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Case Law Details

Case Name : UDL Logistics Pvt. Ltd. Vs Commissioner of Customs (CESTAT Bangalore)
Appeal Number : Customs Appeal No. 20295 of 2023
Date of Judgement/Order : 09/01/2024
Related Assessment Year :

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.

CESTAT Upholds Penalty for CB's Failure to Verify Exporter's Representative's Authenticity

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.


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.

  • K. S. Sawant & Co vs. CC, Mumbai: 2012 (284) ELT 363 (Tri.-Mum.)
  • Shri Pradeep Seth vs. CC, New Delhi: Final Order dated 27.2.2023 (Tri.-Del.)
  • Trans Asia Shipping Services vs. CC, Bangalore: Final Order dated 5.6.2023 (Tri.-Bang.)
  • M/s. Sadagati Clearing Services Pvt. Ltd. vs. CC (Air),New Delhi: Final Order dated 29.5.2023 (Tri.-Del.)
  • M/s. Ashok Malhotra vs. CC (Airport), New Delhi: Final Order dated 30.05.2023 (Tri.-Del.)
  • E. Maj Shipping Pvt. Ltd. vs. CC (Airport) New Delhi: Final Order dated 24.05.2023 (Tri.-Del.)

4. The Authorised representative reiterated the findings of the Commissioner in the impugned order.

5. Heard both sides.

6. On perusal of records, it is observed that a show-cause notice No.155/2021-22 dated 24.1.2022 was issued to the exporter and also the appellant for the same offence for which they are in appeal against the impugned order. Simultaneously, another show-cause notice No.5/2022/Commr. dated 10.10.2022 was issued to the appellant under Regulation 17(1) of CBLR, 2018. In the above show-cause notice dated 24.1.2022, it is alleged that Mr. Najeeb Zainudeen was the kingpin involved in the export of the red sander logs and there were many others involved including Mr. Satishkumar who had used IEC details of the exporter for export of prohibited goods. The only allegation against the appellant in this show-cause notice that he had violated the conditions under Regulation 10(e) and 10 (m) of CBLR 2018 and thus, was made them liable for penalty under Section 114, 114(AA) of the Customs Act, 1962. Before completion of the adjudication proceedings of the above show-cause notice, another show-cause notice No.5/22 dated 10.10.2022 was adjudicated which is now before us. The Commissioner in the impugned order observed that “I agree with the Customs Broker’s submission that they are not supposed to physically verify the address of the importer/exporter as the same is not a legal obligation on the part of the CB to fulfil. Further, I also agree with the CB that as per the provisions of the Regulations of CBLR 2018, their job is to verify the genuineness of the exporter/importer, their GSTIN and not the goods. I am also of the opinion that they are not expected to check thegenuineness of the goods as the verification or examination of the goods is the statutory function of the Customs. They may not have the knowledge of any mis-declaration of the quality, quantity, nature and value of the goods by the importer/exporter.” After recording the above observations, the Commissioner finds that the appellant had not received any authorisation from the exporter for the said consignment as per the Regulation 10(a) of the CBLR 2018. Accepting the fact that the shipping bill was filed based on the KYC documents, invoices and packing list made by Mr. Satishkumar, Commissioner alleges that the appellant should have received authorisation and all other documents directly from the exporters which resulted in fraudulent export. The act of negligence on the part of the appellant was only to the extent of not verifying the authenticity of the documents and to check whether the orders have been placed by the exporters. The appellant has placed before us documents to show that the KYC documents were authorised by the exporter and also placed before us the mahazar which shows that the department had seized certain documents which included original attested copy of KYC documents of the exporter including certificate of IEC, GST registration certificate, PAN card and Aadhar Card. Since based on these documents, they had verified online and filed the shipping bill in good faith; they cannot be penalised for the illegal attempt to export prohibited goods. Moreover, the main show-cause noticed dated 24.1.2022 which deals with the main culprits should have been adjudicated along with the present notice. In view of the above, we find no reason for revoking the license of the appellant and for forfeiture of the security deposit. Therefore, we set aside the revocation of license and forfeiture of the security deposit.

7. However, the fact remains that the goods that were declared as ‘Industrial Ductile Pipes’ were found to be ‘red sander logs’ and the shipping bills were filed by the appellant. For having violated the Regulations of CBLR in not verifying the genuineness of Mr. Satishkumar who claims to the authorised representative of the exporter will warrant penalty under CBLR 2018. Accordingly, we uphold the penalty of Rs.50,000/- (Rupees Fifty Thousand Only).

The appeal is allowed partly.

(Order pronounced in open court on 09/01/2024.)

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