Custom, Excise & Service Tax Tribunal
Hayatt Shipping P Ltd vs Commissioner Of Customs Commissioner ... on 23 January, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Customs Appeal No. 85501 of 2022
(Arising out of Order-in-Original CAO No. 139/CAC/PCC(G)/SJ/CBS(Adj) dated
28.01.2022 passed by the Principal Commissioner of Customs (General),
Mumbai-I)
M/s. Hayatt Shipping Pvt. Ltd. Appellant
Room No.20, 3rd Floor, Kashmiri House,
20/22, M.A. Sarang Marg,
Dongri, Mumbai 400 009.
Vs.
Commissioner of Customs (General), Mumbai Respondent
New Custom House, Ballard Estate, Mumbai 400 001.
Appearance:
Shri Anil Balani, Advocate, for the Appellant Shri Sydney D'Silva, Additional Commissioner, Authorised Representative for the Respondent CORAM:
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Date of Hearing: 23.01.2023 Date of Decision: 23.01.2023 FINAL ORDER NO. A/85308/2023 PER: SANJIV SRIVASTAVA This appeal is directed against Order-in-Original CAO No. 139/CAC/PCC(G)/SJ/CBS(Adj) dated 28.01.2022 passed by the Principal Commissioner of Customs (General), Mumbai-I, holding as follows:-
"ORDER 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. Hayatt Shipping Pvt. Ltd., CB No. 11/396 [PAN No. AAAFA3866E) under Regulation 18 of the CBLR, 2018.
2 C/85501/2022
(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 License No.11/396 is ordered to be revoked under Regulation 14 of the CBLR, 2018.
(iv) I hereby order that the CB surrender the original License as well as all the 'F', 'G' & 'H' cards issued there under immediately 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 Appellant is a Customs Broker having Customs Broker Licence No. 11/396 (PAN No. AAAFA3866E). Information was gathered that an import consignment of toys with misdeclaration and concealment of cosmetics inside was attempted to be cleared for home consumption with intent to evade customs duty and other statutory provisions by M/s. Global Enterprises under Bill of Entry No. 6026676 dated 18.04.2018 at Navkar Corporation Ltd., JNPT, who has filed the said Bill of Entry. Proceedings were initiated against the importer and against the appellant - Customs Broker for revocation of their licence. The licence of the Customs Broker was suspended vide order No. 42/2020-21 dated 16.02.2021 under the provisions of Regulation 16(1) of Custom Broker Licensing Regulations, 2018 and the said suspension was revoked pending inquiry proceedings under Regulation 17 of CBLR, 2018 by Commissioner of Customs (General), Mumbai vide order No. 52/2020-21 dated 15.03.2021 read with corrigendum dated 27.07.2021. A show cause notice dated 15.03.2021 was issued to the Customs Broker under Regulation 17(1) of CBLR asking them to show cause as to why the licence bearing No.11/396 issued to them should not be revoked and security deposit not forfeited and/or penalty should not be imposed on them under Regulation 14 read with Regulations 17 & 18 of CBLR, 2018. Inquiry was made and the Inquiry Officer vide his report dated 3 C/85501/2022 16.09.2021 held as to the charges made against the Customs Broker for violation of Regulations 10(a), 10(d), 10(e), 10(m) and 10(n). Appellant contested the inquiry report and filed written submissions vide letter dated 29.10.2021. After considering the submissions, Principal Commissioner has proceeded to decide as per the impugned order referred in para 1 above. Aggrieved appellant has filed this appeal.
3.1 We have heard Shri Anil Balani, Advocate for the appellant and Shri Sydney D'Silva, Additional Commissioner, Authorised Representative for the Revenue.
3.2 Arguing for the appellant, learned counsel submits as follows:-
There is no reference to any Offence Report in the above orders.
The Enquiry Notice was issued on 15.03.2021 (Ex.-D). It refers to and relies upon statements of the following persons:-
(i) Mohd. Arfat Mehmood Mukadam, Director of the Appellants;
(ii) Santosh D. Gunjal, the person who referred the work;
(iii) Sahadeo B. Rade, Proprietor of Global Enterprise, the importer firm;
(iv) Chandrashekar C. Rane;
(v) Irfan Popatiya; and
(vi) Amjad Bakall In Advocate's letter dated 9.8.2021 (Ex.-E) (on page 92) It is recorded that even the Enquiry Notice does not refer to any Offence Report.
Advocate's letter dated 11.08.2021 (Ex-F) records that statement of representative of The Greater Bombay Co-op. Bank Ltd. and mail of the Branch Manager of the said Bank were never supplied. It was prayed that cross-examination 4 C/85501/2022 of all persons must be granted after supplying the said documents.
In Advocate's letter dated 29.10.2021 (Ex-H) application for cross- examination of 7 persons was reiterated. Copy of Offence Report dated 21/01/2021 relied upon by the AR has never been supplied.
The impugned Order dated 28.01.2022 revoking the Appellants' license is challenged on the following grounds:
(A) On page 141 the order refers to statement dated 6.8.2018 of Mohd. Arfat Mukadam, Director of the Appellants, which inter alia reads as under:
(i) He was Introduced in person to Sahdeo Rade, Proprietor of Global Enterprise and to Irfan Popatiya (Power of Attorney) by Santosh Gunjal;
(ii) The KYC documents, etc. were given to him by Irfan Popatiya;
(iii) This consignment is the first and only consignment with Global Enterprise;.
(iv) He was not aware that cosmetics were concealed in the container.
(B) In his statements (on page 142) Santosh Gunjal confirmed he had introduced Irfan and IEC holder of Global Enterprise to Mukadam.
(C) Thus the findings from page 161 confirming the charges under Regulations 10(a), (d), (e), (m) and (n) of the CBLR, 2018 based on Rade's unverified statements are not convincing.
(D) In the instant case the learned Pr. Commissioner of Customs (General) has not given any finding on the issue of cross-examination. Instead he relied upon the statements of Rade for revoking the Appellants' C.B.Licence.
5 C/85501/2022 (E) Under Regulation 17(1) of the CBLR, 2018, notice has to be issued within 90 days from the receipt of Offence Report. It is hard to believe that Offence Report is dated 21.01.2021 for a Bill of Entry dated 18.04.2018. The Offence Report must be subjected to deep scrutiny.
(F) The proceedings are barred by time and hit by limitation as per the CESTAT Final Order No.A/86335/2019 dated 10.6.2019 in the case of Mehul & Co.
Hon'ble Telangana High Court in the case of Shasta Freight Services Pvt. Ltd. [2019 (368) ELT 41] has held as under:-
"22. Paragraphs 24, 25 and 26 of the enquiry report also shows that the Enquiry Officer was persuaded to hold the petitioner guilty of violation of the Regulations, on the basis of the oral testimony of the aforesaid witnesses. Therefore, the condition precedent under Regulation 20(4) for considering the request of the Customs Broker for cross-examination, stood satisfied. Hence, the petitioner became entitled to cross-examination of these witnesses.
23. But unfortunately, the request for cross-examination was rejected by the Enquiry Officer for the reasons stated in paragraph 27 of his report. Paragraph-27 of the enquiry report reads as follows :
"27. As the request for cross-examination of witnesses was made to the Assistant Commissioner (Inquiry Officer) during the 4th PH, necessary correspondence to facilitate the same on 8-1-2018 were made as detailed in para 17 above. While the noticee has further requested for a fresh date and time for cross-examination with at least one week notice; but since the inquiry report has to be submitted within a period of 90 days from the date of issue of Notice as per Regulation 20(5) of the CBLR, 2013, the same is not possible for consideration. Further it needs to be stated that neither of the witnesses has turned up for cross-examination on the scheduled date, despite even an oral communication about the same to Shri Pramod Bhor.
6 C/85501/2022 ... ... ... Given that the request for cross-examination of persons (whose statements been recorded) was put forth to the Assistant Commissioner on 18-12-2017 only, efforts to enable the same within the time-constraints of inquiry proceedings as per the Regulation 20(5) of CBLR, 2013 were made. Moreover, the primary submission, dated 6- 11-2017, was neither directed to the Inquiry Officer nor was the CB forthcoming to either attend the PH or submit supporting documents, until withdrawal of the notice by the Principal Commissioner of Customs. In the event of no such withdrawal and given the limitations of time, but keeping in view of the requirements of providing opportunity of being heard (which were not attended by the CB) and given the non-presentation of witnesses for cross-examination, it is to state that the findings are based on the available documents at hand i.e. the offence report, statements of Arjun Pilane and Pramod Bhor, the Prohibition order and the submissions of the CB, read with CBLR, 2013."
24. Therefore, it is clear that there was a gross violation of the principles of natural justice. Unfortunately for the Department, the principles of natural justice have also been in-built into Regulation 20(4). Therefore, the Enquiry Officer could not have violated the mandate of law. It would have been a different matter if the Enquiry Officer had chosen not to rely upon the statements of those two witnesses, but to proceed only on the basis of other available documents. But in more than one place, the Enquiry Officer affirmed his reliance upon the statements of witnesses, among other things. Therefore, the impugned order based upon such an enquiry report is contrary to the procedure prescribed by Regulation 20(4) and clearly in violation of the principles of natural justice.."
This judgment has been affirmed by the Hon'ble Apex Court as reported in [2022 (381) ELT 436 (SC)].
7 C/85501/2022 Since the order has been passed in violation of the principles of natural justice, the same could not have been sustained.
3.3 Arguing for the Revenue, learned AR submits that the order against the appellant needs to be sustained and for that purpose he relies upon the following decisions:-
o Rubal Logistics Pvt. Ltd. [2019 (368) ELT 1006 (Tri.-Del.)] o Noble Agency [2002 (142) ELT 84 (Tri.-Mumbai)] o Cappithan Agencies [2015 (326) ELT 150 (Mad.)] o Jasjeet Singh Marwah [2009 (239) ELT 407 (Del.)] o Union Clearing P. Ltd. [2018 (361) ELT 321 (Bom.)] o Srinivas Clearing & Shipping (I) P. Ltd. [2022 (380) ELT 60 (Bom.)] o AB Consultants [2015 (330) ELT 273 (Tri.-Mum.)] o D.M. Mehta & Bros [2017 (346) ELT 477 (Tri.-Mum.)] o Sabin Logistics Pvt. Ltd. [2018 (362) ELT 226 (Mad.)].
4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 Commissioner has recorded following findings in the impugned order to hold against the appellant:-
"35.5 In the instant case, the license of Customs Broker M/s. Hayatt Shipping Pvt. Ltd., CB No (11/396)was suspended vide Order No. 42/2020-21 dated 16.02.2021 under the provisions of Regulation 16(1) of CBLR, 2018. Thereafter Personal Hearing to the CB was given and the Suspension of the CB license was revoked vide order no. No.52/2020-21 dated 15.03.2021 read with corrigendum dated 27.07.2021 to Order No.52/2020-21 dated 15.03.2021under the provisions of Regulation 16 (2) of CBLR, 2018, pending inquiry under Regulation 17 of the CBLR, 2018. Vide Show Cause Notice No. 82/2020-21 dated 15.03.2021, the CB were called upon to show cause, as to why the license bearing no. 11/396 issued to them should not be revoked and security deposited should not be forfeited and/or penalty should not be imposed upon them under Regulation 14 read with 17 & 18 of the CBLR, 2018, for their failure to comply 8 C/85501/2022 with the provisions of the Regulations 10(a), 10(d), 10(e), 10(m) and 10(n) of the Custom Broker Licensing Regulations 2018, with pending Inquiry being initiated by the Inquiry Officer Shri Rajesh Munde, Deputy Commissioner of Customs appointed in the case.
35.6 Inquiry report dated 16.09.2021 was received and the charges framed against CB i.e., violation of Regulation 10(a), 10(d), 10(e), 10(m) and 10(n) of the CBLR, 2018 were held 'Proved' in the Inquiry Report.
36. I now examine the charges in the SCN sequentially. It has been alleged that CB did not exercise due diligence in discharging their obligation as required under Regulation 10(a), 10(d), 10(e), 10(m) and 10(n) of the CBLR, 2018.
36.1 In respect of Regulation 10(a) of CBLR 2018 it has been alleged that the CB shall obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as a Customs Broker and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be. It is noticed that during course of investigation it was revealed that as per statement Shri Mohammed Arfat Mehmood Mukadam, Director and G-Power of Attorney holder of the Customs Broker M/s. Hayatt Shipping Pvt. Ltd. recorded on 06.08.2018, under Section 108 of the Customs Act, 1962, he admitted that he got the documents from a person by name Shri Irfan Ismail Popatiya, who was introduced by his friend Shri Santosh Gunjal. Shri Mohammed Arfat Mehmood Mumkadam further stated that he personally verified the address of Shri Sahdeo Bapurao Rade, Proprietor of M/s. Global Enterprises. However, IEC holder Shri Sahdeo Bapurao Rade, proprietor of M/s. Global Enterprises has denied that he had applied for any Importer Exporter Code (IEC).Shri Sahdeo Bapurao Rade further stated that he has not authorized anybody to carry out any import-export business in his name. Hence, it is clear that Shri Sahdeo Bapurao Rade, proprietor of M/s. Global Enterprises has not authorized the CB M/s. Hayatt Shipping Pvt. Ltd., CB No. 9 C/85501/2022 11/396. Therefore, I hold that the CB failed to fulfill the obligation of Regulation 10(a) of CBLR, 2018.
36.2 In respect of Regulation 10(d) of CBLR 2018 it has been alleged that a Customs Broker shall 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. As per statement of Shri Sahdeo Bapurao Rade, proprietor of M/s. Global Enterprises was recorded on 08.08.2018, under Section 108 of the Customs Act, 1962 he did not apply for any Importer- Exporter Code (IEC). According to this statement neither he ever has any business interest in M/s. Global Enterprises nor was he aware of M/s. Global Enterprises. It was also added that he has not given any authorization or Power of Attorney to anybody to operate business activities of M/s. Global Enterprises. He also claimed that he was not the proprietor of M/s. Global Enterprises and not aware of its business or functioning. In the Statement Shri Mohammed Arfat Mehmood Mumkadam, Director and G- Power of Attorney holder of the Customs Broker recorded on 06.08.2018, he inter alia admitted that he got the documents from a person by name Shri Irfan Ismail Popatiya, who was introduced by his friend Shri Santosh Gunjal. From this, it is evident that Shri Sahdeo Bapurao Rade, proprietor of M/s. Global Enterprises never authorized the CB M/s. Hayatt Shipping Pvt. Ltd., and Shri Mohammed Arfat Mehmood Mumkadam, Director and G-Power of Attorney holder of the Customs Broker M/s. Hayatt Shipping Pvt Ltd., never met Shri Sahdeo Bapurao Rade. It is on record that there was no interaction between the Customs Broker and the Shri Sahdeo Bapurao Rade, proprietor of M/s. Global Enterprises so that the Customs Broker could give proper advice. Hence, I hold that the CB failed to fulfill the obligation of Regulation 10(d) of CBLR, 2018.
36.3 In respect of Regulation 10(e) of CBLR 2018 it has been alleged in the Show Cause Notice that the CB did not exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related 10 C/85501/2022 to clearance of cargo or baggage. I find that the CB has not interacted directly with the IEC holder. The documents for clearance purpose were received by the CB through middlemen viz. Shri Santosh Dagdu Gunjal and Shri Chandrashekar Chandrakant Rane, who were neither importer nor authorized representative of the importer. Thus, the CB has failed to verify the authenticity and genuineness of the proxy importer M/s. Global Enterprises. Therefore, it is clear that the CB allowed unauthorized person Shri Amjad Mohd. Farukh Bakali to import the goods by misuse of IEC. Thus, by their acts of omission and commission, the CB has aided and abetted the fraudulent imports. Therefore, the Customs Broker has failed to exercise due diligence to ascertain the correctness of the information furnished by the client. Hence, I hold that the CB failed to fulfill the obligation of Regulation 10(e) of CBLR, 2018.
36.4 In respect of Regulation 10(m) of CBLR 2018 it has been alleged in the Show Cause Notice that the CB has not discharged his duties as a Customs Broker with utmost speed and efficiency and without any delay. I find that failure to comply with regulation 10(m) of CBLR, 2018 is clearly established that Shri Mohammed ArfatMehmoodMumkadam, Director & G-Power of Attorney Holder has admitted in his statement that all the clearance documents were received through middlemen viz. Shri Santosh DagduGunjal and Shri ChandrashekarChandrakantRane, who were neither importer nor authorized representative of the importer and failed to verify the authentic and genuineness of the proxy importer M/s. Global Enterprises. It is evident that the CB has not been efficient in the discharge of their obligation laid down under the CBLR, 2018. Hence, I hold that the CB failed to fulfil the obligation of Regulation 10(m) of CBLR, 2018.
36.5 In respect of Regulation 10(n) of CBLR 2018 it has been alleged that the CB did not verified 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 It is observed from record that the CB M/s. Hayatt Shipping Pvt. Ltd., 11 C/85501/2022 CB No. 11/396 failed to verify correctness of Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity and functioning of M/s. Global Enterprises at the declared address by using reliable, independent, authentic documents, data or information. Statement Shri Mohammed Arfat Mehmood Mukadam, Director and G-Power of Attorney holder of the Customs Broker M/s. Hayatt Shipping Pvt. Ltd. was recorded on 06.08.2018, under Section 108 of the Customs Act, 1962, wherein he admitted that he got the documents from a person by name Shri Irfan Ismail Popatiya, who was introduced by his friend Shri Santosh Gunjal. Shri Mohammed Arfat Mehmood Mukadam further stated that he personally verified the address of Shri Sahdeo Bapurao Rade, Proprietor of M/s. Global Enterprises whilst the IEC holder Shri Sahdeo Bapurao Rade, proprietor of M/s. Global Enterprises has denied of having applied for any Importer Exporter Code (IEC), Shri Sahdeo Bapurao Rade further stated that he has not authorized anybody to carry out any import-export business in his name. Shri Santosh Kashiram Kadam in his statement recorded on 31.08.2018 under Section 108 of the Customs Act, 1962 inter alia stated that he does not know M/s. Global Enterprises (Service Tax Registration Number AHAPK2065NSD001) and does not have any relation/concern/business transaction with it; that there is no office of M/s. Global Enterprises (Service Tax Registration no. AHAPK2065NSD001) in his residential address at BEST quarter at C/10, BEST Staff Quarter, Jerbai Wadala Road, Near Cancer Society, Parel, Mumbai, Maharashtra - 400012. From this it became evident that the CB M/s. Hayatt Shipping Pvt. Ltd. CB No (11/396) have not been careful and not diligent in undertaking the KYC of the background of M/s. Global Enterprises and accepted documents from the persons who were neither importer nor authorized representative of the importer and miserably failed to verify the authentic and genuineness of the bogus importer M/s. Global Enterprises. Hence, I hold that the CB failed to fulfill the obligation of Regulation 10(n) of CBLR, 2018."
12 C/85501/2022 4.3 In para 34, submissions made by the appellant in their representation dated 29.10.2021 against the inquiry officer's report, have been recorded which are reproduced below:-
"The Inquiry Officer gravely erred in relying on adjudication order dated 31.03.2020 imposing penalty on the CB. He failed to appreciate that appeal against the said order filed by CB is pending.
Further, it is well settled that the proceeding under CBLR should not be influenced by adjudication in as much as they are independent and mutually exclusive.
The Inquiry Officer has to decide independently and on his own. He should not allow himself to be influenced by the findings of another person. He cannot substitute his judgement with the judgement of another authority. The Inquiry Officer gravely erred in examining statements of 7 persons which were recorded under section 108 of Customs Act, 1962 without following the procedure laid down under the CBLR. The said 7 persons should have been directed to attend the Inquiry Proceedings. Their testimony should have been recorded and thereafter Cross-
examination should have been permitted. Regulation 17(3) & (4) read as under.
"(3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall, in the course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the inquiry in regard to the grounds forming the basis of the proceedings, and he may also put any question to any person tendering evidence for or against the Customs Broker, for the purpose of ascertaining the correct position.
(4) The Customs Broker shall be entitled to cross-examine the persons examined in support of the grounds forming the basis of the proceedings, and where the Deputy Commissioner of Customs or Assistant Commissioner of Customs declines permission to examine any person on the grounds that his 13 C/85501/2022 evidence is not relevant or material, he shall record his reasons in writing for so doing."
His finding that inconsistencies were found in the said statements which could not be reconciled made it all the more inoperative for him to personally examine the said persons in the course of Inquiry.
The Inquiry Officer failed to appreciate that in case there were contradiction between the depositions of SahdeoRade (IEC Holder) and The CB, those contradictions could only have been resolved by rejecting the statements and making an honest attempt to arrive at the truth. The contradictions cannot be resolved by conveniently rejecting the version of the CB. That exposes the bias on the part of the Inquiry Officer against the CB. It also proves that he was in a tearing hurry to decide the case by throwing the principles of natural justice to the winds.
The Inquiry Officer failed to appreciate that the statements under section 108 are recorded by the investigating agency for the purpose of adjudication of duty, fine and penalty. On the other hand, the CBLR proceedings affect the likelihood of the CB and directly impact the fundamental rights guaranteed under the Constitution of India to carry on business, trade and occupation. Hence, the burden is on the department to prove and establish each charge with credible documentary evidence and oral evidence. A shortcut approach by taking a statements recorded by another agency which are admittedly conflicting and contradictory and attempting to resolve the contradictions in a hurried and biased manner behind the back of the CB neither be countenanced nor sustained.
The findings are amorphous and omnibus. The fact is that Regulations 10(a), 10(d), 10(e), 10(m) and 10(n) are not violated by the CB.
The Inquiry Report deserves to be rejected and the proceedings deserve to be dropped."
4.4 In the entire order which we have reproduced, we do not find any consideration of the submissions made by the appellant 14 C/85501/2022 in their representation dated 29.10.2021. The order has been passed without consideration of the submissions made and is against the principles of natural justice.
5.1 Appeal filed by the appellant is allowed by way of remand to the original authority for passing a speaking order after providing the appellant all the documents that are relied against them and after consideration of all the submissions made by the appellant before him.
5.2 As the issue is in respect of revocation of the CHA licence impacting the right to livelihood of the concerned persons, we direct that the matter in remand proceedings should be decided within two months from the receipt of this order.
5.3 Appeal is allowed by way of remand.
(Order pronounced in the open court) (Sanjiv Srivastava) Member (Technical) (Dr. Suvendu Kumar Pati) Member (Judicial) tvu