Case Law Details
JKG Infralogistics Pvt. Ltd. Vs Commissioner of Customs (Administration & Airport) (CESTAT Kolkata)
Introduction: In the recent case of JKG Infralogistics Pvt. Ltd. vs. Commissioner of Customs (Administration & Airport) at CESTAT Kolkata, the Customs Broker faces allegations of fraud related to the export of ball bearings. The appellant, a Customs Broker, challenges penalties imposed under the Customs Broker Licensing Regulations (CBLR).
Detailed Analysis: The appellant, a licensed Customs Broker, handled the export of ball bearings for M/s. Gupta Vyapaar. The investigation revealed alleged over-valuation of consignments to defraud the government and gain additional benefits. The Customs Broker, accused of facilitating the fraud, faced a show cause notice under CBLR 2018.
The case hinges on violations of CBLR, including Regulation 10 (d), (m), (n), and (q). The appellant contends the absence of evidence linking them to the export goods’ over-valuation. The chartered engineer’s testimony lacked substance, and no conclusive proof established the Customs Broker’s involvement in the alleged misconduct.
The appellant argued their non-involvement in export value declarations, as it falls under the exporter’s sole prerogative. The absence of malice and the appellant’s cooperation in the investigation further weakened the case against them. The department’s circumstantial evidence lacked independent corroboration, failing to substantiate the allegations.
The regulatory charges under CBLR, 2018, including failure to advise the client, discharge duties promptly, verify client details, and cooperate with authorities, were deemed misdirected and unfounded. The appellant highlighted the denial of natural justice, as their request for cross-examination was overlooked without adequate reasons.
Conclusion: The CESTAT Kolkata, after careful consideration, found the department’s allegations misdirected and lacking substantive evidence. The order revoking the Customs Broker license was deemed illegal and incorrect. Consequently, on 01.12.2023, the CESTAT Kolkata set aside the order, annulling the revocation of the Customs Broker license and granting consequential benefits as per the law.
This case highlights the importance of concrete evidence in establishing regulatory violations, emphasizing the need for a fair and just legal process. The decision underscores the significance of due process and cooperation in regulatory investigations, safeguarding the rights of Customs Brokers in such legal disputes.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The appellant is a Customs Broker who was issued the Customs Broker License in terms of Regulation 7 of the Customs Broker Licensing Regulations 2013 (CBLR), (now Customs Broker Licensing Regulations 2018). During the course of business, the appellant handled export of ball bearings, exported vide four Shipping Bills all dated 21.09.2020 filed by M/s. Gupta Vyapaar. Earlier the appellant had handled several export consignments on behalf of the said exporter during the period 10.09.2020 to 16.09.2020, for which no anomalous report at the time of export has been brought on record. During the course of the investigations regarding the said four live consignments it came to notice that the said consignment was highly over-valued allegedly with intent to defraud the government and avail higher amount of ITC, IGST and other export related incentives. Scrutiny of previous records of M/s. Gupta Vyapaar (Proprietor Shri Udit Gupta), was also therefore carried out by the department in respect of 17 previous exports for which the Shipping Bills were filed by the present Customs Broker- the appellant in the present matter. During the course of investigations, based on certain alleged damning evidence gathered by the authorities and the replies of Shri Udit Gupta thereto being allegedly evasive and with no sufficient financial backing to undertake such high valued exports, the authorities arrested Shri Udit Gupta. In his statement with reference to an email dated 17.02.2021 sent to the department (DC SIIB), Shri Udit Gupta informed the authorities that the same was done either by Shri Jitesh Gupta of M/s. JKG Infralogistics Pvt. Ltd. or one Shri Wasim Bhai as his Email Id was used by the two of them. Shri Udit Gupta also denied any knowledge about the chartered engineer one Shri Siya Ram Jha, who had submitted the valuation report in respect of the consignments of the ball bearings. On the other hand Shri Jitesh Gupta in his testimony had informed the authorities that the exporter Shri Udit Gupta had contacted him and though he had not personally visited the premises of the exporter, his staff had done so and that the documents from the exporter were received on email, as also the nomination of the chartered engineer was done by the exporter.
2. On the basis of preliminary investigations and the inference drawn by the authorities that Shri Jitesh Gupta Director of M/s. JKG Infralogistics Pvt. Ltd. alongwith the G card holder, Shri Govind Kumar Thakur was actively involved in facilitation of the export fraud, a show cause notice under the Customs Broker Licensing Regulations 2018, came to be issued to the appellant on 4.06.2021, alleging violations of Regulation 10 (d), (m), (n) and (q) of the Customs Broker Licensing Regulations 2018. The appellant was also charged for violation of Regulation 13(12) of CBLR, 2018 concerning failure of exercising supervision required to ensure proper conduct over the employee. For sake of ready reference Regulation 10 (d), (m), (n) and (q) are reproduced here under:
“REGULATION 10. Obligations of Customs Broker.-
A Customs Broker Shall-
(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 he 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;
(q) co-operate with the Customs authorities and shall join investigations promptly in the event of an inquiry against them or their employees.”
3. We have heard the two sides and considered the rival submissions. It is the contention of the appellant that there is nothing in the show cause notice as well as the order passed by the learned Commissioner which could associate or attribute the appellant for the offence relating to over-valuation of the export goods. The appellant submits that the chartered engineer cross-examined by the enquiry officer could not establish or produce any tangible evidence to link the appellants or that they had approved of the alleged misconduct and consequential mis-declaration on part of the exporter. No malafide on the part of the Custom Broker have been brought into play in the order passed as well as the show cause notice.
4. We note that while deciding the question of over valuation on part of the exporter, there is nothing on record to in any way conclusively link the conduct of the said offence with the connivance of the Customs Broker. There is nothing to decisively link the appellant with the commissioning of the said fraud and mere oral, unverified testimony cannot substitute as proof in the matter. It is also not established from records that the chartered engineer was fixed by the appellant. Further, the declaration of the export value is the sole prerogative of the exporter and not that of the Custom Broker, who files the Customs documents as per information supplied by the exporter/importer as the case be. If any conscious contumacious conduct is ascribed to the Custom Broker it has to be led by positive evidence which in this case is none. Also, there is nothing in the order or the show cause notice to link, the appellant with the non-realization of the export proceeds in respect of export shipments made in the past. Moreover, timelines for receipt of the export proceeds as in law had still not expired by then. There is nothing on record to show that the Customer Broker was not in possession of the requisite mandatory documents like the IGST registration, PAN and such other details of the exporter. Therefore, no case for violation of any of the regulations 10 (d), (m) and (n) can be made out against them. The circumstantial evidence led by the department is not backed by independent corroborative evidence to substantiate the allegations. We find no infringement of Regulation 10(q) as well in the matter as it is on record that the appellant has always co-operated in the enquiry. The fact that the chartered accountant could not expressly prove that the Custom Broker or his employee was the person who had represented before him as the exporter, only goes in to strengthen the appellant’s case. Therefore, the allegation only exposes the hollowness of the department’s claim with reference to Regulation 13(12) of CBLR, 2018. We therefore find the allegations levelled by the department as misdirected and mis-founded. The appellant also points out that they were denied natural justice as well, by the learned Commissioner in as much as their request, for cross-examination was merely brushed aside without any cogent reasons. Under the aforesaid circumstances, there is nothing to demonstrate:
a) That the Custom Broker did not advise his client with regard to the compliance of the statutory provisions of the Customs Act.
b) That the Customs Broker failed to discharge duties with speed and efficiency.
c) That the Custom Broker had failed in verifying the details of the exporter, as provided under Regulation 10(n), using reliable independent, authentic – document, data or information.
d) Moreover, no case is simply made out by the department for invoking Regulation 10(q), as we find that the Customer Broker had all along cooperated and coordinated in the enquiries initiated, and the department has not cited even a single stance of such non-co-operation by the There is moreover nothing, except one persons word against the other, to establish that Shri Siya Ram Jha was appointed by the Director of the appellant firm Shri Jitesh Gupta.
e) The charge of impersonation, for which Regulation 13(12) CBLR, 2018, has been invoked also remains unsubstantiated.
5. To implicate the appellant with the commissioning of the fraud. The charge has to be led by positive and reliable evidence and vague hypothesis and presumptions cannot be the basis for any unilateral action initiated against the Broker.
6. We are of the view that the department has failed to make out any sustainable case of violation of the provisions of the CBLR, 2018 by the Custom Broker. The order passed by the learned Commissioner being not legal and correct is therefore liable to be set aside. We therefore quash the same and annul the order of revocation of the Customs Broker license, with all consequential benefits as accrue in law.
(Pronounced in the open court on…01.12.2023…)