Safe Cargo Clearing Services Vs C.C. Ludhiana (CESTAT Chandigarh)
CESTAT Chandigarh held that extreme penalty of revocation of custom broker licence for violating obligation under regulation 10 of CBLR, 2018 unwarranted, however, imposition of penalty and forfeiture of security justified.
Facts- The appellant holds a Custom broker license and was permitted to work as a custom broker at various customs stations. As per the communication from Additional Commissioner, Ludhiana, the appellant has been found involved in a case of fraudulent import pertaining to M/s. PS Traders. As per the mandate of the Regulation 10(n) of the CBLR, 2018 read with the Circular No. 09/2010-Customs dated 08.04.2010, it was incumbent upon the CB to verify identity and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information which apparently the CB have failed to do.
Accordingly, the Commissioner of Customs, in exercise of powers conferred upon him under Regulations 16 (1) of CBLR, 2018, suspended the Customs Broker License issued to Safe Cargo Clearing Services. The suspension of CHA licence was continued vide order in original dated 15.11.2021 by the Commissioner, Customs and later the license of the Custom Broker M/s. Safe Cargo Clearing Services 52, Rasila Nagar, opposite BBMB Power House, Chandigarh Road, Ludhiana was revoked and penalty of Rs. 50000/- has been imposed vide the impugned order. Being aggrieved, the present appeal is filed.
Conclusion- Held that in the present case, the appellant illegally cleared the consignment having cigarettes and later on deleted all the WhatsApp chats/call records with their crime partners. Further, Sunil Dutt has categorically admitted in his statement that he has not obtained any KYC documents from the actual importer and all the documents including the KYC were given to him by Sandeep Kumar inspector and he has never contacted and met the actual importer at any point of time. Thereby, he has violated the regulation 10(n) which prescribed that the custom broker has to verify correctness of the importer exporter code (IEC) number, goods and services tax identification number (GSTIN), identify of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. The appellant had failed to verify the correctness of IEC, identity and whereabouts of the firms with authentic data and information thereby violating the obligations cast upon it under Regulation 10 (n) of CBLR 2018.
Held that he has not fulfilled the obligation under regulation 10 of CBLR, 2018 but his act and conduct does not warrant the imposition of extreme penalty of revocation of custom broker licence depriving him of his livelihood. But certainly his conduct warrants, the imposition of penalty and forfeiture of security deposit. Accordingly, held that revocation of custom broker licence of the appellant is not warranted and we set aside the revocation. As far as the imposition of penalty and forfeiture of security deposit are concerned, we are of the opinion that the imposition of penalty of Rs. 50,000/- and forfeiture of security are justified in the facts and circumstances of the case.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The present appeal is directed against the Order-in-Original dated 28.06.2022 vide which the Ld. Commissioner has revoked Custom Broker Licence of the appellant under Regulation 17 of CBLR 2018 and imposed penalty of Rs. 50,000/- under Regulation 18 read with Regulation 14 of CBLR, 2018.
2. The Ld. Commissioner also forfeited the security deposit made by the Custom Broker at the time of taking licence in terms of Regulation 14 of CBLR, 2018.
3. Briefly the facts of the present case are that the appellant holds Custom broker licence and was permitted to work as custom broker at various customs stations.
3.1 A communication from. Additional Commissioner, Ludhiana Customs Commissionerate, vide letter Cus/SIIB/MISC/451/2021-SIIB-0/0-Commr-Cus-Ludhiana dated 07.09.2021 was received wherein it has been reported that Custom Broker has been found involved in a case of fraudulent import pertaining to M/s PS Traders Shop. No. 20/100, Turi Bazar, Near Anardana Chowk, Patiala. Details of case is as under:
a In a Bill of Entry No. 3479461 dated 08.04.2021 filed by M/s. Safe Cargo Clearing Services on behalf of M/s P. S. Traders, Shop No. 20/100, Turi Bazar, Near Anardana Chowk, Patiala, Punjab holding IEC No. GAUPS9998M, for import of 14836 Kg of Aluminium Scrap under CTH 76020010 having assessable value of Rs. 12,51,524/- After issuance of Customs Out of Charge (COC), during transit, the consignment was intercepted by the Preventive Wing, CGST Commisssione rate, Ludhiana and apart from 10.300 MT Iron Scrap, 3960000 Cigarette Sticks of 100 mm length with Filters & four Alloy Wheels recovered. A case was booked and later, goods have been seized under section 110 of Customs Act, 1962.
b. Certain documents such as examination reports, detention memo, statements of Customs Officers namely Shri Sandeep Kumar, Inspector &Shri Rambir Singh, Supdt. statements of Customs Brcker Shri Abdesh Kumar of M/s Safe Cargo Clearing Services, Ludhiana and Shri Sunil Dutt, G-Card holder working with M/s Safe Cargo Clearing Services, Ludhiana have been provided to this office by the CGST Commisssione rate, Ludhiana. Further, during investigation by this office statements of Shri Prabhjot Singh, proprietor of M/s P. S. Traders, Patiala, Custom Broker Shri Paramjit Singh, G-Card holder of M/s DAS Logistics Pvt. Limited, Ludhiana, representative of Shipping Line and others have been recorded under Section 108 of the Customs Act, 1962,
c. In this case, it has been seen that the said consignment was marked for 50% examination, however was cleared from the Customs Area without conducting examination, without depositing of Customs duty & other levies and also on the basis of manual COC. Even Customs seal was not broken. Further, Cigarettes imported in the said consignment in the guise of Aluminum Scrap / by concealing in Scrap are under prohibition The Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 provides that “No person shall import cigarettes or any other tobacco products for distribution or supply for a valuable consideration or for sale in India unless every package of cigarettes or any other Tobacco products so imported by him bears thereon, or on its label, the specified warning”. In the instant case, cigarettes have been found without statutory pictorial & textual warning
(d) As per Regulation 10 (n) of the Customs Broker Licensing Regulations, 2018 (Notified under Notification No. 41/2018-Customs (NT) dated 14.05.2018. The Customs Broker has an Obligation to verify correctness of Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN), identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. But Sh. Sunil Dutt, G-card of M/s Safe Cargo Clearing Services in his statement dated 12.04.2021 recorded under CGST Act, 2017 himself admitted his fault. Sh. Sunil Dutt, G-card of M/s Safe Cargo Clearing Services has mentioned that he never met the proprietor of M/s P. S. Traders. Patiala on whose behalf he had filed the import documents. Further Sh Sunil Dutt is not appearing before Customs despite Summon being sent on 12.08.2021, 28.08.2021, 31.08.2021 & 11.09.2021 In this regard a complaint under Section 174-175 of Indian Penal Code. 1860 has been lodged before Chief Judicial Magistrate. Ludhiana,
(e) He was duty bound to confirm the KYC of importer before filing the import documents and examination of consignment and payment of Customs duty before clearance of the consignment. The said consignment was managed to clear from Customs without examination on 09.04 202 whereas the M/s Safe Cargo Clearing Services was responsible to get the consignment examined for which documents were filed by him. M/s Safe Cargo Clearing Services has failed in his duties by submitting. signing false declaration or documents to Customs in the transaction of his business as a Customs broker &authorized representative of the importer.
(f) It is pertinent to mention here that Sh. Sunil Dutt, G-card of M/s Safe Cargo Clearing Services in his statement dated 15.04.2021 tendered by him before the CGST official, has stated that he had already deleted the communication of whatsapp chat which was crucial evidence in the case and hence, cannot be trusted in any manner. It appears that he in connivance with other accused managed to illegally clear the consignment having Cigarettes and later on deleted all the whatsapp chat/ call records with their crime partners.
(g) In the instant case, Sunil Dutt did not persuade the importer to deposit Customs duty and examination of consignment. Also, warehouse file for issuance of Gate pass was. prepared by him, however he did not come forward to get issuance of gate pass. Though, he was responsible to get the consignment examined, examination of the said import consignment was not conducted. Hence, M/s Safe Cargo Clearing Services has not performed his duty with due diligence and with utmost efficiency and has not fulfilled the obligations of Custom Broker as envisaged in Regulation 10 of CBLR, 2018 and have not discharged his duties as a Customs Broker.
3.2 As mandated by Regulation 10(n) the CBLR, 2018, the Customs Broker was duty bound to confirm the KYC of the importer before filing the import documents, which the Customs Broker and his employee G-Card holder Sh. Sunil Dutt failed to do. The Customs Broker consciously owned the deeds and acts done by his employee G card Holder Sh. Sunil Dutt by way of furnishing a bond dated 14.05.2018
3.3 Moreover, the Board vide Circular No. 09/2010-Customs dated 08.04.2010 has specifically prescribed “Know Your Customer (KYC) guidelines to the CBS/CHAS so that the CBS/CHAS are not (mis)used Intentionally or unintentionally by importers/exporters indulging in fraudulent activities and with a view to control offences involving various modus operandi such as misuse of export promotion schemes, fraudulent availment of export incentives and duty evasion by bogus IEC holders, etc. In this regard, a detailed guideline on the list of documents to be verified and obtained from the client/customer was also provided. Here, it appears that the CB failed to exercise due diligence and grossly violated the KYC guidelines of the said Circular dated 08.04.2010 read with the provisions of the CBLR, 2018. As per the mandate of the Regulation 10(n) of the CBLR, 2018 read with the Circular No. 09/2010-Customs dated 08.04.2010, it was incumbent upon the CB to verify identity and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information which apparently the CB have failed to do.
3.4 M/s Safe Cargo Clearing Services holding CB License number 12/CB/REG/LDH/2015 have failed to comply with the provisions of Regulation 10 of CBLR 2018 and are therefore liable for action under Regulation 14 read with Regulation 17 and 18 of CBLR, 2018, including revocation of license, forfeiture of part or whole of security & imposition of penalty Accordingly, the Commissioner of Customs, in exercise of powers conferred upon him under Regulations 16 (1) of CBLR, 2018, suspended the Customs Broker License No. 12/CB/REG/LDH/2015 vide Order issued under F.No. VIII- 13(15) Tech/ CHA/SCCS/HQRS/LDH/2015 dated 08.09.2021 (DIN 20210975NK000000C3B9) issued to Safe Cargo Clearing Services, and ordered to submit the License along with F/G/H Cards (in original) to the Deputy Commissioner (TECH), Customs Commissionerate, Ludhiana immediately. The suspension of CHA licence was continued vide order in original dated 15.11.2021 by the Commissioner, Customs, Ludhiana and later the license of the Custom Broker M/s. Safe Cargo Clearing Services 52, Rasila Nagar, opposite BBMB Power House, Chandigarh Road, Ludhiana was revoked and penalty of Rs. 50000/- has been imposed vide Order-In-Original number Comm/VG/LDH/CUSTOMS/05/2022 dated 28.06.2022. Aggrieved by the said order, the appellant has filed the present appeal.
4. Heard both the parties and perused the record.
5. Ld. Counsel appearing for the appellant submitted that the impugned order revoking the CHA licence and forfeiting security amount and imposing the penalty of Rs. 50,000/- are not sustainable in law as the same has been passed without properly appreciating the facts and the law and custom broker regulation, 2018. He further submitted that the inquiry conducted by the Deputy Commissioner Sandeep Kamboj is in violation of regulation 17(4) of CBLR, 2018 as the appellant has not been given the opportunity to cross examine certain persons whose statements was relied upon by the department. He further submitted that the reasons for denial of cross examination is also not legally sustainable.
6. He further submits that the documents relied upon by the inquiry officer were not supplied to the appellant in spite of their request thereby entire inquiry is vitiated and cannot be relied upon for inflicting any punishment on them. He further submits that the custom broker filed bill of entry no. 347461 dated 08.04.2021 on the basis of documents supplied by the importer Ms. P.S. Traders after complying with KYC norms. He also submits that the impugned goods were not presented for examination because the custom duty was not paid and the goods were clandestinely removed without issuing custom out of charge order. He further submits that the custom broker was not involved in clandestine removal of the goods from the port with the connivance of custom officers.
7. He further submits that prima facie facts of the case shows that impugned goods were removed clandestinely with the connivance of custom officers for which custom broker cannot be punished.
8. Ld. Counsel took us through to the report of the inquiry officer and pointed out that there are contradictions in the same. He further submits that the show cause notice issued to the appellant is defective one, as it has been issued without bringing on records, statement of custom officers, custodian, CGST officers etc. Hence, the same is bad in law. He further submits that the inquiry officer has not given any finding regarding issuance of notice beyond the period of limitation.
9. In support of his submissions, he relied upon the following decisions:
* Trade Wings Logistics India Pvt. Ltd. Vs. Commissioner of Customs 2019 (370) ELT 510 (T).
* Anax Air Services Pvt. Ltd. Vs. Commissioner of Customs, New Delhi.
10. On the other hand, Ld. DR supported the findings in the impugned order and submitted that the custom broker has failed to comply with the regulations as prescribed in regulation 10 of CBLR. He further submitted that Sunil Dutt, G-card holder of the appellant was responsible to get the consignment examined, but examination of the consignment was not conducted and he was aware that consignment was cleared without examination and payment of custom duties but he did not inform the custom department of the same. Hence, he has not performed his duty with due diligence and utmost efficiency and has not fulfilled the obligations of custom broker as envisaged in regulation 10 of CBLR, 2018. He further submits that the inquiry officer recorded the statement of Abdesh Kumar F-card holder of the custom broker and Sunil Dutt G-card holder of custom broker dated 12.04.2021 wherein they have admitted that they had not obtained any KYC documents from the actual importer i.e. PS traders. Further, Sunil Dutt admitted all the documents including the KYC were provided to him by Sandeep Kumar, inspector customs and he never contacted the actual importer during and after the clearance of the consignment which is in violation of regulation 10(n) of CBLR, 2018.
11. Ld. DR further submits that the custom broker consciously owned deeds and acts done by his employees i.e. G-card holder, Sunil Dutt by way of furnishing a bond dated 14.05.2018.
12. Ld. DR further submits that cross examination was denied because no cogent reasons were given for seeking cross examination at the belated stage. She further submitted that revocation of licence and imposition of penalty has been imposed by the adjudicating authority after following the procedure laid down under regulation 17 of CBLR, 2018.
13. Ld. DR in support of her submission has relied upon the following decisions:-
