Custom, Excise & Service Tax Tribunal
Shaikh & Pandit Agencies Pvt Ltd vs -Kolkata(Admn Airport) on 19 August, 2022
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.2
Customs Appeal No.75975 of 2021
(Arising out of Order-in-OriginalNo.KOL/CUS/AIRPORT/ADMN/24/2021
dated08.11.2021 passed by Commissioner of Customs (Airport & ACC), Kolkata.)
M/s.Shaikh & Pandit Agencies Private Limited
(15A, Hare Street, 1st Floor, Kolkata-700001.)
...Appellant
VERSUS
Pr.Commissioner of Customs (Airport &ACC), Kolkata
.....Respondent
(15/1, Strand Road, Custom House, Kolkata-700001.) APPEARANCE Dr. S.K.Mohapatra & Shri Sudipta Ghosh, both Advocates for the Appellant Shri M.P.Toppo, Authorized Representative for the Respondent (s) CORAM:HON'BLE SHRI P.K.CHOUDHARY, MEMBER(JUDICIAL) HON'BLE SHRI P.ANJANI KUMAR, MEMBER(TECHNICAL) FINAL ORDER NO. 75489/2022 DATE OF HEARING : 17 June 2022 DATE OF DECISION : 19 August 2022 P.K.CHOUDHARY :
This Appeal has been filed by the Appellant assailing the order dated 08.11.2021 passed by the Principal Commissioner of Customs (Airport & ACC), Kolkata, whereby he ordered the suspension of 2 Customs Appeal No.75975 of 2021 Customs Broker's Licence of the Appellant under Regulation 16(1) of the CBLR, 2018.
2. The Appellant is a licenced Customs Broker. They filed Shipping Bills in respect of 12 consignments for their clients - (i) Bevyesh Trading, (ii) Evergreen Corporation, (iii) M/s. C.S. International (Prop. - Chandra Kala Sharma) for export of Ball Bearing. The SIB of the Principal Commissioner of Customs (ACC), Kolkata received information to the extent that 4 export consignments (under Shipping Bill Nos. 5330386, 5330392, 5330396 & 5330397 all dated 21.09.2020 respectively) of 'Ball Bearings' filed by M/s. Gupta Vyapaar (IEC CTGPG 6543A) may be highly overvalued to defraud the Exchequer by getting higher input tax credit and export related incentives. Incentives claimed in the above Shipping Bills are as follows:-
Total FOB value: Rs.2,93,05,216/-
Total IGST refund claimed: Rs.52.77 Lakh Tatal MEIS claimed: Rs.8.79 Lakh.
2.1 On examination it was found that the goods were declared as 'Rolling Element Components/Parts (B.Bearing)' and the value of the goods was declared as USD 3.99 (Rs.290.87) per unit. The approx.
weight of each ball bearing (net weight divided by number of units) was found to be approx. 9.71 grams. Supplier of the said goods contained in these Shipping Bills, M/s.Siddhivinayak Enterprises (Legal name-Akhai Das, GSTIN - 19BHAPD8662D1ZG), has been found to be non-existent. 2.2 These consignments of Ball Bearings were examined by an empanelled Chartered Engineer Shri Siya Ram Jha who submitted his report dated 08.10.2020. In his report, he stated that the unit price of each Ball bearing should be Rs.45 per piece. The declared price was Rs.290.87 per piece. However, the unit price determined by Chartered Engineer appears to be on higher side as the online catalogue for Ball Bearing of the same model and size places the wholesale price at Rs.11.40/- per piece (for 500 pieces) clearly indicating that the market price could go further lower than Rs.11.40/piece considering the 3 Customs Appeal No.75975 of 2021 current size of the instant consignment with over one (01) Lakh Ball bearings.
2.3 It was further gathered that IEC of M/s. Gupta Vyapaar was issued on 03.07.2020. He has only one (01) bank account (AC No- 19850200003991) in Federal Bank, VIP Road Branch, Kolkata. The statement of the account showed that there was only one deposit transaction of Rs.10,000 (Rupes Ten Thousand only) on 11.06.2020 conducted through that account clearly evidencing that the exporter was in no position to export the goods worth more than Rs.2.93 Crores. 2.4 Subsequently, on the basis of evidences gathered during investigation, Shri Udit Gupta, Prop of M/s. Gupta Vyapaar, was arrested for violation of Section 132 and Section 135(a), (b) and (c) of Customs Act, 1962.
3. Further, data pertaining to export of Ball Bearings (RITC 8482) was analysed for the period 01.01.2020 to 12.09.2020 wherein it was found that a total of 35 consignments of similar/identical description had been exported through Air Cargo Complex, Kollkata, out of which 12 consignments have been cleared by M/s. Shaikh & Pandit Agencies Pvt.Ltd.. The list of Shipping Bills cleared by the said CB has been mentioned below:
Table-A Sl. SB No. Date Value No of Unit Whether Descrip Weight of Exporte Whether No. (Rs. In pieces price BRC tio n of each Bill r exporter Lakh) (USD) realized goods Bearing (Net existent as on wt of 30.07. consignmen 2021 t/No of pieces) 1 469965 25-08- 72.90 25000 3.95 No Ball or 8.20 gms Bevyesh Addressee 0 2020 Bearing Trading shifted to new address as 2 470006 25-08- 72.90 25000 3.95 No Ball or 8.20 gms per investigation 7 2020 Bearing report of DRI & E, WB. All 3 470036 25-08- 72.90 25000 3.95 No. Ball or 8.20 gms the three 0 2020 Bearing suppliers of the exporter 4 470549 25-08- 72.90 25000 3.95 No. Ball or 8.20 gms are found to be non-
2020 Bearing
existent.
5 474510 27-08- 72.90 25000 3.95 No Ball or 8.20 gms Address
0 2020 Bearing verified. East-
west-north-
south
4
Customs Appeal No.75975 of 2021
6 474579 27-08- 72.90 25000 3.95 No Ball or 8.20 gms Evergre boundary of
1 2020 Bearing en the exporter's
Corporat address is
ion also provided.
7 474580 27-08- 72.90 25000 3.95 No Ball or 8.20 gms Evaded all the
6 2020 Bearing summons
issued by
8 474580 27-08- 72.90 25000 3.95 No Ball 8.20 gms SIB, ACC.
8 2020 Bearing
9 401152 23-07- 75.98 26000 3.95 No Ball 10.50 gms
1 2020 Bearing
10 401196 23-07- 75.98 26000 3.95 No Ball 10.50 gms
4 2020 Bearing M/s. Non-existent
C.S.
Internati
11 401217 23-07- 75.98 26000 3.95 No Ball 10.50 gms
onal
6 2020 Bearing (Chandr
a Kala
Sharma)
12 401424 23-07- 64.22 22000 3.95 No Ball 10.50 gms
7 2020 Bearing
4. Total ITC (Input Tax Credit) claimed by above mentioned exporters in respect of above-mentioned Shipping Bills is Rs.1.57 Crore (Rupees One Crore Fifty-Seven Lakh only) while total drawback claimed is Rs.17.5 Lakh (Rupees Seventeen Lakh Fifty Thousand only). Also, ITC claim amounting to Rs.2,06,70,300.00 (Rupees Two Crores Six Lakh Seventy Thousand Three Hundred only) of Bevyesh Trading Private Limited was rejected by SGST and is under investigation of DRI & E, West Bengal.
5. A prohibition Order No.11/2021 dated 13.10.2021 was issued against the Appellant for the alleged failure in discharging their obligation under Regulations 10(d), 10(m), 10(n) and 10(q) of CBLR, 2018 as follows :-
"9. Provisions of Regulations of Customs Broker Licensing Regulation (CBLR), 2018 that appears to be violated by the CB M/s. Shaikh &Pandit Agencies Pvt.Ltd.
9.1 As per Regulation 10(d) of CBLR, 2018, a Customs Broker shall advise his clients to comply with the provisions of Customs Act. In case of failure by his clients, it is the responsibility of a Customs Broker to immediately bring this non-compliance to the notice of Deputy/Assistant Commissioner.5
Customs Appeal No.75975 of 2021 From the facts mentioned above, it is evident that one of the three exporters viz. M/s. C S International (Chandra Kala Sharma) has been found to be non-existent. Therefore, it appears that the CB was not in a position to advise his clients to comply with the provisions of Customs Act, 1962, thereby, failed to comply with the provisions of Regulation 10(d) of CBLR, 2018.
9.2 As per Regulation 10(m) of CBLR, 2018, a Customs Broker shall discharge his duties as a Customs Broker with utmost speed and efficiency and without any delay;
In the subject case, the CB has cleared the consignments of non- existent exporter. This fact alone clearly establish that CB has failed to perform his duties efficiently and thereby, violated provisions of Regulation 10(m) of CBLR, 2018.
9.3 As per Regulation 10(n) of CBLR, 2018, a Customs 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;
In view of foregoing discussions, it appears that the CB has handled consignments of three (03) risky exporters as mentioned above. Out of these three exporters,
(i) One exporter i.e., Chandra Kala Sharma (M/s. C S International) has been found to be non-existent by jurisdictional GST Commissionerate.
(ii) Further, as per verification report drawn by jurisdictional GST formation, M/s. Bevyesh Trading Private Limited was not found at its declared place of business, 348, Jessore Road, Kolkata - 700055, but a display in the form of a printout found on the wall of the premises indicated that the RTP has shifted to 48/1, Jessore Road, Tulsidham Complex, Kolkata-700055. No application for amendment has however been made till date.
(iii) Further, Shri Sudhansu Poddar, authorized representative of CB M/s Shaikh &Pandit Agencies 6 Customs Appeal No.75975 of 2021 Pvt.Ltd., in his statement given before SIB stated that the exporter, Evergreen Corporation, which is Bihar based entity, handles their local operation through Office premises of M/s Bevyesh Trading Private Limited. However, as per the GST verification report, no trace of business activity of M/s. Evergreen Corporation has been found at the declared place of business of M/s Bevyesh Trading Private Limited. Moreover, the GST verification report nowhere mentions the existence/operations of Evergreen Corporation at the declared place.
Therefore, it appears that the CB has failed to verify the 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 and thereby, violated provisions of Regulation 10(n) of CBLR, 2018.
9.4 As per Regulation 10(q) of CBLR, 2018, a Customs Broker shall co-operate with the Customs authorities and shall join investigations promptly in the event of an inquiry against them or their employees.
In the subject case, as per statement of Shri Sudhansu Poddar, authorized representative of the CB, one of the employees of the CB has verified the declared place of business in respect of all three exporters mentioned in Table-A. However, as per verification report of GST officials, the exporter M/s C S International (Chandra Kala Sharma) has been found to be non-existent. This fact implies that employee of the CB who has been authorized to give voluntary statement has not given truthful statement which is an offence under the Indian Penal Code. On the other hand, it also establishes that the Customs Broker is not willing to co-operate in the investigation thereby violating the provisions of Regulation 10(q) of CBLR, 2018."
7Customs Appeal No.75975 of 2021 Accordingly the Appellant's licence was suspended by the impugned order.
6. The Ld.Counsel for the Appellant has submitted as follows:-
(I) THAT the CB Order No.11/2021, dated October 13, 2021 issued by the Respondent under Regulation 16(1) of Customs Broker Licensing Regulations, 2018ordering suspension of the appellant's Customs Broker Licence No.S-87, Code No.2107, Pan No.-AAFCS8825B, for alleged contravention of Regulations 10(d), 10(m), 10(n) and 10(q) of the CBLR 2018 and corresponding contemplation of proceedings under Regulation 17(1) of the CBLR 2018 is pursuant to the purported Offence Report dated 16.08.2021 from the Deputy Commissioner of Customs SIB (ACC), Kolkata in respect of alleged offence which occurred almost one year prior to the date of the said Offence Report, is violative of the set judicial precedence in this regard.
(II) THAT the Learned Principal Commissioner has failed to appreciate that as per Regulation 16(1) of CBLR, 2018, suspension of Customs Broker's Licence may be resorted to in appropriate cases where immediate action is necessary and in the appellant's case it was neither appropriate nor any immediate action was warranted in as much as the incidence of export was more than one year old.
(III) THAT the learned Principal Commissioner of Customs (Airport & ACC) has failed to appreciate that the Appellant as a Customs Broker, was in no way concerned with the declaration of the consignments exported under cover of the impugned 12 Shipping Bills, with regard to the admissibility of export incentives in as much as it has filed the Shipping Bills electronically through ICEGATE based on the invoice and other documents submitted by the exporter in bonafide discharge of its duty in routine course of its business. The mandate of proper declaration under section 50(2) and section 50(3) of the Customs Act 1962 lies with the exporter and the Customs Broker has the limited role to file the 8 Customs Appeal No.75975 of 2021 Shipping Bills based on the invoice and other documents submitted by the exporter. As per section 50(2) of the Customs Act 1962, the exporter of any goods, while presenting a shipping bill or bill of export, shall make and subscribe to a declaration as to the truth of its contents. Similarly, as per section 50(3) of the Customs Act 1962, the exporter who presents a shipping bill or bill of export under this section shall ensure the following, namely:-
(a) the accuracy and completeness of the information given therein;
(b) the authenticity and validity of any document supporting it;
and
(c) compliance with the restriction or prohibition, if any, relating to the goods under this Act or under any other law for the time being in force.
The Proper Officer for verification of the truth and authenticity of such declaration by the exporter along with compliance with the restriction or prohibition, if any, is the Appraiser/Superintendent of Customs who is responsible for assessment and clearance of such consignments in terms of Notification 40/2012-Cus (NT). Therefore, the mandate of mis-declaration, with respect to valuation and admissibility of export incentives if any, and the corresponding penal liability arising out of the same is not attributable to the Appellant as a Customs Broker and the Department has got its absolute liberty to deal with the same as far as the exporters are concerned as per the prescribed Rules and Regulations in this regard.
(IV) THAT the learned Principal Commissioner has erred in failing to appreciate that the affirmation in respect of M/s C.S. International (Chandra Kala Sharma) is a tissue of blatent lies that the firm is not in existence in the given address. The same affirmation has purportedly been made based on the visit of one State Tax Officer of West Bengal GST Sri Surojit Bhattacharjee 9 Customs Appeal No.75975 of 2021 who has formed his opinion that this concern is not found at present in the above noted address on 05.04.2021 and keeps its door under lock and key. He has taken the caretaker's version that the said RTP is not available at this present time and he keeps its door under lock and key. Both these affirmations, at no stretch of imagination, supports the Department's affirmation that the Firm M/s C.S. International (Chandrakala Sharma) is not in existence in the given address. The lack of coordination in the various sections of the Department for a transparent investigation is also a writ large in the manner. Department has ignored the submission of the Appellant dated 28.10.2021 pointing out inter alia that even on net searching made on 27-10-2021 in respect of M/s C.S. International, it has been found that they have submitted their last GST Return on 23-10-2021 for the FY 2021- 22 for the same address at 278, Rabindra Sarani, Kolkata- 700007. If the investigation doesn't wake up from the slumber even after such information for a search and seizure of the premises of the exporter claimed to be a fraudster it is the action of the investigation not of the appellant Customs Broker that requires to be faulted with.
(V) THAT the learned Principal Commissioner has erred in failing to appreciate that the allegation that none of the three suppliers to the exporter M/s. Bevyesh Trading are available in the given address is attributable to the appellant in as much as no such obligation under Customs Act, 1962 or CBLR, 2018 has been bestowed upon the CB to verify the antecedents of the suppliers to the exporter.
7. The Ld.Authorized Representative for the Department vehemently supports the impugned order.
8. We have considered the arguments of both sides and have perused the appeal records.
9. The sole point to be decided at this stage is whether there is a justification for continuation of the licence of the Appellant under 10 Customs Appeal No.75975 of 2021 Regulation 16 of CBLR 2018 given the facts and circumstances of the case pending further investigation and decision on revocation of licence or imposition of penalty under CBLR, 2018. The four grounds have been given in the impugned order for continuing suspension of the licence of the Appellant :
Ground No.1. The Appellant failed in fulfilling its obligation under Regulation 10(d) because it had handled 12 consignments and got clearance work of all the three impugned exporters through a middle agent, Md. Shakil Ahmed. Though they had enquired from Md.Shakil Ahmed regarding non-realization of Bank Realization Certificates of these consignments they were informed that foreign remittance would be realized in coming days. The CB had no idea of the valuation of the consignments and never tried to know the real value of the Ball Bearings and never in a position to comply with the relevant provision of Customs Act. Ground No.2. The Appellant violated Regulation 10(m) as it failed to discharge its duties as a Customs Broker with utmost speed and efficiency and without delay. It is assertion that the Customs Broker has a responsibility to protect Government revenue which it failed to do in the present case; that over- valuation of exports to defraud the Exchequer by getting the very high Input Tax Credit and export related incentives. Ground No.3. The Appellant violated Regulation 10(n) inasmuch as one of the exporters M/s C.S. International (Chandrakala Sharma) has been found to be non-existent at the declared place of business and the Appellant was required to verify the correctness of IEC, GSTIN No., identity of his clients and functioning of its client at the declared address through reliable, independent, authentic documents and information. Ground No.4. The Appellant has violated Regulation 10(q) inasmuch as Customs Broker was required to co-operate with the Customs authorities and join investigation promptly in the event of any enquiry against them or their employees. Though one of 11 Customs Appeal No.75975 of 2021 the employees of the Customs Broker had verified the declared place of business in respect of the 3 exporters, however, as per verification report of GST officials, the exporter M/s. C.S. International (Chandrakala Sharma) has been found to be non- existent. The exporter had also evaded summons issued by the SIB (ACC). This fact implies that employee of the Customs Broker who has been authorized to give voluntary statement has not given truthful statement which implies that the Customs Broker is not willing to co-operate in the investigation and thereby appears to have violated the provisions of Regulation 10(q) of CBLR 2018.
10. We proceed to examine these.
11. As far as the first allegation regarding not verifying the value of the export goods is concerned we find that the Appellant is correct in stating that the CBLR do not require or authorize the Customs Broker to determine the value of the imported or export goods. The power of valuation of the goods under section 4 of the Customs Valuation Rules rests on (a) the exporter/importer itself in the case of self-assessment; and (b) the proper officer who can reassess the Bill of Entry or Shipping Bill so self-assessed by the exporter under section 17. There is nothing on record to show that the Appellant had colluded with the exporter to over-value the goods. It is also on record that the goods were cleared by the proper officers who had the duty and the power to determine/re-determine the value of the export goods. It is also not unreasonable to say that 'proper officers' are more competent in the matter of understanding valuation than the Appellant Customs Broker. When the proper officers have themselves allowed the clearance of Shipping Bills, no blame whatsoever can be placed at the door of the Appellant on the ground that it had no idea of the price of the export goods. Of course, if further investigations show that the Appellant had colluded to over-value the goods, it would be different matter, but the impugned order only mentions that the Customs Broker never tried to 12 Customs Appeal No.75975 of 2021 know the real value of the Ball Bearings. Appellant is not required to do so, therefore no allegation under Rule 10(d) prima facie sustain.
12. As far as Regulation 10(m) is concerned, the allegation that the Appellant had processed the Shipping Bills with over-valued goods resulting in loss to the Exchequer. This is a very serious allegation not substantiated by any facts in the impugned order. The Shipping Bills once assessed are final unless they are appealed against before the Commissioner(Appeals). Therefore to allege the value is wrong, Shipping Bills must be appealed against before the Commissioner(Appeals) and the assessments modified. Nothing in the records shows that this has happened. The powers of the proper officer under section 28 also do not extent to modify assessments where no duty was short paid and the only thing is for an appeal to be filed against the assessment of Shipping Bills. If indeed, the goods were heavily over-valued in the Shipping Bills and cleared, the claim should rest on the officer, who cleared them. The Customs Broker has no right or responsibility to modify the value in a Shipping Bill under the law.
13. As far as the Regulation 10(n) is concerned, the allegation in the Show Cause Notice is that the Department had sent a letter to the GST officers who confirmed that M/s. Bevyesh Trading Pvt.Ltd. was not found at its declared place of business, 348 Jessore Road, Kolkata- 700055, but a display in the form of a print out found in the wall of the premises indicated that the RTP has shifted to 48/1, Jessore Road, Tulsi Dham Complex, Kolkata-700055. No application for amendment has however been made till date. By the same verification report it is noticed that the three suppliers of M/s. Bevyesh Trading Pvt.Ltd. were found to be non-existent at their declared place of business and the Appellant should have verified this. Firstly we do not think that the Regulation requires the Appellant to physically go to the premises of each of its clients and verify whether they are functioning from that place. Secondly, if the GSTIN Number is issued by the departmental officers, it is for them to verify whether they exist at that address or otherwise.
13Customs Appeal No.75975 of 2021
14. Lastly, as far as Regulation 10(q) is concerned, the allegation in the Show Cause Notice is that as per the statement of Shri Sudhansu Poddar, Authorized Representative of the Customs Broker, one of the employees of the Customs Broker has verified the declared place of business in respect of the three exporters. However, as per the verification report of GST officials, the exporter M/s. C.S. International (Chandrakala Sharma) has been found to be non-existent. This fact implies that the employees of Customs Broker, who was authorized to give voluntary statement, has not given truthful statement, which amounts to an offense under the Indian Penal Code. On the other hand it also establishes that the Customs Broker is not willing to cooperate in the investigation thereby violating the provisions of Regulation 10(q) of CBLR, 2018. The lack of coordination in the various sections of the department for transparent investigation is also writ large in the matter. The department has ignored the submissions of the Appellant dated 28.10.2021 pointing out inter alia that even on net searching made on 27.10.2021 in respect of M/s. C.S. International it has been found that they have submitted their last GST return on 23.10.2021 for the financial year 2020-21-2022 for the same address at 278, Rabindra Sarani, Kolkata-700007. Therefore, the charge of violation of regulation 10(q) against the Appellant Customs Broker does not sustain.
15. We also find that the learned Principal Commissioner has not recorded in the impugned order that he is satisfied that there was an immediate need to stop the operation by the Appellant as required under Regulation 16 of the CBLR,2018.
16. In view of the above, we find that the findings in the impugned order that the Appellants Customs Broker has violated Regulations 10(d), 10(m), 10(n) and 10(q) cannot be sustained and need to be set aside and we do so.
17. For these reasons, we find that the impugned order confirming the suspension of the licence of the Appellant cannot be sustained and it needs to be set aside. We make it clear that we have not drawn any conclusions regarding the final liability of the Appellant which depends 14 Customs Appeal No.75975 of 2021 upon the evidence that may be revealed during further enquiry and investigations.
18. The impugned order is set aside and the Appellant's Appeal is allowed with consequential relief, if any.
(Order pronounced in the open court on 19 August 2022.) Sd/ (P.K.CHOUDHARY) MEMBER (JUDICIAL) Sd/ (P.ANJANI KUMAR) MEMBER (TECHNICAL) sm