Custom, Excise & Service Tax Tribunal
Unicorn World Logistics vs Commissioner Of Customs Airport & ... on 27 January, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
New Delhi
PRINCIPAL BENCH - COURT NO. 4
Customs Appeal No.50376 Of 2024
[Arising out of OIO No. 14/ZR/POLICY/2024 dated 13.02.2024 passed by the
Commissioner of Customs (Airport & General), New Delhi]
M/s Unicorn World Logistics : Appellant
WZ-170, G-Block, Street No. 17
Hari Nagar, New Delhi-110058
Vs
Commissioner of Customs Airport : Respondent
& General-New Delhi New Customs House, Near IGI Airport New Delhi APPEARANCE:
Shri PrachitMahajan and Shri Shubham Singh, Advocates for the Appellant Shri Rajesh Singh, Authorized Representative for the Respondent CORAM :
HON'BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL) HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) FINAL ORDER No. 50102/2025 Date of Hearing:17.10.2024 Date of Decision:27.01.2025 HEMAMBIKA R. PRIYA The present appeal has been filed by M/s Unicorn World Logistics1to assail the Order-in-Original No. 14/ZR/POLICY/2024 dated 13.02.2024 wherein the Commissioner has revoked the Customs Broker License No. R-27/DEL/CUS/2011 (PAN No. AFBPM9459D)valid upto 19.02.2031.
2. The brief facts of the case are that the appellant is a Customs Broker having CB License No. R-27/DEL/CUS/2011. Based on Analytics 1 The appellant 2 Customs Appeal No. 50376 Of 2024 Report No- 07/2023-24 dated 04.05.2023 regarding fraudulent exports by non-existent entities, wherein it was alleged that 17 entities were found to be non-existent at their registered place of business, and these 17 non-existent entities had filed a total of 150 Shipping Bills with an FOB of Rs. 132.76 Cr and availed export benefits.The investigation report recommended action against Customs Brokers who had handled such export be taken in terms of the provisions under Customs Broker Licensing Regulations, 2018 for their act of omission and commission in regard to facilitating exports by non-existent entities.The department noted that the appellant had provided customs clearance services to M/s Darix Enterprises, who figured in the list of these 17 exporters, thereafter, a Show Cause Notice No.-65/ZR/Policy2023 dated 23.08.2023 was issued to the appellant wherein it was alleged that the Customs Broker has acted in contravention to Regulation 10(n) of the Customs Broker Licensing Regulation, 2018. The matter was adjudicated vide Order-in-Original No. 6. 14/ZR/Policy/2024 dated 13.02.2024 wherein the CB License was revoked, along with the forfeiture of security deposit & penalty was imposed.
3. The Learned Counsel submitted that the DGARM report had recommended action under CBLR, 2018 against Customs Brokers who had handled such alleged fraudulent exports made by non-existent entities. As the appellant CB had provided customs clearance services to M/s Darix Enterprises, the present proceedings under CBLR, 2018 were initiated against the appellant.He contended that the said exporter did not fall within the purview of the said report, as M/s Darix 3 Customs Appeal No. 50376 Of 2024 Enterprises had been allowed to re-export the imported goods, after adjudication followed by imposition of redemption fine and penalty. Hence, he submitted that this was not the case of exports under LUT for availing exports benefits.
3.1 Learned Counsel furthercontended that the impugned order was legally unsustainable as the SCN is vague and does not spell out the allegations clearly. He relied on the decision of the Tribunal in the case of Primus Logistics Private Ltd. vs. Commissioner of (A&G)2. Learned counsel also submitted that the DGARM Report was incorrect in respect of the appellant. The said report related to exports under LUT by non-existent entities for availing export incentives, IGST refunds or ITC refunds. However, he submitted that the instant S/B No. 9279910 dated 22.03.2022was filed for re-export of imported goods. Hence, there was no question of availing of any export benefit in the present case. Learned counsel stated that the appellant had not violated provisions of Regulation 10 (n) of CBLR, 2018 as the appellant had obtained the required KYC documents such as PAN, AADHAR, IEC, Rent Agreement from the said exporter and these documents were also submitted before the Adjudicating Authority. Therefore, the revocation of Customs Broker License of the appellant is not sustainable. He relied on the following decisions:-
Perfect Cargo & Logistics vs. C.C. (Airport & General), New Delhi3 Kunal Travels (Cargo) vs. Commissioner of Customs (I&G) 4 Commissioner of Customs v. Shiva Khurana5 Naman Gupta v. Commissioner of Customs (A & G)6 22024 (24) Centax 265 (Tri. Del.) 3 2021 (376) E.L.Τ. 649 4 2017(354) E.L.T. 447 (Del) 5 2019 (367) E.L.T. 550 (Del.) 4 Customs Appeal No. 50376 Of 2024 He further submitted that the present case was squarely covered by decision in case of Perfect Cargo & Logistics Vs. Commissioner of Customs, New Delhi (Airport & General)7wherein, in similar circumstances, the Commissioner had revoked the License of Custom Broker on the sole basis of communication received from DGARM regarding risky exporters who were found to be non-existent.
However, the Tribunal had set aside the order on the ground that the case was not built on conclusive evidence and the Customs Broker and its employees cannot be deprived of their livelihood in such a casual manner.
3.2 Learned counsel also submitted that the appellant did not have any other source of income and the appellant and his 27 employees have been deprived of a livelihood with revocation of CB License. In this context, he relied on the decision of the Tribunal in case of C.J. Joshi & Sons v. Commissioner of Customs, Kandla8and TV Shanmugam vs. Commissioner of Customs, Chennai9.In view of above submissions, ld. counsel prayed that the impugned order may be set aside and consequently, the revocation of CB License of appellant, forfeiture of security deposit and the penalty imposed upon appellant, may also be set aside.
6 2024 (388) E.L.T. 40 (Del.) 7 2022 (382) E.L.T. 126 (Tri. Del.), 8 1999 (113) E.L.T. 900 (Tri.-Bom.) 9 2006 (199) ELT 700 (Tri.-Chennai) 5 Customs Appeal No. 50376 Of 2024
4. Learned Authorized Representative for the Department reiterated the findings in the impugned order and submitted that the appellant did not verify the genuineness of the GSTN while filing the bills of entry or even in export shipping bills. The CB was not in touch with the actual IEC holder of the said firms, thus had not tried to verify the correctness of documents, 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. Hence, the appellant had contravened the provisions of Regulation 10(n) of CBLR, 2018. The IEC, GSTN were obtained just prior to consignment. The rent agreement was of the same month of GST registration and IEC. The premises had been hired during peak Covid period in the month of Sept. 2020. The goods imported were old and used photocopiers, which was restricted goods as per DGFT Policy. The appellant CB filed another B/E with invalid/wrong GSTN No. without authorization. 4.1. Ld. AR further submitted that the Board vide Circular No. 09/2010-Customs dated 08.04.2010 has specifically prescribed "Know Your Customer KYC guidelines to the CBs/CHAs so that the CBS/CHAs are not facilitating intentionally or unintentionally, importers / exporters indulging in fraudulent activities. Hence, a detailed guidelines on the list of documents to be verified and obtained from the client/customer had been also provided. Here, it evident that the CB failed to exercise due diligence and grossly violated the KYC guidelines of the said Circular dated 08.04.2010 read with the provisions of the CBLR, 2018 as a number of exporters had been found 6 Customs Appeal No. 50376 Of 2024 to be untraceable. As per the mandate of the Regulation 10(n) of the CBLR, 2018 read with the Circular No. 09/2010-Customs dated 08.04.2010, it was incumbent upon the CB to verify identity and functioning of his client at the declared address by using reliable, independent, authentic documents, data or Information which is evident that the CB have failed to do so. There is no force in submission of CB that they had complied with all obligations prescribed under Regulation 10(n). The order-in-original is contrary to observation made at discussion and findings that CB had handled the export consignment of non-existent exporters. It is evident from the finding that there was collusion by the CB with the said importer/exporter to defraud the exchequer. It is also observed that CB has not follow KYC guidelines as prescribed under Customs Brokers Licensing Regulations (CBLR), 2018. It is evident that the CB firm M/s ATR Logistics India Pvt. Ltd., the appellant has failed in complying with responsibilities as per CBLR, 2018. In this regard, ld. AR relied upon the following decisions:-
Noble Agency vs. Commissioner of Customs, Mumbai10 Commissioner of Customs vs. K. M. Ganatra & Co. 11
5. We have heard the learned Counsel for the appellant and the learned AR for the department. The short question before us is whether the revocation of CB license of the appellant is justified in the light of the facts of the case. The admitted facts are as follows:
i. The appellant is registered as Customs Broker with the Customs department.
10 2002 (142) ELT 84 (Tri.-Mumbai) 11 2016 (332) ELT 15 (S.C.) 7 Customs Appeal No. 50376 Of 2024 ii. He had handled the customs clearance of M/s Darix Enterprise which included the import of certain goods which were restricted vide Bills of Entry no. 6775926 dated 21.12.2021 and 7553734 dated 18.2.2022.
iii. The said import consignment was adjudicated and allowed to be re-exported on payment of Redemption fine and penalty vide Order-in-Original No. 34/JS/ADC/Darix/ICD- Ppg/2022 dated 16.03.2022.
iv. The CB filed Shipping Bill No. 9279910 dated 28.03.2022 for re-export on payment of redemption Fine and penalty. v. The DGARM Analytics report no. 07/2023 dated 04.5.2023 was issued relating to exports under LUT by non-existent entities for availing export incentives, IGST refunds or ITC refunds.
6. We note that the CB License of the appellant has been revoked on the grounds that Rule 10 (n) of the CBLR, 2018 was violated. The said regulation is reproduced hereafter:
"Regulation 10(n): 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;"
The basic requirement of regulation 10(n) is that the customs broker should verify the identity of the client and functioning of the client at the declared address by using reliable, independent, authentic documents, data or information. For this purpose, a detailed guideline on the list of documents to be verified and obtained from the client is 8 Customs Appeal No. 50376 Of 2024 has been mentioned. In the context of the present case, we note that the CB has the required KYC documents such as PAN, Aadhar, IEC and none of these have been found to be fake. We note that the CB had carried out due diligence at the time of filing of the documents and there is no requirement for actual physical verification to verify the correctness of the document submitted. It is not the case of the department that the documents had been obtained for forged documents as noted above. The appellant had submitted the KYC documents, and it is also on record that the importer/exporter had duly appeared for statement as in when summoned by the department. The ld. AR has submitted that the IEC/GSTIN was obtained just prior to the consignment. It was also submitted that the rent agreement was of the same month as the issue of GSTIN & IEC. We are not convinced that this constitutes a violation of Rule 10(n) of CBLR 2018, when the said regulations does not lay down any timelines in this regard. There appears to be no violation of the said regulation by the CB appellant.
7. We note that the appellant has relied on this Tribunal's decision in the case of Perfect Cargo(supra). The relevant paras are reproduced for ease of reference:
"12. In this case, there are no details in the SCN or in the inquiry report or in the impugned order as to how the DGARM came to the conclusion that the exporters did not exist and how after considering the defence submissions, the Commissioner came to a conclusion that the appellant had violated Regulation 10(n) of CBLR, 2018. This case has been made and the licence has been revoked not only taking the alleged communication from DGARM as conclusive proof that the exporters did not exist but also inferring from it that the appellant has not 9 Customs Appeal No. 50376 Of 2024 conducted the verification as per Regulation 10(n) of CBLR, 2018. The SCN did not even supply a copy of the communication from the DGARM to the appellant, let alone the details of its inquiries which led to the conclusion that the exporters did not exist. The entire case, therefore, is not built on conclusive evidence.
13. We are surprised that the Commissioner found it proper to deprive the appellant and its employees of their livelihood in such a casual and callous manner. The impugned order cannot be sustained and needs to be set aside."
8. In the instant case, we note that the Department has not led any evidence to show that the appellant had in any manner facilitated exports by non-existent exporter for availing export incentives. From the above, it is evident that the importer/exporter was available at the time of import, as is evident from the fact that his statement was recorded on 10.02.2022 and 24.02.2022. It has been submitted before us by the department that the appellant did not verify the GSTIN as the same was cancelled. It has been submitted before us that the software linked to ICEGATE had automatically taken the Aadhar number of the importer instead of the GSTIN. This has not been controverted by the Department in their submissions. It is not the case of the Department that the said Aadhar number is fake or fraudulent.
9. In addition, it is evident from the fact that this was not a case of an exporter who was non-existent or had taken undue monetary export benefits. We are unable to accept the contention that the appellant had knowingly facilitated the exports as listed out in the 10 Customs Appeal No. 50376 Of 2024 DGARM report. Merely based on the said report, the revocation of the CB license cannot be upheld, more so when the consequence is loss of livelihood of the appellant and his employees. Such power needs to be exercised with due care and caution.
10. In view of the above discussions, we set aside the impugned order. Consequently, the appeal is allowed.
(Order pronounced in the open Court on 27.01.2025) (DR.RACHNA GUPTA) MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) G.Y.