Custom, Excise & Service Tax Tribunal
Ms Bruce Logistics Pvt Ltd vs Mumbai(Mulund Cfs &Amp; General) on 10 December, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Customs Appeal No. 87736 of 2017
(Arising out of Order-in-Original No. 20 and 39/2017-18 dated 30.06.2017
and 18.09.2017 passed by Principal Commissioner of Customs (General),
Mumbai-I)
M/s. Bruce Logistics Pvt. Ltd. Appellant
CB No.11/1680, 13, Shreepal Complex,
Suren Road, Andheri (E),
Mumbai 400 093.
Vs.
Commissioner of Cust. (General), Mumbai Respondent
2nd floor, New Custom House, Ballard Estate, Mumbai 400 001.
WITH Customs Appeal No. 86014 of 2019 (Arising out of Order-in-Original CAO No. 55/CAC/CC(G)/RC/CBS(Admn) dated 20.03.2019 and 18.09.2017 passed by Commissioner of Customs (General), Mumbai) M/s. Bruce Logistics Pvt. Ltd. Appellant CB No. 11/680, 1, Aaradhana, Sir M.V. Road, Andheri (E), Mumbai 400 069.
Vs. Commissioner of Cust. (General), Mumbai Respondent 2nd floor, New Custom House, Ballard Estate, Mumbai 400 001.
Appearance:
Shri Brijesh Pathak, Advocate, for the Appellant Ms. Trupti Chavan, Assistant Commissioner, Authorised Representative for the Respondent CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO. A/87290-87291/2019 Date of Hearing: 25.11.2019 Date of Decision: 10.12.2019
2 C/87736/2017,86014/2019 PER: SANJIV SRIVASTAVA This appeal is filed against the order in original CAO No 55/CAC/CC(G)/ RC/CBS (Admn) dated 20.03.2019 of Commissioner Customs (General) Mumbai. By the impugned order Commissioner has held as follows:
"12. Having regard to the above, in view of the forgoing discussion, facts and circumstances of the case, in exercise of the power conferred upon me under Regulation 20(7) of CBLR, 2013 (now Regulation 17(7) of CBLR, 2018), I hereby revoke the CB license of M/s Bruce Logistic P Ltd., CB License No 11/1680 under Regulation 18 of CBLR, 2013 (now Regulation 14 of CBLR, 2018) and order to forfeit the security deposit in full."
1.2 Another appeal has been filed by the Appellant against the suspension of his licence.
1.3 Since both appeals arise out of the same proceedings and are interlinked, they are taken up together.
2.1 Appellants are Custom Broker operating on the strength of regular Custom Broker License No 11/1680 issued by Commissioner Customs (general) Mumbai Zone -I under Regulation 7(1) of CBLR, 2013 (now Regulation 7(2) of CBLR, 2018).
2.2 The Additional Commissioner Customs SIIB (I) ACC Mumbai forwarded a offence report dated 22.06.2017 to the Commissioner (General) stating that Appellant had processed the import clearance of the 200 pcs of "Blank Firing Guns"
declared as "Metal Toys" by classifying them under CTH-9503 instead of CTH-9303 for their clients M/s Airsoft Gun India. Investigations undertaken revealed that Appellants had in past filed five B/E for the import clearance of same goods for the same clients. The current B/E No 9616942 dated 09.05.2017 was put on hold on 13.06.2017.
2.3 After completion of investigations a Show Cause Notice dated 11.06.2018 was issued by the Commissioner Customs (Import) ACC Mumbai, to Airsoft Gun India making Appellant and it's Director Shri Ben Joseph Tharakan, co-noticee, for 3 C/87736/2017,86014/2019 irregular importation of the said "Blank Firing Guns" by declaring them as "Toy Guns" and classifying them under CTH-9503 instead of CTH-9303 to avoid the import restrictions as per Arms Rule, 2016, providing that "Acquisition, Import and Sale of Blank Firing Guns is restricted and requires license."
2.4 The Custom Broker License was on the basis of the offence report received, put under suspension by Commissioner (General) vide Order No 20/2017-18 dated 30.06.2017. Further the suspension was continued by the Order No 39/2017-18 dated 18.09.2017 pending inquiry. This order of suspension has been appealed before CESTAT vide Appeal No C/87736/2017 and is pending as on date.
2.5 After completion of the inquiry Ground of Imputation and Articles of Charges framed stating as follows:
"The CB has not fulfilled their obligation laid down under Regulation 11 of the CBLR, 2013 (now Regulation 10 of CBLR, 2018) detailed as below:
Article of Charge I - Regulation 11(d) advise his client to comply with the provisions of the Act 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.
Article of Charge II - Regulation 11(e) 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."
2.6 After receipt of Inquiry Report, Commissioner Customs (General) Mumbai Zone - I adjudicated the matter as per impugned order referred in para 1, supra.
2.7 Aggrieved by the impugned order, Appellants have filed this Appeal. They had also filed the application for early hearing which has been allowed vide Misc Order No M/85456/2019 dated 03.06.2019.
4 C/87736/2017,86014/2019 3.1 We have heard Shri Brijesh Pathak, Advocate for the Appellant and Ms Trupti Chavan, Assistant Commissioner, Authorized Representative for the Revenue.
3.2 Arguing for the Appellant's learned Advocate submitted that-
Since the proceedings initiated against them have been concluded by the impugned order, revoking their license, the appeal filed by them against the order of suspension of their license in the same proceedings have become infructuous;
Importer namely Airsoft Gun India, deals in sale of Blank Guns/ Toy Guns and allied product.
When they approached them for import clearance of the import consignment for the first time in 2015, they took all documents required for KYC which included their ISO Certification, Sales Tax and VAT Registration etc. Importer also provided them a write up on the Blank Guns along with Invoice, Airway Bill and test report from the Forensic Laboratory. Importer also informed them that these are Toy Guns and are used for amusement purpose as in movies etc., and also that these are classified under heading 9503 at various ports in India as per the information available of website "zauba.com". After checking up the information and the classification as claimed from the website referred by the importer, they filed first Bill of Entry No 3214478 dated 10.11.2015 as per invoice declaring the goods as "Metal Toy Guns". The goods were examined under the supervision of Dy Commissioner (Shed) and examiner reported that these guns do not look like "toys". Examiner sent the samples to Appraising Group for verifying description and applicability of Arms Act and Police NOC. Group referred the matter Truth Labs Forensic Services for testing whether Blank Guns are Toys, dummy or real guns or can be modified as real guns, whether are harmful to use or otherwise. Truth Labs reported that these Blank Firing Guns which fire only 5 C/87736/2017,86014/2019 blank cartridges are harmless to human. They also stated that there is obstruction in the barrel and no bullet in the cartridge hence it does not come under the purview of India Arms Act. Group then referred the goods to Government Forensic Lab, Kalina and to Commissioner of Police, Mumbai for testing. As there was no satisfactory response from these agencies and clearance was getting delayed, the matter was referred to Additional Commissioner SIIB. After discussion that were held between Commissioner, Additional Commissioner (SIIB), Deputy Commissioner (Group VI) and Deputy Commissioner (Shed) the assessments were finalized as declared and goods released. The assessment made were in line with the earlier practice of clearing the goods under CTH 9503 at ACC Mumbai and other Ports in country. After this subsequent Bill of Entry filed were subjected to similar examination and verification following the same assessment order and practice.
When the B/E No 9616942 dated 09.05.2017 was filed for a consignment of 200 pcs of Blank Guns, the said consignment was intercepted and put on hold, as department alleged that Arms Act was amended with effect from 16.07.2016. Even after assessment and payment of duty, AO Gr VI directed the importer to classify the goods under CTH 9303 and comply with the policy requirements. Based on the intelligence gathered by DGoV, the consignment was jointly examined by DGoV and SIIB on 13.06.2017 and the goods seized under a proper panchnama.
Investigations were carried out, the statement of Importer and Appellants recorded under Section 108, to allege that Appellant knowingly mis-declared the goods as "Metal Toy Guns" and classified them under CTH 9503 to circumvent policy and licensing requirements;
Their statement recorded on 19.06.2017 and 25.07.2017 that the subject goods are classifiable under 93.03 on showing part of Explanatory Notes, do not prove that he 6 C/87736/2017,86014/2019 had knowledge about correct classification under that heading even when all the officers in the department including the Commissioner had not even after seeing the goods suggested such a classification. He cannot be faulted for having classified the goods under 9503. They had declared the goods as per the information provided by the importer and the goods were assessed and the classification determined by the proper officer of Customs after due examination and verification of goods. For the failure of the proper officer to determine the correct classification, Custom Broker could not have been held responsible.
Proceedings conducted are also marred by delay at every stage. As per the Custom Broker Licensing Regulation the entire proceedings initiated against them for revocation of license should have been concluded within a period of 270 days from the date of receipt of offence report. However for the reason of delay at every stage, the proceedings took 625 days to conclude thus there is delay of nearly 355 days.
In view of submissions as above the order revoking the license cannot be sustained and needs to be set aside.
3.3 Arguing for the revenue learned Authorized Representative submitted that-
Appellants had in the B/E filed intentionally and deliberately misdeclared the good to circumvent import policy restrictions and requirement of license as per Arms Rule, 2016. The proprietor of Importer Sh Rajesh Goswami has in his statement dated 19.06.2017, stated that Custom Broker had suggested them to declare the goods a "Metal Toy Guns". While these goods were found on examination to be Blank Firing Guns which were capable of modifications and conversion into lethal weapons. During the course of inquiry, the involvement of Appellant in the said fraudulent import of "Blank Firing Guns" which 7 C/87736/2017,86014/2019 is restricted under the Arm Rules, 2016 has been brought on record and proved beyond doubt.
Appellant has failed to discharge the obligations cast on him under Regulation 11(d) & (e) of the Custom Broker Licensing Regulation 2013 ((now Regulation 10(d) & (e) of CBLR, 2018). This has also been admitted by the Appellant in his statement recorded under Section 108 of Customs Act, 1962.
To further ascertain the role of Appellants a report was called by the adjudicating authority from the SIIB (I) ACC. Taking into account the report dated 28.02.2019, received by the adjudicating authority on 05.03.2019, Commissioner has concluded that it is established beyond doubt that the CB was involved in a serious offence committed by violating the Customs Act, 1962 and the Arms Act, 1959 read with the Arms Rule, 2016 as amended.
Appellants had advised the importer to purposely mis declare the impugned goods "Metal Toy Guns" under CTH 9503 which is for classification of Toys, despite the fact that these guns were clearly and un-mistakenly declared as "blank Guns" in the invoice as stated in SCN dated 11.06.2018.
She also relied upon the following decisions in her support-
o Jasjeet Singh Marwah [2009 (239) ELT 407 (del)] o H B Cargo services [2011 (266) ELT 448 (AP)] o Baraskar Brothers [2009 (244) ELT 562 (T)] 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 From the facts as available on record it is evident that the proceedings against the Appellant for mis-declaration of the goods have be undertaken in respect of the B/E Number 9616942 dated 09.05.2017. In the said Bill of Entry, Appellant had declared the goods imported as follows as per the invoice of supplier and claimed the classification of goods under CTH 9503:-
8 C/87736/2017,86014/2019 S Description (as per Description as per Number No B/E) Invoice 1 ARAL 622 Metal Toy ARAL 622 Metal Toy 20 Gun Black Gun Black 2 ARAL 1071 Metal Toy ARAL 1071 Metal Toy 20 Gun Satin with Gun Satin with golden parts golden parts 3 ARAL 1071 Metal Toy ARAL 1071 Metal Toy 20 Gun Chromewith Gun Chromewith golden parts golden parts 4 ARAL 610 Metal Toy ARAL 610 Metal Toy 40 Gun Satin Gun Satin 5 ARAL 610 Metal Toy ARAL 610 Metal Toy 40 Gun Chrome Gun Chrome 6 ARAL 1453 Metal Toy ARAL 1453 Metal Toy 40 Gun Satin Gun Satin 7 ARAL 1453 Metal Toy ARAL 1453 Metal Toy 20 Gun Matte Chrome Gun Matte Chrome 4.3 On the basis of the intelligence the goods were examined jointly by SIIB and DGoV on 13.06.2017. During Course of examination in every package of the imported goods, (200 pieces) a pamphlet was found showing the Brand Name ARAL and Istanbul in the Address. Other leaflet showed following instructions and warnings:
(i) "Before you use your blank pistol, please read and follow warnings/ instruction in this brochure.
(ii) Please read and follow your country's laws and regulations for provided blank pistols.
(iii) Handling of any weapon is deemed dangerous if instructions ... are not applied. Full attention is strongly recommended to avoid unexpected incidents.
(iv) If you do not know how to use a shotgun, seek assistance from vendor or a professional in this matter.
(v) For safety purposes keep blank pistols and ammunitions stored and locked away from reach of children.
(vi) Always check your surroundings and chosen target for clearance before discharging your blank pistols to avoid unexpected incidents.
(vii) When not in use if applicable put safety latch on and/ or do not place finger in the trigger area and remove magazine.
9 C/87736/2017,86014/2019
(viii) Never use blank pistol for joking purposes. You must always follow laws and regulations of the blank pistol.
(ix) You must consider your blank pistol coup when firing.
Blank pistol must be held tightly and at proper position (Example Form 1/ Form 2)
(x) Due to the high explosion sound, a proper ear gear is recommended to avoid hearing loss. Please be considerate of others as to not disturb when choosing a place of practice target.
(xi) The cartridge discharge explosive material and fumes are harmful to your health. Area must be well ventilated when in use.
(xii) All empty Ammunition cases should be Picked up and disposed properly to ensure a clean environment.
(xiii) If you have any problems cause of making changes on blank pistol or not, it is not under responsibility of manufacturer, cause of using out of produced proposal.
(xiv) Manufacturer does not oblige to give an information about making changes on blank pistols."
4.3 On the basis of the above pamphlets recovered from the boxes, during the examination it was alleged that the imported goods were not 'Metal Toy Guns" classifiable under CTH 9503, but were actually 'Blank Guns/ Pistols" classifiable under CTH 9303, thus were restricted item and required a license in terms of Arms Rules, 2016 as amended read with Arms Act. Accordingly the goods were put under seizure after drawing the samples from the consignment.
4.4 Statement of the Importer and Appellant (Custom Broker) was recorded under Section 108 of Customs Act, 1962 on 19.06.2017 and on 25.07.2017 a. In his statement recorded on 19.06.2017, Shri Rajesh Kumar Goswami, Proprietor of Importer stated that-
They own and maintain website by name airsoftgunindia.com, and all the sale of the guns is undertaken through the said website.
10 C/87736/2017,86014/2019 On their website, they have declared that ARAL 1453, ARAL 622, ARAL 610 & ARAL 1072 are blank firing guns used in Bollywood and Hollywood movies for sounds and spark just like real guns, whereas while filing the B/E they had declared them as Metal Toy Guns. It was stated in the "Truth Lab Report" that these guns are non lethal and do not come within the purview of Indian Arms Act and cannot be converted into real fire arms. He is not aware whether "Truth Lab Forensic Services" is approve forensic lab.
Their CHA, M/s Bruce Logistics (Appellant) suggested them to declare the goods as Metal Toy Guns.
He was not aware of the provisions and restrictions imposed in terms of Arms Rules notified on 15th July 2016 to effect that acquisition, possession, carry or use of Blank Firing Guns for theatrical productions requires license. Since November 2015 they have imported Six Consignments of Blank Firing Guns. In past five consignments they had imported 261 pieces of Blank Firing Guns, which they had put for sale though their online portal. Out of 261 Guns imported they had effected sale of about 220 Guns, for which they received the payment through NEFT, RTGS and through payment gateway electronically.
b. In his statement recorded on 25.06.2017, Shri Rajesh Kumar Goswami, Proprietor of Importer stated that-
As he was not aware of requirements of Arms Act and Arms Rule, he is not having required license to import such goods.
He was not aware of the HSN Explanatory Notes and Custom Tariff wherein the said goods are shown as restricted. Even Customs officer or Custom Broker have told him about the same in past.
c. In his statement recorded on 19.06.2017, Shri Ben Joseph Tharakan, Director of Appellant stated that-
11 C/87736/2017,86014/2019 Before starting dealing with any client, they insist for the KYC Form along with company's identity documents, address proof, bank signature verification of the authorized signatory, someone from their office will also cause physical verification at the premises of client or their premises. In the case of present importer they had undertaken the same process of KYC.
He was aware of the requirements of the ITC (HS) Import Policy, Condition 2, as per which the import of toys under CTH 9503 was permitted freely only when accompanied by the certificate from accredited agency & certificate of confirmatory. However the certificates were not produced for the clearance of the said consignments. For determining the classification of the goods while filing the Bill of Entry, he had checked the classification of similar consignments on https://www.zauba.com and other databases. The importers had described the goods to them as replica/ Toy Gun where there was no projectile but looks like a real gun and sounds like one too but was clearly not a gun used for firing. They also checked the classification with various Group officers. General understanding was that without physical examination it will not be possible to determine the correct classification. According to their understanding they filed the Bill of Entry classifying the goods under 9503.
The goods were examined and the samples of the same were sent to Truth Forensic Lab & Police Forensic Lab Kalina by the Customs as part of due diligence with regards to understanding nature of goods, if the goods were harmful for human beings and if the goods can be modified to lethal Firearms. He is not aware of the report of Police Forensic Lab, Kalina but after detailed scrutiny goods were cleared by the Customs.
As per their understanding and also the understanding of Customs there was no licensing requirement. This procedure had been followed for the clearance of all consignments. Even in respect of the B/E 9616942 dated 12 C/87736/2017,86014/2019 09.05.2017, for which the clearance has been put on hold, there has been query by the shed appraiser because as per his understanding, there has been amendment in the Arms Rule in July 2016 as per which license was required. Appraiser had also highlighted the correct classification to be 9303. After discussions with the Shed Deputy Commissioner and Additional Commissioner, importers has been asked to produce the license which he was in process. However subsequently after a week the consignment was examined by SIIB and put on hold for the same reason.
None of his any other client imported the same or similar goods.
For the four shipments, B/E was filed declaring goods as Metal Toy Guns followed by description as mentioned on invoice, for two shipments B/E was filed exactly according to suppliers invoice.
4.4 Holding Shri Rajesh Goswami and Shri Ben Joseph Tharakan responsible for misdeclaration of goods imported in impugned consignment and for the consignments imported previously both were arrested. After completion of the investigations in the matter a Show Cause Notice dated 11.06.2018 alleging mis-declaration of the "Blank Guns"
classifiable under CTH 9303 as "Metal Toy Guns" classifiable under CTH 9503, with the intention to avoid the policy restrictions.
4.5 In the Court of ACMM Esplande Mumbai, were the Case No RA/203/2017 was registered against the importer after, Shri Rajesh K Goswami filed the retraction of his statement on 28.07.2017 stating as follows:
"May it Please your Honour:
I Rajesh Kumar Goswami, do hereby state on solemn affirmation as under:-
1. I say that my statement was recorded by Customs before my arrest.
13 C/87736/2017,86014/2019
2. I say that the said statement was recorded under duress & giving false promise and false information.
3. I say that I am retracting the said statement as the same is not true & voluntary.
4. I say that the statement in the same shown not be used against me as the same are not true.
5. I say that I am retracting my said statement and say that I will file a detailed retraction at a later stage."
4.6 On 29.06.2017 the License of the respondents was suspended and on 27.09.2017, Charge sheet issued to them, appointing the Enquiry as well as the presenting officer, with directions to complete the enquiry proceedings within 90 days. The charge sheet was received by them on 3.10.2017. After hearing the appellants in inquiry proceedings on 17.01.2018 and 16.02.2018, enquiry officer concluded the enquiry proceedings and submitted the enquiry report dated 12.10.2018 stating as follows:
"After going through the documents mentioned in the foregoing para, I find that:
1. The documents sought by the notice were neither on records which were made available to me nor they are made relied upon documents hence those documents cannot be provided by inquiry officer to the noticee and if they want certain documents which were other than Relied Upon Documents for their defence, it is upto them to get and produce before Inquiry Officer and not the other way round.
2. The statements dt 19/06/2017 and dt 25.07.2017 of Mr Ben Tharakan, Director of M/s Bruce Logistics Pvt Ltd. And statements dt 19/06/2017 and 27/07/2017 of Mr Rajesh Kumar Goswami. Proprietor of M/s Airsoft Gun India which are relied upon documents in this case are not retracted till date by any of them.
Taking into the consideration of above findings and Presenting Officers report, I found that Articles of Charge of the said notice stand proved and vindicated."
14 C/87736/2017,86014/2019 4.7 Commissioner (General) after the receipt of enquiry report conducted the hearing on 20.11.2018, when appellants filed the written submissions/ reply. Thereafter impugned order, referred in para 1, supra was passed holding as follows:
"11.1 This is the case of import of 200 pieces of 'Blank Firing Guns' declared as 'Metal Toy Guns' by classifying under CTH 9503 instead of CTH 9903 vide BE No. 9616942 dated 09.05.2017 imported by M/s. Airsoft Gun India. It is observed that the importer had imported six consignments since Nov 2015 including above mentioned live consignment, out of which five consignments had been cleared by the CB M/s. Bruce Logistics P. Ltd. and the goods was declared as 'Metal Toy Guns' classifying under CTH 9503 instead of 'Blank Firing Guns' classifying under CTH-9303. In all six Bes, M/s. Bruce Logistics Pvt. Ltd. intentionally mis-declared the goods to circumvent import policy restrictions and requirement of license as per Arms Rule, 2016. The proprietor of import firm, Sh. Rajesh Goswami, in his statement dated 19.06.2017, stated that their CB, M/s. Bruce Logistics had suggested to declare the goods as 'Metal Toy Guns'. While these were found on examination to be 'Blank Firing Guns' which were capable of being modification and conversion into lethal weapon and pose a national security risk.
11.2 The involvement of the CB in the said fraudulent import of 'Blank Firing Guns' which is restricted item of import under Arms Rules, 2016 and required import license, is proved beyond doubt during inquiries. The CB has failed to discharge their obligations required to fulfil under Regulation 11(d) and 11(e) of the CBLR, 2013 (now Regulation 10(d) and 10(e) of the CBLR, 2018). The violation is admitted by CB in his statement. Indeed, it is necessary to place the legal position as far as the provisions of the section 108 of the Customs Act, 1962 are concerned. In the case of Jasjeet Singh Marwah vs. UOI by the Hon'ble High Court of Delhi reported in 2009 (239) ELT 407 (Del.), it was held that a statement made before the Customs officials under section 108 of the Customs Act, 1962 is not a statement recorded under section 161 of the Criminal Procedure Code, 1973. Further a 15 C/87736/2017,86014/2019 statement recorded under section 108 of the Customs Act, 1962 of the CB by the Custom authorities is admissible as evidence and can form the sole basis for suspending the CB's license, however, subject to the usual safeguards that it is voluntary and truthful. Therefore, it is a material piece of evidence collected by Customs under Section 108 of Customs Act, 1962 can be used as evidence against the CB to the extent of establishing non-compliance of the mandatory provisions of CBLR, 2018. Any contravention of such obligations even without intent would be sufficient to invite upon the CB, the punishment listed in the regulations.
11.3 Further, in written submission, the CB has contended that the inquiry has been made in a complete violation of principle of natural justice and disregard to the provisions contained in Rule 20 of CBLR, 2013, without giving them any opportunity to present their case and produce their defence. During preliminary hearing on 17.01.2018 before the Inquiry Officer, they have asked some additional documents for the reasons of preparing their defence. As per CB's version the same were not provided and the CB could not produce their defence before the inquiry. The CB has quoted following citation in support of his contention:
Silicon Graphics System (India) P. Ltd. vs. UOI - 2006 (204) ELT 247 (Bom.) Shripra Alloys Ltd. vs. CCE, Nagpur - 2007 (220) ELT 297 (Tri-
Mum) wherein supply of non-relied upon documents may not be relevant for the department by may be relevant for affected party to prepare his defense. Therefore, request for their supply cannot be said to be frivolous.
11.4 In above context, it was mentioned by IO in his report dated 12.10.2018 that the documents sought by the CB were neither on records nor they were made relied upon documents. Hence, those documents cannot be provided by Inquiry Officer to the CB and had no relevance for CB at all. If the CB wanted certain documents which are other than relied upon documents 16 C/87736/2017,86014/2019 for their defense, it was upto them to get the same and produce before IO and not the other way round. This stand taken by IO is reasonable and acceptable to me because onus of making defence was on CB and something which is not relied upon by IO, cannot be made available.
11.5 The CB prayed for time till 14.12.2018 to submit his representation on the report of Inquiry Officer in his written submission at the time of personal hearing. But till date the CB has not submitted any representation or any other documents/information to the undersigned.
11.6 The CB Shri Ben Joseph Tharakan had admitted in his statement dated 19.06.2017 and 25.07.2017 that he had filed the Bill of Entry only on the basis of information gathered from the internet and the understanding they had with the importer M/s. Airsoft Gun India from their earlier consignments. As per Arums Rules, 2016, the import of Blank Firing Guns is restricted and required license and its importation has bearing on national security. The CB was aware that the importer also operating a website www.airsoftgunindia.com wherein he had declared the impugned goods as 'Blank Firing Guns'. It means that CB was well aware that the goods were not 'Metal Toy Guns' but the 'Blank Firing Guns'. The CB didn't advise their importer about the proper and true declaration of description of the goods and CTH accordingly, more so when it was connected with Arms Act, 1959. The CB could have advised his client to comply with the provisions of the Act and KYC procedure and also could have informed such non-compliance to the proper Customs Authorities which he failed to do so.
11.7 As far as the second charge is concerned, the CB had connived with the importer to import restricted goods and subsequently the CB admitted that the impugned goods should have been classified under CTH 9303 instead of 9503. The CB did not take proper care while filing BE about the correct description and classification and cleared the consignments without proper verification of correctness of the data provided by the importer when he very well knew it's real description.
17 C/87736/2017,86014/2019 Therefore the infraction in respect of Regulations 11(d) and 11(e) of CBLR, 2013 is established beyond doubt."
4.8 In view of the above we do not agree with the submissions of the appellant that there has been in-ordinate delay in processing the proceedings leading to revocation of their license, though the timelines provided by the Custom Broker Licensing Regulations have not been strictly complied with. Hon'ble Bombay High Court has in case of Unison Clearing Pvt Ltd [2018 (361) ELT 321 (Bom)] held as follows:
"15. In view of the aforesaid discussion, the time limit contained in Regulation 20 cannot be construed to be mandatory and is held to be directory. As it is already observed above that though the time line framed in the Regulation need to be rigidly applied, fairness would demand that when such time limit is crossed, the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the time limit was not adhered to. This would ensure that the inquiry proceedings which are initiated are completed expeditiously, are not prolonged and some checks and balances must be ensured. One step by which the unnecessary delays can be curbed is recording of reasons for the delay or non-adherence to this time limit by the Officer conducting the inquiry and making him accountable for not adhering to the time schedule. These reasons can then be tested to derive a conclusion whether the deviation from the time line prescribed in the Regulation, is "reasonable". This is the only way by which the provisions contained in Regulation 20 can be effectively implemented in the interest of both parties, namely, the Revenue and the Customs House Agent."
Similar view has been expressed by the Hon'ble Calcutta High Court in case of OTA Falloons Forwarders Pvt Ltd [2018 (362) ELT 947 (Cal)] by sating as follows:
16.Regulations of 2004 as well as the Regulations of 2013 are products of exercise of powers under Section 146 of the Customs Act, 1962. Both the Regulations regulate the affairs of a Customs House Agent, subsequently known as the Customs 18 C/87736/2017,86014/2019 Agent in the Regulations of 2013. Regulation 22 of the Regulations of 2004 and Regulation 20 of the Regulation 2013 deal with the power to revoke a licence granted. Both the Regulations stipulate time-limits. None of the Regulations, however, provide for the consequence of not adhering to the time-limit prescribed. The consequence of non-adherence to the time-limit being not provided for in either of the two Regulations, it is open to an interpretation that, the time-limits prescribed are not mandatory. While interpreting a statute when it provides for a time-limit for doing a certain act, then, the entire statute is required to be considered, in the context of the object that the statute seeks to achieve. A statutory provision prescribing a time-limit without providing for the consequence of non-
adherence can be interpreted to mean that, the time-limit provided is directory and not mandatory. Regulation 22 of the Regulations of 2004 and Regulation 20 of the Regulations of 2013 are provisions for the purpose of checking unwholesome practices at the instance of a Customs House Agent or a Customs Agent as the case may be. These are provisions which empower the authority to revoke the licence granted as a measure of punishment for a wrongdoing of the licensed person. Any licence granted unless coupled with a grant or interest, is revocable. These provisions provide for the procedure for the revocation of the licence granted. These provisions seek to regulate the affairs of the licensed persons, so that, such licensed persons obeys the grant of licence in true spirit, on the pain of cancellation of the licence upon being found to have transgressed its parameters. The licence granted under the Regulations of 2004 or 2013 cannot be said to be coupled with any grant or interest making it irrevocable. Such is not the contentions of the petitioner.
17. M/s. Asian Freight (Unit of Esan Freight & Travel Pvt. Ltd.) & Anr. (supra) went into the question whether the provisions are mandatory or directory and arrives at a finding that, the time- limit in Regulation 20 of the Regulations of 2013 is not mandatory and that, any proceeding for revocation of Customs House Agents' licence beyond ninety days of receipt of the 19 C/87736/2017,86014/2019 offence report would not per se stand invalidated by mere reason of such belated initiation. The Division Bench of the Bombay High Court in Unison Clearing Pvt. Ltd. (supra) considers the issue whether the timeframe prescribed in Regulation 20 of the Regulation of 2013 is mandatory or directory. It holds that, the time-limit contained in Regulation 20 of the Regulations of 2013 cannot be construed to be mandatory but directory. It goes on to say that, the timeline framed in the Regulation need to be rigidly applied, fairness would demand that, when such time-limit is crossed, the period subsequently consumed for completing the enquiry, should be justified by giving reasons, and the causes on account of which the time- limit was not adhered. M/s. Asian Freight (Unit of Esan Freight & Travel Pvt. Ltd.) & Anr. (supra) is of a coordinate Bench. I find no reason to arrive at a different finding than that of M/s. Asian Freight (Unit of Esan Freight & Travel Pvt. Ltd.) & Anr. (supra) when it holds that, the time-limit of Regulation 20 of the Regulation of 2013 is not mandatory. On a parity of the same reasoning Regulation 22 of the Regulations of 2004 is not mandatory, but directory. The second issue is answered accordingly.
4.9 From the above it is quite evident that sole evidence relied in the impugned order, against the appellant is the statement dated 19.06.2017 of Shri Rajesh Kumar Goswami, wherein he has stated that their Custom Broker had suggested to declare the goods as "Metal Toy Guns'. Apart from the above in the impugned order we do not find anything else relied against the appellants. As have been stated in para 4.5, the said statement was relied upon by the Commissioner, has been retracted by Shri Rajesh Kumar Goswami before ACMM, stating that the statement was not voluntary and has been taken by the Customs Officer under duress and by giving false promise and false information. In the impugned order reliance has been has placed on the decision of Delhi High Court in case of Jasjeet Singh Marwah [2009 (239) ELT 407 (Del)], stating that statement made before the Customs officers under Section 108 is not a statement recorded under section 161 of Criminal Procedure 20 C/87736/2017,86014/2019 Code, 1973, and can form sole basis for conviction. There can be no dispute about the same, however the statement has to examined for it being voluntary. It has been held by the Hon'ble Apex Court in case of K I Pavunny [1997 (90) ELT 241 (SC)] that "25. It would thus be seen that there is no prohibition under the Evidence Act to rely upon the retracted confession to prove the prosecution case or to make the same basis for conviction of the accused. The practice and prudence require that the Court could examine the evidence adduced by the prosecution to find out whether there are any other facts and circumstances to corroborate the retracted confession. It is not necessary that there should be corroboration from independent evidence adduced by the prosecution to corroborate each detail contained in the confessional statement. The Court is required to examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise. If the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. If the Court on examination of the evidence finds that the retracted confession is true, that part of the inculpatory portion could be relied upon to base conviction. However, the prudence and practice require that Court would seek assurance getting corroboration from other evidence adduced by the prosecution."
We do not find even a whisper in the entire order, about the statement relied upon holding it to be true and voluntary. In our view the impugned order needs to be set aside on this ground itself. In view of specific retraction made by Shri Rajesh Kumar Goswami before the ACMM, before relying on his statement in view of the decision of the Apex Court referred above we are of the view that Commissioner or Enquiry Officer should have first tested the said statements as per the test laid down by the Apex Court and then relied upon the same.
4.10 From the facts as stated in foregoing paras it is also evident that issue in the present case can more appropriately be described as that of mis classification and not mis declaration as alleged in the proceedings initiated against the appellants. There 21 C/87736/2017,86014/2019 is no denial of the fact that the goods were physically examined by the Customs Officer and samples too were drawn from the consignment, sent to appropriate lab for testing by the Custom Officers. It was only after satisfying themselves and discussions at all levels upto Commissioner the goods were held classifiable under Heading 9503. When the Custom Officers themselves have after physically examining the goods concluded that the goods were classifiable under Heading 9503, then can the Custom Broker be accused of mis-declaring the goods and their classification. When Custom Officers who are expert in the matter of classification themselves failed to determine the correct classification of goods after physically examining it and considering the issue for substantial time then can an Custom Broker be accused of failing to determine the correct classification on the basis of description given by the importer and in the import documents.
4.11 Admittedly certificate as required in terms of ITC (HS) Import Policy, Condition No 2, for the import of goods under CTH 9503 was not produced by the Importer/ Custom Broker, but what stopped/ prevented Custom Officers from insisting on the same before allowing the clearance. Can this failure of the Custom Officers be also the reason for accusing the Custom Broker of his failure to comply with the policy requirements?
4.12 Appellant as per the Article of Charges have been accused of failure in complying with Regulation 11(d) and 11(e) of the Custom Broker Regulations, 2013. The said Regulations are reproduced below:
"(d) advise his client to comply with the provisions of the Act and in case of noncompliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;
(e) 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;"
In the impugned order we do not find any discussion to show how the Appellants have failed to comply with the requirements 22 C/87736/2017,86014/2019 of Regulations 11(d) and 11(e). He had advised the client as per his understanding of the law and procedure, and had exercised due diligence accordingly. In our view the only additional advice that he could have rendered in respect of the consignments imported and cleared under CTH 9503 could have been for complying with the requirements of ITC (HS) Import Policy, Condition No 2 for import of goods under that heading. In case the said certificate was produced or insisted upon before clearance of the goods the entire case of misdeclaration/misclassification could have been averted. In our view revocation of licence for that would be too harsh a punishment for the same when Custom officers also have not insisted for the same. The forfeiture of security deposit for the same would have been adequate taking into account the fact that goods sought to be cleared, were "blank guns" which could have been modified into lethal weapons jeopardizing the National Security and the security of individuals.
4.13 Similar view has been expressed by the Hon'ble Delhi High Court in the case of Ashiana Cargo Services [2014 (302) ELT 161 (Del)] as follows:
"11.Viewing these cases, in the background of the proportionality doctrine, it becomes clear that the presence of an aggravating factor is important to justify the penalty of revocation. While matters of discipline lie with the Commissioner, whose best judgment should not second- guessed, any administrative order must demonstrate an ordering of priorities, or an appreciation of the aggravating (or mitigating) circumstances. In this case, the Commissioner and the CESTAT (majority) hold that "there is no finding nor any allegation to the effect that the appellant was aware of the misuse if the said G cards", but do not give adequate, if any weight, to this crucial factor. There is no finding of any mala fide on the part of the appellant, such that the trust operating between a CHA and the Customs Authorities (as a matter of law, and of fact) can be said to have been violated, or be irretrievably lost for the future 23 C/87736/2017,86014/2019 operation of the license. In effect, thus, the proportionality doctrine has escaped the analysis.
12.Learned Senior Standing Counsel for the Customs has stressed that the infraction in this case is not a routine matter, but rather, illegal smuggling of narcotics by the G card users. However, given the factual finding that the CHA was not aware of the misuse of the G cards (and thus, also unaware of the contents being smuggled), no additional blame can be heaped upon the CHA on that count alone. Rather, the only proved infraction on record is of the issuance of G cards to non- employees, as opposed to the active facilitation of any infraction, or any other violation of the CHA Regulations, whether gross or otherwise. Neither have any such allegations been raised as to the past conduct of the appellant, from the time the license was granted in January, 1996. Equally, it is important to note that the appellant has - as of today - been unable to work the license for 8 years, and thus been penalized in this manner. This is not to say that the trust operating between the Customs Authorities and the CHA is to be taken lightly, or that violations of the CHA Regulations should not be dealt with sternly. A penalty must be imposed. At the same time, the penalty must - as in any ordered system - be proportional to the violation. Just as the law abhors impunity for infractions, it cautions against a disproportionate penalty. Neither extreme is to be encouraged. In this case, in view of the absence of any mens rea, the violation concerns the provision of G cards to two individuals and that alone. A penalty of revocation of license for this contravention of the CHA Regulations unjustly restricts the appellant's ability to engage in the business of the CHA for his entire lifetime. As importantly, it skews the proportionality doctrine, substantially lowering the bar for revocation as a permissible penalty, especially given the dire civil consequences that follow. On the other hand, the minority Opinion of the CESTAT, delivered by the Judicial Member, correctly appreciates the balance of relevant factors, i.e. knowledge/mens rea, gravity of the infraction, the stringency of the penalty of revocation, the fact that the appellant has already 24 C/87736/2017,86014/2019 been unable to work his license for a period of 6 years (now 8 years), and accordingly sets aside the order of the Commissioner dated 24-1-2005."
This decision of the Hon'ble High Court has been affirmed by the Supreme Court as reported at [2015 (320) ELT A175 (SC)].
5.1 In view of discussions as above we partly allow the appeal No. C/86014/2019 filed by the appellant to the extent of setting aside the order of revocation of Custom Broker License of the Appellants.
5.2 Appeal No. C/87736/2017 is dismissed as infructuous.
(Order pronounced in the open court on 10.12.2019) (S.K. Mohanty) Member (Judicial) (Sanjiv Srivastava) Member (Technical) tvu