Custom, Excise & Service Tax Tribunal
V S Bhagwati Shipping vs Commissioner, Customs-New Delhi ... on 24 January, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - IV
Customs Appeal No. 51930 of 2022 [DB]
[Arising out of Order-in-Original No. 12/Denovo/MK/Policy/2021 dated
04.02.2021 passed by the Commissioner of Customs (Airport & General), New
Delhi]
M/s. V S Bhagwati Shipping ...Appellant
Through its proprietor
Mr. Vinod Kumar Sharma,
C-I/399D, 1st Floor, Palam Vihar,
Gurgaon - 122017
VERSUS
Commissioner of Customs - New Delhi
(Airport and General) ...Respondent
New Customs House, Near IGI Airport, New Delhi - 110037 APPEARANCE:
Shri G.S. Arora and Shri Ashirwad, Advocates for the Appellant Shri Shiv Shankar, Authorized Representative for the Respondent CORAM:
HON'BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL) HON'BLE MRS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) DATE OF HEARING: 16.10.2024 DATE OF DECISION: 24.01.2025 FINAL ORDER No. 50085/2025 DR. RACHNA GUPTA The present appeal has been filed to assail the Order-in- Original No. 12/2021, dated 03-02-2021 vide which the Customs Broker License of appellant has been revoked, forfeiture of security deposited and imposition of penalty of Rs.50,000/- has also been ordered. The facts in brief, relevant for present adjudication are as follows:
1.1 The respondent commissioner received information from the Assistant Commissioner, Customs Broker Section, NCH, Mumbai-I vide letter F. No. S/8-98/2017-18 CBS dated 21.05.2018, that a 2 Customs Appeal No. 51930 of 2022 [DB] case of fraudulent import of Areca Nuts and Black Peppers by mis-
declaring the same as of Sri Lankan origin had been booked against one Mr. Sarfaraz Khan Pathan of Ahmedabad and other three importers, namely, M/s. R.M. International, M/s. T.G. Enterprise & M/s. M.M. Enterprise of Ahmedabad. They had misdeclared, allegedly in connivance, the Areca Nuts and Black Pepper of Indonesian and Vietnam origin, respectively as of Sri Lankan origin thereby misusing Indo Sri Lanka Free Trade Agreement (ISFTA) & South Asian Free Trade Area (SAFTA) agreement. Shri Vinod Kumar Sharma, Custom House Broker of M/s V. S. Bhagwati Shipping, who got cleared the goods from Customs at Nhava Sheva port is also alleged to have connived with the said three importers and Mr. Sarfaraz Khan in wrong availment of the benefit of ISFTA & SAFTA agreements with a view to circumvent payment of duty at appropriate rate. The live consignments of Areca Nuts and Black peppers were lying at Nhava Sheva being got cleared by M/s V S Bhagwati, the appellant as Custom Broker/ Custom House Agent and were seized on 13.11.2017. Those were 7 in number as per the details provided by Mr. Sarfaraz Khan on 06/07.10.2017 1.2 The matter was further investigated and it was revealed that Indian importers, other than above three, have also adopted similar modus operandi, which resulted in loss of Customs duty to the tune of crores of rupees. The importers in India along with de facto owners have admitted their offence stating that the Areca Nuts and Black Peppers imported into India from Indonesia and Vietnam respectively but by wrongly showing them as of Sri Lanka origin. 3
Customs Appeal No. 51930 of 2022 [DB] Further, it revealed that Shri Vinod Kumar Sharma, Proprietor, M/s. V.S. Bhagwati Shipping (Appellant) who got the goods cleared from Customs at Nhava Sheva port, was the common figure in facilitating the mis-declaration of country of origin to various Indian importers. 1.3 Further inquiry based on the statement of Shri Vinod Kumar Sharma, Proprietor recorded on 28.09.2017 and 22.11.2017 revealed that Appellant firm had played main role in the mis-use of scheme of ISFTA and SAFTA agreement by facilitating / aiding and abetting the importers in resorting to mis-declaration of Areca Nuts and Black Peppers of Indonesia and Vietnam origin, respectively by showing the same as of Sri Lanka origin. The said act of Shri Vinod Kumar Sharma had been corroborated by the documentary evidences in the form of whatsapp messages /emails as well as oral evidences in the form of statements of Shri Sarfaraz Khan Pathan, Shri Raju Kothari, financier, Shri Mohammad Ershad Ahmed, Partner, M/s. Hamza Enterprise, Bangalore, Shri Lalit Agrawal and Ghanshyam Agrawal, Partners, M/s. Om Shiva Shakti Products Inc., Bangalore.
1.4 Based on these observations, department alleged that apart from the contraventions of the Customs Act, 1962, the CB had also violated various regulations under Customs Brokers Licensing Regulation, 2018 (read with erstwhile Customs Brokers Licensing Regulation, 2013). Accordingly, a Show Cause Notice No. 28/2018 dated. 16.08.2018 was issued to Appellant wherein it was alleged that the CB/ appellant had failed in complying with Regulations 10(a), (d), (e) & (n) of CBLR, 2018 (read with erstwhile CBLR, 4 Customs Appeal No. 51930 of 2022 [DB] 2013) and is, therefore, liable for action under Regulation 14 read with Regulation 17 & 18 of CBLR, 2018 (read with erstwhile CBLR, 2013), including revocation of license, forefeiture of part or whole of security amount and imposition of penalty.
1.5 Based on these allegations and in compliance to CBLR 2018, an Inquiry Officer was appointed. The appellant CB attended inquiry proceedings before the Inquiry Officer, requested for documents based on which the SCN was issued to the appellant and also sought cross examination of persons whose statements are relied upon in the SCN. The Inquiry Officer after hearing the appellants, submitted inquiry report. The Inquiry Report confirmed the alleged violation of the CBLR 2013/2018 as alleged in the SCN. Thereafter appellant CB participated in the adjudication proceedings under CBLR 2013/2018 as conducted by the Commissioner (Airport & General) and reiterated request for documents and cross examination. However, Learned Commissioner vide order number 08/2019 dated 08-02-2019 while agreeing with the recommendations/findings of the of the Inquiry Officer and while denying the opportunity of cross-examination revoked the License of the appellant CB, imposed penalty of Rs.50,000/ and forfeited security amount. Being aggrieved with the said order dated 08.02.2019, appellant filed the appeal before the Tribunal. Tribunal vide final order dated 29-06-2020 set aside the order of learned Commissioner of Customs and remanded the matter for de novo adjudication. Ld. Commissioner of Customs (Airport & General) vide impugned order No. 12/2021 dated. 03.02.2021 again ordered 5 Customs Appeal No. 51930 of 2022 [DB] for revocation of appellant's/customs broker's license, forfeiture of security deposited and imposition of penalty of Rs.50,000/-. Being aggrieved the appellant is before this Tribunal.
2. We have heard Shri G.S. Arora and Shri Ashirwad, learned Advocates for the appellant and Shri Shiv Shankar, learned Authorized Representative for the department.
3. It is submitted on behalf of appellant that the impugned order has been passed without examining the submissions of the appellant, the order has traveled beyond the scope of Show Cause Notice as was issued to the Appellant. The adjudicating authority is alleged to have relied on such documents which were never provided to the Appellant. The order rather suffers from lack of examination of documents produced by the Appellant. Ld. Counsel impressed upon that thus there has been grave injustice to the appellant by deliberate violation of law where adjudicating authority has failed to consider submissions on behalf of appellants and has passed the order based on presumptions and assumption. 3.1 It is further submitted that ld Commissioner has failed to examine records of the Inquiry Officer, Inquiry Report as well as the statement of the Inquiry Officer during Cross examination. Not a single document mentioned in the body of the SCN has been identified by the Inquiry Officer during Cross Examination. Further it has been proven by the statements during cross examination of the concerned investigating officers of DRI that there is no conformation from Sri Lankan Authorities regarding Certificates of 6 Customs Appeal No. 51930 of 2022 [DB] Country of Origin ( COO) being false or forged. In the absence of the same, the COOs as per CBIC instructions as well as judicial pronouncements cannot be rejected by the Customs authorities. It is also submitted that statements under Section 108 Customs Act 1962 are not admissible in CBLR proceedings. Further, if the allegations of false or forged COOs is not proved, the entire allegation does not survive. In the absence of COOs being proved to be false or forged by Sri Lankan Authorities, the same shall prevail over any statement recorded by DRI officers on the principle that documentary evidence shall prevail over oral evidence. 3.2 It is further submitted that allegations upheld in the impugned order regarding non compliance to Regulation 10(a) of CBLR 2018 (and corresponding Regulation of CBLR 2013 ) in respect of not obtaining authorization and KYC directly from the importers concerned, are absolutely unjustified and are contrary to the documents. There are catena of judgements that CB can obtain documents from the importers through third persons. Thus this finding of the ld. Commissioner is not sustainable. Regarding allegation of non compliance to Regulation 10 (d) of CBLR 2018 ( and corresponding Regulation of CBLR 2013 ) in respect of advising the clients correctly is concerned, same cannot be upheld against the appellant CB till any of the COOs are proved false or forged. All actions of the CB have to be judged in this regard not on the basis of inadmissible evidence but on the veracity of the COOs determined as per prescribed procedure. Regarding allegation of non compliance to Regulation 10 (n) of CBLR 2018 ( and 7 Customs Appeal No. 51930 of 2022 [DB] corresponding Regulation of CBLR 2013 ) in respect of verification of IEC of the importers and their functioning the same are alleged to be misplaced. Learned Commissioner has upheld the same incorrectly as all the concerned importers whose consignments have been cleared by the appellant CB have joined investigations. None of their documents have been found to be forged, false or incorrect or deficient. Not a single importer has denied the imports. Further, appellant had not cleared any consignment of M/s M.M. Enterprise Ahmedabad. Thus the confirmation of the allegation is not supported by evidence. No document regarding identity has been found to be incorrect or false. Hence there can be no violation of Regulation of CBLR, 2018.With these submissions Learned Counsel has prayed for setting aside the order under challenge and for the appeal to be allowed.
4. While rebutting these submissions, Learned DR has mentioned that the license of the appellant has rightly been revoked. There is no infirmity while ordering forfeiture of the whole amount of security deposit nor in imposition of penalty of Rs. 50,000/- on the appellant in view of apparent violation of Regulations 10(a), 10(d), 10(e), &10(n) CBLR, 2018 (read with erstwhile CBLR, 2013) verified in the inquiry report no. 2432/2018 dated 13.11.2018. The findings of the impugned order are reiterated. It is further submitted that the request for cross examination was merely a delay tactic hence was rightly declined. Otherwise also there is sufficient evidence on record as a proof for the alleged illegal act on the part of the appellant. Hence, there is 8 Customs Appeal No. 51930 of 2022 [DB] no infirmity in the Order under challenge as apparent from following submission:
1. Failure to Obtain Authorizations: The CB did not secure necessary authorizations from the proprietors of the importing firms M/s R.M. International, M/s T.G. Enterprise, and M/s M.M. Enterprise. All interactions were conducted through a third party, Mr. Sarfaraz Khan Pathan, as evident from the confessional statement dated 28.09.2017 &22.11.2017 of Sh. VK Sharma (the proprietor and 'F' card holder of CB firm M/s V.S.Bhagwati Shipping), indicating a lack of direct engagement with the actual importers. This constitutes a violation of Regulation 10(a) of CBLR, 2018(read with Regulation 11(a) of erstwhile CBLR, 2013), which mandates direct authorization from clients.
2. Negligence in KYC Compliance: The CB failed to perform due diligence by not obtaining KYC documents directly from the importers. KYC details were submitted through an intermediary, which is contrary to the regulatory requirement that mandates direct verification. The Inquiry Officer observed that the CB's actions compromised the authenticity of the documentation, violating Regulation 10(a) of CBLR, 2018(read with Regulation 11(a) of erstwhile CBLR, 2013).
3. Failure to Advise and Report Non-Compliance: The CB knowingly allowed misdeclaration regarding the Country of Origin (COO) of goods to proceed without advising the importers to comply with customs regulations. Evidence shows that the CB facilitated the importers' attempts to incorrectly claim benefits 9 Customs Appeal No. 51930 of 2022 [DB] under ISFTA/SAFTA schemes, thus violating Regulations 10(d) and 10(e) of CBLR, 2018.
4. Lack of Verification: Shri Vinod Kumar Sharma, the Proprietor and F-card holder of the CB firm M/s V.S. Bhagwati Shipping, in his statement, interalia stated that the documents such as Customer Information Sheet, undertaking regarding truthfulness and authenticity of SAFTA certificate & authority letter to Customs relating to consignments of Black Peppers imported in the name of M/s. T.G. Enterprise were not signed by the Proprietor, M/s. T.G. Enterprise, Ahmedabad and the signature on the said documents was different from the signature on the PAN card submitted by the Proprietor, M/s. T. G. Enterprises. Hence, it is clear that he failed to verify the KYC, antecedent, correctness of Importer Exporter Code (IEC) number, identity and functioning of his clients viz. M/s R. M. International, Ahmedabad, M/s. T. G. Enterprise, Ahmedabad & M/s. M. M. Enterprise, Ahmedabad at the declared addresses and hence it was alleged that CB contravened Regulation 10(n) of the CBLR, 2018 (read with Regulation 11(n) of erstwhile CBLR, 2013).
4.1 Learned Departmental Representative has relied upon the following decisions:
(i) Surjeet Singh Chhabra Vs. UOI, which held that admissions made before customs officials are binding, even if later retracted.
(ii) M/s. AG Impex Vs. Commissioner of Customs, New Delhi in Customs Appeal No. 52953 of 2019 (DB) Final Order No. 58586/2024 dated 13.09.2024, wherein it is held that:10
Customs Appeal No. 51930 of 2022 [DB] "7. In view of entire above discussion, we hold that the data retrieved from the appellant's proprietor's own mobile is the document admissible into evidence. The requirement of certificate under Section 138C, as is impressed upon by the appellant, is held not applicable in the given set of circumstances as already explained above. No infirmity has been found in the manner of redetermining the value and the quantum thereof. With these observations, the order under challenge is hereby upheld.
Consequent thereto, the appeal is dismissed."
(iii) Baraskar Brothers Vs. Commissioner of Customs (General), Mumbai reported as 2009 (244) ELT 562, wherein it is held that "there is no second opinion to the fact that the CHA is a very important component in the whole system of Customs administration, which has a major bearing on Customs revenue collection and national security. The CHAs cannot shy away from the responsibilities and obligations casted upon them by law".
In light of these submissions, the appeal is accordingly prayed to be dismissed.
5. Having heard the rival contentions and perusing the entire records, we observe and hold as follows:
5.1 The present case is arising out of the allegation that the appellant, being the customs broker was aware of the fact that the origin of impugned imported goods, Areca Nuts and Black Pepper was Indonesia and Vietnam respectively and that the same was misdeclared as of Sri lanka origin in connivance with importers and one Mr. Sarfaraz Khan Pathan. It has been held by the adjudicating authority below that the appellant was required to have 11 Customs Appeal No. 51930 of 2022 [DB] authorization from the importers in his favour, he should have been diligent and should have done KYC of the importers. He should have advised his clients to submit genuine documents and should have brought the discrepancy noticed to the knowledge of the customs authority. The impugned show cause notice thus has alleged and the impugned order has confirmed the violation of several provisions of Regulation 10 of CBLR, 2018.
5.2 To check the correctness of the findings arrived at in the order under challenge (dated 03.02.2021). We observe that following two question need adjudication:
(i) Whether the appellant as Customs Broker have violated Regulations 10(a), 10(d) 10(e), and 10(n) of Customs Broker License Regulations, 2018 (CBLR)?
(ii) Whether the appellant/Customs Broker has connived with the importer and abetted the alleged act of mis-
declaring the goods to be of Sri Lankan Origin?
6. Question No. 1
For this purpose, we proceed regulation wise as follows : 6.1 Regulation 10(a) of CBLR, 2018 reads as follows :
"10.(a) 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."
The adjudicating authority concluded that CB/appellant had not obtained due authorization from any of the importers required 12 Customs Appeal No. 51930 of 2022 [DB] under provisions of Regulation 10(a) of CBLR, 2018 read with erstwhile Regulation 11(a) of CBLR, 2013. The Customs Broker had not obtained authorizations from the proprietors of M/s. R.M. International, M/S. T.G. Enterprise, Ahmedabad and M/S. M.M. Enterprise, all three of the importers, to work as Customs Broker. He did not meet the proprietor of these firm(s), and all the correspondence / interaction in respect of the import of Areca nuts and Black Pepper were made with Mr. Sarfaraz Khan Pathan. The KYC details in respect of the above three firms were also obtained from said Shri Sarfaraz Khan Pathan and not from the importers.
As apparent from the above provision, it is obligatory for the Custom Broker to obtain an authorization from the individuals by whom he is for the time being is employed as Customs broker. However, as per the above regulation, to our opinion, there is no requirement in law for a Customs Broker to personally meet the individual by whom he is for the time being employed/ authorised as a Customs Broker. No provision under the Customs Act 1962 or under CBLR 2013/2018 requires CB to interact in person with the importer or exporter. Further, it is observed that none of the importers in their statement denied appellant to be their authorized CB. There is no statement recorded from any of the importers that they did not authorize the appellant to conduct customs clearance work with respect to the impugned imports. There is also no denial of any of the three importers that Mr. Sarfaraz Khan was dealing with CB on their (importer's) behalf. There is even no allegation that authorisation was asked by any officer and that it was not 13 Customs Appeal No. 51930 of 2022 [DB] produced. We find that the authorization of importer M/s. R M International is on record. Thus the finding of learned Commissioner with respect to Regulation 10(a), as observed above, is against the facts and contrary to the documents and statements on record. Therefore, we find that the impugned order was not correct in its finding holding that the appellant violated Regulation 10(a) of CBLR 2018.
6.2 Regulation 10(d) and 10 (e)reads as follows.
Regulation 10(d) 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;
Regulation 10(e) A Customs Broker shall -
Exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage;
According to the department, Inquiry officer found that the CB neither advised the importers to comply with the provisions of the act nor did he brought to the notice of Deputy/ Assistant Commissioner of Customs the fact that importers have fake Certificates of Origin (COOs) Further, the CB himself had not ascertained the correctness of information in respect of origin of goods. Thus, CB has violated the provision of regulation 10(d) and 14 Customs Appeal No. 51930 of 2022 [DB] 10(e) of CBLR, 2018 [erstwhile Regulation 11(d) and 11(e) of CBLR, 2013].
6.3 We observe that these allegations have been leveled based on appellan's (Mr. Vinod Sharma) statements. The Ld. Counsel for the Appellant strongly submitted that the statement of the proprietor of the CB dated 22-11-2017 and the one dated 28-09-2017 was obtained under duress. We find that the said statement was later retracted before the Inquiry Officer. Hence the statement of alleged confession cannot be relied upon without cogent corroboration to the same. We do not find any such corroboration to the alleged confession of appellant. We draw our support from the decision in the case of Vinod Solanki [2009 (233) E.L.T. 157 (S.C.) = 2009 (13) S.T.R. 337 (S.C.)] the Hon'ble Supreme Court has inter alia held as under :-
(1) Burden to prove that confession was voluntary is on the department.
(2) Court must bear in mind the time of retraction, nature and manner and other relevant factors to arrive at a finding.
In the case of Tejwal Dyestuff Industries [2007 (216) E.L.T. 310 (T)] the Tribunal has held as under :-
"Recording of the confessional statement would not put an end to the investigation and the Revenue Officers should be careful to ensure that they are not tricked out of a regular and detailed investigation by making strategic confessions which are retracted by preparing affidavits soon after they are made and which affidavits are again strategically withheld from the Revenue Officers, so that they become complacent and do not carry out a fuller investigation. It appears that the Revenue Officers in the 15 Customs Appeal No. 51930 of 2022 [DB] present case have fallen victim to this type of strategic confessional statements which have been retracted soon after they were made in the affidavits which were withheld by the deponents till the proceedings came up before the Commissioner, by which time the damage of not making a fuller investigation, thinking that the confessional statements are made and not retracted, was already done."
6.4 We further observe that the extract of WhatsApp Chats from appellant's mobile is also relied upon. From the perusal we find that even the said whatsApp chats do not show that appellant violated any of these two regulations. Otherwise also, someone else's or of the co-noticee conversation, though with appellant cannot be considered as confession of appellant. We observe that the chats rather are reflecting that appellant had advised the importer that to take the benefit of COO certificate, it must be printed on PP bags itself. Hence, it is wrongly held that the appellant has failed to advice his clients. We draw our support from the decision of Hon'ble Supreme court in the case of Mohtesham Mohd. Ismail [2007 (220) E.L.T. 3 (S.C.) = 2009 (13) S.T.R. 433 (S.C.)], the Hon'ble Supreme Court has held that confession of a co-accused person cannot be treated as substantive evidence. Para 16 of the said judgment reads as under :-
"We may, however, notice that recently in Francis Stanly @ Stalin v. Intelligence Officer, Narcotic Control Bureau, Thiruvananthapuram [2006 (13) SCALE 386], this Court has emphasized that confession only if found to be voluntary and free from pressure, can be accepted. A confession purported to have been made before an authority would require a closure scrutiny. It is furthermore now well-settled that the court must seek corroboration of the purported confession from independent sources."16
Customs Appeal No. 51930 of 2022 [DB] 6.5 Further, the said statement is not admissible for purpose of CBLR proceedings being recorded under Section 108 of the Customs Act 1962. While we are on Section 108 of the Customs Act, we may also advert to Section 24 of the Evidence Act, 1882 which deals with admissibility of a confession. Section 24 of the Evidence Act reads as under:
"24. Confession caused by inducement, threat or promise, whenirrelevant in criminal proceeding. - A confession made by an accused person is irrelevant in a criminal proceeding, if the making of the confession appears to the Court to have been caused by any inducement, threat or promise, having reference to the charge against the accused person, proceeding from a person in authority and sufficient, in the opinion of the Court, to give the accused person grounds which would appear to him reasonable, for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him."
6.6 From a reading of Section 24 of the Evidence Act what is clear is that a confession made by an accused due to any inducement, threat or promise having reference to the charge against the accused person would be irrelevant in a criminal proceeding. This Court held in State of Punjab v. Barkat Ram 1962 (3) SCR 338 that customs officers are not police officers for the purpose of Section 25 of the Evidence Act which says that no confession made before a police officer shall be proved as against a person accused of any offence. A Constitution Bench of this court in Romesh Chandra Mehta v. State of West Bengal, AIR 1970 SC 940 = 1999 (110) E.L.T. 324 (S.C.) = [1968] 1968 taxmann.com 3 (S.C.) held that customs officers are entrusted with the powers specifically relating to collection of customs duty 17 Customs Appeal No. 51930 of 2022 [DB] and prevention of smuggling. For that purpose, they are invested with the power to search any person on reasonable suspicion, to summon a person to give evidence, to arrest such a person if there is a reasonable suspicion that such a person is guilty of an offence under the Customs Act etc. 6.7 We also observe that the findings by the learned Inquiry officer and Ld. Commissioner has no discussion and elaboration as to how Appellant came to know that imported Areca Nuts and Peppers were not of Sri Lankan origin. The statement of appellant is held to be the clear admission of appellant about having prior knowledge of the fact that COOs are fake without any corroborating evidence about the alleged fakeness. The imports are admitedly covered by Documents issued by Government of Sri Lanka and also by all requiered commercial documents. These documents issued by another Sovereign Government, the documentary evidence, can not be disbelieved and discarded on the basis of the oral evidence that too the statement of appellant which is alleged to have been recorded under undue influence and force and was later retracted. 6.8 Appellant as CB is bound by the documents given to him by the importers. Further, till date department has not been able to produce any evidence that any of the documents submitted at the time of clearance of the imported Areca Nuts are forged or false. No report from the Country of Origin i.e Sri Lanka or from the alleged countries i.e. Indonesia and Veitnam have been obtained. The inquiry officers in their cross examination have admitted that they didn't call for any report verifying the genuineness of COOs from 18 Customs Appeal No. 51930 of 2022 [DB] any of these countries. It has been acknowleged that the statement of appellant solely has been relied upon. As already held above the burden was still on department as the statements were alleged to be recorded under duress and were later retracted. Once documents on record point out imports being from Sri Lanka and there is nothing on record to show/prove otherwise, there was no necessity under CBLR 2013/2018 to give any advice to the contrary. Hence, we hold that the findings in this regard are not sustainable.
6.9 As far as allegation regarding not ascertaining the correctness of information in respect of Country of Origin of the goods is concerned, we find that CBLR 2013/2018 do not prescribe any investigative role for the CB. The duty of CB is to ensure the documents filed are correct and details are filled up by the CB as per documents given to him. This Tribunal in Final Order No. 50705/2020 dated 29.06.2020 has already held as follows:
"17. Having considered the rival contentions and on perusal of the records, we find that the respondent commissioner passed the impugned order of revocation and penalty without examining any evidence, and without ensuring that the appellant CHA/CB is given proper opportunity of hearing to meet the allegations in the show cause notice. Neither the evidence were seen by the Adjudicating Authority, nor a copy of the same was provided to the appellant, CB. This error is glaring, particularly in respect of the investigation by the DRI, Bangalore, as no report for the same is even cited in the show cause notice or suspension order.
18. It is further evident that when the Adjudicating Authority himself did not have the relied upon documents, etc., there is no question of the same being made available to the appellant-CHA, resulting in gross violation of the process of the court, and the 19 Customs Appeal No. 51930 of 2022 [DB] principles of Natural Justice. Mere reliance on the Suspension Order and the allegations in the show cause notice by the ld. Commissioner in passing the impugned order, has vitiated the impugned order, leading to mis-carriage of justice.
19. We further observe that the main allegation against the appellant CB is connivance in production of false certificate of „country of origin‟, submitted at the time of clearance along with the bills of entry. The only evidence in this case appears to be the confessional statement of the authorised person of appellant, Mr. V.K. Sharma. There is no report from the Appropriate Authority of Sri Lanka disputing the certificate of origin, who are the competent persons to give evidence in the matter. There is no whisper of any verification made by the Customs Authority during investigation from Sri Lankan Authority."
Final order of this Tribunal, Kolkata Bench, in the case of B. K. Clearing Agency Vs. Commissioner of Customs (Administration & Airport), Kolkata bearing No. 75256/2023 dated 26.04.2023 has held that:
"14. We find that paragraph 6 of the Circular 9/2010-Cus dated 8.4.2010 requires the client to furnish to the CHA, a photograph of himself / herself, in the case of an individual and those of the authorized signatory in respect of other forms of organization such as company/trusts, etc. and any two of the listed documents in the annexure to the said Circular. Thus, it is evident that even as per the Circular, obtaining a photograph and any two of the documents listed in the Annexure to the circular is sufficient compliance of Regulation 10(n) of CBLR, 2018. The most important documents in these cases are the IEC and the GSTIN - one issued by the same department and the other by the DGFT. The IEC issued by the DGFT has not been disputed at all without which the goods could not have been exported. The Appellant has obtained these documents as prescribed in the said Circular."20
Customs Appeal No. 51930 of 2022 [DB] 6.10 The task of verification of documents is of the departmental officers. Law also does not empower the CB to undertake any investigations. Hence this part of the allegation is without any basis and wrongful presumption that CB should have investigated the documents provided by the importers. Further, when law of the land states that COO certificates can not be challenged even by the Customs Authorities except by following a prescribed procedure, how can a CB challenge those documents and in particular when the certificates were supported by Bill of lading,Commercial invoice etc. None of these documents have been objected nor have been denied by the importers to have been provided to the appellant. Even Mr. Sarfaraz Khan is also not denied to be the contact person on behalf of the importers.
6.11 Law does not require a custom broker to physically deal with the goods before the same are received in custom area. The Custom Broker operates on the basis of document supplied to him and in that context it can hardly be held that the documents/ details filed by the Custom Broker on the strength of documents supplied by the importers are wrong. We draw our support from the decision in the case of M/s. Sai Chhaya Impex Pvt. Ltd. Vs. Commissioner of Customs (Airport & General), New Delhi decided vide Final Order of this Tribunal, Principal Bench, bearing No. 50102/2023 dated 03.02.2023.
In these circumstances we did not find any merit in confirmation of charge under Regulation 10(d) and 10(e)of the CBLR 2018. The same is therefore liable to be dropped. 21
Customs Appeal No. 51930 of 2022 [DB] 6.12 The next charge upheld against the appellant relates to violation of Regulation 10(n) of the CBLR,2018. The Regulation10(n) reads as follows:
"The Custom Broker shall 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."
6.13 The adjudicating authority below has held that the CB did not verify the KYC, antecedent, correctness of importer exporter code (IEC) number, identity and functioning of his clients at the declared address and thus the CB has failed to perform duties casted upon him under the provisions of Regulation 11(n) of CBLR, 2018. From the above provision, we find that the obligation of CB under Regulation 10(n) can be summarized 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
(d) Verify the functioning of the client at the declared address using reliable, independent, authentic documents, data or information 6.14 All 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 22 Customs Appeal No. 51930 of 2022 [DB] 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 :
Presumption as to genuineness of certified copies. TheCourt 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 23 Customs Appeal No. 51930 of 2022 [DB] signed or certified, held, when he signed it, the official character which he claims in such paper."
6.15 We find that Regulation 10(n) nowhere extends the responsibility of the CB to physically going to the premises of each of the importers to ensure that they are functioning at the premises. When a Government officer issues a certificate or registration with an address to an Importer, the Customs Broker cannot be faulted for trusting the certificates so issued. It is otherwise not the case of department that IEC etc. of the importers herein were forged. Infact all the importers were found existing and they even joined the investigation and admitted appellant to be their CB for clearance of impugned imports. It has been held by the High Court of Delhi in the case of Kunal Travels [2017 (3) TMI 1494-Delhi High Court = 2017 (354) E.L.T. 447 (Del.)] 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 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).
6.16 The responsibility of the Customs Broker under Regulation 10(n) does not extend to ensuring that all the documents issued by 24 Customs Appeal No. 51930 of 2022 [DB] 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. 6.17 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 i.e. documents, data, or information. 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 stands 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, fulfil this obligation by obtaining data or information. In this case, since there is no denial that relevant documents were with Customs Broker and got filed with the Bill of Entry filed by said Custom 25 Customs Appeal No. 51930 of 2022 [DB] Broker, we are fully satisfied that the appellant has fulfilled this part of the obligation under Regulation 10(n).
6.18 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 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. 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. There is nothing on record to show that either of these documents were fake or forged which are otherwise issued by competent government authorities. 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.
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Customs Appeal No. 51930 of 2022 [DB] 6.19 We, therefore, find that the Customs Broker has not failed in discharging his responsibilities under Regulation 10(n). The impugned order is not correct in concluding that the Customs Broker has violated Regulation 10(n).
6.20 In view of above discussion, we hold that none of the provisions of CBLR, 2018 have been violated by the appellants. The findings to that extent are liable to be set aside. 7. Question No. 2 7.1 Foremost we need to know the meaning of abetment. It is a criminal offence hence is defined under Section 107 of Indian Penal Code, 1862 and now under Section 45 of Bhartiya Nyay Sanhita, 2023 to mean as follows:
A person abets the doing of a thing, who:
1. instigates any person to do that thing; or
2. engages with one or more other person or persons in any conspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that conspiracy, and in order to the doing of that thing; or
3. intentionally aids, by any act or illegal omission, the doing of that thing.
Explanation 1: A person who, by wilful misrepresentation, or by wilful concealment of a material fact which he is bound to disclose, voluntarily causes or procures, or attempts to cause or procure, a thing to be done, is said to instigate the doing of that thing. Explanation 2: Whoever, either prior to or at the time of the commission of an act, does anything in order to facilitate the 27 Customs Appeal No. 51930 of 2022 [DB] commission of that act, and thereby facilitates the commission thereof, is said to aid the doing of that act.
The Supreme Court has interpreted the crime of 'abetment', saying that the offence is made if the accused's "direct and alarming encouragement or incitement" left the person committing offence with no other option but to take the fatal final step resulting into crime. In its decision in the case titled as Prakash and others vs State of Maharashtra in criminal appeal arising out of SLP( Crl.) no. 1073 of 2023 decided on 20.12.2024, Hon'ble apex court has held that:
"24. This Court in Chitresh Kumar Chopra v. State (Govt. of NCT of Delhi) [(2009) 16 SCC 605 : (2010) 3 SCC (Cri) 367] had an occasion to deal with this aspect of abetment. The Court dealt with the dictionary meaning of the words "instigation" and "goading". The Court opined that there should be intention to provoke, incite or encourage the doing of an act by the latter. Each person's suicidability pattern is different from the other. Each person has his own idea of self-esteem and self-respect. Therefore, it is impossible to lay down any straitjacket formula in dealing with such cases. Each case has to be decided on the basis of its own facts and circumstances.
25. Abetment involves a mental process of instigating a person or intentionally aiding a person in doing of a thing. Without a positive act on the part of the accused to instigate or aid in committing suicide, conviction cannot be sustained."
7.2 Reverting to the facts of the present case, we observe from Para 18 of Order-in-Original that the allegations of conspiracy/abetment are that appellant was mastermind in fraudulent import of impugned goods which has been confirmed based on following findings:
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(i) He himself confessed to have all the knowledge about how to fraudulently obtain COO certificate for the goods which are not of Srilankan Origin.
(ii) DRI had also intercepted an Indonesia Seal Intact container during investigation.
(iii) A copy of bail application by the CB, stating that the CB had retraced from all his statements is unsigned and uncertified and it could not be establishe.
(iv) Retraction from a statement tendered before a Customs Officer does not make any difference in this case in the light of the judgement by Hon'ble Apex Court in Surjeet Singh Chhabra Vs. UOI, reported in 1997, [(89) ELT 646 (SC)] wherein the Apex Court had held that "Customs Official are not police officers and admission made before them, though retracted, binds the deponent".
7.3 From the discussion under Question No. 1, it has already been held that the statement of appellant cannot be considered for want of any cogent corroboration for it as got retracted at the initial stage of seeking bail. There is no such evidence on record which may prove that COO from Sri Lanka, is a fake document that it was not issued by Sri Lankan Government. Thus the very basis of the allegations vanishes. In absence thereof, allegation of abetting the alleged imports by appellant being mastermind cannot at all sustain. The findings about retracted statement are wrong in light of the discussed case law while adjudicating Question No.1. Hence, 29 Customs Appeal No. 51930 of 2022 [DB] we hold that appellant is wrongly alleged to be abetter/mastermind for such act/omission which department has failed to prove. There is also no evidence on record to prove that Arica nuts were being imported from Indonesia and black pepeers were being imported from Vietnam. In absence of any such documentary evidence the document issued by Sri Lankan Government (Certificate of Origin) is wrongly been doubted by the department. The sole statement of appellant himself alleging it to be his confession has wrongly been used against him while penalizing him. The adjudicating authority, while doing so, has acted in gross violation of Article 21 of the Constitution of India.
8. In the light of entire above discussion, the findings of the order under challenge are therefore liable to be set aside. Both the above framed questions are decided in favour of the appellant. Accordingly, we do not find any merit in the impugned order. The same is therefore set aside and appeal is allowed with consequential relief, as per law.
[Order pronounced in the open court on 24.01.2025] (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) HK