UDL Logistics Pvt. Ltd. Vs Commissioner of Customs (CESTAT Bangalore)
Introduction: The case of UDL Logistics Pvt. Ltd. vs. Commissioner of Customs, adjudicated by CESTAT Bangalore, involves the imposition of penalties due to the failure to verify the genuineness of a person claiming to be the authorized representative of an exporter. Despite claims of online verification, the appellant faced penalties for violating Customs Broker Licensing Regulations (CBLR) 2018. This article delves into the details of the case, arguments presented, and the tribunal’s decision.
Detailed Analysis:
UDL Logistics Pvt. Ltd., a Customs Broker, faced penalties following the interception of export consignments containing prohibited red sanders logs instead of declared “Ductile Industrial Pipes.” The Commissioner imposed penalties and revoked the appellant’s license, citing violations of CBLR 2018. The appellant contested the penalties, arguing that they verified the exporter’s genuineness through online channels and complied in good faith.
The appellant’s counsel highlighted that the appellant had verified the exporter’s authenticity online and submitted all requisite documents attested by the exporter. However, the Commissioner alleged negligence on the appellant’s part for not obtaining authorization directly from the exporter. Despite presenting evidence of online verification and attested KYC documents, penalties were upheld for failure to verify the exporter’s representative adequately.
While the tribunal acknowledged the appellant’s efforts in online verification, it emphasized the appellant’s responsibility to ensure the authenticity of all documents and authorization from the exporter. The tribunal upheld penalties for the appellant’s failure to verify the representative’s genuineness, emphasizing compliance with CBLR 2018.
Conclusion: The ruling by CESTAT Bangalore in UDL Logistics Pvt. Ltd. vs. Commissioner of Customs underscores the importance of thorough verification processes for exporters’ representatives. Despite online verification efforts, penalties were upheld due to the appellant’s failure to verify the representative’s authenticity adequately. This case serves as a reminder to customs brokers of their obligations under CBLR 2018 and the repercussions of inadequate verification procedures in export transactions.
FULL TEXT OF THE CESTAT BANGALORE ORDER
The appellant is in Customs Broker holder of Customs Broker License No.CUS/BLR/CB/03/2020 valid up to 27.02.2030.
2. The DRI officers intercepted export consignments pertaining to M/s. TEAC Engineers where the products were declared as “Ductile Industrial Pipes”but on examination the consignment, it contained red sanders logs which are prohibited items for export. Since the appellant had filed these shipping bills and had violated the Customs Brokers Licensing Regulations (CBLR) 2018 and therefore, they were issued with show-cause notice which culminated into impugned order wherein the Commissioner revoked the license and ordered for forfeiture of entire security deposit and imposed penalty of ₹50,000/-. The appellant is in appeal against this impugned order.
3. On behalf of the appellant, the learned counsel submits that one Mr. Satishkumar claiming to be representative of the exporter sought the services of the appellant to export ‘Industrial Ductile Pipes’. Mr. Satishkumar submitted all the export documents along with the KYC documents attested by the exporter in original. With these documents, the genuineness of the exporter was verified online from the webpages of the Government Authorities and also that of the exporter and all the documents were found to be genuine. Hence, the appellant filed the shipping bills for export of ‘Industrial Ductile Pipes’. It is further claimed that several others including the Department Officials were issued with show-cause notice and the notice is still pending, but based on the offence report, the authorities proceeded to proceed against the appellant by issuing notice and adjudicating the case against the appellant alleging violation of Regulation 10 (e) and 10 (n) of CBLR 2018. It is claimed that the offence report dated 22.7.2022 was issued by the principal Commissioner of Customs, Bengaluru while the enquiry report stated referred to the investigation report dated 20.2.2022. Therefore, the show-cause notice dated 10.10.2022 is barred by limitation in terms of Regulation 17(1) CBLR 2018. To support his claim, he placed reliance on Shri Pradeep Kumar Seth vs. CC, New Delhi: Final Order dated 27.2.2023 (Tri.-Del.).
3.1 On merits, it is submitted that Regulation 10(e) is about exercising diligence while imparting instructions to the client and admittedly there is no finding on this aspect but the only allegation was that authorisation was not obtained from the exporter which is incorrect since the appellant had verified the genuineness of the exporter from the online webpages. To substantiate their claim on merits, the following decisions were relied on to claim that online verification was sufficient to verify the genuineness of the exporter.
