Sameer Logistics Private Limited Vs Commissioner of Customs (CESTAT Chennai)
CESTAT Chennai held that violation of the Customs Brokers Licensing Regulations (CBLR), 2013 though stands established, the revocation of Customs Broker Licence is set aside as business and the livelihood of not only the appellant, but also its employees is adversely affected because of the suspension and revocation of the licence.
Facts- The appellant had filed a Bill-of-Entry on behalf of M/s. Jeppiar Furnace and Steels Pvt. Ltd., Chennai, namesake importer, for clearance of goods described as “Low Melting Steel (LMS) Bundle Scrap” which arrived in five 20 feet containers. The import documents namely, invoice, Bill of Lading, etc., were in the name of M/s. Lakshmi Impex, Madurai and the goods were reportedly sold to M/s. Jeppiar Furnace and Steels Pvt. Ltd. Royapettah, Chennai on High Sea Sale (HSS) agreement basis.
Apart from the declared goods, smuggled cigarettes valued at Rs.4.13 crore were found and seized. Consequently, an investigation conducted has revealed that Mr I. Durai Murugan, owner of M/s. India Exim Services had filed the above-impugned Bill-of-Entry on receipt of the import documents from Mr S. Murugan of M/s. Sri Lakshmi Impex, Madurai.
A Show Cause Notice was issued to the appellant-CHA under Regulation 20 of the CBLR, 2013 proposing to revoke the Customs Broker Licence issued to the appellant, forfeiture of their security deposit and imposition of penalty, under Regulation 18 read with Regulation 20 of the CBLR, 2013 for their failure to comply with the provisions of the CBLR, 2013.
The Commissioner of Customs, after observing that the appellant was in the knowhow to be indulging in wrong practice, ordered revocation of the Customs Broker Licence, imposed a penalty of Rs.50,000/- under Regulation 18 and further ordered forfeiture of the part security deposit of Rs.1,00,000/- under Regulation 18, also ordering the surrender of the ‘G’ Cards and ‘F’ cards issued to the appellant’s employees forthwith. Being aggrieved, the present appeal is filed.
Conclusion- The appellant has allowed Mr. I. Durai Murugan of M/s. India Exim Services to file documents in the name of M/s. Jeppiar Furnace and Steels Pvt. Ltd. without obtaining any authorization from the importer and without verifying the genuineness of the High Sea Sales Agreement, fabricated by Mr. S. Murugan of M/s. Sri Lakshmi Impex, and also issuing KK Form to the transporter for clearance of the imported goods to unauthorized persons and not to the importer. So, the contravention of Regulations 11(a), 11(b), 11(n), 11(e) are proved.
The Customs Broker Licence was suspended with effect from 31.01.2017 which was finally revoked on 05.10.2017. We take note of the fact that the appellant is unable to do any business and the livelihood of not only the appellant, but also its employees is adversely affected because of the suspension and revocation of the licence.
Held that the violation of the CBLR, 2013 though stands established as detailed above, the revocation of Customs Broker Licence is too harsh a punishment and hence, the revocation is set aside considering the fact that the appellant’s Customs Broker Licence was suspended and so, was out of business for more than six and a half years.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts of the appeal are that M/s. Sameer Logistics Private Limited, Linghi Chetty Street, Chennai, who is a holder of regular Customs Broker Licence No. 306/2014 issued by the Chennai Customs Commissionerate, have challenged the Order-in-Original No. 58992/2017 dated 05.10.2017 which has ordered revocation of their Customs Broker Licence apart from forfeiture of security deposit of Rs.1,00,000/- and also imposition of penalty of Rs.50,000/-, under the provisions of Regulation 20 (7) of the Customs Brokers Licensing Regulations (CBLR), 2013.
2. The appellant had filed a Bill-of-Entry No. 4393017 dated 26.02.2016 on behalf of M/s. Jeppiar Furnace and Steels Pvt. Ltd., Chennai (IEC: 0403028752), namesake importer, for clearance of goods described as “Low Melting Steel (LMS) Bundle Scrap” which arrived in five 20 feet containers. The import documents namely, invoice, Bill-of Lading, etc., were in the name of M/s. Lakshmi Impex, Madurai and the goods were reportedly sold to M/s. Jeppiar Furnace and Steels Pvt. Ltd. Royapettah, Chennai on High Sea Sale (HSS) agreement basis.
3.1 On specific intelligence, the DRI, Chennai Zonal Unit (DRI-CZU), examined this consignment. Apart from the declared goods, smuggled cigarettes valued at Rs.4.13 crore were found and seized. Consequently, investigation conducted has revealed that Mr. I. Durai Murugan, owner of M/s. India Exim Services, had filed the above impugned Bill-of-Entry on receipt of the import documents from Mr. S. Murugan of M/s. Sri Lakshmi Impex, Madurai. From the voluntary statement of Mr. I. Durai Murugan, that the Bill for impugned clearance was raised in the name of M/s. India Exim only and not in the name of the appellant.
3.2 Mrs. R. Premavathy, who was qualified under Rule 9 of the Customs House Agents Licensing Regulations, 1984, is the authorized signatory of the Customs Broker at Chennai. In her voluntary statement recorded before the Senior Intelligence Officer, it has been inter alia admitted that she could not get enough business in Chennai and so, she had joined hands with Mr. I. Durai Murugan of M/s. India Exim Services. Her job was only to disclose the password for filing the Bill-of-Entry online for a monthly remuneration of Rs.20,000/- and it was also agreed that M/s. India Exim Services and M/s. Sameer Logistics Pvt. Ltd. would use the same office address, which also got approved by the Customs Broker Section of the Custom House.
3.3 On further summons, Mr. I. Durai Murugan has specifically replied that he did the marketing for his company viz. M/s. India Exim Services and that all the clients for whom clearance was made were his clients only and had no connection with Smt. R. Premavathy. Mr. S. Murugan had entered into a High Sea Sale Agreement with M/s. Jeppiar Furnace and Steels Pvt. Ltd. and had provided him two import documents for filing the Bill-of-Entry, namely: a High Sea Sale Agreement between M/s. Sri Lakshmi Impex and M/s. Jeppiar Furnace and Steels Pvt. Ltd. and another High Sea Sale Agreement between M/s. Sri Mahalakshmi Impex and M/s. Jeppiar Furnace and Steels Pvt. Ltd. He also appears to have inter alia admitted that the aforesaid import documents were cleared and the consignments were handed over to Mr. K. Murali, a local transporter, as per the direction of Mr. S. Murugan.
3.4 Shri K. Murali, vide his statement, has inter alia stated that his job was confined to removing the customs cleared consignments to the importer’s destination as mentioned in the KK Form issued by the Customs House Agent. Mr. S. Murugan of Madurai had approached him for transportation of his consignment imported in the name of M/s. Sri Lakshmi Impex and M/s. Sri Mahalakshmi Impex. It is also stated by him that when approached by Mr. S. Murugan, the CHA’s were Allwin Cargo (represented by Mr. Suresh) and Sameer Logistics (represented by Mr. I. Durai Murugan and his staff Mr. Ashok). The cleared consignments were initially diverted to Gummidipundi, as directed by Mr. S. Murugan and later, from November 2015, the cleared containers were taken to the premises of one M/s. Ananya Industries, No. 131/1a, Manali High road, Chennai-57 for segregation, where after the containers would be taken to the actual destination specified in the KK Form. In view of the above, it appeared to the Revenue that post customs clearance, the goods were handed over to the transporter arranged by Mr. S. Murugan with the knowledge of the CHA.
3.5 M/s. Jeppiar Furnace and Steels Pvt. Ltd. vide their letters dated 11.03.2016 and 14.03.2016, have categorically denied their involvement in the smuggling of cigarettes.
3.6 It is also seen from the records that Mr. S. Murugan, Proprietor of M/s. Sri Lakshmi Impex (IEC: 3515010068), his two sons namely, Mr. Sudalai Muthu Murugan, Director of M/s. Lakshmi Impex and Mr. M. Mayandi, were given numerous summons to appear before the investigation for enquiry and to give evidence, which were not complied with.
4. From the foregoing, it has been revealed that the appellant had colluded with unscrupulous persons and had failed to discharge their obligations as a customs Broker as envisaged under the CBLR, 2013 and had contravened the provisions of Regulations 11(a), 11(b), 11(m), 11(n), 11(e) and 11(k) of the CBLR, 2013, thereby resulting in the Order of Suspension of the Customs Broker dated 31.01.2017 and Order of Continuation of Suspension dated 23.03.2017 under Regulation 19(2) ibid.
5. A Show Cause Notice dated 07.04.2017 was accordingly issued to the appellant-CHA under Regulation 20 of the CBLR, 2013 proposing to revoke the Customs Broker Licence issued to the appellant, forfeiture of their security deposit and imposition of penalty, under Regulation 18 read with Regulation 20 of the CBLR, 2013 for their failure to comply with the provisions of the CBLR,
6. The Inquiry Officer vide his report dated 07.07.2017, affirmed the violation of Regulations 11(a), 11(b), 11(m), 11(n), 11(e) and 11(k) of the CBLR, 2013, which was forwarded to the appellant-Customs Broker vide letter dated 12.07.2017. A written reply was received from the Customs Broker on 16.08.2017.
7. The Commissioner of Customs, Chennai-VII Commissionerate, during adjudication, has, vide order impugned herein, after observing that the appellant was in the knowhow to be indulging in wrong practices, ordered revocation of the Customs Broker Licence, imposed a penalty of Rs.50,000/- under Regulation 18 and further ordered forfeiture of the part security deposit of 1,00,000/- under Regulation 18, also ordering surrender of the ‘G’ Cards and ‘F’ cards issued to the appellant’s employees forthwith.
8. Feeling aggrieved against the above order passed by the Ld. adjudicating authority, the appellant has preferred the present appeal before this forum.
9. Ld. Advocate Mr. G. Derrick Sam, representing the appellant, while reiterating the grounds of appeal, has submitted his contentions, which are summarized as given below: –
(a) The appellant had filed the Bill-of-Entry as per the import documents received from Mr. S. Murugan, a Madurai based scrap dealer, who was introduced by their marketing agent Mr. I. Durai Murugan. The description ‘Low Melting Steel Bundle Scrap’ was declared as per the supplier’s invoice.
(b) The IEC Certificate given to the appellant is genuine, which was not disputed by the DRI, and the genuineness of the same was duly verified by the appellant.
(c) The appellant had no role in the case made out against the importer for concealment of the
(d) The concealment of cigarettes in the containers is the basis for suspension of Customs Broker Licence. As a Customs Broker, the appellant had filed the Billof-Entry No. 4393017 dated 26.02.2017 in Chennai Customs as per the documents / commercial invoice with the said description. The appellant has filed the Bill-of-Entry in the name of M/s. Jeppiar Furnace and Steels Pvt. Ltd. only on the strength of the High Sea Sale Agreement, which is an acceptable procedure in Customs.
(e) The import documents viz. invoice, packing list, Billof-Lading, Pre Shipment Inspection Certificate, etc., describe the goods as “Low Melting Steel Bundle Scrap”. Mr. I. Durai Murugan, the marketing agent of the Customs Broker, has also revealed the same
(f) The Ld. adjudicating authority has failed to appreciate that the appellant had undertaken the clearance work in good faith that the import item was only steel scrap, which is a normal item of import through Chennai Port and further, the appellant had not noticed any discrepancies in the import documents.
(g) The appellant had not contravened Regulation 11(a) inasmuch as both Mr. S. Murugan and Mr. Mayandi are existing persons and not fictitious, which fact was confirmed by the DRI investigation. The appellant had thus filed the Bill-of-Entry based on the genuine IEC Certificate of Mr. S. Murugan.
(h) The import documents were received using the digital signature of Mrs. Premavathy, the authorized The goods were declared as per the import documents received viz., invoice, packing list, sale contract, Bill-of-Lading, Pre Shipment Inspection Certificate and High Sea Sale Agreement in the name of M/s. Jeppiar Furnace and Steels Pvt. Ltd. and there was no allegation against the appellant in this regard. Hence, the appellant has not allowed any unauthorized persons and consequently, there was no contravention of
Regulation 11(b).
(i) The appellant had not contravened Regulation 11(m) since there is no evidence on record to show that they had delayed the process of clearance and had not discharged their duties with care and speed; in the case of import, their role is limited to filing Bill-of-Entry, processing the Bill-of-Entry for assessment, arranging for examination, etc. There is no evidence to show that the appellant was having knowledge about concealment/misdeclaration.
(j) Except the DRI, no one was having intelligence about the smuggling of cigarettes. The appellant had acted in good faith since the IEC was genuine and had no knowledge about the concealment at the time of filing / processing of the Bill-of-Entry and thus, there was no contravention of Regulation 11(n).
(k) On similar lines, the appellant has also denied contravention of Regulations 11(e) and 11(k).
(l) The statements recorded from Mr. Mayandi of M/s. Sri Lakshmi Impex, Mr. Sudalai Muthu Murugan, K. Murali do not reveal any involvement of the appellant or their staff in the smuggling of foreign brand cigarettes in containers. The appellant had not aided / colluded with the importer at any point of time and further, there was no evidence to prove their involvement.
(m) The following decisions were relied upon in support: –
