Case Law Details
United Custom House Agency Pvt. Ltd Vs Principal Commissioner of Customs (CESTAT Kolkata)
CESTAT Kolkata has held that Custom Broker License suspended under Regulation 16(1) of Customs Brokers Licensing Regulations, 2018 for around a month is directed to be lifted as necessary inquiry should have completed during the said suspension time.
Facts-
On the basis of investigation, revenue came to the conclusion that the appellant has failed to follow the provisions of Custom Brokers License Regulation 2018. It was alleged that the appellant failed to follow regulation 10(d) by failing to bring the non-compliance by the importer to the knowledge of DC or AC. It was alleged that the appellant had never met the importer directly and therefore, was never in a position to advice his client. Regulation 10 (d) obliges a Custom Broker to advice his clients to comply with the provisions of the Customs Act, 1962.
The impugned order held that Regulation 10(m) obliges the custom broker to perform his duties with efficiency and utmost speed. Further, Regulation 10(n) obliges the custom broker to verify correctness of importer/exporter (IEC) number, GSTIN Number, to identify of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. It was alleged that the appellant had not verified the registered address of Importer before taking up the jobs, as Custom Broker, for clearance of the said consignment.
Conclusion-
We find that there is significant force in the argument of appellant that they have done the necessary verification through documents. It is notice that the impugned order is with respect to suspension under Regulation 16(1) of CBLR, 2018. The impugned order holds that further inquiry needs to be conducted to arrived at the final decision in the instant case and therefore, on that ground upholds the order of suspension of Custom Broker.
We find that the Custom Broker license was suspended vide order No. 01/2022 dated 19.01.2022 and the said suspension was upheld vide the impugned order dated 16.02.2022. We find that significant amount of time is lapse and whatever inquiry was necessary would have been completed now. In this background and looking at the gravity of offence we do not find any justification and continuing the suspension any more. In view of above we direct that the suspension may be lifted with immediate effect.
FULL TEXT OF THE CESTAT KOLKATA ORDER
This appeal has been filed by M/s United Customs House Agency’s against suspension of their Custom Broker License.
2. Learned Counsel for the appellant pointed out that in a case of import when certain sealed containers were opened the goods within the container were found to be mis-declared. The bill of entry was filed by M/s United Customs House Agency’s through the appellant customs broker declaring the import as “Dammar Baatu” in three 20 feet containers. The goods were examined under a Panchnama and the said containers were found to contain “Betel Nuts(Supari)” hidden behind two rows of bags of “Dammar Baatu”.
3.1 In the notice it was alleged that the Directorate General of Foreign Trade (DGFT), vide Notification No. 20/2015-20 dated 25.07.2018, revised policy condition for Areca Nut of sub-heading 080280 from ‘free’ to ‘Prohibited. However, as per said notification, import is free if CIF value is Rs. 251/- and above per Kilogram. As per CBIC Tariff Notification No. 81/2021- Customs (N.T.) dated 14.10.2021, Tariff value for Areca Nuts i.e., goods falling under sub-heading 080280 is USD 5252 Per Metric Tonne.
3.2 In the notice it was alleged that the Approximate value of 39462.3 Kgs of Areca Nuts/ Betel Nuts as found concealed in said consignment is Rs. 1,56,89,279/- and total duty evasion arising due to said gross mis-declaration is approximately Rs. 1,72,58,207/-. It was alleged that Concealed goods i.e., Areca Nuts found during examination is an edible nut and thus, becomes edible goods, All the food items require certification from Authorized Officer of FSSAI to the effect that the imported foods items are safe for consumption. In terms of Paragraph 2.03 of the Foreign Trade Policy, all imported goods shall also be subject to domestic laws, acts, rules, orders, regulations, technical specifications, environmental and safety norms as applicable to domestically procured goods. The import policy makes it mandatory for all edible food products to comply with Food Safety and Standard Act, 2006. In absence of such compliance, the goods shall be considered prohibited in nature. In the present case, the importer has concealed the goods and tried to evade the compliance of FSSAI Act, the import of Areca Nut shall be considered prohibitions of the Customs Act, 1962 read with FSS Act,2006 & Food Safety and Standards (Food Import) Regulations, 2017. Thus, the importer, M/s Regent Overseas was changed with contravention of the provisions of the aforesaid Acts by affecting the Food safety and public health by trying to sell the non-confirming impugned good into the market.”
3.3 In the notice it was alleged that the Summons dated 27.10.2021, 29.10.2021, 01.11.2021, 05.11.2021, 23.11.2021, 26.11.2021 and 01.12.2021 were issued to Shri Tapas Kumar Biswas, Proprietor of M/s Regent Overseas however, the importer did not respond to the said Summons. Search conducted at the residence of importer on 02.11.2021 revealed that he is absconding since the time he got aware that the said consignment is prescribed for 100% examination. Moreover, the family members present during the said search, also could not tell the whereabouts of Shri Tapas Kumar Biswas. It was alleged that the financial status as judged from the said physical visit to the importer showed that he is very poor. He did not appear to be the actual importer. He appears to be a dummy firm of some other fraudulent importer. Thus, from the above it is alleged that the importer has been absconding and is intentionally not cooperating in the investigation.
4.1 In the notice it was alleged that the Statement of Shri Pankaj Kumar Mal, ‘G’ Card Holder and Authorized representative of CB, was recorded on 28.10.2021 under the provisions of Section 108 of Customs Act, 1962 wherein he, inter-alia, stated that:
a) The KYC documents were not verified by them. The same was verified by Shri Uttam Roy of M/s Sarathi Forwarding Pvt. Ltd.
b) He is not aware of the provisions of CBLR, 2018.
4.2 In the notice it was alleged that the Statement of Shri Shankar Prasad Verma, Director of CB, was recorded on 29.10.2021 and 15.11.2021 under the provisions of Section 108 of Customs Act, 1962, wherein he, inter-alia, stated that:
a) He received the Authorization letter of importer and other documents in relation to said consignment from Shri Uttam Roy. Shri Uttam Roy runs a Freight Forwarding Agency by the name of M/s SFPL.
b) He does not personally know the importer. He does not have any contract with M/s SFPL.
c) After Customs clearance of import/ export consignments, he issued bills in the name of importer/ exporter and handed over the same to M/s SFPL for payment to them. He did not pay anything to M/s SFPL for providing Customs clearance work to them.
d] He has never met Shri Tapas Kumar Biswas (Proprietor of M/s Regent Overseas) in person or any other authorized person of importer. Also, he has never communicated with the importer.
e) He did not verify that Shri Tapas Kumar Biswas is the Proprietor of M/s Regent Overseas.
f) He did not verify the registered address (as mentioned in KYC form) of the importer.
g) He only verified GST certificate and IEC on GST website and DGFT website respectively.
h) He did not receive any payment from the importer for payment of Customs duty.
i) He did not check whether Shri Tapas Kumar Biswas was the actual beneficiary of the said consignment. Also, he did not know about the financial background of the importer
J) It is usual practice by his CB firm to accept KYC documents of importers as provided by Shri Uttam Roy, for Customs clearance work.
k) He did not know that the said consignment was the first import consignment of the importer.
4.3 In the notice it was alleged that the Statement of Shri Uttam Roy, Director in M/s Sarathi Forwarding Pvt. Ltd. (M/s SFPL), was recorded on 29.10.2021 under the provisions of Section 108 of Customs Act, 1962, wherein he, inter-alia, stated that:
a) His company I.e., M/s SFPL arranges clients for Customs clearance purpose, transporting, pelleting, fumigation of goods. He acts like a middleman between importer/ exporter and CHA.
b) He got the work related to the said consignment from Shri Mukesh Shaw of M/s Omm Shipping Logistics (M/s OSL)
c) He received an email dated 11.10.2021 from M/s OSL (email id- info@ommshipping.co.in) for said clearance work. He provided the full set of documents such as KYC, GST, IEC, PAN, Aadhar, Invoice, Bill of Lading etc.
d) All the documents in relation to the said consignment, as provided to him by M/s Omm Shipping Logistics, were forwarded by him to the CB vide email.
e) He was supposed to get Rs. 3000/- from M/s Omm Shipping Logistics for clearance of said consignment. The importer was supposed to pay Rs. 500 to the CB. He was not supposed to receive any payment from the importer.
f) He has provided above 30 (thirty) such clients to CB.
g) He is not an employee of the CB and further he does not have any Authorization letter from the importer to act on their behalf.”
5. On the basis of above investigation revenue came to the conclusion that the appellant has failed to follow the provisions of Custom Brokers License Regulation 2018. It was alleged that the appellant failed to follow regulation 10(d) by failing to bring the non-compliance by the importer to the knowledge of DC or AC. It was alleged that the appellant had never met the importer directly and therefore, was never in a position to advice his client. Regulation 10 (d) obliges a Custom Broker to advice his clients to comply with the provisions of the Custom Act, 1962.
5.1 The impugned order held that Regulation 10(m) obliges a Custom Broker to perform his duties with efficiency and utmost speed. Revenue alleged that the appellant had never met the importer. It was alleged that the appellant obtained the KYC documents for importers through a middle man namely Shri Uttam Roy. It was also alleged that the appellant did not verify the registered address mentioned in the KYC documents of the importer. It was also alleged that the appellant failed to check if Shri Tapas Kumar Biswas the importer was he actually beneficially of the said consignment. The financial background of the importer was not verified.
5.2 Regulation 10(n) obliges the custom broker to verify correctness of importer/exporter (IEC) number, GSTIN Number, to identify of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. It was alleged that the appellant had not verified the registered address of Importer before taking up the jobs, as Custom Broker, for clearance of the said consignment.
6. Learned Counsel for the appellant pointed out that the allegation that they had not verified address is incorrect. He pointed out that Shri Shankar Prasad Verma, the Director of the appellant company, had categorically stated that the KYC documents were verified by them. It was argued that both IEC and GST registration certificate and other statutory documents contain the full address of the importer and business address of the importer is same in all documents. Learned Counsel pointed out that the documents collected by them from the importer were in accordance with circular dated 8th April, 2010 issued by CBEC. Learned Counsel also pointed out that the KYC form was duly verified by the bank and the said KYC form contains the address of the importer. It is seen that the GSTIN registration certificate of Shri Tapas Kumar Biswas, produced by the appellant during hearing contains the following Address:
- Duttapukur AMANTRAYAN MORE, DUTTAPUKUR, DUTTAPUKUR, North 24 Parganas, West Bengal,743248
The IEC of Shri Tapas Kumar Biswas contains the following Address:
- MANDAL PARA, JOYPAL, KOLKATA,24 PARAGANAS NORTH, WEST BENGAL, 743234
The Adhar Card of the appellant contains the following Address:
- MANDAL PARA, JOYPUL, JOYPUL North 24 Parganas West Bengal-743234
The Bank account of the appellant contains the following Address: ·
- AC-16, Sector-1, Saltlake, Kolkata -70064
6.1 Learned Counsel argued that the impugned order in para 15(iii)(a) holds that the appellant had never met the importer and came into contact with importer only through a middle man. It also holds that the appellant did not verify if the importer was the proprietor of M/s Regent Overseas and the appellant did not verify the registered address (as mentioned in the KYC form) of the importer. It is seen that the impugned order merely relies on the statement of the G- card holder Shri Pankaj Kumar Mal, Director of the appellant company Shri Shankar Prasad Verma, Director of M/s Sarathi Forwarding P. Ltd. Shri Uttam Roy who come to the conclusion that no documents were verified by the appellant. It is seen that Shri Uttam Roy in his statement dated 29.10.2021 has clearly stated that he had sent the full set of documents such as KYC, GST, IEC, PAN, Adhar, Invoice, Bill of Lading etc., to the appellant on E-mail. The appellant in his statement has stated that, he verified the GST certificate and IEC on the website of GST and DGFT website respectively. He clearly stated that he did not verify the registered address as mentioned for KYC form of the importer. In this regard it is seen that Hon’ble High Court of Delhi in the case of Shiva Khurana had observed as follows:
“7.This Court is of the opinion that the impugned order is justified in the facts and circumstances of the case. The reference to the verification of “antecedents and correctness of Importer Exporter Code (IEC) Number” and the identity of the concerned exporter/importer, in the opinion of this Court is to be read in the context of the CHA’s duty as a mere agent rather than as a Revenue official who is empowered to investigate and enquire into the veracity of the statement made orally or in a document. If one interprets Regulation 13 (o) reasonably in the light of what the CHA is expected to do, in the normal course, the cast is merely to satisfy itself as to whether the importer or exporter in fact is reflected in the list of the authorized exporters or importers and possesses the Importer Exporter Code (IEC) Number. As to whether in reality, such exporters in the given case exist or have shifted or are irregular in their dealings in any manner(in relation to the particular transaction of export), can hardly be the subject matter of “due diligence” expected of such agent unless there are any factors which ought to have alerted it to make further inquiry. There is nothing in the Regulations nor in the Customs Act which can cast such a higher responsibility as are sought to be urged by the Revenue. In other words, in the absence of any indication that the CHA concerned was complicity in the facts of a particular case, it cannot ordinarily be held liable.”
6.2 Learned Counsel argued that in light of above it is seen that it cannot be the responsibility of the Custom Broker to actually go and physically verify the address of the importer.It also cannot be the responsibility of custom broker to indulge in investigation as to if the person approaching him is actual importer or otherwise and if this said person is financially capable of importing sustains. The appellant has conducted necessary verification on the website of GST and of DGFT with respect to IEC and GST Registration. It was also submitted on behalf of the appellant that GSTIN and IEC of the said importer are still valid and can be verified on the respective websites. It is also been argued that the documents supplied by the importer through a middle manare in accordance with the requirement of circular dated 8th April, 2010. In this background we can hardly find a fault with the appellant in failing to verify the address of the importer.
7. Learned Authorized Representative for the Revenue argued that the appellant never communicated with the importer and therefore, it was impossible for him to advice the importer as mandatory under regulation 10(d) of the Customs Broker Regulations. He relied on the impugned order.
8. We have gone through the rival submissions, we find that the impugned order upholds the order of suspension of the license. The order upholding the suspension is dated 16.02.2022. The charges against the appellant are failure to follow Regulation 10(d) of CBLR, 2018 in as much as the appellant was never in direct contact with the importer. Therefore, he could not have been in position to advice his client as requires under Regulation 10(d) of CBLR, 2018. The defence of the appellant i.e. the sealed container was received and the appellant had no occasion to come to know about the mis-declaration and therefore, could not have possibly informed the authorities. The next charge on the appellant is failure to follow Regulation 10(m) of CBLR, 2018. The said regulation requires the Customs Broker to discharge his duties as the Custom Broker utmost speed and efficiency and without any delay. The impugned order holds that the appellant had never communicated with the importer and did not verify the registered address as mentioned in KYC form of the importer. The impugned order. The impugned order also notices that the appellant had not verified the financial background of the importer. It could not be the responsibility of Custom Broker to actually physically verify the address of the importers or the financial background of the importer. The appellants have argued that the responsibility cast on them is to do whatever verification is possible on the basis of the documents like IEC Code, GST number, pan number etc., The impugned order holds that the Custom Broker failed to follow due diligence before accepting the custom clearance work of the importers. The next charge on the appellant is that he failed to follow the Regulation 10(n) of CBLR, 2018 which requires the Custom Broker to verify correctness of Importer Exporter Code IEC number, GSTIN, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. The impugned order holds that the appellant failed to verify the registered address as mentioned in KYC form before taking up the job as Custom Broker for clearance of the said import consignment. The appellant has claimed that the KYC documents were verified by them on the strength of the documents supplied by importer namely IEC Code, Adhar Card, Trade Licence, Bank Details, IFSC Code with importer name, Father’s name and full address with photo fixed on KYC form. The impugned order does not accept this defence and still upholds the suspension order relying on the decision of Hon’ble Apex Court in the case of K. M. Gantra& Co. in Civil Appeal No. 2940 of 2008. Wherein following has been 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/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.”
9. We find that there is significant force in the argument of appellant that they have done the necessary verification through documents.It is notice that the impugned order is with respect to suspension under Regulation 16(1) of CBLR, 2018. The impugned order holds that further inquiry needs to be conducted to arrived at the final decision in the instant case and therefore, on that ground upholds the order of suspension of Custom Broker.
10. We find that the Custom Broker license was suspended vide order No. 01/2022 dated 19.01.2022 and the said suspension was upheld vide the impugned order dated 16.02.2022. We find that significant amount of time is lapse and whatever inquiry was necessary would have been completed now. In this background and looking at the gravity of offence we do not find any justification and continuing the suspension any more. In view of above we direct that the suspension may be lifted with immediate effect. Our findings and observations are purely interim and should not affect the final decision taken after the inquiry, If any, pursued by the Revenue.
(Pronounced in the open court on 05 July 2022).
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