Manoj Gadhiya Vs C.C. (CESTAT Ahmedabad)
It is apparent that the appellant was fully aware about the fictitious nature of the importers as the documents were being fabricated with his knowledge. He also admitted that he had never met the importer but solely relied on the documents submitted by High Sea Seller. His defense seems to be that once document is self certified he does not have any responsibility. This is just an excuse. The entire responsibility of KYC has been placed on the Customs Brokers. If just self attestation was enough than there was no need to put of responsibility of KYC on Customs Broker. He also admitted to forging of signatures. His only defense seems to be that he was merely an employee following direction of superior and that the Superior Shri Amit Khatu was let off.
In view of the above it is apparent that the appellant has failed in his duty as H- Cardholder and actively involved himself in facilitating evasion of customs duty. The appellant was given specific responsibility by revenue by making him an H- Card Holder. He cannot simply pass the blame to his superior G-Card Holder. In this background the charges under section 112(a) of the customs act as well as 114A of the customs act are upheld.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This appeal has been filed by Shri Manoj Gadhiya against imposition of penalty under customs Act.
2. The case was booked against M/s Rudrani Impex Pvt Ltd. and others including the present appellant in a case involving a proper claim of export benefits. The appellant Shri Manoj Gadhiya was earlier a manager of M/s Ukinex Commercial Services. Shri Amit C Khatu was a “G” Card Holder of M/s Ukinex Commercial Services, Mumbai. In the said proceedings notice was issued to 85 noticee and the present appellant was one of them.
2.1 The appellant approached the tribunal for early disposal of his appeal as he wishes to apply for Custom Broker License. As per Regulation 5 of the Customs Broker Licensing Regulation, 2018 (Notification no 31/2018-Customs(NT) 14.05.2018),a person becomes eligible to appear for F-Card Holder exam only if he has not been penalised for any offences under the customs act and various other act. Since the appellant has been penalised in the customs act he becomes ineligible to appear for the said exam in terms of Regulation 5 of the CBLR 2018. In above background earlier hearing was allowed to the appellant.
2.2 The appellant is co-noticee in the case wherein the large number of Embroidery Machines were imported using EPCG License in the names of fictitious non existing entities. The charge against the appellant was that he facilitated for import of these machines in fictitious names, by failing to verify the documents, by failing to conduct KYC of these fictitious importers. It was also held in the impugned order that the appellant used G Card details of Shri Amit Khatu in the import documents and also signed for Mr khatu. It was also held that the appellant signed import documents in the name of N.B Agarwal who had already died. Para 52.5 of the impugned order records as follows:
“52.5. I find that Mr. Manoj Gadhiya in his depositions recorded on 13.02.2014 has accepted that they did not have any KYC in respect of the importers where RIPL was the high sea seller and they had accepted the genuineness of the documents supplied to them. He has further stated that they had not verified the antecedents, correctness of the IEC Code Nos, identity and functioning of the dummy Units at the declared address, as required under Regulation No 11(n) of the CBLR. He had not verified the photocopies of the rent deeds and electricity bills with the original ones. Mr Haresh Gadhiya in his statement dated 28.03.2014 has also made identical depositions as Mr Manoj Gadhiya. He has further admitted that he and Mr Manoj Gadhiya, after the death of N.B Agarwal (earlier Proprietor, used the “G” Card Details of Mr Amit Khatu in the import documents and also signed for Mr Khatu. They both had further signed import documents in the name of Mr N B Agarwal who had already expired. From the above facts, it is clear that both Mr Haresh Ghadiya and Mr Manoj Gadhiyahave not acted in due diligience as they had not verified the antecedents identity and functioning of the dummy units at their declared address. Both Mr Haresh Gadhiya and Mr Manoj Gadhiya knew that the import documents were being filed by them on behalf of dummy units without verifying their existence. By the above acts, they have abetted RIPL in filing false documents and also dealt with the goods in a manner which they knew were offending in nature and would be liable to confiscation,. Therefore, Mr Haresh Gadhiya and Mr Manoj Gadhiya cannot escape their liability for penal action under Section 112 (a) of the Act. I also find that Mr Haresh Gadhiya and Mr Manoj Gadhiya had forged the signatures of Mr N B Agarwal , the earlier proprietor under section 114 AA of the Act as they used forged documents for import of the computerized embroidery machines.”
3. Learned Counsel for the appellant argued that the appellant was the holder of “H” Card issued by the Assistant Commissioner of Customs Surat and he was looking after import and export work of M/s Ukinex Commercial Services, Surat which is a custom house agent ( Custom broker). M/s Ukinex Commercial Services was engaged in import of capital goods like Embroidery Machines for which traders/dealers use to contact along with relevant required documents for import. M/s Ukinex Commercial Services would file bill of entry online and thereafter submitted hard copies of the relevant documents like PAN Card , IEC, RCMC, SSI, Factory address proof, electricity bill, municipal tax bill along with leave and licence agreement and residence address proof of the importer which are all self attested documents by the importer DRI booked case against M/s Rudrani Impex Pvt Ltd, Surat, alleging diversion of imported computerised Embroidery Machines Computerized against dummy IEC and EPCG Licence holder or payment of zero duty or 3% concessional Custom duty. The notice alleged that imported these machines from china and shown said machines as sold on High Sea Sales Basis to the dummy/fictitious IECs holder firms and got cleared the said machines against EPCG Licenses of these firms. In this case the bill of entry was filed by M/s Ukinex Commercial Services.
3.1 In this regard, statement of the present appellant was recorded on 13.02.2014 wherein the appellant had explained to the officers of investigating agency, the method and manner in which he used to undertake the task on behalf of CHA firm. The appellant had explained in general terms in regards to all the importers that they had not maintained any records in respects of KYC of their customers, however, they were verifying the genuineness of the IEC and PAN card of the customers online from the website of DGFT and income tax department respectively before submitting the documents to customs.
3.2 The appellant had submitted that their main customer was M/s Rudrani Impex Pvt. Ltd. & others who were mostly all high sea sellers of different type of textile machinery. The appellant had informed the officers that they had taken authorization letters, permission letter for seal cutting of container from importers for the clearance of the goods from Customs and after online assessment of bill of entry, the 2nd & 3rd copy of bill of entry obtained from CMC were sent to head office at Mumbai and Shri Amit C. Khatu, G Card holder signed the same and returned it to them and thereafter they submitted the same to Customs at ICD, Sachin for their signature, the appellant informed that on behalf of the importers either his office staff or he himself remained present during inspection/examination of cargo.The importers were never present when the imports were of M/s Rudrani Impex Pvt Ltd.
3.3 The appellant also informed the officers that he used to do verification of electricity bills of Torrent power from the website as well as Vera (tax) Bill issued by Surat Municipal Corporation from SMC website and did not find any incorrect bills during such verification of the said documents through these official websites. The appellant informed that for the clients of Surat they had taken KYCs and authorization letters from the respective High Sea Sellers and submitted to the Customs authority and they did not have KYCs and authorization letters in their records. It was also informed that the appellant had taken KYCs from M/S Rudrani Impex in respect of importers who had imported the embroidery machines on high sea sale basis from them and submitted the same to the Customs authorities.
3.4 The appellant says and submit that the penalty under section 112 (a) of the Customs Act, 1962 has been imposed for violation of provisions of Rule 11(n) of the Customs Brokers Licensing Regulations, 2013 (CBLR, 2013) which requires the Customs Brokers to verify antecedent, correctness of Importer Exporter Code (IEC) number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. The appellant submits that antecedents of documents are confirmed when the person has submitted self attested documents to be submitted before the Government department. The self attestation of a document puts responsibility of genuineness of photocopy of document on the person attesting it. The Importer Exporter Code has been verified from website of DGFT.
3.5 The appellant has submitted that they have verified the electricity bills from Torrent Power website and Surat Municipal Tax bills produced by importers from surat Vera (tax) website. No discrepancy has been found and the information given in the self attested documents were found matching with the details available on respective website.
3.6 Thus all the reasonable steps were taken by the appellants before submitting documents to the customs. It cannot therefore be said the appellant has contravened the provisions of Rule 11(n) of CBLR, 2013. In the first statement itself the appellant had disposed before the investigating officers that this type of procedure was being followed in respect of all the importers and Rs. 8,000/- per container was charged for which bills were raised. There is no allegation of the department that the appellant had charged any extra money from M/s Rudrani Impex in respect of the present consignment of embroidery machine in dispute. The appellant had taken authorization letter, permission letter for seal cutting of container from importers from the clearance of the goods from customs and after online assessment of bill of entry, the 2nd & 3rd copy of bill of entry obtained from CMC were sent to head office or at Mumbai and Shri Amit C. Khatu, G. Card Holder signed the same and returned it to them and thereafter they submitted the same to Customs at ICD Sachin for their signature.
3.7 The appellant submits that due diligence to the possible extent has been taken by the appellant and there is no reason available on record or proved by the adjudicating authority to show that the appellant had prior knowledge about the importer firms begin dummy. The appellant submits that all KYCs of the importers which were self-attested and submitted by M/s Rudrani Impex who was regular client of the appellant and Mobile number of its Director and Employee were available with the appellant, these KYC documents were also submitted to the custom department without retaining the copy of the same.
The appellant relied on the following cases:
