Custom, Excise & Service Tax Tribunal
Shriwin Shipping And Logistics vs Commissioner Of Customs (Viii) ... on 22 November, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
REGIONAL BENCH - COURT NO. - III
Customs Appeal No. 41490/2019
(Arising out of Order-in-Original No. 69097/2019 dated 23.5.2019 passed by the
Commissioner of Customs, Chennai VIII)
M/s. Shriwin Shipping & Logistics Appellant
Door No. 76/80, Moore Street
Chennai - 600 001.
Vs.
Commissioner of Customs Respondent
Commissionerate - VIII Custom House, No. 60, Rajaji Salai Chennai - 600 001.
APPEARANCE:
Shri S. Bhaskaran, Advocate for the Appellant Ms. K. Komathi, JC (AR) for the Respondent CORAM Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) Hon'ble Shri P. Anjani Kumar, Member (Technical) Final Order No. 41393 / 2019 Date of Hearing : 20.11.2019 Date of Pronouncement: 22.11.2019 Per Ms. Sulekha Beevi C.S. The appellant is a Customs Broker license holder from Chennai Customs. Investigations were initiated on various grounds and during such investigation it appeared that one Shri A. Sathish who had no valid Customs Broker license of his own, had acted as a Customs Broker and handled customs clearance work for Shri A. Madhu Singh and Shri Aftab Alam by using the customs broker company's name of 2 the appellant and M/s. Unique Line, Chennai. It also came to light that Shri A. Sathish had paid monetary benefits to the actual Customs Broker company owners / partners for allowing him to use their Customs Broker company name and login id. Shri A. Sathish had used the license as well as login id of the appellant so that A. Madhu Singh and Aftab Alam, against whom investigations were initiated were able to illegally import goods. Consequently, proceedings were initiated against the appellant for violation of Customs Broker Licensing Regulations (CBLR), 2018 r/w CBLR, 2013.
2. It is the case of the department that the appellant acted as Customs broker for M/s. Sri Sai Enterprises by giving access to their company's name and login id to Shri A. Sathish of M/s. Sai Impex for monetary consideration and to move the import container in which high valued BIS, IPR violated and other high valued goods were attempted to be removed without filing Bill of Entry and without the knowledge of Customs. Such access given by appellant to Shri A. Sathish also enabled Shri A. Sathish to file the Bill of Entry dated 3.5.2017 by which high valued BIS violated and other undeclared goods were imported. The appellant had not obtained KYC documents and had not verified the antecedents of the importer M/s. Sri Sai Enterprises. They had not verified the identity and functioning of the client also. Shri G. Nathavel, partner of appellant-company had never met the actual IEC holder Smt. Usha Rani of M/s. Sri Sai Enterprises. Their only point of contact was with Shri A. Sathish who was neither proprietor, partner, director nor an authorized signatory of M/s. Sri Sai Enterprises. Appellant failed to verify the fact that the import was 3 actually made by third person Shri A. Madhu Singh by misusing the IEC of Smt. Usha Rani. These facts were never brought to the notice of the Customs. Proper verification of antecedents of the IEC holder and their functioning and their address on record, if done, could have possibly thwarted the smuggling and illegal import of goods. On such facts, appellant was called upon to show cause why the Customs Broker license should not be revoked, security deposit should not be forfeited and why penalty should not be imposed. After due process of law, the original authority ordered revocation of license and forfeiture of security deposit of Rs.25,000/-. A penalty of Rs.50,000/- was also imposed. Aggrieved by such order, the appellant is now before the Tribunal.
3. The ld. Counsel Shri S. Bhaskaran appeared and argued on behalf of the appellant. He submitted that the main allegations leveled in the Show Cause Notice against the appellant are as under:-
(i) Regulation 10(d) of CBLR 2018 read with Regulation 11(d) of CBLR, 2013 has been infringed inasmuch as they had failed to advise their clients to comply with the provisions of the Act as they do not know the said IEC holders. Moreover, the non-compliance of the same was not brought to the notice of customs;
(ii) Regulation 10€ of CBLR, 2018 read with Regulation 11(e) of CBLR, 2013 has been violated inasmuch as they had allowed unauthorized persons to import the goods by misuse of IEC and thereby failed to exercise due diligence to ascertain the correctness of the information furnished by the said importers or their authorized agents;4
(iii) Regulation 10(n) of CBLR, 2018 read with Regulation 11(n) of CBLR 2013 has been violated inasmuch as they have deliberately not verified the antecedents of IEC holders and as matter of fact, they colluded with the impersonators of IECs and remained an active part of this masquerading exercise."
4. The ld. counsel advanced arguments alleging that the department has failed to comply with the procedure contemplated in the CBLR, 2018 r/w CBLR, 20133. As per Regulation 17, 19 as well as 20, time limit has been prescribed for conducting the proceedings for revocation of license. Regulation 17(1) of CBLR states that the Principal Commissioner or Commissioner of Customs shall issue a notice in writing to the Customs Broker within a period of 90 days from the date of receipt of offence report. In the present case, the offence report is dated 11.6.2018. The Show Cause Notice then ought to have been issued within 90 days from the date of the offence report. However, the Show Cause Notice has been issued only on 14.9.2018 which is beyond the time limit prescribed by the Regulation. Again, as per Circular No. 9/2010 dated 8.4.2010, the proceedings for revocation ought to have been completed within nine months from the date of receipt of offence report. Thus, the proceedings for revocation ought to have been completed on or before 10.3.2019. However, the proceedings have been completed by the department and order of revocation has been passed only on 23.5.2019 beyond the time limit stipulated in Circular 9/2010. Further, there is a delay in giving the inquiry report and the same was given only on 21.2.2019 5
5. No doubt, the Regulations do not only contemplate action against the erring brokers but also contemplates timely action, but such action has to be initiated against the erring brokers as has been laid down by catena of judgments by various other High Courts, including 3 division bench judgments of our Hon'ble High Court. It is further respectfully submitted that the law of limitation is common to both the customs broker and also the authorities, while the provision not only enables the respondent to levy penalty, but also empowers the respondent to revoke the license, which is an extreme step curtailing the right to carry on any trade or professional as guaranteed by the Constitution of India and therefore the object behind such a provision can only imply that the time limit prescribed under the regulations has to be scrupulously followed, so as thwart unnecessary and unwarranted speculations and other aspects. The object of the enactment viz. CBLR is to protect the substantive and individual rights of the customs broker and that the consequences of violating such Regulations would certain affect the interest of the parties and would certainly defeat the very purpose of the enactment.
6. The ld. counsel submitted that since the department has not followed the time limit prescribed in the Regulations which is mandatory, the order of revocation of license cannot sustain. To support his argument that the time limit prescribed as per the Regulations is mandatory, the ld. counsel relied upon the following judgments:-
6
(a) Judgment of the Hon'ble High Court of Madras in the case of Santon Shipping Services Vs. Commissioner of Customs , Tuticorin in CMA No. 730 of 2016 dated 13.10.2017
(b) Commissioner of Customs, Tuticorin Vs. MKS Shipping Agencies
- 2017 (348) ELT 640 (Mad.)
(c) Commissioner of Customs Vs. M/s. A.M. Ahmed & Co. in W.A. No. 371 of 2015 dated 2.7.2015
(d) Impexnet Logistic Vs. Commissioner of Customs - 2016 (338) ELT 347 (Del.)
7. On merits, the ld. counsel submitted that there is no averment in the Show Cause Notice that appellant was involved in mis- declaration of goods. The case against importer is that the importer had not declared goods in the nature of mobile phones, accessories, which are restricted. There is no iota of evidence furnished by the department to prove that appellant had knowledge of the contents in the container. As a Customs broker the appellant can only declare the goods as informed by importer and the same were mentioned in the Bill of Entry. The allegation that appellant has violated the Regulations under CBLR 2018 is without any basis. Further, appellant has obtained KYC documents from the IEC holder. The IEC is in the name of Smt.Usha Rani. Shri A. Sathish is the son-in-law of Smt.Usha Rani. The department does not have a case that Smt. Usha Rani does not have an IEC issued in her name or that the address and other details given is incorrect. As far as possible, the appellant has verified the antecedents of the importer / IEC holder. Merely because the importer had not declared certain goods which were not 7 within the knowledge of the appellant, the grave punishment of revocation of license cannot be imposed on the appellant. The allegation that the appellant had allowed Shri A. Sathish to use the login id as well as the license of the appellant etc. is false and made to suit the case of department. None of the allegations raised in the Show Cause Notice has been established and therefore revocation of license, forfeiture of security deposit or the penalty imposed cannot sustain. He relied upon the decision in Ashiana Cargo Services Vs. Commissioner of Customs - 2014 (302) ELT 161 (Del.) which was affirmed by Hon'ble Apex Court as reported in 2015 (320) ELT A175 (SC).
8. The ld. AR Ms. K. Komathi appeared for the Respondent. She strongly stressed that the appellant allowed Shri A. Sathish to use his license as well as the login id to facilitate the illegal imports. They are also guilty of attempting to remove the goods without filing Bill of Entry and without knowledge of Customs. Such access was given by the appellant to Shri A. Sathish by which the high valued BIS / IPR violated and other undeclared goods were imported. If the appellant had obtained KYC documents and also verified the antecedents of the importer M/s. Sri Sai Enterprises, the illegal imports would not have happened. Shri G. Nathavel who is the partner of the appellant company has admitted that the mistake is on their part as Customs Broker for not complying with the Regulations of CBLR, 2018. By such acts of the appellant, they have facilitated Shri A. Madhu Singh of M/s. Pooja Collections, Chennai to import goods by evading customs duty. The order passed revoking the license of appellant as 8 well as forfeiting the security deposit and imposition of penalty is legal and proper.
9. Heard both sides.
10. The foremost issue that has been raised by the ld. counsel for appellant is on the technicalities of not complying with the time limit prescribed by the Regulations. Ld. counsel pointed out that in para 7.1 of Circular 9/2010-Cus. dated 8.4.2010, the Board has clarified that an overall time limit of nine months has to be taken from the date of offence report for completing the proceedings. Further, Regulations prescribe time limit for each stage of the proceedings. It is stated therein that the Commissioner of Customs shall issue a notice in writing to the Customs Broker within a period of 90 days from the date of receipt of an offence report. In the present case, the offence report is dated 11.6.2018. However, Show Cause Notice has been issued on 14.9.2018 which is beyond the period prescribed in Regulation 20. Similarly, the proceedings for revocation have been completed beyond the period of nine months and the order for revocation has been issued on 23.5.2019 which is against the Board Circular 9/2010. Sub-clause (5) of Regulation 20 states that a report of inquiry shall be submitted within a period of 90 days from the date of issuance of the Show Cause Notice under sub-Regulation (1). In the present case, the Show Cause Notice was issued on 14.9.2018 and the inquiry report was submitted only on 21.2.2019 which is beyond 90 days prescribed in sub-regulation (5).
11. The Hon'ble High Court in the case of Santon Shipping Services (supra) vide judgment dated 13.10.2017 had occasion to consider 9 whether the time-limit prescribed in the Regulation for proceedings of revocation of license is mandatory or directory. It was held that non- compliance of the time limit prescribed in the Regulation is fatal and the order of revocation of license passed without complying with the time limit cannot sustain. Similar view was taken in the MKS Shipping Agencies (supra) as well as other decisions relied by the ld. counsel. Following these decisions, we are of the considered opinion that the order passed by the Commissioner revoking the license without complying the statutory time limit is against law and cannot sustain.
12. The ld. counsel has argued on merits also. The violations alleged in the Show Cause Notice have been narrated in the paragraphs above. The department alleges that appellant has violated Regulation 10(d), (e) and (n) of CBLR, 2018 r/w CBLR, 2013. The case of department is that appellant allowed Shri A. Sathish to use their Customs Broker license as well as to use the login id so as to facilitate illegal imports. However, there is no evidence adduced by the department to show that the appellant had allowed other persons to use their license and login id. Apart from a bald statement in the Show Cause Notice, there is nothing on record to prove these allegations. It is also alleged that the appellant failed to verify the antecedents of the importer and that they were not in possession of KYC documents. KYC details of the IEC holder was obtained by the appellant and the transactions were done through Shri A. Sathish, who represented on behalf of IEC holder. No direct involvement of the appellant in the alleged illegal import has been established by the department. When the KYC details have been obtained, the appellant 10 cannot be found fault alleging that he did not directly meet the IEC holder before filing the Bill of Entry or doing any such transaction as Customs Broker. In Kunal Travels (Cargo) Vs. Commissioner of Customs (I&G), IGI Airport, New Delhi - 2017 (354) ELT 447 (Del.) observed that it would be far too onerous to expect the CHA to inquire into and verify the genuineness of IE Code given to it by a client for each import / export transaction. The Tribunal in Bajaj Enterprises Vs. Commissioner of Customs (General), Mumbai - 2017 (347) ELT 675 (Tri. Mum.) has taken similar view. On merits also, we find that the appellant succeeds.
13. From the foregoing discussions, the impugned order is set aside. The appeal is allowed with consequential relief, if any.
(Pronounced in court on 22.11.2019) (SULEKHA BEEVI C.S.) Member (Judicial) (P. ANJANI KUMAR) Member (Technical) Rex