 Date of Decision: 28.02.2022 FINAL ORDER NO. A/85383/2022 PER: SANJIV SRIVASTAVA This appeal is directed against Order-in-Original No. 13/CAC/PCC(G)/PS/CBS(Adj) dated 28.05.2021 of the Commissioner of Customs (General), Mumbai-I, wherein the Commissioner has held as under:-
"ORDER
12. I, Principal Commissioner of Customs (General), in exercise of the power conferred upon me under Regulation 17(7), of the CBLR, 2018, pass the following order:
(i) I hereby impose penalty of Rs. 50,000/- (Rupees Fifty Thousand only! on M/s. Ramesh Transport Company (CB No.
2 C/86442/2021 11/1018) PAN No. :AAAHR3080FCH001) under Regulation 18 of the CBLR, 2018.
(ii) I hereby order for forfeiture of entire amount of security deposit furnished by the CB, under Regulation 14 of the CBLR, 2018.
(iii) The CB Licence No.11/1018 is ordered to be revoked under Regulation 14 of the CBLR, 2018.
(iv) That the CB surrender the original License as well as all the 'F', 'G' & H' cards issued there under immediately 13. This order is passed without prejudice to any other action which may be taken against the Customs Broker and their employees under the Customs Act, 1962, or any other act for the time being in force in the Union of India."
2.1 The appellant is a Customs Broker holding Licence No.11/1018 issued by Mumbai Customs, under Regulation 7(1) of Customs Broker Licensing Regulations, 2013 (now Regulation 7(2) of CBLR, 2018).
2.2 Investigation was undertaken by Serious Fraud Investigation Office (SFIO) in the matter of M/s. ABC Cotspin Pvt. Ltd. (ABCCPL) on the basis of complaint made by various Banks, namely State Bank of India, Bank of Baroda and Axis Bank. They reported that ABCCPL committed a fraud on them by availing export finance by submission of export bills without making exports.
2.3 Investigation report pointed out that checklists have been issued to ABCCPL by M/s. RSS Shipping Pvt. Ltd. and M/s. Kotak Multilink Logistic without ensuring the receipt of merchandise at the port and before uploading the data on the ICEGATE portal. They also facilitated issuance of House Bills of Lading from the freight forwarding companies, i.e. M/s. Seamax Logistics Ltd. and M/s. United Container Lines Pvt. Ltd. M/s. RSS Shipping Pvt. Ltd. was operating the CHA licence in the name of the appellant herein and M/s. Harin Transport.
3 C/86442/2021 2.4 The checklists and the house bill of lading have been used by ABCCPL to defraud the Banks. It was further noticed that though the arrival of merchandise at the designated port of shipment slowed very much, the Customs Broker continued to hand over the checklists and house bills of lading to ABCCPL despite having lot of pending shipments against already issued checklists.
2.5 On the basis of above, immediate action was taken against the Customs Broker and his licence was suspended vide order No. 36/2019-20 dated 27.08.2019 and subsequently revoked vide order No. 50/2019-20 dated 04.10.2019.
2.6 A show cause notice dated 28.10.2019 was issued to the appellant asking them as to why their licence should not be revoked, security deposit not forfeited and/or penalty should not be imposed on them under Regulation 14 of CBLR for violation of Regulation 10(d), 10(e) and 10(m) of CBLR.
2.7 This show cause notice has been adjudicated by the Principal Commissioner vide the impugned order. Aggrieved, the appellant has filed this appeal.
3.1 We have heard Shri Hans Raj Garg, Advocate, for the appellant and Shri Bhushan Kamble, Assistant Commissioner, Authorised Representative for the Revenue.
3.2 Arguing for the appellant, -
Learned counsel submits on record order No. 02/AT/Commr/Cus/2020 dated 25.11.2020 passed by the Commissioner of Customs, Nagpur in case of Customs Broker, M/s. Harin Transport, wherein in respect of the same investigation, the said appellant has been acquitted. Since the entire proceedings against the appellant have arisen out of the same investigation and for the same offence, there should be no discrimination in the treatment of the two as has been held by the Tribunal in the case of Niraj Prasad reported at 2019 (11) TMI 436 and of Hon'ble 4 C/86442/2021 Supreme Court in the case of Damodar J. Malpani reported at 2002 (9) TMI 114 (SC).
Accordingly he prays that the order of the Commissioner, Nagpur be made applicable in their case also.
3.3 Learned Authorised Representative reiterates the findings recorded in the impugned order.
4.1 We have considered the impugned order along with the submissions made in the appeal and during the course of argument.
4.2 The Principal Commissioner has in her order recorded the findings as follows:-
"6. In respect of Regulation 11(d) of CBLR 2013 it has been alleged that the CB did not advise their client to comply with the provisions of the Act, other allied Acts and the Rules and Regulations thereof, and in case of non compliance, did not bring the matter to the notice of the DC/AC of Customs. The defence submission stated that on the basis of the checklist, no export can take place; that the CB never issues a Bill of Lading; that under the CBLR 2018, there is no obligation to meet the Exporter and there is no authority with the CB to ask for return of the house BL from the exporter. I find that the investigation revealed that M/s. ABCCPL (the exporting firm) connived with CB M/s. RSS Shipping (who were using the CB licence M/s. Ramesh Transport Company) other CBS and freight forwarding companies to conceal the facts that the exports of merchandise did not take negotiation/availment of bank finance on export bills and presented the place at the time of documents as if the exports had taken place. By doing so, M/s. ABCCPL induced the banks to grant advance against the export bills by negotiation/discount (crediting of funds into the account) and committed the act of "Cheating". I find that Shri Sanjeev Verma, Director of M/s. RSS Shipping P Ltd. in his statement dated 24.03.2018 and 27.07.2018 recorded on oath as per provisions of Section 217(4) of the Companies Act, 2013, stated that they were doing CHA work under the oral authority of M/s. Ramesh Transport Company; that they had only oral authority from Shri.
5 C/86442/2021 Ramesh P. Mange, Proprietor of CB M/s. Ramesh Transport Company; that they used to make the shipping bill data and forward the same to the office of M/s. Ramesh Transport Company, for uploading the same on the "ICEGATE of Customs Department, which they used to do from their office; that they took responsibility for all of them Le. M/s. Seamax Logistics Ltd, M/s 38 Shipping P Ltd. (themselves) and M/s ABCCPL were responsible for the exports which did not happen and the BLs were wrongly stamped as "Shipped on Board". Hence, it is evident that Shri Ramesh P. Mange, proprietor of the CB M/s. Ramesh Transport Company allowed his CB Licence to be misused by M/s. RSS Shipping P. Ltd. far uploading shipping bill data prepared by them on the "ICEGATE of Customs Department I find from investigation that for CB knew the purpose and also the facts of non-completion of exports for previously issued House BL/MTD, but instead of informing the Customs Authorities about the non compliance by the exporter they continued to issue checklists for fresh/further invoices which clearly proves the mens rea of the CB. The CB unlawfully allowed M/ RSS to use their licence. The CB no produce any written authorisation from their client M/s ABCCPL. There is no evidence of interaction between the Customs Broker and the IEC holder of the exporting firm M/s. ABCCPL for the Customs Broker to give proper and sound advice to the exporter and the CB did not make any effort to meet/contact the exporter. It is clear that CB neither advised his client regarding following proper procedure nor did he bring the apparent irregularity to knowledge of Customs Authorities. Thus, the Customs Broker has intentionally violated the Regulation 10(d) of the CBLR, 2018, and above discussion clearly proves contravention of provisions of Regulation 10(d) of the CBLR, 2018.
7. In respect of 10(e) of the CBLR, 2018, the defense submission stated that Inquiry Officer had recorded a finding that the CB neither restricted the freight forwarder or the exporter for wrong doings nor informed the Department about the misuse of check list, house BL/MTDs; that unless and until it is established that the CB had any prior knowledge about the misuse of the checklist, the CB has no obligation to inform the Department about the same. I find that Shri Ramesh P. Mange, proprietor of 6 C/86442/2021 the CB M/s. Ramesh Transport Company allowed his CB Licence to be used by M/s. RSS Shipping P. Ltd, unlawfully for uploading shipping bills data prepared by them on the "ICEGATE" of Customs Department. It is evident from the investigation that the CB obtained the House BLS / MTDS from freight forwarders before or without receipt of merchandise/handing over merchandise and completion of Customs/ export formalities (before clearance of cargo by Customs for export) and without LEO date, and handed over those BLS/ MTDs along with the checklist to M/s RSS Shipping for onward submission to M/s. ABCCPL to enable them to get the export bills discounted with the banks. I find from investigation that despite lapse of more than 3 months (in many cases more than 6 months) for completion of exports for already issued checklists with House BLS/MTDs, the CB M/s. Ramesh Transport Co. did not make effort to verify the genuineness of the exporter and their correctness of their Shipping Bills, BL and MTDs. The CB M/s. Ramesh Transport Company knew the fact that exports had not been taken place for already issued House BL/ MTD and the exporter was continuously asking for fresh checklist, strangely it did not raise suspicion in the mind of an experienced CHA. Dove acts of CB show connivance on their part to perpetuate the fraud by M/s. ABCCPL and Shri Ashish Jobanputra on banks. The CB clearly, knowingly aided and abetted the offence and facilitated the same through deliberate layering of intermediaries as he was part of the gang of the fraudsters. It is clearly evident that the Customs Broker deliberately processed the Checklist as per the directions of M/s. RSS Shipping without exercising due diligence to ascertain the correctness of the information and impart same to the exporter. Thus, it is clear that the C has deliberately not carried out obligation cast on him so as to feign innocence later Hence, conclude that the CB has intentionally violated the provisions of Regulation 10je) of CBLR, 2018.
8. In respect of 100mg of the CBLR, 2018, the defense submission stated that the Inquiry Officer has wrongly recorded that the CB indulged in practice of issuing checklist and continued this practice despite knowing the fact that actual exports never happened; that the said findings are irrelevant in the said charge and moreover, are contrary to the facts of the 7 C/86442/2021 case. It is evident that Shri Ramesh P. Mange, proprietor of the CB M/s. Ramesh Transport Company allowed his CB Licence to be used by M/s RSS Shipping P. Ltd. for uploading shipping bills data prepared by them on Department. I find it from investigation that the CB knew very well the fact that them on the "ICEGATE of Customs exports had not been taken place for already issued House Bl./ MTD and the exporter was continuously asking for fresh checklist. Despite this they (the C did not carry out verification of IEC holder as needed. Despite knowing the that M/s. ABCCPL and Shri Ashish Jobanputra were utilizing the checklist and House BL/MTD for discounting of export bills, the CB M/s. Ramesh Transport Company did not ask M/s. ABCCPL and its directors to return the House BL/MTDs for which shipments were delayed beyond 15 days. The Inquiry Officer observed that had the CB asked for return of BLs, MTDs issued on the basis of checklists generated by them, further misuse of checklists and wrongly stamped BLs could be stopped, therefore, this act on the part of CB proved to be far from being efficient as the CB failed to use requisite knowledge and skill in the instant case to be a reliable CB under the Regulations. Having perused the findings of the Inquiry Officer, I am of the considered opinion that the findings of the inquiry officer are based on the available evidence, facts and circumstances of the case. I agree with the findings of the Inquiry Officer with respect to Regulation 10(m) of the CBLRL, 2018. Thus, the CB violated the provisions of Regulation 10 (m) of CBLR, 2018, since they had malafide intention which proves the contravention of provisions of Regulation 10 (m) of the CBLR, 2018.
11. In view of the paras above I find that Shri Ramesh P. Mange, Partner of CB M/s. Ramesh Transport Company (CB No. 11/1018), had not met or contacted the IEC holder of M/s ABCCPL, while filing checklist for exports in the name of M/s. ABCPPL. Shri Ramesh P. Mange, proprietor of the CB M/s Ramesh Transport Company allowed his CB Licence to be used by M/s. RSS Shipping P. Ltd., who was involved in the fraud, for uploading shipping bills data prepared by them on the "ICEGATE of Customs Department. The investigation revealed that M/s. ABCCPL connived with CB M/s. Ramesh Transport Company, M/s. RSS Shipping other CBs and freight forwarding companies 8 C/86442/2021 concealed the facts that the exports of merchandise did not take place at the time of negotiation/availment of bank finance on export bills and presented the documents as if the exports had taken place. By doing so, M/s. ABCCPL induced the banks to grant advance against the export bills by negotiation/discount (crediting of funds into the account) and committed the act of "Cheating". The CB M/s. Ramesh Transport Company knew the fact that exports had not taken place for already issued House BL/MTD and the relevant documents were utilized for obtaining bank credit (without completing underlying exports). The above acts of CHA and freight forwarding companies showed connivance on their part to perpetuate the fraud by M/s. ABCCPL and Shri Ashish Jobanputra, the main conspirator, on banks. The CB M/s. Ramesh Transport Company knowingly aided and abetted the offence and facilitated the same through deliberate layering of intermediaries since he was part of the gang of the fraudsters. Had Shri Ramesh P. Mange the CB, acted in a vigilant manner and performed his duties efficiently, the huge revenue loss to the Banks would have not been taken place. The above evidence on record clearly indicates that the CB was working in a manner to facilitated fraud and violated the obligations cast upon them under the CBLR, 2018. The CB has clearly failed to discharge duties cast on him under CBLR, 2018 and is liable for penalty. ..."
4.3 It is an admitted fact that the appellant has issued the checklists to the exporters. Even investigation report recorded that ABCCPL owned and controlled by Shri Ashish Jobanputra was exporting cotton since the year 2009 mainly to China under Letter of Credit. Since ABCCPL was a regular exporter exporting goods since 2009, they did not find any difficulty in getting the export documents for availing the fraudulent export credits from the Banks. These documents have been issued by M/s. RSS Shipping Pvt. Ltd. who was operating the CHA licence in the name of M/s. Ramesh Transport Co. (the appellant herein) and M/s. Harin Transport.
4.4 Proceedings were initiated against the appellant and also Custom Broker, M/s. Harin Transport. After considering the 9 C/86442/2021 same set of evidence and investigation, the Commissioner at Nagpur has dropped the entire proceedings against M/s. Harin Transport. In para 7.8 of his order, the Commissioner has observed as follows:
"7.8. I find that the SCN relies upon the statement of Shri Sanjeev Verma, Director of M/s. RSS Shipping Pvt. Ltd. recorded by SFIO under the provisions of the Companies Act, 2013. I find the only witness is not consistent in his statement as at one point he stated that the CB authorized him orally to use his CB Licence and afterwards he stated that CB firm is not aware of the fraudulent action took place with Bankers with help of Checklists. In this regard, the Charged CB vehemently denied that they never authorize Shri Verma to use their CB licence and submitted that their authorized employees were looking after the clearance work at Mundra Part To substantiate their stand, the CB firm provided details of the employees posted at Mundra Port and provided copies of their I-Cards issued by Customs Authorities As far as knowledge of fraud, the Charged CB submitted that they perform their duties under the framework of CBLR, 2018 and the Customs Act, 1962 and it is not in their control to monitor what the exporter is doing with the Checklists forwarded to them through E-Mails."
4.5 In para 11 of the impugned order, reproduced above, the only ground on which the Commissioner proceeded against the appellant is that Shri Ramesh Mange had not met or contacted ABCCPL while filing the checklists for export in their name and has thus allowed his CB licence to be used by M/s. RSS Shipping Pvt. Ltd. which was involved in uploading the shipping bill data prepared by them on ICEGATE portal. On the basis of above, the Commissioner concluded that the evidence on record clearly indicated that the Customs Broker was working in a manner to facilitate fraud and had violated the obligation casted upon them under the CBLR,2018.
4.6 On the same set of evidences, two different findings have been recorded by the Commissioners at Nagpur and Mumbai. In our view, such a discrimination which leads to revocation of licence of one Customs Broker and permits them to operate 10 C/86442/2021 without any hindrance is nothing but discrimination contrary to Article 14 of the Constitution.
4.7 In the decision referred to by the appellant in the case of Damodar J. Malpani [2002 (9) TMI 114-SC], the following have been held:-
"3. It appears from the records that several letters were written by the appellants to the Excise Authorities requesting that a sample of the appellants' product may be chemically analysed at the appellants' cost for the purpose of determining whether the appellants' product or process in any way differed from the product and process of M/s. Chandulal K. Patel and Company. However, the Excise Authorities decided against the appellants without heeding such request. On 4-8-88 a decision was taken by the Assistant Collector to classify the appellants' product under Tariff Heading 24.04. On 11-8-88 a sample of the appellants' product was taken by the respondents but returned within one week without testing on the ground that the issue was being finalised by the Assistant Collector. In the appeal preferred to the Collector, the appellants again raised the issue specifically that the process followed by and the product of the appellants were identical with that of M/s. Chandulal K.P. Patel and Company and that the appellants product should be similarly classified under Heading 24.01. While upholding the decision of the Assistant Collector, the Collector did not consider this aspect of the matter at all. The point was again taken specifically in the appellants' appeal before the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal however dismissed the appeal and said :
"The appellants have stated that some of the manufacturers who were producing similar goods, were not paying any excise duty on their production. These matters are not before us and it is neither possible nor desirable for us to deal with these matters. Suffice it to say that each and every case has to be examined in the light of our above observations, and it is for the competent Central Excise Officers to come to correct decisions in consonance with the principles of uniformity, equity and justice".
11 C/86442/2021
4. It is difficult to understand the reasoning of the Tribunal. The least that the Tribunal could have done in the interest of 'uniformity' was to call upon the Revenue Authorities to explain why they were making a distinction between the appellants product and that of M/s. Chandulal K. Patel without subjecting the appellants' product to any chemical analysis.
5. In their appeal from the decision of the Tribunal before us the appellants have again raised the issue that the Tribunal should have considered the fact that the appellants and Chandulal K. Patel & Co's products were identical and were the outcome of an identical process, and that since the latter had been exempted from paying any central excise duty on the ground that their product was classifiable under Tariff Heading 24.04, the appellants should get the same benefit.
6. At the hearing today we sought an explanation from the learned Counsel appearing on behalf of the Revenue Authorities as to why different stands had been taken in the cases of M/s. Chandulal K. Patel & Company and the appellant. Since the matter had not been squarely dealt with on facts at any stage by any of the authorities below, it was not possible for learned Counsel to give us the reasons for drawing this distinction between the two manufacturers and differently classify what were alleged to be materially the same product.
7. In the circumstances we deem it appropriate to set aside the order of the Tribunal and remand the matter back to the Tribunal for considering whether the product and process followed by M/s. Chandulal K. Patel & Co. is the same as that of the appellants. For the said purpose, the Tribunal will send a sample of the appellants' product for the chemical analysis if not already done. The Tribunal will thereafter consider the question of classification of the appellants' product having regard to the classification of 'Karta Chhap Zarda' the chemical analysis report and any other material that may be placed before it by the respective parties."
4.8 Further the procedure for export starts with filing of checklists on ICEGATE portal. If the same is not backed by the proper shipping bill within 15 days, the checklist gets purged. It is not understood how the issuance of checklist by the Customs 12 C/86442/2021 Broker was a fraud under the Customs Act. Even if the same was an offence under some other Acts, the appellant needs to be tried in terms of those Acts and should not have been inflicted with the punishment sought to be inflicted in terms of CBLR, 2018.
5.1 In view of above, we are not in a position to sustain the impugned order.
5.2 Appeal is allowed.
(Order pronounced in the open court) (Sanjiv Srivastava) Member (Technical) (P. Dinesha) Member (Judicial) tvu