Sun Clearing Agency Vs Commissioner of Customs (General) (CESTAT Mumbai)
Summary: The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, examined the revocation of the Customs Broker licence of Sun Clearing Agency, together with the imposition of penalty and forfeiture of its entire security deposit, under the Customs Brokers Licensing Regulations, 2018 (CBLR). The proceedings arose from an investigation by the Directorate of Revenue Intelligence into alleged smuggling of electronic waste, including used computers and laptops, through transshipment consignments imported in the name of M/s AMP Impex. The goods were allegedly misdeclared as paper rolls of corrugation reels and were intended to be diverted during transportation from Nhava Sheva to ICD Pimpri, Pune.
The Department alleged that Shri Kishor Auti, proprietor of Sun Clearing Agency, knew about the illegal importation and had connections with individuals involved in the transactions. On this basis, the Commissioner suspended the Customs Broker licence, subsequently revoked it under Regulation 17(7), imposed a penalty and forfeited the security deposit. The allegations concerned contraventions of Regulations 10(d), 10(e), 10(m) and 10(n) of CBLR, 2018. The appellant challenged the proceedings on merits, limitation and denial of cross-examination of witnesses whose statements had been relied upon.
The Tribunal found that the appellant firm had not acted as Customs Broker for the disputed imports or transshipment. The actual customs formalities had been handled by other persons, including Shri Sagar Rohidas Bangar and another Customs Broker firm. Although Shri Kishor Auti had introduced certain persons involved in the transactions, that conduct was in his individual capacity and was already the subject of separate proceedings under the Customs Act, 1962. The Tribunal held that action under CBLR could not be sustained against the appellant firm when it had not handled the relevant customs documents, import clearance or transshipment process.
The Tribunal further observed that the notice proposing revocation was issued on 31 March 2022, although the investigation had been completed by 22 September 2020. This exceeded the 90-day period prescribed under Regulation 17(1), without any reasonable explanation for the delay. The Tribunal also referred to the requirements governing cross-examination of witnesses and procedural compliance. It concluded that the revocation proceedings were unsustainable both on the merits and on the prescribed time limits.
Accordingly, the Tribunal set aside the Commissioner’s order dated 7 October 2022 revoking the Customs Broker licence, imposing penalty and forfeiting the security deposit. The appeal was allowed in favour of Sun Clearing Agency. The ruling distinguishes the individual conduct of a licence holder from the statutory responsibilities of a Customs Broker firm and emphasises compliance with the disciplinary procedure prescribed under CBLR, 2018.
List of Cases Discussed
1. Shasta Freight Service Pvt. Ltd. Vs Pr. Commissioner of Customs, Hyderabad, 2019 (368) ELT 41 (Telangana High Court): Relied upon by the appellant in challenging the disciplinary proceedings, including the procedural requirements governing action against Customs Brokers.
2. Basudev Garg Vs Commissioner of Customs, 2013 (294) ELT 353 (Delhi High Court): Cited in support of the appellant’s objection concerning reliance on witness statements without permitting cross-examination.
3. Leo Cargo Services Vs Commissioner of Customs (Airport & General), New Delhi, 2022 (382) ELT 30 (Delhi High Court): Cited by the appellant in challenging the revocation proceedings.
4. Sabin Logistics Pvt. Ltd. Vs Commissioner of Customs, Chennai-VIII, 2019 (367) ELT 200 (Madras High Court): Relied upon by the appellant in support of its challenge to the disciplinary action.
5. Indo Cargo Trading Services Vs Commissioner of Customs, New Delhi, 2018 (359) ELT 600 (CESTAT Delhi): Cited by the appellant concerning Customs Broker disciplinary proceedings.
6. On Time Logistics Vs Commissioner of Customs, Indore, 2017 (348) ELT 145 (CESTAT Delhi): Cited by the appellant in support of its challenge to the impugned order.
7. Premier Cargo Movers Vs Commissioner of Customs, New Delhi, 2016 (343) ELT 1038 (CESTAT Delhi): Relied upon by the appellant concerning the validity of Customs Broker licence revocation proceedings.
FULL TEXT OF THE ORIGINAL ORDER OF CESTAT MUMBAI
This is an appeal filed by M/s Sun Clearing Agency, having registered office at 02, Building No.1, Pancharati CHS Ltd., Jivdaya Lane, Bhatwadi, Ghatkopar (W), Mumbai-400084 (herein referred to as ‘appellants’ for short) assailing the Order-in-Original CAO No. 47/CAC/PCC(G)/SJ/CBS Adj dated 07.10.2022 (referred to as ‘impugned order’).
2. In the impugned order the learned Commissioner of Customs (General), in exercise of powers conferred upon him under Regulation 17 (7) of the Customs Brokers Licensing Regulations, 2018 (CBLR) had revoked the CB license issued to the appellants for acting as a Customs Broker under the above regulations ibid, besides imposition of penalty and forfeiture of entire security deposit furnished by the appellants. Being aggrieved against the impugned order, the appellant filed this appeal before the Tribunal.
3. The brief facts of the case are that Directorate of Revenue Intelligence, Mumbai Zonal Unit (DRI) had received an intelligence about the smuggling of E–Waste i.e., old and used computers and laptops from Hong Kong which are transshipped through Dubai to India (Nhava Sheva port), and a live consignment of such modus operandi has been imported in the name of M/s AMP Impex in container No. TRLU 5257576 for which a transshipment permit has been issued at Nhava Sheva port, Jawaharlal Nehru Custom House (JNCH) vide No. 1826614 dated 02.11.2019.
4. From the perusal of the records of the case, it is seen that DRI had received an intelligence that old and used in computers, laptops were smuggled under the guise of declared goods namely paper rolls of Corrugation reels, which are purported to be for clearance at ICD, Pimpri, Pune. During the transshipment of goods from the gateway port-Nhava Sheva, Mumbai to destination customs port-ICD at Pimpri, Pune, by adopting a modus operandi of removing smuggled goods en-route and replacing the same with the declared goods in an illegal manner, by tampering with the container seals and resealing the container with duplicate seals, smuggling of E-waste was attempted by the importer M/s AMP Impex and others involved in such act. The importation of impugned goods i.e., E-waste was in violation of the provisions under the Hazardous Waste (Management, Handling and Trans-boundary Movement) Rules, 2016 read with the Foreign Trade Policy 2015-2020. Accordingly, independent show cause proceedings were initiated by DRI by issuing SCN F. No. DRI/MZU/NS/ENQ-145/2019 dated 22.09.2020, proposing confiscation of imported goods, cover goods used for substituting the smuggled goods, vehicle used for transshipment, besides imposition of penalty under sections 112(a), 114AA of the Customs Act, 1962, on various persons involved in the improper importation as a syndicate. The said syndicate included the following persons namely, (i) Shri Manoj Laxman Waghmare, IEC holder and proprietor of importer M/s AMP Impex; (ii) Shri Bhavik Mehta, importer and beneficial owner; (iii) Shri Kishor Auti, Proprietor of appellants Customs Broker M/s Sun Clearing Agency; (iv) Shri Sagar Rohidas Bangar, Logistics, Clearing agents; (v) Central Warehousing Corporation, ICD, Pimpri, Customs Cargo service provider (vi) Director of Alisan Shipping and Logistics Private Ltd., and few employees of above entities.
5. On the basis of the DRI investigation indicating that the Customs Broker (CB) had failed in its obligation as Shri Kishore Auti, Proprietor of appellants CB firm M/s Sun Clearing Agency knew that E-waste i.e., old and used computers, laptops in place of declared items, are being imported by syndicate in violation of extant legal provisions, the Commissioner of Customs (General) had suspended the CB license vide Order No.37/2021-22 dated 20.01.2022. Further, after giving post decisional hearing, such suspension was continued vide Order No.43/2021-22 dated 24.03.2022. Subsequently show cause notice No.36/2021-22 dated 31.3.2022 was issued for the act of omission and commission of CB, leading to contravention of Regulations 10(d), (e), (m) and (n) of the Customs Brokers Licensing Regulations, 2018 (CBLR). The enquiry report was submitted on 13.06.2022, concluding that the customs broker firm had contravened Regulations 10(d), (e), (m) and (n) of CBLR, 2018 and all the charges having been found to be proved. Accordingly, the Commissioner of Customs (General) had revoked the CB license No. 11/2083, which had been issued to the appellants for acting as a Customs Broker under CBLR, besides imposition of penalty and forfeiture of entire security deposit furnished by the appellants vide the impugned order dated 07.10.2022.
6. Learned Advocate appearing for the appellants submitted that on merits as well as on time limits, the impugned order does not sustain and pleaded that the same may be set aside. He also stated that appellants had submitted their retraction of statements recorded by DRI at the first opportunity before the Court of Hon’ble J.M.F.C., Uran at Uran on 14.11.2019. Thus, he stated that on the ground of not allowing cross-examination of witnesses on whose statements suspension action had been taken, does not sustain. In this regard, he relied upon the following case laws: –
(a) Shasta Freight Service Pvt., Ltd. Vs. Pr. Commissioner of Customs, Hyderabad – 2019 (368) ELT 41 (Telangana)
(b) Basudev Garg Vs. Commissioner of Customs – 2013 (294) ELT 353 (Del)
(c) Leo Cargo Services Vs. Commissioner of Customs (Airport & General), New Delhi – 2022 (382) ELT 30 (Del)
(d) Sabin Logistics Pvt. Ltd. Vs. Commissioner of Customs, Chennai-VIII – 2019 (367) ELT 200 (Mad.)
(e) Indo Cargo Trading Services Vs. Commissioner of Customs, New Delhi – 2018 (359) ELT 600 (Tri-Del)
(f) On Time Logistics Vs. Commissioner of Customs, Indore – 2017 (348) ELT 145 (Tri-Del)
(g) Premier Cargo Movers Vs. Commissioner of Customs, New Delhi – 2016 (343) ELT 1038 (Tri-Del)
7. Learned AR appearing for the Revenue reiterated the findings recorded in the impugned order.
8. On perusal of the records, it transpires that the imported goods which were found to be e-waste was imported under Import General Manifest (IGM) No.2237690 dated 26.10.2019 in container No. TRLU 5357576. As the imported goods were destined to ICD, Pimpri, Pune, they were cleared under a transshipment permit No. 1826614 dated 02.11.2019 from the JNCH Gateway port to final customs port/ICD at Pune. In terms of legal provisions under Section 30 and of the Customs Act, 1962, IGM is required to be filed by the person-in-charge of the vessel or any other authorised person. Further, for transhipment of goods to any other customs station within the country, procedure prescribed under Section 54 ibid, is required to be followed for movement of imported cargo without payment of customs duty. From the statement recorded by DRI from Shri Manoj Laxman Waghmare, IEC holder and proprietor of importer M/s AMP Impex during the investigation, it was stated that the invoice, packing list in the bill of Lading were forwarded to him by one Shri Sagar Rohidas Bangar, and these documents were subsequently forwarded to ShriR.B. Indore of Customs Broker firm M/s Global Version Clearing Private Limited, who in turn approached the ICD, Pimpri, Pune for obtaining the Transshipment Permit (TP). As the goods are yet to reach the destination Customs Port, it appears that no bill of entry has been filed. The said Shri Sagar Rohidas Bangar also arranged for driver, for taking delivery of the container from JNCH by producing the TP code, payment of customs duties, transportation charges and CHA/CB charges. Further, the statement dated 07.11.2019 recorded from Shri Kishor Auti, Proprietor of appellants CB firm, revealed that e-waste in container No. TRLU 5357576 had been imported by Shri Bhavik Mehta, and he had merely acted as the in-between and introduced Shri Sagar Rohidas Bangar to said Shri Bhavik Mehta. It is stated by him that Shri Sagar Rohidas Bangar, alone had handled the actual work of customs formalities in the instant case. Shri Kishor Auti, also informed DRI investigation authorities vide his voluntary statements about all the four imports of used computers, used laptops imported by M/s AMP Inpex. He also informed during investigation, the specific details about one container having No. SEGU 4081890 against Bill of Entry No. 5511942 dated 01.11.2019, which had arrived at Ludhiana ICD and awaiting customs clearance. These were subsequently seized by the Department vide seizure memo dated 30.03.2020. The details of other two consignments imported at Kolkata Port vide Bills of Entry No. 4559092 dated 19.08.2019 and No. 4836733 dated 09.09.2019 by importers having IEC No. AQJP 0635P and IEC No. FYAPS 8687G through one Shri Govind Kautkar was also informed by him during the investigation. The above details indicate that the said Shri Kishor Auti, Proprietor of appellants CB firm had provided all known details about the illegal activities of the syndicate to the DRI investigation team and this had also enabled the department to seize furthermore e-waste/goods involved in this modus operandi.
9. From the perusal of the records, we futher find that the appellants have not been engaged as the customs broker in the above transaction of transshipment of imported goods from JNCH to ICD, Pune. While the investigation reveals that Shri Kishor Auti, Proprietor of appellants CB firm had introduced or acted as via-media between Shri Bhavik Mehta, the beneficial importer and Shri Sagar Rohidas Bangar, who had handled the actual work of customs formalities. The appellants and/or the proprietor i.e., Shri Kishor Auti of the appellants CB firm was not engaged as customs broker in any of the transaction involving the above violations in the instant case. It is true that as an individual person Shri Kishor Auti, is responsible for the omission and commission which had led to import of e-waste in violation of the Customs Act, 1962 read with relevant Rules and Regulations. We also find that separate show cause proceedings have been initiated for the role played by Shri Kishor Auti in his individual capacity in the above transactions under the Customs Act, 1962 by DRI vide show-cause notice dated 22.09.2020. In view of the above factual details, we are of the considered view that under no circumstances, particularly when the appellants have not been engaged as a customs broker in the aforesaid transaction, there can be a case for taking action against violations of CBLR. Hence, the impugned order does not sustain on this very ground alone.
10. Further, we find that CBEC Circular No. 46/2005-Cus. dated 24.11.2001, automated transshipment module was introduced for permitting transshipment of containerized cargo from one port to ICD/CFS, as per Section 54 of the Customs Act, 1962 and the Rules framed therein. Accordingly, the shipping agents or ICD/CFS operator, who act as an authorized carrier of goods under transshipment is responsible for such goods and are required to safeguard the customs duty, safety of cargo and avoid pilferage during enroute etc. and for this purpose they execute bond and bank guarantee before the customs authorities at gateway port. Hence, these persons are responsible for the transshipment of the cargo, and the appellant custom broker is not responsible for such act under Section 54 of CBLR, 2018.
11. On the aspect of time limits prescribed under CBLR, the very first action under Regulation 17(1) ibid, is for issue of notice in writing stating the grounds on which it is proposed to revoke the license or impose penalty, which is required to be issued within 90 days from the date of receipt of intelligence/offence report from investigation authority. As the SCN was issued in this case on 31.03.2022 after having the investigation completed on 22.09.2020, obviously this requirement of CBLR has not been fulfilled in this case. There is no reasonable explanation given for the delay in initiating action under CBLR in the impugned order. Hence on this count also, the impugned order confirming the revocation of the customs broker’s license on the basis of the enquiry report against the show cause notice dated 31.03.2022 is not sustainable.
12. In view of the above and on the basis of various decisions taken by the coordinate benches of the Tribunal and higher judicial forums on the adherence to time limits prescribed under CBLR, 2018, and for the opportunity to be given for cross examination of witness whose statements were relied upon for action to be taken under CBLR, we find that there is no basis for sustaining the impugned order of the learned Commissioner.
13. We also find that legal provisions governing the issue of customs brokers in contained in Section 146 of the Customs Act, 1962, which provide that no person shall carry on business as a customs broker relating to the entry or departure of a conveyance or the import or export of goods at any customs station unless such person holds a license granted in this behalf in accordance of regulations. The CBLR, 2018 has been framed under this section and it provides, inter-alia, for the circumstances in which a licence may be suspended or revoked.
14. Under CBLR, 2018, a customs broker license is issued to a person who qualified the conditions prescribed in terms of Regulation 5 and had passed the examination conducted under Regulation 6, for grant of Customs Broker licence under Regulation 7. The applicant who seeks to be licenced as a customs broker could be an individual, be it a proprietor or Director or managing director or partner or an authorized employee, who had qualified in the prescribed examination and possessing requisite knowledge and experience for handling the customs processes in respect of import or export of goods or in entry or departure of a conveyance. In cases, where any customs broker is found deficient in fulfillment of his obligations as prescribed in Regulation 10 CBLR, 2018 or in any way contravened the provisions of Customs Act and/or Rules and Regulations made thereunder, then necessary action in initiating an inquiry, adjudication of the case on the basis of such inquiry report action for suspension, imposition of penalty, and/or revocation of license etc. are decided by the jurisdictional Commissioner as per the procedure and time lines given under the Regulations 16, 17 and 18 of CBLR, 2018.
15. From the facts of the case and on perusal of the records, it transpires that the appellants have not handled any customs document or any process involving importation of goods in the instant case. Even the transshipment permit has been obtained on the basis of the request given by ICD, Pimpri, Pune and the same was handled by Shri R.B. Indore of Customs Broker firm M/s Global Version Clearing Private Limited, in approaching ICD, Pimpri, Pune for obtaining the Transshipment Permit (TP) and Shri Sagar Rohidas Bangar who had handled all customs processing for delivery on transshipment at JNCH, Nhava Sheva to ICD, Pimpri, Pune.
16. The facts of the case also indicate that Import General Manifest No.2237690 dated 26.10.2019 for container No. TRLU 5357576 containing the imported goods which were destined to ICD, Pimpri, Pune, were cleared under an transshipment permit No. 1826614 dated 02.11.2019 from the JNCH Gateway port to final customs port/ICD at Pune. From the statement recorded by DRI from Shri Manoj Laxman Waghmare, IEC holder and proprietor of importer M/s AMP Impex during the investigation, it was stated that the invoice, packing list and the Bill of Lading were forwarded to him by one Shri Sagar Rohidas Bangar which were subsequently forwarded to Shri R.B. Indore of Customs Broker firm M/s Global Version Clearing Private Limited, who in turn approaches the ICD, Pimpri, Pune for obtaining the Transshipment Permit (TP). From the above, it is seen that there is no role of Shri Kishor Auti as proprietor of appellant’s CB firm, and he had not handled the imported goods as a customs broker. Thus, in the absence of any legal basis for initiating action under CBLR, 2018 as explained in paragraphs 13 and 14 above, we are of the considered opinion that the impugned order does not legally sustain.
17. In view of the foregoing discussions, we do not find any merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants, as well as in imposition of penalty against them and for forfeiture of security deposit. Therefore, by setting aside the impugned order, we allow the appeal in favour of the appellants.
(Order pronounced in open court on 02.08.2023)
