Case Law Details
Jetset Shipping Private Limited Vs Commissioner of Customs (CESTAT Delhi)
CESTAT Delhi held that imposition of penalty and revocation of customs broker license justified as customs broker abetted the illegal export and also failed to comply with the provisions of CBLR, 2018.
Facts- The appellant is holding CBL valid upto 9.10.2026. On investigation, it was found that fraudulent export has been committed for wrong availment of IGST refund by dubious exporters, M/s Aero Exports and M/s. Yellowsky Exports, and Customs Broker, Shri MK Arora, Director of the appellant company is also a party in the dubious exports made by both the firms to avail IGST refund. Shri Ganga Singh Yadav, proprietor of M/s Aero Export failed to appear despite several summons issued.
Shri M.K. Arora in his statement under Section 108 of the Act stated that he had verified the KYC and as he met Shri Mitilesh Kumar Jha through an agent, Shri Gaurav Aggarwal, detailed verification was not found to be necessary as the exporter came to his office before the first export along with that agent. As the CB failed to fulfil their obligations and violated the provisions of CBLR, with a view to further prevent the mis-use, license of the CB was suspended vide order dated 21.01.2020 by the Commissioner of Customs, which was subsequently confirmed vide order dated 21.02.2020.
Show cause notice dated 19.03.2020 was issued to the appellant for revocation of license, forfeiture of security deposit in terms of Regulation 14 read with Regulation 17 of CBLR, 2018 and imposition of penalty under Regulation 18 read with Regulation 17 of CBLR, 2018. On arriving at the conclusion that the CB has acted in an irresponsible manner and abetted the act of illegal exports with intention to avail ineligible IGST refunds, the Commissioner revoked the CB license with forfeiture of the whole amount of security deposit and penalty of Rs.50,000 by the impugned order. Being aggrieved, the appellant has preferred the present appeal before this Tribunal.
Conclusion- Held that the appellant has not only failed to comply with the provisions of CBLR, 2018, but have abetted the illegal exports and, therefore, no interference is called for. The misconduct is of the nature, which renders him unfit to transact the business of CB. The allegations made out are grave enough to justify the action initiated against him and, therefore, the punishment imposed is just and proper. We do not find any infirmity in the impugned order and hence, the same is affirmed.
FULL TEXT OF THE CESTAT DELHI ORDER
1. Challenge in the present appeal is to the revocation of the Customs Broker License 1, forfeiture of security deposit and penalty of Rs.50,000 imposed by the impugned order-in-original no.80/MK/POLICY/2020 dated 30.09.2020 for violation of the provisions of Regulation 10(a), 10(d), 10(e), 10(m) and 10(n) of Customs Broker Licensing Regulations, 2018 2.
2. The appellant 3 is holding CBL valid upto 9.10.2026. On investigation, it was found that fraudulent export has been committed for wrong availment of IGST refund by dubious exporters, M/s Aero Exports and M/s. Yellowsky Exports, and Customs Broker, Shri MK Arora, Director of the appellant company is also a party in the dubious exports made by both the firms to avail IGST refund. Shri Ganga Singh Yadav, proprietor of M/s Aero Export failed to appear despite several summons issued.
3. Statement of Shri Mithilesh Kumar Jha, proprietor of M/s. Yellowsky Exports was recorded under Section 108 of the Customs Act 1962 4, where he admitted that he was the proprietor of the firm only on paper and worked as Supervisor on monthly salary of Rs.35,000 to Rs.40,000 per month. It was further stated that on receipt of IGST refund, he was sent to report to Shri M.K. Arora of M/s. Jetset Shipping Pvt. Ltd at his office, where Shri Arora explained him that the goods were being exported to Dubai by this firm and goods have been purchased from different suppliers. The exports have been affected by the CHAs, namely, M/s. Jetset Shipping Private Limited, M/s. Prakash Kushwaha & Co. and M/s. Ramesh Transport Company.
4. During the course of investigation, statement of Shri Satyaprakash Kushwaha, proprietor of M/s. Prakash Kushwaha & Co. was recorded, wherein he stated that Shri M.K. Arora had requested him to file the shipping bills for M/s. Yellowsky Exports, and export documents, and the payment by way of cheques were received from the office of M/s. Jetset Shipping Pvt. Ltd.
5. Shri M.K. Arora in his statement under Section 108 of the Act stated that he had verified the KYC and as he met Shri Mitilesh Kumar Jha through an agent, Shri Gaurav Aggarwal, detailed verification was not found to be necessary as the exporter came to his office before the first export along with that agent. As the CB failed to fulfil their obligations and violated the provisions of CBLR, with a view to further prevent the mis-use, license of the CB was suspended vide order dated 21.01.2020 by the Commissioner of Customs, which was subsequently confirmed vide order dated 21.02.2020.
6. Show cause notice dated 19.03.2020 was issued to the appellant for revocation of license, forfeiture of security deposit in terms of Regulation 14 read with Regulation 17 of CBLR, 2018 and imposition of penalty under Regulation 18 read with Regulation 17 of CBLR, 2018. The inquiry report dated 15.06.2020 submitted by the inquiry officer concluded that the CB has contravened the provisions of Regulation 10(a), 10 (d), 10 (e), 10(m) and 10(n). On arriving at the conclusion that the CB has acted in an irresponsible manner and abetted the act of illegal exports with intention to avail ineligible IGST refunds, the Commissioner revoked the CB license with forfeiture of the whole amount of security deposit and penalty of Rs.50,000 by the impugned order. Being aggrieved, the appellant has preferred the present appeal before this Tribunal.
7. Heard Shri Anish Mittal, the learned Counsel for the appellant and Shri M.R. Dhaniya, the Authorised Representative for the revenue.
8. The learned Counsel for the appellant denied the violation of the provisions of the CBLR and mainly relied on the decision of this Tribunal in their own case vide Final Order No.55570/2024 dated 18.04.2024, where order of revocation of license along with forfeiture of security, deposit and imposition of penalty was set aside.
9. The learned Authorised Representative reiterated the findings of the Adjudicating Authority and distinguished the decision relied upon by the appellant. Referring to the various statements recorded under Section 108 of the Act during the investigation, it was submitted that Shri M.K. Arora along with two dummy export companies was involved in the wrongful availment of IGST refunds and have thereby breached the provisions of the regulations.
10. We may first examine whether the present case is covered by the decision of this Tribunal relied on by the appellant in their own case. On examining the factual matrix of the two cases, we find that the same are distinguishable. Firstly, the allegation in the earlier case were made out only for violation of Regulation 10(n), whereas in the present case, the allegation is that the appellant violated Regulation 10(a), 10 (d), 10 (e), 10(m) and 10(n) and as a result, the scope of consideration in the earlier case was limited and, therefore, the present case cannot be said to be covered by the earlier decision. The decision relied on by the appellant in their own case was based on the decision of the earlier Division Bench of the Tribunal in Mauli Worldwide Logistics versus Commissioner Customs, New Delhi (Airport & General)5, where also the allegations were restricted and limited only to the violation of the provisions of Regulation 10(n). Moreover, factually the allegations here are more serious as the investigation revealed that the appellant himself have been found to be involved in the dubious exports. In his statement, Shri Mithilesh Kumar Jha, proprietor of M/s Yellowsky Exports stated that on receipt of IGST refund, he was sent to report to Shri M.K. Arora of M/s Jetset Shipping Pvt. Ltd. at his office at Rajokri, where Mr. Arora explained him that goods were being exported to Dubai by this firm and goods had been purchased from different suppliers. Further, the statement of Shri Satya Prakash Kushwaha, proprietor of M/s. Prakash Kushwaha & Co. was recorded, where he admitted that Shri M.K. Arora of M/s. Jetset Shipping Pvt. Ltd. had requested him to file the shipping bills for M/s Yellowsky Exports and export documents as well as payment, by way of cheque was received from the office of M/s. Jetset Shipping Pvt. Ltd. Thus, the two proprietors of the export firms were acting on behalf of Shri M.K. Arora and had nothing to do with the exports made by the exporter firms. Thus, we are of the view that the instant appeal is not covered by the earlier decision in the appellant’s own case but has to be decided on its own merits.
11. We may now examine the statements made by Shri M.K. Arora. As per his statement dated 0306.2020, he met Shri Mithilesh Kumar Jha, proprietor of M/s. Yellowsky Exports, through an agent Shri Gaurav Agarwal and detailed verification of the exporter was not found to be required as the exporter came to his office before the first export along with that agent. The CB, while denying the allegations in the show cause notice came out with a version that both the exporters are bonafide exporters having full knowledge of the procedure of exports and having their own properties.
12. From the submissions made by CB on 08.06.2020, it is evident that he knew about the dubious exports being made by the exporting firms, M/s. Aero Exports and M/s. Yellowsky Exports, and that both the exporters were in the control of Chartered Accountant, Mr. Gaurav Agarwal, his brother, Mr. Saurabh Agarwal and Mr. Ankur Kampani, Builder, son of retired IPS officer and his mother retired IRS officer, who were the main mastermind and beneficiary in this whole transaction. Shri Mithilesh Kumar Jha was working as Civil Engineer in the real estate business and was the co-beneficial. The bank account and IEC code documents were prepared and managed by the Chartered Accountant and his brother. The purchases from the seller and the buyer with BRC and withdrawal of the amount and transfer of funds were also arranged by the Chartered Accountant and his brother. The transporter and E-way bill and other documents were also managed by them. All this clearly reflects that the CB was aware of the entire modus-operandi and it was within his knowledge that proprietors of the two exporter firms were only dummy proprietors and they had no control on the export transaction. In such a situation the CB is under an obligation firstly to advise the client or otherwise inform the department, however they failed to perform the duties under the regulations.
13. The very fact that the CB was aware of the export being transacted in a dubious manner and kept quiet, clearly proves the allegation that the CB was part of the dubious exports. The involvement of the CB is further substantiated by the statement of Shri Mithilesh Kumar Jha, that he was supposed to report back to Shri M.K. Arora, who used to brief them about the details of the exports. Similarly, Shri Satyaprakash Kushwaha, proprietor of M/s Prakash Kushwaha & Co. (CHA) stated that at the instance of Shri M.K. Arora, the shipping bills were filed by their company for M/s. Yellowsky Exports, and export documents and the payment by way of cheques were received from the office of M/s. Jetset Shipping Pvt. Ltd. All this establishes the connivance of the appellant in knowingly abetting the fictitious exports.
14. Under Regulation 10(a), CB is required to obtain authorisation from each of the companies or firms, by whom the CB is employed and produce such authorisation whenever required. The facts of the present case show that the proprietors of the exporting firms were not only dummy proprietors and were unaware of the activities of export rather they were acting on behalf of Shri M K Arora. In the circumstances, there is no question of rendering any valid authorization, which otherwise is not available on record and thereby the CB contravened the provisions of Regulation 10(a) CBLR, 2018.
15. Regulation 10 (d) requires the CB to advise his client to comply with the provisions of the Act and other rules and regulations thereof, and in case of non-compliance is required to bring the matter to the notice of the department. As discussed above, the CB in his statement has pointed to the modus-operandi and the involvement of others, which according to him were actually controlling the export activities through the dummy proprietors. Though the CB was very well aware of the illegal exports yet he did not bring these facts to the notice of the department and kept quiet. In such circumstances, the CB failed to comply with the duty and obligation imposed by the provisions of Regulation 10(d).
16. Regulation 10 (e) requires the CB to exercise due diligence to ascertain the correctness of any information, which he imparts to a client with reference to any work related to clearance of cargo or baggage. The facts of the present case reveal that the CB knowingly and actively abetted the act of illegal exports. He should have exercised due diligence and imparted correct position of law as regards the nature of the exports. Infact when the CB himself have participated and indulged in the dubious exports, there could not be any compliance of the provisions of Regulation 10(e) of CBLR.
17. Regulation 10(n) casts duty on the CB to verify the correctness of Importer Exporter Code (IEC), Goods and Services Tax Identification Number (GSTIN), identity of his client and functioning of his client at the declared addresses by using reliable, independent and authentic information. The learned counsel for the appellant has taken us through the various documents IEC, GSTIN, PAN and AADHAAR Cards, which the exporter firms have submitted. Although there is no obligation on the CB to look into the information made available by the importer or exporter as he acts merely as a processing agent of documents with respect to clearance of goods through Customs House and he is not an inspector to verify the genuineness of the transaction moreso grant of these documents is proof regarding verification of facts, however, when the CB himself is a party to the dubious export the compliance of the KYC norms is just a farce and, therefore, violation of Regulation 10 (n) is made out against the CB.
18. In the facts and circumstances of the present case, as discussed above, it is apparent that CB has failed to discharge his duties with utmost speed and efficiency and without any delay. As per his own statement, the CB had knowledge of the illegal exports conducted by some other persons and the proprietors shown were merely on paper having no knowledge of the actual activity of exports. Despite that CB did not act with due diligence or with utmost efficiency in advising the firms or bringing this fact to the knowledge of the department. Consequently, the CB contravened Regulation 10(m) of the CBLR.
19. Without multiplying too many decisions on the role played by the CB in clearance of goods at the customs house, we may refer to the decision in Commissioner of Customs Vs. K.M. Ganatra & Co. 6, where the Apex Court affirmed the view of the Bombay High Court in Noble Agency Vs. Commissioner of Customs, Mumbai 7, which is as under:-
“The CHA occupies a very important position in the Customs House. The Customs procedures are complicated. The importers have to deal with a multiplicity of agencies viz. carriers, custodians like BPT as well as the Customs. The importer would find it impossible to clear his goods through these agencies without wasting valuable energy and time. The CHA is supposed to safeguard the interests of both the importers and the Customs. A lot of trust is kept in CHA by the importers/exporters as well as by the Government Agencies. To ensure appropriate discharge of such trust, the relevant regulations are framed. Regulation 14 of the CHA Licensing Regulations lists out obligations of the CHA. Any contravention of such obligations even without intent would be sufficient to invite upon the CHA the punishment listed in the Regulations….”
20. The appellant has not only failed to comply with the provisions of CBLR, 2018, but have abetted the illegal exports and, therefore, no interference is called for. The misconduct is of the nature, which renders him unfit to transact the business of CB. The allegations made out are grave enough to justify the action initiated against him and, therefore, the punishment imposed is just and proper. We do not find any infirmity in the impugned order and hence, the same is affirmed.
21. The appeal is, accordingly dismissed.
[Order pronounced on 28th June, 2024]
Note:-
1 (CBL)
2 (CBLR, 2018)
3 (CB)
4 Act
5 Final Order No. 50561/2022 dated 4.07.2022
6 2016 (332) ELT 15 (SC)
7 2002 (142) ELT 84(Tribunal)
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