Custom, Excise & Service Tax Tribunal
Freight Logistics vs Commissioner, Customs-New Delhi ... on 9 July, 2021
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. II
CUSTOMS APPEAL NO. 50325 OF 2021
(Arising out of Order-in-Original No. 05/MK/Suspension
Confirmation/Policy/2021 dated 15.1.2021 passed by the Commissioner,
of Customs (Airport & General), New Delhi)
M/s Freight Logistics Appellant
Versus
Commissioner of Customs (Airport & General) Respondent
New Delhi Air Cargo Export, New Customs House, New Delhi Appearance Shri Prabhat Kumar, Advocate for the Appellant Shri Sunil Kumar, Authorized Representative for the Respondent CORAM:HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing: 17.06.2021 Date of Decision: 09.07.2021 Final Order No. 51649/2021 P.V. Subba Rao:
This appeal has been filed by the appellant assailing Order-in-
Original No. VIII(H)13/175/FL/2013/606 to 616 dated 15.1.2021 passed by the Commissioner, Customs (Airport & General), New Customs House, New Delhi whereby the suspension of Customs Broker License of the appellant was confirmed under Regulation 16(2) of Customs Broker Licensing Regulation, 2018.2
C/50325/2021
2. Imports and exports are free in India subject to some restrictions imposed by law. After the outbreak of Covid Pandemic many countries imposed restriction(s) on imports and exports to safeguard their country's interests. The DGFT had prohibited export of fabric used to make masks by Notification No. 52 (2015-
20) dated 19.3.2020. This is a case of attempted smuggling of this fabric to China, mis-declaring the nature of goods and using the Importer Exporter Code (IEC) of a company without their knowledge or involvement. The present proceedings pertain to suspension of the license of the Customs Broker for their alleged failure to perform their obligations under Regulation 10 of CBLR, 2018 in the attempted illegal export.
3. The facts of the case, in brief, are that the appellant is a Customs Broker Licensed by the Commissioner of Customs (Airport & General), New Custom House, New Delhi. A Customs Broker who is licensed can operate in any Custom House across the country. The license is issued after due verification and conducting an examination.
4. The appellant had filed Shipping Bill No. 261988 dated 11.5.2020 supposedly on behalf of the exporter M/s Ala Foodstuff Pvt. Limited, Amritsar (IEC No. 1207001406) to export 481,800 metres of packing materials for pouch. No drawback was claimed on the shipping bill. The Directorate of Revenue Intelligence had received information that prohibited goods namely fabric for mask was being exported to China in the consignment, mis-declaring it as packing material and passed this information to the Additional Commissioner of Customs (SIIB), Air Cargo Complex Export, New 3 C/50325/2021 Customs House, New Delhi, who investigated the matter and on examination of the goods attempted to have been exported, were indeed found to be material for masks the export of which was prohibited by DGFT. Samples were taken and sent for examination to the Central Revenue Control Laboratories vide Test Memo No. 1/2020-21 dated 21.5.2020, who confirmed vide their report dated 26.5.2020 that the material was indeed non-woven fabric of polyester. Export of these goods was prohibited by the DGFT in terms of Notification No. 52 (2015-20) dated 19.3.2020.
5. Further investigations also showed that M/s Ala Foodstuff Pvt. Ltd., Punjab in whose name the shipping bill was filed by the appellant had nothing to do with the consignment and was not even aware of the shipping bill being filed. The appellant had received documents for the shipment from one Shri Pushpraj Yadav of M/s POL Enterprises, who confirmed having given those documents to the appellant after receiving them from one Shri Ashok Kumar, whom he met in the export shed. Shri Manish Sharma, F card holder of the appellant, had received export documents from Shri Pushpraj Yadav. Thus, the export was attempted to be made in the name of M/s Ala Foodstuff Pvt. Ltd., who were not concerned with the export and were engaged only in export of rice to some countries, but not to China. They were also not engaged in export of the product in question.
6. After detailed investigation, the Additional Commissioner, (SIIB) issued a Show Cause Noticed dated 22.12.2020 to all concerned including the appellant. The appellant was called upon to show cause as to why penalty should not be imposed upon them 4 C/50325/2021 under Section 114(1)and Section 114AA of the Customs Act, 1962. A copy of this Show Cause Notice was sent to the Commissioner of Customs (Airport & General) who issues licenses and regulates the Customs Brokers in Delhi. Based on this Show Cause Notice the Commissioner suspended the license of the appellant on 7.1.2021 under Regulation 16(1) of the CBLR, 2018. After giving an opportunity of being heard, he confirmed the suspension under Regulation 16(2) of CBLR, 2018 by the impugned order.
7. We have heard at length the arguments made by learned Counsel for the appellant and learned Departmental Representative and have also considered their submissions. We have also gone through the appeal memorandum.
8. The arguments of the learned Counsel were as follows:
(a) There was no emergency or needed action requiring suspension of license under Regulation 16(1) and its confirmation under Regulation 16 which reads as under :
"16. Suspension of license.--
(1) Notwithstanding anything contained in regulation 14, the Principal Commissioner or Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the license of a Customs Broker where an enquiry against such Customs Broker is pending or contemplated:
Provided that where the Principal Commissioner or Commissioner of Customs may deem fit for reasons to be recorded in writing, he may suspend the license for a specified number of Customs Stations.
(2) Where a license is suspended under sub-regulation (1), the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose license is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs Broker: Provided that in case the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, passes an order for continuing the suspension, further procedure thereafter shall be as provided in regulation 17."
(emphasis supplied) 5 C/50325/2021
(b) There was inordinate delay in issue of the suspension order. An intimation by the Additional Commissioner, SIIB was first made on 24.7.2020, whereas suspension order was issued only on 7.1.2021 and confirmed on 15.1.2021 after a gap of five months and thirteen days. The provision for suspension of license empowers the Commissioner of Customs to suspend license "in appropriate cases where immediate action is necessary." Evidently, no immediate action was necessary because action was taken after a gap for nearly six months;
(c) All shipments of the Customs Broker were put up on alert after May 2020, but nothing untoward was found till January 2021 and their license was suspended, relies on the following case laws:
(i) Commissioner of Customs Vs. National Shipping Agency - 2008 (226) ELT (Bom.);
(ii) P. Cawash & Co. Vs. Commissioner of Customs (Gen.), Mumbai - 2018 (364) ELT 871 (Tri.-Mumbai);
(iii) A.S. Vasan & Sons Vs. Principal Commissioner of Customs (General), Mumbai - 2018 (362) ELT 271 (Tri.-Mumbai);
(iv) R.S. Kandalkar & Co. Vs. Commissioner of Central Excise, Mumbai - 2014 (299) ELT 360 (Tri.-Mumbai);
(v) Randhir Singh Vs. Union of India - Criminal Appeal No. 210 of 2017 (SC)."
(d) The impugned order dated 15 January, 2021 does not speak of immediate action required and hence the same is not sustainable. He relies on the following cases:
(i) Ratnadip Shipping Pvt. Ltd. Vs. CC, Mumbai - 2019 (370) ELT 1765 (Tri.-Mumbai);
(ii) East West Freight Carriers (P) Vs. Collr. of Customs -
1995 (77) ELT 79 (Mad.);
6
C/50325/2021
(iii) M/s N.C. Singha & Sons & Anr. Vs. Union of India & Ors. - 1998 (2) Callt 483 Hc. 1998 (61) ECC 47, 1998 (104) ELT 11 Cal.
(iv) Jeena And Co. Vs. Collector of Customs - 1987 (13) ECC 117;
(v) Vetri Impex Vs. Commissioner of Customs, Trichy -
2001 (135) ELT 95 (Tri.-Chennai);
(vi) Poonam Cargo Service Vs. Collector of Customs, Delhi
- 1999 (110) ELT 696 (Tribunal).
(e) The Customs Broker fully cooperated with the investigation and at no stage had the authorities apprehended any role played by the customs broker;
(f) The appellant has clear record for 15 years and hence no motive can be attributed to the appellant.
9. In view of above, the learned Counsel for the appellant prays that the suspension order may be set aside and the Customs Broker may be allowed to operate and any other relief may be provided to them.
10. On being specifically asked about the current status of proceedings under Regulation 14 for cancellation of license or imposition of the penalty, learned Counsel fairly submits that the same has been initiated by the Commissionerate and is in process.
11. Learned Departmental Representative opposes the appeal. On the first ground that there was almost a gap of six months between the SIIB informing the Commissioner about incident and actual suspension of license, learned Departmental Representative points out that merely because an information has been received that there is a suspicion of alleged irregularity in export, the department has not jumped to any conclusion and suspended the 7 C/50325/2021 appellant's license. Information is received in various forms on various issues on a daily basis by the Customs officers each of which does not necessarily result in discovery of commission of an offence. Therefore, it is important that the matter be investigated first. In this case the SIIB has precisely done that and after investigation and getting the test report and ascertaining that the goods attempted to be exported was raw material for manufacture of masks, export of which was prohibited by the DGFT, the Additional Commissioner, SIIB has issued a Show Cause Notice to various persons including the appellant proposing to impose penalty under Section 114 and 114 AA. The Show Cause Notice was issued on 22.12.2020 and within 7 days of issue of this notice, the Customs Broker License of the appellant was suspended by the Commissioner of Customs (Airport & General). The order of suspension was promptly issued and thereafter the suspension was confirmed by the impugned order within another 8 days. Therefore, there is no force whatsoever in the arguments of the learned Counsel that there was inordinate delay. The appellant had failed to comply with Regulation 10(a), 10(e) and 10(n) of the Customs Broker Regulation, 2018 read with Board's Circular No. 9/2010-Cus. dated 8.4.2010. Regulation 10 reads as follows:
"10. Obligations of Customs Broker.-- A Customs Broker shall --
(a) obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as a Customs Broker and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;
(b) transact business in the Customs Station either personally or through an authorised employee duly approved by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;
(c) not represent a client in any matter to which the Customs Broker, as a former employee of the Central Board of Indirect taxes and Customs gave 8 C/50325/2021 personal consideration, or as to the facts of which he gained knowledge, while in Government service;
(d) advise his client to comply with the provisions of the Act, other allied Acts and the rules and regulations thereof, and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;
(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;
(f) not withhold information contained in any order, instruction or public notice relating to clearance of cargo or baggage issued by the Customs authorities, as the case may be, from a client who is entitled to such information;
(g) promptly pay over to the Government, when due, sums received for payment of any duty, tax or other debt or obligations owing to the Government and promptly account to his client for funds received for him from the Government or received from him in excess of Governmental or other charges payable in respect of cargo or baggage on behalf of the client;
(h) not procure or attempt to procure directly or indirectly, information from the Government records or other Government sources of any kind to which access is not granted by the proper officer;
(i) not attempt to influence the conduct of any official of the Customs Station in any matter pending before such official or his subordinates by the use of threat, false accusation, duress or the offer of any special inducement or promise of advantage or by the bestowing of any gift or favour or other thing of value;
(j) not refuse access to, conceal, remove or destroy the whole or any part of any book, paper or other record, relating to his transactions as a Customs Broker which is sought or may be sought by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be;
(k) maintain up to date records such as bill of entry, shipping bill, transhipment application, etc., all correspondence, other papers relating to his business as Customs Broker and accounts including financial transactions in an orderly and itemised manner as may be specified by the Principal Commissioner of Customs or Commissioner of Customs or the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;
(l) immediately report the loss of license granted to him to the Principal Commissioner of Customs or Commissioner of Customs, as the case may be;
(m) discharge his duties as a Customs Broker with utmost speed and efficiency and without any delay;
(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;
(o) inform any change of postal address, telephone number, e-mail etc. to 9 C/50325/2021 the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, of all Customs Stations including the concerned Deputy Commissioner or Assistant Commissioner of the Commissionerate who has granted the license immediately within two days;
(p) maintain all records and accounts that are required to be maintained under these regulations and preserve for at least five years and all such records and accounts shall be made available at any time for the inspection of officers authorised for this purpose; and
(q) co-operate with the Customs authorities and shall join investigations promptly in the event of an inquiry against them or their employees."
12. The license of the Customs Broker can be revoked and penalties can be imposed under Regulation 14. Pending revocation of license it can be suspended under Regulation 16(1) and the suspension can be confirmed under Regulation 16(2), which is precisely what was done in this case. He relies on the following case laws :
(a) Orient Clearing & Forwarding Agency - [2001 (136) ELT 3 (Cal.)];
(b) Sabin Logistics Pvt. Ltd. [2018 (362) ELT 226 (Mad.)];
(c) Jasjeet Singh Marwaha - [2009 (239) ELT 407 (Del.)];
(d) Asian Freight - [2020 (373) ELT 323 (Cal.)];
(e) Shree Venkatesh Shipping Services P. Ltd. - [2010 (261) ELT 8803 (Tri.-Mumbai.
13. We note that Regulation 10 of CBLR, 2018 places various obligations upon the Customs Broker which, if not complied with, can attract revocation of license and/or imposition of penalty under Regulation 14. This is not an issue to be decided at this stage, that as the matter is in process sub-judice, before the lower authorities. Pending decision on the action under Regulation 14, the Commissioner by the impugned order has suspended the license of the Customs Broker under Regulation 16. It is the case of the appellant that this suspension can be done only when immediate 10 C/50325/2021 action is required. If no action was taken for six months from the date of the alleged commission of offence, no case is made out for taking immediate action. Therefore, the suspension needs to be set aside. It is the case of the Revenue that even before suspending the license, the Customs Officers have to investigate the alleged offence and the role, if any, played by the Customs Broker. After completion of the investigation, a Show Cause Notice was issued in the main case of attempted illegal export. In the Show Cause Notice the appellant was also a co-noticee and penalties were proposed to be imposed. This is the point at which there was sufficient material to proceed against the Customs Broker and within a week the license of the Customs Broker was suspended and the suspension was confirmed within another eight days. Therefore, there is absolutely no delay in the matter.
14. It is true that suspension is required only in cases where the Commissioner feels the need for immediate action. But this assessment of need for immediate action should be based on prima facie view about the role played by the Customs Broker. Had the Commissioner suspended the license of the Customs Broker as soon as the alleged illegal export was suspected, such an action would not have been sustainable because the appellant was not the exporter but had only facilitated filing of export documents. It needs to be seen as to whether the appellant Customs Broker had some role to play or some negligence of the duty cast upon him under the regulations. After investigation, the SIIB has issued a Show Cause Notice to all concerned. In this Show Cause Notice the role of the appellant was brought out and a penalty was proposed 11 C/50325/2021 under Section 114 and 114AA upon the appellant. In our considered view, this is the triggering point at which the Commissioner could have had reason to conclude that the Customs Broker should not be allowed to operate in the Customs House. Within 7 days of the issue of Show Cause Notice in the main case, the appellant's license was suspended and then it was confirmed within a period of another eight days. We, therefore, find no delay in issuing the suspension order.
15. Another argument of the learned Counsel was that there was no recording in the impugned order that such immediate action was necessary. Therefore, the Commissioner suspended the licence without even concluding that such an action is necessary. We find that Regulation 16(1) of CBLR, 2018 empowers the Commissioner of Customs, to, in appropriate cases, where "immediate action is necessary", suspend the license of the Customs Broker. Having suspended, Regulation 16(2) provides for confirmation after giving an opportunity of hearing. Evidently, Regulation 16(2) does not talk about immediate action because the action would have already been taken under Regulation 16(1). Para 37 of the impugned order records that "immediate action was felt necessary" and license was suspended under 16(1). It reads as follows:
"37.....Therefore, keeping in view of the above facts mentioned in the SCN No. 32/KRM/ADC/ACE/2020 dated 22.12.2020 issued by Additional Commissioner of Customs, Air Cargo Exports under letter C. No. VIII(10)ACE/SIIB/Ala/04/2020-21/7850-59 dated 22.12.2020, immediate action was felt and to prevent further misuse of Customs Broker License No. R-05/DEL/CUS/2008 valid up to 28.08.2027 of M/s Freight Logistics (PAN AABFF264IR), under Sub- Regulation (1) of Regulation 16 of the Customs Broker Licensing Regulation 2018, Customs Broker License No. R-05/DEL/CUS/2008 valid up to 28.08.2027 of M/s Freight Logistics (PAN: AABFF264IR) was suspended on 07.01.2021 vide OIO No. 02/MK/Suspension/Policy/2021 dated 07.01.2021 at all the Customs stations/ports of India with immediate effect. M/s Freight Logistics 12 C/50325/2021 was further directed to surrender the original Customs Broker License and all the F/G/H cards issued to them immediately.
The impugned order only confirmed it under Regulation 16(2). We find no force in the argument of the appellant.
16. Therefore, we find no infirmity in the impugned order confirming suspension of the license or violation of the provisions of Regulation 16 of the CBLR, 2018. We also note that this is merely an order of suspension of license and the appellant has full opportunity to explain his case and put forth his defence in the proceedings for action under Regulation 14 of CBLR, 2018 which are already in process. In view of the above, we find that the impugned order confirming the suspension of the license of the appellant is fair and reasonable and needs no inference. We make it clear that we are not passing any remarks on the merits of the case which may be considered during the proceedings under Regulation 14 before the Commissioner and no inference should be drawn from this order on the merits of the case in the proceedings under Regulation 14.
17. The appeal is dismissed and the impugned order is upheld.
(Pronounced in Court on 09.07.2021) (Anil Choudhary) Member (Judicial) (P.V. Subba Rao) Member (Technical) RM