Case Law Details
Meenu Rathore CB Vs CCE and ST (CESTAT Chandigarh)
CESTAT Chandigarh held that allegation of violation of regulation 10(b), 10(d) and 10(n) of Customs Broker Licensing Regulation, 2018 (CBLR) proved against the appellant. Accordingly, customs broker license duly revocable.
Facts- The appellant Meenu Rathore has been granted customs broker licence by the Commissioner custom, Amritsar and was permitted to work as customs broker at various customs stations. The appellant is engaged in the customs clearance of import and export. A show cause notice dated 19.07.2022 was issued by the Ld. Commissioner of Ludhiana under 17(1) of CBLR, 2018.
Post inquiry report and after considering the objections of the appellant, the Commissioner of Customs, Ludhiana vide the impugned order dated 13.01.2023 revoked the Customs Broker license of the appellant and forfeited the security and also imposed the penalty of Rs. 50,000/- against which the appellant has filed the present appeal.
Conclusion- We find that there are serious allegations made in the show cause notice dated 19.07.2022 against the appellant for contravention of regulation 10(b), 10(d) and 10(n) of licensing regulation, 2018. We also find that on the alleged allegations an inquiry officer was appointed who after affording adequate opportunity to the appellant submitted the inquiry report on the basis of which show cause notice was issued and the allegations of violation were proved against the appellant.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The present appeal is directed against the impugned order dated 13.01.2023 passed by the Commissioner of Customs Ludhiana whereby the Commissioner of Customs has revoked the licence of the appellant under regulation 17(1) of Customs Broker Licensing Regulation, 2018 for failure to comply with the provision of regulation 10 and 13(12) of CBLR, 2018, forfeiture of security under regulation 14 of CBLR, 2018 and imposition of penalty of Rs. 50,000/- under regulation 18 read with Regulation 14 of CBLR, 2018.
2. Briefly the facts of the present case are that the appellant Meenu Rathore has been granted customs broker licence by the Commissioner custom, Amritsar and was permitted to work as customs broker at various customs stations. The appellant is engaged in the customs clearance of import and export. A show cause notice dated 19.07.2022 was issued by the Ld. Commissioner of Ludhiana under 17(1) of CBLR, 2018 alleging as under:-
“A communication from Additional Commissioner of Customs, ACC Export, New Customs House, New Delhi vide letter C.No VIII/(10)ACE/SIIB/ABD/45/2020-21/637 and 639 both Dated 28.04.2022 was received wherein it was stated that a case was investigated by their office regarding consignment covered under Shipping Bill No. 5352634 dated 18.10.2021 intended to be exported by way of misdeclaration and undervaluation of goods. The description of goods as per shipping bill was “100% Plastic PCB” whereas, upon examination/ report by the Chartered Engineer the goods were found to be “old & used/broken PCB’s covered under the category of E-waste. E-waste was intended to be exported by violating the provisions of Section 50 of the Customs Act, 1962 by not declaring the truthful declaration as warranted, deliberately misdeclared/not declared the proper value of the export goods as required under Customs Valuation Rules, 2007, violated provisions of the Foreign Trade (Development and Regulation Act, 1992, the Foreign Trade (Regulation) Rules, 1993 and have also not followed regulation 3(1) of Foreign Exchange Management (Export of Goods & Services) Regulations, 2015 read with Section 8 of Foreign Exchange Management Act 1999, provisions of Hazardous and Other Waste Rules, 2016.
The Shipping Bill was filed on IEC of M/s Aly Baba Décor through Customs Broker Ms Meenu Rathore holding Customs Broker License No. 02/CHA/REG/ASR/2005. The investigation revealed that M/s Aly Baba Décor, B-71, Roop Nagar, Industrial Area, Near Bank of Baroda, Loni, Ghaziabad, UP is engaged in the business of export of handicrafts and other misc. items and exporting goods through Customs Broker Ms Meenu Rathore.
It was found that Ms Meenu Rathore subleased its licence to Shri Girish Kumar of M/s Global Art Logistics since 2017 on the conditions that (i) she will get Rs. 15000/- as sublease cost (ii) an advance of Rs. 2 00000/- as pre deposit (iii) office expenditure and Staff expenditure (for Customs Broker service) would be borne monthly by Shri. Girish Kumar. This has been admitted by Shri Girish Kumar of M/s Global Art Logistics in his statement dated 25.10.2021 tendered before investigating authority.
The investigation further un-earthed that the IEC of M/s Aly Baba Décor was misused by Sh. Girish Kumar for exporting goods i.e E-waste belonging to Sh. Sunil Kumar by undervaluing and misclassifying the same. Ms Meenu Rathore did not appear for statement before investigating authority despite summons dated 25.03.2022 & 01.04.2022.
From the ICES system it was noticed that goods of similar nature had been earlier exported to Hongkong by filing 98 shipping bills in past also on the same particulars.
The investigation conducted by Customs, Delhi concluded by way of issuance of SCN No. 17/SKJ/ADC/ACE /SIIB/2022 dated 07.04.2022, it has been alleged therein that Ms Meenu Rathore has subleased the Customs Broker License to Sh. Girish Goel for consideration (as discussed supra) and has also deputed her own person namely Mr. Dinesh Bhardwaj ( G Card Holder) who was being paid by Sh. Girish Goel. Ms Meenu Rathore misused the CHA license for exporting goods without following due process/rules, thus Ms Meenu Rathore has not only violated the provisions of Rule 10 of Customs Broker Licensing regulations 2018, but also facilitated knowingly to Shri Girish Goel for violating various provisions such as Section 50 of the Customs Act, 1962, undervalued the export goods against requirement under Customs Valuation Rules, 2007, violated provisions of the Foreign Trade Act, 1992, 1993 and have also not followed regulation (1) of the Foreign Exchange Management Regulation, 2000, 2015 and readwith Section 8 of Foreign Exchange Management Act, 1999, provisions of Hazardous and other Wastes Rules, 2016 and for such act of commission and commission discussed supra she appears liable for penal provisions under Section 114(iii) and Section 114AA of the Customs Act, 1962”.
On these allegations Roshal Lal, Deputy Commissioner, Ludhiana was appointed as an inquiry officer in this case. The inquiry officer after completion of inquiry submitted his report which was conveyed to the appellant and appellant was given sufficient time to file the objections against the inquiry report and after considering the objections of the appellant, the Commissioner of Customs, Ludhiana vide the impugned order dated 13.01.2023 revoked the Customs Broker license of the appellant and forfeited the security and also imposed the penalty of Rs. 50,000/- against which the appellant has filed the present appeal.
3. Heard both the parties and perused the record.
4. Ld. Counsel appearing for the appellant submitted that the impugned order revoking the Customs Broker License of appellant is not sustainable in law as the same has been passed without properly considering the facts and the law and the regulations namely, Customs Regulation, CBLR,2018. He further submitted that the inquiry report dated 14.10.2022 is not having the document identification number as required vide CBIC circular no. 37/2019 dated 05.11.2019. The said inquiry is a violation of CBIC circular and accordingly, it is vague and deemed to have never been issued and cannot be given any credence. He further submitted that neither any statement of representative of Ms. Aly Baba Décor nor of Sh. Sunil Kumar mentioned in para 5 of the show cause notice has been brought on record. Further, there is nothing brought on record regarding overseas payment received against export of goods against alleged 98 shipping bills. There is no report given by the inquiry officer regarding involvement of customs broker in alleged export of goods against 98 shipping bills. He further submitted that during the inquiry, appellant requested the Deputy Commissioner, Ludhiana inquiry officer for cross examination of the representative of Ms. Aly Baba Décor who was dealing in export and Sunil Kumar so as to bring on record the factual position; further the appellant requested for cross-examination of Girish Kumar and Dinesh Bhardwaj both G-Card holder but the same was not allowed by the inquiry officer. He further submitted that Girish Kumar and Dinesh Bhardwaj are the G-Card holders, duly authorized by the Deputy Commissioner of Customs to conduct business. The appellant entered into agreement dated 20.04.2017 with Sh. Girish Kumar Prop. M/s. Global Art Logistics for assisting in customs clearance. Girish Kumar who was authorized by the appellant conducted the business on behalf of the appellant and hence there is no violation of regulation 10(b) of CBLR, 2018. He further submitted that G-card holders in this case Girish Kumar and Dinesh Bhardwarj acted beyond the scope of their employment and therefore the appellant cannot be vicarious held liable for such acts of the employee as per second proviso to regulation 17 of CBLR, 2018 which empowers the department to initiate similar action against G-Card holders as well but no such action appears to have been initiated against the G-Card holders under CBLR,2018. He further submitted that there is nothing brought on record that the customs broker was having any knowledge or reason to believe the alleged misconduct of G-Card holders. There is no allegation of flow of any illegal consideration to customs broker in respect of the impugned activities. He further alleged violation of regulation 17(1) of CBLR, 2018 according to which a show cause notice is to be issued within a period of 90 days from the date of receipt of offence report. Whereas, in this case the show cause notice dated 19.07.2022 was issued beyond 90 days.
5. On the other hand, Ld. DR appearing for the revenue defended the impugned order and submitted that the Commissioner Customs after considering of the allegations’ against the appellant and the submissions made by the appellant in their defence has passed well reasoned order and found the appellant guilty of the charge leveled against her. She further submitted that in the inquiry it has been found that the appellant has violated the regulation 10(b), 10(d)&10(n) of Customs Broker Licensing, Regulation 2018. She further submitted that the appellant did not produce any evidence to show that Girish Kumar is her authorized employee whereas it was found during the investigation that Dinesh Bhardwaj, G-Card Holder was being paid by Girish Kumar Prop. of Global Art Logistics and the appellant subleased its license to Girish Kumar since 2017 on condition that
a) that she will get Rs. 15,000/- as sublease cost.
b) an advance of Rs. 2,00,000/- as pre-deposit
c) office expenditure and staff expenditure would be borne monthly by Sh. Girish Kumar.
6. She further submitted that this fact was admitted by Sh. Girish Kumar of Ms. Global Art Logistics in his statement dated 25.10.2021 made before the investigating authority. She also submitted that this kind of unlawful agreement is in violation of the regulation 10(b) of CBLR, 2018. In support of her submission, she relied upon the recent judgment of the Principal Bench in the case of Swastik Cargo Ageny Vs. commissioner of Customs Vide final order no. 50133/2023 wherein identical allegations as in the present case were levelled against the customs broker and the Division Bench at Delhi by detailed judgment has upheld the order of revocation passed by the adjudicating authority and dismissed the appeal of the customs broker.
7. After Considering the submissions of both the parties and perusal of the material on records we find that the submissions made by the Ld. Counsel for the appellant do not have force and are devoid of merit. We find that there are serious allegations made in the show cause notice dated 19.07.2022 against the appellant for contravention of regulation 10(b), 10(d) and 10(n) of licensing regulation, 2018. We also find that on the alleged allegations an inquiry officer was appointed who after affording adequate opportunity to the appellant submitted the inquiry report on the basis of which show cause notice was issued and the allegations of violation were proved against the appellant. Ld. Commissioner in the impugned order has considered each and every submission made by the appellant and has given reasoned finding.
8. Here it will be apt to reproduce the relevant of the findings of the Ld. Commissioner which is as under:-
9. Further, we also find that Division Bench decision of the principal Bench in the case of Swastik Cargo Ageny Vs. commissioner of Customs (Supra) relied upon by the DR wherein identical allegations were there against the customs broker and the Division Bench after considering the various decisions of the hon’ble Supreme Court and the High Court has upheld the revocation of Customs broker license of the customs broker. The relevant para in the said judgment are reproduced hereinbelow:-
“28. Before adverting to the specific violations of CBLR, 2013, it is necessary to appreciate the role or the position of the CHA / CB. The Apex Court in the case of Commissioner of customs Vs K. M. Ganatra & Co. reported in 2016 (332) ELT 15 (SC), placed reliance on the decision in Noble Agency Vs. Commissioner of Customs, Mumbai – 2002 (142) ELT 84 (Tri. Mum.) wherein a Division Bench of the CEGAT, West Zonal Bench, Mumbai has observed:-
“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….” We approve the aforesaid observations of the CEGAT, West Zonal Bench, Mumbai and unhesitatingly hold that this misconduct has to be seriously viewed.”
29. Similarly, the view taken by the High Court of Madras, in Sri Kamakshi Agency Vs Commissioner of Customs, Madras -2001 (129) ELT 29 it has been held that:
“the grant of licence to act as a Custom House Agent has got a definite purpose and intent. On a reading of the Regulations relating to the grant of licence to act as Custom House Agent, it is seen that while Custom House Agent should be in a position to act as agent for the transaction of any business relating to the entry or departure of conveyance or the import or export of goods at any customs station, he should also ensure that he does not act as an agent for carrying on certain illegal activities of any of the persons, who avail his services as Custom House Agent. In such circumstances, the person playing the role of Custom House Agent has got greater responsibility. The very prescription that one should be conversant with various procedures, including the offences under the Customs Act to act as a Custom House Agent would show that, while acting as Custom House Agent, he should not be a cause for violation of those provisions. A CHA cannot be permitted to misuse his position as a CHA by taking advantage of the access to the department. The grant of licence to a person to act as Custom House Agent is to some extent to assist the department with the various procedures such as scrutinising the various documents to be presented in the course of transaction of business for entry and exit of conveyance or the import or export of the goods. In such circumstances, great confidence is reposed in a Custom House Agent. Any misuse of such position by the Custom House Agent will have far reaching consequences in the transaction of business by the Custom House officials.”
30. The recent decision of this Tribunal in the case of M/s Falcon India (Customs Broker) Vs. Commissioner of Customs, (Airport and General) New Delhi in Customs Appeal No. 50934 of 2021 dated 21.03.2022, it has been observed:
“33. The above decisions lay down that the Customs Broker (or Custom House Agent) is a very important person in the transactions in the Custom House and it is appointed as an accredited broker as per the Regulations and is expected to discharge all its responsibilities under them. Violations even without intent are sufficient to take action against the appellant. While it is true, as has been decided in a number of cases, that the Customs Broker is not expected to do the impossible and is not expected to physically verify the premises of the importer or doubt the documents issued by various Governmental authorities for KYC, it is equally true that the Customs Broker is expected to act with great sense of responsibility and take care of the interests of both the client and the Revenue. It is expected to advise the client to follow the laws and if the client is not complying, it is obligated under the Regulations to report to the Assistant Commissioner or Deputy Commissioner. Fulfilling such obligations is a necessary condition for the CB licence and it cannot be termed as „spying for the department‟ as argued by the appellant before us. It has also been argued that if it spies for the department, it will lose its business. It is evident from the facts of this case, that the appellant was not only aware of the benami Bills of Entry but has actually filed them with the full knowledge that they were benami and they were filed by Anil after a case of undervaluation has been booked by DRI against him. It is afraid of losing business because it has built its business model on violators who, it does not want to upset by reporting to the department. Therefore, we find no reason to show any leniency towards the appellant. At any rate, once violation is noticed, it is not for the Tribunal to interfere with the punishment meted out by the disciplinary authority, viz., the Commissioner unless it shocks our conscience. In this case, it does not.”
31. Keeping in view the aforesaid decision as well as the facts & findings of the present case, it stands proved that the CB has not discharged the obligations cast on him under the Regulation as the CB fully connived with the freight forwarder and therefore never verified the existence of the exporters or the documents submitted in this regard. The facts of the present case reflects that it is virtually a case of subletting the license as practically the entire transaction of export was controlled & managed by the Proprietor of the freight forwarder. Thus, any contravention of the obligations on the CB under the Regulations even without any intent would be sufficient to proceed for imposition of punishment as provided in the Regulations, K. M. Ganatra & Co. (supra)”.
10. Keeping in view the ratios of various decisions cited supra, we hold the appellant guilty of violation of regulation 10(b), 10(d) and 10(n) CBLR, 2018.
11. In view of our discussion above, we do not find any infirmity in the impugned order passed by the Commissioner Ludhiana and we uphold the same by dismissing the appeal of the appellant.
(Order pronounced in the court on 11.05.2023)
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