Mis-declaring nature of goods in bill of entry renders revocation of authorized courier registration

Sitex International Vs Commissioner of Customs (CESTAT Delhi)

CESTAT Delhi uphold the order of revocation of registration of the authorized courier and forfeiture of security on account of actively violated the provisions of the act and rules by knowingly filing the bills of entry in the name of wrong consignee and also be mis-declaring the nature of the goods.

Facts-

The appellant is a proprietorship firm which has been issued a license under Regulation 10. The appellant’s main business is in Chennai and the proprietor of the appellant firm is Shri A. Kader Riswan. He extended his business to Delhi and appointed one Shri Azarouddin Ansari Kadar as the Assistant Manager (Delhi).

In 2019, Shri Azarouddin Ansari had filed the 37 courier bills of entry in the name of the appellant firm declaring the imported goods as household items. On examination of the goods in respect of these 37 bills of entry, customs officers found that the goods were declared to be household items while they were actually food supplements and ladies suits imported in commercial quantities.

Investigation revealed that the entire consignment belonged to one Shri Mukesh Rana who engaged the appellant to clear the goods.

After completing the investigation, the order-in-original was passed by the Additional Commissioner of Customs whereby the goods were confiscated the duty was re-assessed and penalties were imposed upon Shri Anmol Krishna Murthy who claimed to be the owner of the goods.

This order of the Additional Commissioner formed the basis for the present proceedings against the appellant under the Regulations and the issue of the impugned order.

Conclusion-

The appellant has actively violated the provisions of the act and rules by knowingly filing the bills of entry in the name of wrong consignee and also be mis-declaring the nature of the goods.

Considering all the facts of this case, we find that there is no error in the order of the Commissioner holding that the appellant has violated the Regulations. These provide that the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may revoke the registration of an authorised courier and also pass an order for forfeiture of security.

FULL TEXT OF THE CESTAT DELHI ORDER

This appeal is filed by M/s Sitex International, New Delhi¹ assailing the order in original ² dated 04.12.2020 whereby the appellant’s license under the Courier Imports and Exports (Electronic Declaration and Processing) Regulations ³, 2010 was revoked and the security deposit made by the appellant was forfeited and a penalty of Rs. 50,000/- was imposed on the appellant. The operative part of the impugned order is as follows:

“In exercise of powers conferred in terms of Regulation 13 & 14 of CIER, 2010:

(i) I hold M/s Sitex International, UG/2, Upper Ground Floor, 310/2, Rangpuri, New Delhi-110037 responsible for contravention of provisions of Regulations 12(1)(i), 12(1(iii), 12(1)(iv), 12(1)(v), 12(1)(vii) & 12(1)(x) of the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 and revoke the Courier Registration DEL/POL/COUR/15/2018 dated 31.10.2018 valid up to 29.10.2020 (PAN-BQJPK5725N) issued to them, in terms of Regulation 13(1) of CIER, 2010.

(ii) I order for forfeiture of security amount of Rs.10,00,000/- (Rupees Ten Lacs only) deposited by M/s Sitex International, at the time of issue/renewal of their Courier Registration, for contravention of provisions of Regulations 12(1)(i), 12(1)(iii), 12(1)(iv), 12(1)(v), 12(1)(vii), & 12(1)(x) of the CIER, 2010 in terms of Regulation 13(1) of the CIER, 2010.

(iii) I impose a penalty of Rs.50,000/- (Rupees Fifty Thousand only) on M/s Sitex International, under the provisions of Regulation 14 of CIER, 2010.”

2. We have heard learned counsel for the appellant and learned authorised representative for the Revenue and have perused the records.

3. Goods can be imported or exported through the normal channels such as by air or ship or through couriers. If goods are imported through normal channels, the importer usually engages a customs broker who files the Bill of Entry as per documents provided by the importer and once the goods were cleared through the customs after payment of duty the importer takes the goods away. When goods are imported through courier the processes are slightly different inasmuch as the courier not only processes the clearance of the goods through the customs but actually receives the goods from the overseas exporter, transports them to India, clears them through the customs and further delivers them to the consignee in India at his address. The Regulations regulating this process provide for licensing of couriers who only can handle this work. In such imports, after the goods are brought into the country the courier has to obtain Know Your Customer⁴ documents from the consignees and their authorisation and thereafter file courier bills of entry in respect of each of the consignments. After the goods are assessed by customs, the courier pays the customs duty and clears the goods and takes them to the premises of the importer and delivers them and collects the customs duty which was paid by the courier while clearing the goods. Thus, the courier manages the entire chain from the overseas consignor to the Indian consignee through the customs.

4. The appellant is a proprietorship firm which has been issued a license under Regulation 10. In 2019, the appellant filed 37 couriers bills of entry all dated 10.10.2019 at the courier terminal in Delhi. On examination of the goods in respect of these 37 bills of entry, customs officers found that the goods were declared to be household items while they were actually food supplements and ladies suits imported in commercial quantities. It is pertinent to point out here that any person who wishes to import goods into India on commercial basis requires an Import Export Code (IEC). Further, if food supplements are to be imported for trade, clearance from the Food Safety and Standards Authority of India (FSSAI) is required. By declaring the goods as household items, both these requirements were attempted to be circumvented.

5. The appellant’s main business is in Chennai and the proprietor of the appellant firm is Shri A. Kader Riswan. He extended his business to Delhi and appointed one Shri Azarouddin Ansari Kadar as the Assistant Manager (Delhi). Shri Azarouddin Ansari had filed the 37 courier bills of entry in the name of the appellant firm declaring the imported goods as household items. The matter was investigated and it was found that 37 names of the consignees in the bills of entry were wrong. These 37 “consignees” had earlier imported some goods through the appellant and, therefore, the appellant had their details including their KYC documents. Using these details, goods were imported in the name of these 37 consignees all of who confirmed that the goods did not belong to them. Investigation revealed that the entire consignment belonged to one Shri Mukesh Rana who engaged the appellant to clear the goods. Statement of Shri Azarouddin Ansari was recorded by the officers on 14.10.2019 who confirmed that he had filed the bills of entry for the 37 consignments and that they had full knowledge that the imported goods were commercial goods and not household goods as declared on the Bills of Entry. He further stated that Shri Mukesh Rana had contacted him and offered Rs. 200/- per kg. to clear these goods in the guise of household goods whereas for clearance of usual household goods they get only Rs. 53/- per kg. He further clarified that he would hand over the goods to Shri Mukesh Rana after clearance from customs as per the convenience of Shri Mukesh Rana.

6. Shri Mukesh Rana, in his statement dated 14.10.2019 confirmed that he had contacted Shri Azarouddin Ansari Kadar to clear the goods. He further said that the owner of these goods was one Shri Anmol Krishna Murthy – a resident of Mumbai, who would give him Rs. 250/- per kg as clearance charges of which he would pay Rs. 200/- per kg to Shri Azarouddin Ansari Kadar. After clearance of the goods from customs he was going to deliver the goods to Shri Anmol Krishna Murthy at godown situated at Bagdola Road, near Sector-8, Dwarka Metro Station, Dwarka. These premises were checked by the officers and were found locked. The customs officers sealed it and later opened it and searched and found only one desktop computer with printer.

7. Shri A. Kader Riswan, proprietor of the importer firm, in his statement dated 17.10.2019, said that he resides in Tamil Nadu where he has another office. He admitted that it was in his knowledge that the goods to be imported under the Master Airway Bill were commercial goods and not household goods. He further said that the goods belong the Shri Mukesh Rana who he knew through Shri Azarouddin Ansari Kadar.

8. Statement of Shri Anmol Krishna Murthy, the alleged owner was recorded on 19.11.2019 who confirmed that the goods were booked by him from Dubai through M/s Natbro Logistics LLC, Dubai in which he is partner. He also confirmed that he engaged Shri Mukesh Rana to clear the goods through the courier terminal through any courier agency and that Shri Mukesh Rana, in turn, gave the clearance work to the appellant. He also confirmed that the clearance charges for the shipment was fixed at Rs. 250/- per kg with Shri Mukesh Rana which included the customs duty, the custodian charges and clearance charges and that he had paid this amount to Shri Mukesh Rana in cash at New Delhi. After seeing the 37 courier bills of entry, he appended his signature on them. He also confirmed that he knew that the goods were food supplements, ladies suits and NOT household goods as declared in the bills of entry. He further confirmed that after clearance of the goods through the customs they were to be delivered at the premises of his firm M/s SGK Express, Plot No. 48, Village Bagdola, New Delhi. He confirmed that he was the true owner of the goods and Shri Mukesh Rana arranged 37 different names and addresses of consignors and consignees through Sitex International (the appellant) and sent those details to him at his Dubai office. He actually does not know any of these consignors or consignees. However, the documents were prepared accordingly, and addresses were affixed accordingly on the cartons in the names and addresses provided by Shri Mukesh Rana. On being asked about the payment for the goods to the foreign supplier, he said that he had sent the goods through his own Dubai based company and did not pay any amount to his company for the goods. He further confirmed them that he does not have any FSSAI registration for the imported goods.

9. After completing the investigation and following due process, the order-in-original dated 28.2.2020 was passed by the Additional Commissioner of Customs whereby the goods were confiscated the duty was re-assessed and penalties were imposed upon Shri Anmol Krishna Murthy who claimed to be the owner of the goods.

10. This order of the Additional Commissioner formed the basis for the present proceedings against the appellant under the Regulations and the issue of the impugned order.

11. On behalf of the appellant, the learned counsel made the following submissions:

(i) The appellant is a proprietorship firm of Shri A. Kader Riswan which was granted a license under Regulation 10. In 2019, 37 courier bills of entry were filed by Shri Azarouddin Ansari Kadar, the Assistant Manager of the appellant firm.

(ii) On examination, the goods were found to be mis-declared as household items when, infact, they were food supplements and ladies suits. The consignments belonged to Shri Mukesh Rana who engaged Shri Azarouddin Ansari Kadar who cleared the goods. Shri Azarouddin Ansari Kadar is no more an employee of the appellant as he has been expelled from the firm for misusing the firm’s name for import of the goods.

(iii) The impugned order was passed without appreciating legal provisions and facts and circumstances of the case with pre-determined state of mind to confirm the allegations and hence must be set aside.

(iv) Shri Anmol Krishna Murthy issued a letter to the appellant claiming mis-declaration on their part.

(v) There is no violation of Regulations 12(1)(i), (iii), (iv), (v), (vii) and (x) of the CIER 2010 by the appellant firm. The alleged activity was conducted by the appellant’s employee Shri A. Kadar Riswan without any knowledge or consent or connivance of the appellant firm. Therefore, it was a malafide act by the employee for personal motive and the appellant cannot be held responsible for it.

(vi) There is no negligence or lack of supervision of the employee but the employee breached the trust and carried on the work in his own interest.

(vii) The appellant had no knowledge or information about the malicious import of goods in commercial quantity and mis-declaration with intent to evade payment of customs duty. The appellant was informed about the consignment of household goods under various names and accordingly, filed requisite details were mailed to the office for filing the courier bills of entry. The appellant had no connivance or knowledge or any intention to conduct committed a fraud.

(viii) Neither Shri Mukesh Rana nor on Shri Anmol Krishnamurthy had stated that the appellant had any knowledge or was engaged by them. Shri Azarouddin Riswan was assigned the work who with a malafide intention without consent of the appellant filed the bills of entry.

(ix) Without prejudice to the above submissions, the regulations do not provide for forfeiture of the security deposit.

(x) Revocation proceedings are very harsh which effect the livelihood of the appellant who has been out of work more than one year or above. Therefore, a lenient approach must be taken.

(xi) The appellant was not granted opportunity to defend the case by the inquiry officer against which the appellant filed written complaint to the learned Commissioner.

12. Learned counsel relies on the following case laws:

(i) Aramex India Pvt. Ltd. Vs. Commissioner of Customs (Airport), Mumbai⁵;

(ii) Commissioner Vs. V.B. Bhatia & Co.⁶;

(iii) Patel on Board Courier Ltd. Vs. Commissioner of Customs, Mumbai⁷;

(iv) Commissioner Vs. Bharat Overseas Communicators 8;

(v) Daroowalla Bros. & Co. Vs. Commissioner of Customs (General), Mumbai⁹;

(vi) Killick Air Courier & Forwarders Ltd. Vs. Commr. of Cus., Mumbai¹⁰;

(vii) Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II¹¹;

(viii) Thakkar Shipping Agency Vs. Collector of Customs, Bombay¹².

13. She relied on M/s Aramex India Pvt. Ltd. wherein the revocation of license of the courier was set aside on the ground that the offence was committed by its employee without knowledge of the courier firm and also for the reason that the licence of the courier had already been suspended for one year before and therefore the courier had suffered sufficient punishment.

14. Learned authorised representative for the Revenue supported the impugned order and submitted as follows:

(i) It is on record that the consignee or consignor details indicated in the 37 courier bills of entry filed by the appellant were the names of persons who were not the actual importers or owners of the goods. Therefore, the appellant failed to fulfil its obligation under Regular 12(1)(i). Thus clearly, the appellant connived with Shri Mukesh Rana and Shri Anmol Krishna Murthy and hence the appellant failed to comply with Regulation 12(1)(iii). The details of the consignors and consignees were mis-used by the appellant because the consignor and consignee engaged in the courier bills of entry were not the consignees or owners but their names were used to import goods. Therefore, the appellant violated Regulation 12(1)(iv).

(ii) The appellant attempted to get customs clearance of dutiable commercial goods in the guise of household consignments through mis-declaration which is unbecoming of any licensed courier and, therefore, the appellant violated Regulation 12(1)(iv).

(iii) The appellant has concealed the truth about the description, value and quantity of the goods from the customs officials and thereby had violated Regulation 12(1)(vii)

(iv) The appellant also violated Customs Valuation Rules and thereby violated Regulation 12(1)(x). It is, therefore, prayed that the appeal may be rejected.

15. We have considered the submissions made by both sides. It is undisputed that commercial goods whose import requires an Import Export Code (IEC) and also clearance and FSSAI (in case of food supplements) were imported through 37 bills of entry filed by the appellant. These were filed in the name of 37 different people who had nothing to do with nor any knowledge of the imports. The appellant had in its possession the details of these people which it misused. The real owner of the goods was Shri Anmol Krishna Murthy who, in his statement, admitted that the details of the consignors and consignees indicated in the bills of entry and on the cartons were provided to him by Shri Azarouddin Kadar of the appellant firm. Based on these details, he exported the goods to India through his own firm in Dubai in the names of these consignees who had nothing to do with the consignments. As per his statement, he hired Shri Mukesh Rana to get the goods cleared and paid Rs.250/- per kg for his services including the customs duty. Shri Mukesh Rana, in turn, contacted Shri Azarouddin Kadar of the appellant firm who provided the names and details of consignors and consignees and accordingly, the goods were shipped. However, since the imports were made through courier, the appellant firm itself has to file the courier of bills of entry for clearance of goods and after clearance deliver the goods to the consignees. Shri Krishna Murthy said all goods were to be delivered to him in Dwarka at his place. Shri Mukesh Rana also confirmed the same statement and confirmed that he received 250/- per kg to clear the goods from Shri Krishna Murthy of which he would pay Rs. 200/- to Shri Kadar. Shri Kadar also confirmed the same facts in his statement and said that instead of Rs. 53/-per kg which they would usually get clearance of household goods, they were getting Rs.200/- per kg for these goods. He also confirmed that after clearance he would only deliver the goods to Shri Mukesh Rana as per his convenience and not to the consignees indicated in the Bills of Entry. Shri Mukesh Rana also confirmed that after receiving the goods he would deliver them to Shri Krishna Murthy at his premises in Dwarka. Thus, we find there is no inconsistency in the statements made by the three persons with respect to the mode of operations.

16. The main contention of the learned counsel for the appellant is that simply because an employee of the appellant had committed an error or fraud, the licence of the appellant should not be revoked. This statement cannot be accepted. The employee of the courier has no locus standi in getting the goods cleared through the customs. The licence is issued to the appellant and the appellant has to get the goods cleared. How many persons the appellant employs and what work he gets done through them is up to the appellant. So long as an employee is acting on behalf of the appellant, the responsibility for such actions lies on the appellant. It is not the case that somebody hacked into the system and misused the credentials of the appellant to file the bills of entry. They were filed by the appellant’s own employee Shri Azarouddin Kadar Riswan who was employed as Assistant Manager by the appellant to manage its business in Delhi. Therefore, the full responsibility for any action of the employees of the appellant rests on the appellant.

17. Further, we find that in his statement Shri Azarouddin Kadar, proprietor of the appellant, admitted that the goods imported under Master Airway Bill No. 17647441494 were commercial goods and not household goods. He further admitted that the goods belong to Shri Mukesh Rana who he knew through his employee Shri A. Kadar. Thus, this is clearly not a case where the appellant had no knowledge whatsoever of the illegal and benami imports. These were will within the knowledge of the proprietor of the appellant firm. These facts have been recorded in paragraph 4.2 of the order-in-original of the order of the Additional Commissioner dated 28.2.2020 which is relied upon document for the present proceedings. Thus, we do not accept the proposition that the appellant cannot be penalised for the action of its employee, both for the reason that as the principal the appellant is responsible for the action committed by its own employee and also for the reason that nature of the imports were fully within the knowledge of the proprietor of the appellant itself. Learned counsel had laid emphasis on the Aramex India Pvt. Ltd. We find that the facts of that case were different as it has been recorded in paragraph 7.1 of that order that the appellant has denied any knowledge of the alleged conspiracy and offence committed by certain persons, which included some employees of the appellant. This lack of knowledge was not in dispute in that case. In other words, that was clearly a case where the appellant had no knowledge whatsoever of the fraud committed in that case. The present case, is quite different as the appellant had full knowledge that commercial goods were being imported in the Master Airway bill, but instead bills of entry were filed in the name of various consignors and consignees. Further, these names of so called consignors and so called consignees were provided by the appellant itself through Shri Mukesh Rana to Shri Krishna Murthy who is the master mind and accordingly consignments were labelled and packed. Thus, the appellant was fully involved in the process starting from deciding the names of the consignors and consignees in whose names the goods should be imported up to filing the Bills of Entry. Had it succeeded in clearing the consignments, it would have delivered the goods to Shri Mukesh Rana as per his convenience and not to the consignees.

18. The profit gained through this operation is also clear as Shri Azharuddin has confirmed that instead of Rs. 53/- per kg which they would normally get for clearing household goods they were getting Rs. 200/- per kg. for these consignments. It does not appear from the statement of Shri Azharuddin as recorded in the order of Additional Commissioner that he said that he was clearing the goods on his personal account and without knowledge of Shri Azharuddin Riswan, the proprietor of the appellant firm.

19. Regulation 12(1)(i) requires the courier to obtain an authorisation from each of the consignees or consignors of imported goods for couriers of export goods to the effect that it may act as an agent of such consignor or consignee. In this case the so called consignors and consignees indicated in the bills of entry had nothing to do with the consignments. In fact, these names were provided by the appellant itself to Shri Krishna Murthy through Shri Mukesh Rana so that the goods could be imported mis-declaring both their nature and the names of the consignors and consignees. By doing so, the appellant, Shri Mukesh Rana and Shri Krishna Murthy attempted to bypass two essential requirements for import – the IEC required for all commercial imports and the NOC from the FSSAI. We do not find any error in the impugned order holding that the appellant failed to fulfil its obligation under Regulation 12(1)(i). Shri Mukesh Rana would get Rs. 250/- per kg for the service from Shri Krishna Murthy of which he would pay Rs. 200/- to Shri Riswan – the employee of the appellant instead of the normal rate of Rs. 53/- per kg for household goods.

20. Regulation 12(1)(iii) requires the authorised courier to advise his consignor or consignee to comply with the provisions of the Act, rules and regulations made thereunder and in case of non­compliance thereof to bring the matter to the notice of the Assistant Commissioner or Deputy Commissioner of Customs. In this case the real consignee Shri Krishna Murthy (through Shri Mukesh Rana) has imported the goods in the name of other consignees by mis-declaring them as household goods. The appellant has not only NOT advised the consignee to follow the rules but has actually facilitated violation of the rules and also circumventing the statutory requirement of obtaining IEC for imports in commercial quantities and violating the mandatory requirement of FSSAI for import of foods supplements by providing details of consignors and consignees in whose names unbeknownst to them, the goods could be imported.

21. Regulation 12(1)(iv) requires an authorised courier to verify the antecedents, correctness of IEC number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, date or information. In the normal course, this would be easy for any courier because it has to finally deliver the goods by itself at the declared address of the consignee after clearance from the customs. In this case, instead, the appellant has facilitated imports and attempted to obtain clearance of the goods in the name of many consignees when the actual consignee was Shri Krishna Murthy through Shri Mukesh Rana to whom the appellant was to deliver the goods as per his convenience. Thus the appellant has, therefore, violated Regulation 12(1)(iv).

22. Regulation 12(1) (v) requires the couriers to exercise due diligence to ascertain the correctness and completeness of any information which he submits to the proper officer with reference to any work related to the clearance of imported goods or of export goods. In this case, the appellant has actually connived with Shri Mukesh Rana and filed documents to clear the goods mis-declaring the names of the consignees and consignors and the nature of the goods. Therefore, it has violated the Regulation 12(1)(v).

23. Regulation 12(1)(vii) requires the authorised courier to not withhold any information relating to assessment and clearance of imported goods from the assessing officer. In this case, the appellant has intentionally provided wrong information and withheld the information that commercial goods were being imported in the guise of household goods and has connived with Shri Mukesh Rana in filing the courier bills of entry in full knowledge that they were not household goods.

24. Regulation 12(1)(x) requires to authorised courier to abide by all the provisions of the Act and the rules, regulations and notifications and orders issued thereunder. In this case the appellant has actively violated the provisions of the act and rules by knowingly filing the bills of entry in the name of wrong consignee and also be mis-declaring the nature of the goods.

25. Considering all the facts of this case, we find that there is no error in the order of the Commissioner holding that the appellant has violated the Regulations. These provide that the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may revoke the registration of an authorised courier and also pass an order for forfeiture of security on any of the following grounds:

(a) Failure of the authorised courier to comply with any of the conditions of the bond executed by him under Regulation 11;

(b) failure of the authorised courier to comply with any of the provisions of these Regulations;

(c) mis-conduct on the part of the authorise courier by within the jurisdiction of the Principal Commissioner or Commissioner or anywhere else which in the opinion of Principal Commissioner or Commissioner renders it unfit the transit any business in the customs Airport.

(d) Regulation 14 provides for imposition of a penalty which may extend to 50,000/- for contravention of any of the regulations or abatement such contravention or for failure to comply with any provisions of the regulation which it was his obligation to comply with.

26. As we have upheld the findings of the Commissioner in the impugned order that Regulation 12(1)(i), (iii), (iv), (v), (vii) and (x) were clearly violated by the appellant, we find that revocation of the registration of the appellant under Regulation 13 is correct and proper and calls for no interference. Learned counsel for the appellant also submitted that there is no provision in the Regulations for forfeiture of the security. This submission is not correct as Regulation 13 clearly provides that the Commissioner may pass an order for forfeiture of security also in addition to revocation of the registration. The conditions of the bond executed by the appellant under Regulation 11 are to comply with the provisions for the act, rules and regulations made thereunder. As we have found that impugned order was correct in holding that the appellant violated several regulations there is no reason for us to interfere with the forfeiture of security deposit.

27. Further, we find that for the various contraventions of these regulations as discussed above the appellant was correctly held liable to penalty under Regulation 14 and penalty of Rs. 50,000/-was imposed by the Commissioner in the impugned order.

28. In view of the above, we find that the impugned order is correct and proper and calls for no interference.

29. The impugned order is upheld and the appeal is rejected. (Pronounced in open Court on 28.10.2022)