Custom, Excise & Service Tax Tribunal
M/S. International Freight Systems Co. ... vs Commissioner Of Customs (G), Mumbai on 12 March, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. C/89776/2014-Mum (Arising out of Order-in-Original No. 32/2014-15 dt. 30.07.2014 passed by the Commissioner of Customs (General), Mumbai) For approval and signature: Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
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M/s. International Freight Systems Co. Pvt. Ltd.
:
Appellant
VS
Commissioner of Customs (G), Mumbai
:
Respondent
Appearance
Shri N.D. George, Advocate for Appellant
Shri M.K.Mall, Assistant Commissioner (A.R) for respondent
CORAM:
Mr. Anil Choudhary, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 12/03/2015
Date of pronouncement : /2015
ORDER NO.
Per : P.S. Pruthi
The appellant were acting as Customs Broker for M/s. Ace Fine Pack Pvt. Ltd., M/s. Vestal Impex, and M/s. Shivani Designers, who were investigated for evading duty on the freight element by manipulating import documents. Preliminary investigations revealed that the freight forwarders M/s. Flomic Freight Services Pvt. Ltd. had acted in connivance with some of the importers and their own overseas freight forwarding agents by showing the terms of Bill of Lading as freight pre-paid whereas the freight amount was collected by them in India . The appellant Customs Broker and M/s. Flomic Freight are sister concerns and operating under the same management with same Head Office. The appellant had cleared the import consignments of the above importers using this modus operandi which resulted in evasion of Customs duty to the tune of Rs. 20,00,000/-. Statements were recorded of Shri Renjith Kumar and Shri Anil Kumar who are Manager (Customer Service and Operations) and Branch Manager respectively of both M/s. Flomic Freight Services and the appellant. Both admitted that the manipulation by showing freight pre-paid in the house Bill of Lading was done on instructions from the importer as well as their own overseas agent to oblige to the demands of the importer. Though the freight invoice is issued in Cochin and payment collected, all accounting and transfer of money to the overseas agent was carried out at their Head Office in Mumbai. Commissioner of Customs Cochin, on finding contravention of Regulation 11(d) of Custom Broker Licensing Regulations (CBLR) 2013 and Regulation 17(9), prohibited the operation of the appellant within the jurisdiction of his Commissionerate vide Order dt. 6.6.2014. Thereafter Commissioner of Customs Mumbai suspended the Customs Broker License of the appellant vide his order dt. 23.6.2014, for violation of the same Regulations as well as Regulation 11(m). After granting a post decisional hearing, the Commissioner Customs Mumbai vide Order No. 32/2014-15 dt. 28.7.2014 ordered continuation of suspension of the License pending enquiry under Regulation 20. The appellant is in appeal before us against this order of Commissioner of Customs Mumbai.
2. Heard both sides.
3. The Ld. Counsel for the appellant admitted that the prohibition order dt. 6.6.2014 passed by Commissioner Customs Cochin was set aside by Honble High Court of Kerala in a Writ Petition but this High Court order was set aside by the Division Bench order of Honble Kerala High Court vide Order dt. 28.10.2014.
3.1 The Ld. Counsel relied on Sheshanna Bhumanna Yadav Vs. The State of Maharashtra 1970 (2) SCC 122 to justify that in the absence of corroborative evidence, the appellant cannot be implicated. Further, he relied on the case of M. Shashikant and Company Vs. UOI 1987 (30) ELT 868 (Bom.) in which the Honble High Court held that a person is guilty of abetment if he has connived in the commission of the unauthorized act. According to him, they had no knowledge of the manipulation of freight element. He relied on Somaiya Shipping Clearing Pvt. Ltd. Vs. CCE Mumbai 2006 (197) ELT 552 to state that there is no knowledge on their part regarding the manipulation. The enquiry has already been initiated by the respondents in the matter pertaining to freight fraud in the imports made in Cochin and the present case has no bearing on the import made in Cochin.
4. The Ld. A.R. reiterated findings of the Commissioner.
5. We have carefully considered the submissions of both sides. On the facts there is no dispute. The Bills of Entry in this case were filed by the appellant and duty was evaded by manipulation of documents particularly the Bill of Lading which wrongly showed freight prepaid whereas the freight was collected in India. The key persons involved namely Shri Renjith Kumar and Shri Anil Kumar are working for both sister concerns namely the freight forwarder M/s. Flomic Freight Services Pvt. Ltd and the appellant CHA namely M/s. International Freight Systems Co. Pvt Ltd. The false Bill of Lading was prepared by the Freight Forwarders Overseas Agent. Both Shri Renjith Kumar and Shri Anil Kumar admitted to the illegality of the practice adopted by them. Shri Anil Kumar admitted that the executive staff of the freight forwarder and Customs Broker were aware of this malpractice and he believed that the common Head Office was also aware of this practice. He also stated that there was no separate staff for the Customs Broker and all the staff came under the management of M/s. Flomic Freight Services Pvt. Ltd. It is significant to note that Shri Anil Kumar stated that though the freight invoice was raised in Cochin and payment collected, all the accounting and transfer of money to overseas agents was carried out by the Head Office at Mumbai. Thus, there remains no doubt that the employees of the appellant Customs Broker committed a serious fraud which led to evasion of Customs duty. Instead of advising their client to comply with the provisions of the Customs Act, they rather colluded with the importer and freight forwarder with active knowledge and thus violated the provisions of Regulation 11(d) which mandates that the Customs Broker shall advise his clients to comply with the provisions of the Customs Act. Further, Instead of showing efficiency in their functioning as required under Regulation 11(m), they indulged in manipulation of documents. They also failed in observing the requirement of Regulation 17(9) which mandates the Customs Broker to exercise supervision over the conduct of his office employees. Instead, they totally failed in exercising proper supervision. In fact it is admitted by the two employees that the accounting in respect of freight invoices raised in Cochin and the transfer of money to the Overseas Agents was carried out in the Head Office at Mumbai. The Customs Broker did not question why freight was paid in India when the Bill of Lading showed freight pre-paid In such circumstances, it is difficult to believe that the Customs Broker had no knowledge of the fraud being perpetrated by its key officials under its nose. Therefore the reliance placed by the appellant on the case of Sheshanna Bhumanna (Supra) and Shashikant Company (supra) does not help their case. Because the evidence in the present case points to the knowledge on the part of the Customs Broker. The judgement in the case of Somaiya Shipping (supra) held that there was no evidence of knowledge on the part of the Customs Broker because the mis-declaration of description and value of the goods was on basis of documents submitted by the importer. However, in the present case the employees of the Customs Broker had full knowledge of the fraud and admittedly they had connived in committing the fraud.
6. The appellant tried to sidestep the statutory route by filing a Writ Petition in Kerala High Court which did not entertain the same. The Ld. Counsel took the plea that the offence has taken place in Cochin whereas the License has been suspended by Commissioner of Customs Mumbai. But this plea carries no significance because the License is operative at all stations and any offence committed anywhere in India would be liable to action by the issuing Commissioner who in this case is Commissioner of Customs Mumbai. We further note that the Commissioner has issued a notice to the appellant under Regulation 20 of the CBLR on 22.12.2004 and initiated the inquiry proceedings and directed the concerned officers to conclude the inquiry proceedings in a time- bound manner. Therefore at this stage we do not find any reason to interfere with the order of the Commissioner.
The appeal is dismissed.
(Pronounced court on /2015)
(Anil Choudhary)
Member (Judicial)
(P. S. Pruthi)
Member (Technical)
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