Info Capital Logistic Co. Vs Commissioner of Customs (CESTAT Delhi)
Conclusion: Since the Custom Broker was liable to verify genuineness of importer-exporter code, IEC number, identity of client to prevent facilitation of export prohibited goods, therefore, custom broker was liable for penalty in case of breach of KYC norms and mandatory obligations under Customs Broker Licensing Regulation, 2013.
Held: In the instant case, appellant M/s CSB Logistic (Custom Broker) was duty bound as a Custom Broker under the Regulation of 2014 to verify antecedents and genuineness of the importer exporter code, IEC number, identity of their client and functioning of their client at the declared address by using reliable, independent and authentic documents/ data/ information. As per the facts on record, the Custom Broker did not meet the exporter or the owner of the said Fashion World or the master mind Reyaz Ahmed, the person who originated the goods for exporter, which were prohibited. Thus, their negligence had facilitated the mischievous exporter in attempting to export prohibited goods. Further, they had similarly facilitated the export of about eight consignments in the recent past and there was reasonable belief that such consignments also had prohibited goods. As a custom Broker deals with the documents and details of export/ import consignment for clearance, and was the representative of their client – importer or exporter, before the customs. Accordingly (CSB Logistics), were liable for penal action under Section 114. However, as per the evidence on record, appellant had not made any profit and/or participated in any profit in the export of prohibited goods rather had acted on normal remuneration basis as a freight forwarder. Accordingly, the appeal was allowed by reducing the quantum of penalty.
FULL TEXT OF THE CESTAT DELHI ORDER
Brief facts of the case are that one M/s Fashion World – exporter, filed airway shipping bill No. 5004801 dated 15.09.2014 through their Customs Broker – M/s CSB Logistics. The goods were declared as Clutch Plates for vehicles, packed in four wooden crates having gross weight of 1271 kgs. (250 pcs. contained in each wooden crate). The declared value of the goods was Rs. 2,16,000/-.
2. On examination by the Customs, only 80 pcs. of clutch plates were found in the wooden crates and rest were wooden logs. On further examination by the Wildlife Officer, the wooden logs were found to be red sanders, the export of which is prohibited. Accordingly, the goods were seized.
3. On examination and enquiry by the Customs revealed that i) one Reyaz Ahmed alias Rajbir alias Dharmendra on behalf of M/s Fashion World (IEC holder) contacted Shri Praveen Pant of M/s Cargo Specialist Inc. (a freight forwarder) for export of the seized consignment; ii) Shri Praveen Pant without verifying the genuineness of the exporter or the documents and their credentials, handed over the consignment to another forwarder – M/s Info Capital Logistic Ltd., iii) who again forwarded the consignment to another forwarder namely – M/s Blue Bell Logistics, without verifying the genuineness of the exporter of the consignment and its documents; iv) Thereafter, M/s Blue Bell Logistics further handed over the documents etc. relating to the consignment for export, including filing of Bill of Entry, to the Customs Broker – M/s CSB Logistics.
4. Shri Charan Dass, Prop. of M/s CSB Logistics, (the Customs Broker) in his statement dated 18.09.2014 stated that he was looking after the aforesaid shipment given to him by M/s Blue Bell Logistics – freight Forwarder (their associate). He has also deputed three of his staff members who sit permanently in the premises of M/s Blue Bell Logistics, alongwith their staff members. They handled all customs formalities. On 16.09.2014 at about 8 p.m., he was informed by his staff Shri Lekhraj, that small pieces of wooden logs of red sanders had been found in the shipment, on examination by the Customs.
5. Shri Aneesh Kumar, Director of M/s Blue Bell Logistics stated that they had two types of clients; (i) who contact them directly; and (ii) who come to them through sub agents. They complete the KYC formalities only in the case of direct clients and for the other cases, this work was done by the sub agent. They were mainly working with only two sub agents namely; (i) M/s Info Capital Logistics Co.; and (ii) Force Logistics Pvt. Limited. They have prepared shipping Bill No. 5004801, as the said consignment was received through M/s Info Capital Logistics Co. – freight forwarder. Therefore, all the necessary formalities were done by them. They had sent the concerned consignment directly to cargo terminal.
6. In his statement Shri Tushar Ghosh – the Business Developer of M/s Info Capital Logistics Co. (ICL for short) Stated that like sub-agents / agents, they used to get export/ import shipments from M/s Cargo Specialist Inc. and handed over the shipments to M/s Blue Bell Logistics for further processing. The exporter – M/s Fashion World, booked their shipment through M/s Cargo Specialist. All the documents like the invoices, packing list etc. were sent by M/s Cargo Specialist Inc., to them through their e-mail id. Thereafter, they forwarded the same to M/s Blue Bell Logistics Pvt. Limited by e-mail, for preparing checklist and draft Airway Bill, and once the draft airway bill and checklist were provided, he forwarded it to the customer – M/s Cargo Specialist for approval. After receiving confirmation to go ahead, they again instructed M/s Blue Bell Logistics to file the shipping bill.
7. Thus, from the facts and as a result of investigation it appeared to Revenue that-
(a) The consignment belongs to a person namely Riyaz Ahmed of M/s Fashion World. A person namely Sh. Rajbir of M/s Fashion World contacted Shri Praveen Pant of M/s Cargo Specialist somewhere in August, 2014 for export of a consignment of clutch – plates to Dubai. In relation to this consignment, Sh. Pant also spoke to Sh. Riyaz Ahmed;
(b) That the mobile numbers of these persons are 7827734517 (Reyaz Ahmed) and 8468958068 (Rajbir). Both the mobile numbers were found switched off;
(c) That Shri Pant of Cargo Specialist Inc., has dealt with about 9 consignments of this party during the last two months.
(d) That these consignments were destined to Dubai, Germany and Malaysia;
(e) That the firm M/s Cargo Specialist Inc., of Sh. Pant is a non IATA, and he provides a single window facility from his firm for all services starting from freight forwarding to customs clearance of export consignments;
(f) That he used to outsource the business to other freight forwarders/CHAs, thereby taking profit margin;
(g) That Sh. Pant was a contact of Sh. Tushar Ghosh of ICL and had forwarded all the 9 consignments (including the current consignment), to M/s ICL for freight forwarding and customs clearance;
(h) That Sh. Tushar Ghosh came into contact with Sh. Pant through a common friend;
(i) That M/s ICL is also a non IATA and their main business is providing complete logistic solutions to their clients with main focus on sea freight and customs clearance thereof. However, they also deal in air freight which they do through outsourcing of the work on profit margin basis;
(j) That M/s ICL have outsourced all these 9 consignments to M/s Blue Bell Logistics Pvt. Limited, which again is a non IATA company. They have their associate vendor M/s CSB Logistics – the CHA firm. They used to do freight forwarding to CSB Logistics on margin basis, and used to get customs clearance through CSB Logistics.
(k) That none of the persons mentioned above have ever met with either Reyaz Ahmed or Rajbir or any other person of M/s Fashion World.
(l) That the first contact person in the chain is Shri Praveen Pant of M/s Cargo Specialist Inc., who has stated that he has spoken to these persons namely Reyaz Ahmed or Rajbir on phone only, and has never met them. On enquiry about the payments related to clearance of past shipments, it has been informed by Praveen Pant that he has received only part payment and that too on four occasions. That on three occasions he received the payment in his bank account No. 31528865863 (SBI Patparganj) directly and on one occasion he received the payment in cash through one person. On being asked about the details of this person, he stated that he could not recall his details. The bank statements have been provided by Pant which confirmed his statement as true.
(m) There is a common fact in the statement of all person involved, that all the consignments were sent by the client directly to airport, and services of transportation from Freight Forwarder/ CHA have not been availed of. However, M/s Blue Bell Logistics who used to provide warehouse and transportation services to their clients, have stated that on two of the occasions they happened to see the consignment, despite the fact that these consignments were sent directly to the airport. As per the statement, on one of the occasions the shipment was sent late and could not be exported and thus was kept in their warehouse overnight before sending for export the next day. On another occasion, the packing was found to be damaged by termite, and the same was sent back by them. It has been confirmed by M/s Blue Bell Logistics that the packing of the consignment on both the earlier occasions was identical to the packing in the current consignment, which they happened to see during the course of examination by customs.
(n) The details of vehicle number, driver’s name and driver’s mobile number, who carried the goods to airport in the instant case has been found identical at all ends i.e. from Sh. Pant, Sh. Tushar, Sh. Aneesh, Sh. Charan Dass and Sh. Shivan Sarna.
(o) Shri Shivan Sarna employee (H card) of CHA has also confirmed that he had dealt with all the 9 consignments of the party and he arranged to unload the shipments at cargo terminal from the vehicles which carried the shipments. Shri Sarna also confirmed that packing of all the earlier consignments were identical to the packing of the instant consignment.
(p) The impugned goods i.e. Red Sanders/ Wooden Logs were knowingly and intentionally mis-declared and attempted to be exported under the guise of clutch plates for vehicles.
7. On the basis of current account No. 913020052045498, as declared by the party in their IEC code, a letter to branch manager, Axis Bank, Plot No. 104, Pocket 27, Sector-24, Rohini, New Delhi was issued with a request to furnish the latest status of the exporter’s account and account statement, whether the account is active or dormant, in operative or closed. It was also requested to provide all the addresses alongwith KYC details as submitted by the exporter at the time of opening of account in their bank. The Axis Bank vide their letter 19.03.2015 furnished the copy of documents as submitted by the proprietor of M/s Fashion world viz. Shri Dharmendra Kumar, and further intimated that the account is active at present, having zero balance.
8. During investigation of the case, it is observed that the photo of Shri Dharmendra Kumar as shown in KYC form is the same as also submitted in two other cases being investigated by this office viz (i) M/s S. L. Industries, 515-16, Rithala Industrial Area, New Delhi (S/Bill No. 5175544 dated 24.09.2014) and (ii) M/s Socomec India Pvt. ltd., 756, Pace City-II, Sector 37, Gurgaon (Haryana) (Shipping Bill No. 596072 dated 10.11.2014). However, the photo of Mr. Dharmendra Kumar as given by him at the time of opening of their bank account in Axis Bank branch of Sector-24, Rohini, New Delhi was found different from, with the photo as found on KYC form as furnished by him to Custom House Agent/ Forwarder. In these two cases also, the party attempted to export ‘red senders’, the prohibited items as per CITES, but mis-declared them as (i) clutch plates, and (ii) clutch parts for car (automobile) in their shipping bill, as filed by them for export of the same. From the foregoing, it appears that the mastermind (person) in all these case including the present one is the same. Despite efforts made by this office, the mastermind in this activity of attempted export of prohibited goods, could not be traced.
9. Further it appeared to Revenue that there have been breach of the Foreign Trade Policy 2009-2014. Further, the export of wood and wood products in the form of logs, timber, stamps, roots, bark, powder, flakes, dust and charcoal other than sawn timber, etc. is prohibited. Further, export of red sanders/ red sandal wood from India has been suspended. Further, the appellant have violated the provisions of the Customs Act under Sections 50(2), 110 and 113(d), shipping bill of Export (Form) Regulations, 1991, Regulation 13 of the CHALR, 2004 (obligation of customs house agent), thus, liable to penalty. Further, the red sanders alongwith goods used to conceal, are also liable for confiscation.
10. These appeals arise from the common investigation, vide show cause notice No. 37/JC/SIIB/ACE/2015 dated 30.03.2015, wherein the appellants were required to show cause alongwith the aforementioned M/s Fashion World, proposing to confiscate the seized goods. Further, proposal to impose penalty on the appellants including M/s Fashion World under Section 114 of the Customs Act. The show cause notice was contested by the appellants save and except M/s Fashion World. The red sanders about 1004 kg. valued at Rs. 10,04,000/- was absolutely confiscated under Section 113(d), (h) and (i) of the Customs Act. The clutch plates were also absolutely confiscated under Section 119 of the Act. Further penalties were imposed as follows:-
