M/s. GSP Shipping And Logistics Agency @Hash Commissioner Of Customs (Airport And Administration), Kolkata

The appellants, M/s. GSP Shipping & Logistics Agency, appellants worked as Customs Broker to M/s M.A. Traders and M/s ZS Tradecom Pvt.

Ltd, in whose imports misdeclaration of quantity/quality or smuggling of foreign origin cigarettes was noticed; Ld. Commissioner of Customs (A&A),

Kolkata issued an order, No. 12/2017 dated 10.10.17, to the appellants, suspending their CB License with immediate effect under Regulation, 19(1) of

CBLR, 2013; Assistant Commissioner of Customs, CB Section, Kolkata issued a CB Circular No. 113/2017 dated 11.10.17 intimating such suspension

to all concerned; a hearing as per Regulation 19(2) of CBLR, 2013 was granted to the appellants on 17.10.17; appellants requested to postpone the

same stating that authorized legal representative would be out of station. Learned Commissioner of Customs (Airport & Administration), Kolkata,

issued Order No. KOL/CUS /AIRPORT/ADMN /23 /2017dated 25.10.17, continuing the suspension and initiating proceeding under Regulation 20 of

CBLR,2013; appellants prayed for fixing hearing on 10.11.17 but commissioner ordered that it could be within 15 days i.e. on or before 25.10.17, in

terms of Regulation 19(2) of CBLR, 2013; the Order dated 25.10.17 was passed ex parte.

Being aggrieved by the said Order-in-Original, the appellant preferred an Appeal before this Bench, who, vide Final order No 75073/2019 dated

07.01.2019, set aside the OIO and remanded the matter back to the Commissioner with a direction to allow cross examination of Shri Abid Ali and

Shri Maswood Ahmed. In de novo proceedings a Show Cause Notice, dated 22.12.2017, was issued seeking continuation of the suspension,

revocation of licence and forfeiture of security deposit; Inquiry officer submitted a report dated 21.8.2019, upholding the charge of violation under

Regulation 11(n) of CBLR, 2013 and discharging of violation of Regulations 11(a), 11(d) and 17(9) ibid. After according a personal hearing Learned

Commissioner of Customs(Airport & Administration), Customs House, Kolkata, passed the impugned order, dated 19.06.18, revoking CB Licence and

forfeiting security deposit. Hence, this appeal.

Learned counsel for the appellants submits that Â

the impugned Order-in-Original is bad in law and not maintainable being passed in gross-violation of the principles of natural justice; Ld.

Commissioner, though relied upon the statements of Md. Maswood Ahmed and Md. Abid Ali as well as statement of Md. Maswood Ahmed before

the Inquiry Officer, did not provide the opportunity of cross-examination; he assumed the truth of the statement of Md. Maswood Ahmed; Â

· Inquiry Report dated 13.3.11, indicates that Md. Maswood Ahmed had allegedly stated before the Ld. Inquiry Officer that he had never gave

any authorization to Md. Abid Ali for any import; no verification was conducted to find out whether Md. Maswood Ahmed had at all issued any

letter of authorization in the name of the CB or whether he had signed or approved the Bill of Entry for the purpose of import; Â

· Ld. Commissioner arbitrarily gave a finding that the opportunity of cross-examination on 12.3.18 was not availed by the appellants; it can be

seen that the notice dated 7.3.18, that only personal hearing was fixed; Â

· Ld. Commissioner erroneously and arbitrarily continued placing reliance upon the alleged statement recorded from Md. Maswood Ahmed; the

copy of the statement of Md. Maswood Ahmed was not supplied to the appellants even along with the Inquiry Report or at the time of personal

hearing on 17.05.18 before the Ld. Commissioner or in reply to their representation dated 19.4.18 against the Inquiry Report; it is a serious

violation of the principles of natural justice; Â

· While Md. Abid Ali is participating in the proceeding under Section 124 of the Customs Act, 1962 and appeared for personal hearing on 5-7-

2018, department claims that notice sent to him came back with postal remarks that the ‘addressee left’; it is not clear as to which address

the notice was sent; Â

· Ld. Commissioner had neither dealt with the provisions of Regulation 20(4) of CBLR, 2013; Â

· the finding of the Ld. Commissioner that the appellants had failed to verify the antecedent of his client at the declared address, is absolutely

erroneous in as much as the importer is very much available and had joined the investigation before the DRI as well as before the Inquiry Officer;

as it is not the case that the importer is not available, allegation of violation of Regulation 11(n) of CBLR, 2013 is not sustained; Â

· allegation of violation of Regulation 11(a) of CBLR, 2013 is also not maintainable as the importer approved Bill of Entry and the same amounts

to grant of authorization in favour of the CB, as held by the Hon’ble Tribunal in a number of cases; Â

· in the absence of any specific charge of failure of supervision of the employee by the CB, there cannot be any violation of Regulation 17(9) of

CBLR, 2013 Â

· Commissioner’s reliance on Hon’ble Supreme Court’s decision in the case of K.M. Gantra & Co is not correct, as there is nothing

on record to show that the appellants had any intention in the alleged violation; out of the four consignments of M/s. M.A. Traders, one container

was given out of charge by the Customs which necessarily meant that the alleged misdeclaration was not noticed even by Customs; the allegation

of mis-declaration cannot be cast upon the appellants; as regards the container of M/s. ZS Tradecom Pvt. Ltd. (where the G-card holder of the

appellants was only contacted by Md. Abid Ali, but no job was undertaken by the CB), it is submitted that nobody has stated during the course of

investigation that the appellants had any prior knowledge of presence of cigarette in the said container; therefore, its incorrect visit the appellants

with the maximum penalty under the regulation; Â

· Show Cause Notice under Regulation 20(1) was issued on 22.12.17 and the Inquiry Report was submitted on 13.3.18 (wrongly dated 13.3.11)

by the Ld. Inquiry Officer before the Ld. Commissioner; as such, the final Order under Regulation 20(7) was required to be passed within 90

days, before 11.6.18; impugned Order was passed only on 19.6.18 which is beyond the time limit under Regulation 20 of CBLR, 2013. Â

· Regulation 11(n) of CBLR, 2013 does not require the CB to physical visit and verify the functioning of the importer at the declared address;

verification can be through different modes; there was neither any alert against the IEC nor it is the case that the importer was unavailable at the

declared address. The order of revocation of CB license and forfeiture of entire amount of security deposit for failure of physical verification of

functioning of the declared importer is highly disproportionate, Â

· Shri Maswood Ahmed submitted that he had handed over his IEC to one Shri Quadir Siddiqi and was penalized for his commission and omission;

he has not filed any appeal at least till 13.6.2019; therefore, the CB cannot be faulted. Â

· Learned counsel for the appellant relied upon the following case laws: Â

à Universal Clearing & Forwarding Agency vs. CC (Airport & Admn.) Kolkata: 2019 (369) ELT 915 (Tri.-Kol.) Â

à Merico Logistics Pvt. Ltd. vs. CC (Airport & Admn.) Kolkata: 2020 (372) ELT 580 (Tri.-Kol.) Â

à N.T. Rama Rao & Co. vs. CC, Chennai: 2020 (371) ELT 789 (Tri.-Chennai) Â

à Poonia & Brothers vs. CC (Preventive), Jaipur: 2019 (370) ELT 1074 (Tri.-Del.)

à Geeta Clearing & Forwarding Agencies P. Ltd.: 2019 (370) ELT 1030 (Tri.-Mum.)

Learned authorised representative for the department reiterates the findings of the OIO and submits that the CB has dealt with Shri Abid Ali even

when they were aware that the IEC was not in his name.

We have heard both sides and perused the records of the case. The impugned order finds that the CB has violated the provisions of Regulation

11(n) of CBLR, 2013 inasmuch as he has failed to verify the antecedent and functioning of the client by using reliable and independent sources; it is

not correct on the part of the CB to say that since Shri Abid Ali was present during the investigation and as no alert was in place against any traders,

they had no reason to verify the antecedents and that Shri Maswood Ahmed himself stated that the real importer was one Shri Bedi of New Delhi and

that he has not authorised anyone to import on his behalf. On the other hand, we find that the CB submits that the department themselves could not

find out any fault while clearing the consignments imported by M/s. MA Traders and as such, no previous knowledge of CB can be alleged and in

respect of imports by M/s.ZS Tradecom Pvt. Ltd., no involvement of the CB in secreting cigarettes in the consignment was alleged. The appellants

also submit that the order has been issued beyond the stipulated period; learned Commissioner did not give any opportunity for cross-examination as

directed by the CESTAT and that the learned Commissioner only relied upon their enquiry report but did not give any findings of his own.

We find that CESTAT vide Final Order No.75073/2019 dated 7.1.2019 set aside the order dated 19.6.2018 and remanded the matter back for de

novo orders with a direction to provide opportunity for cross-examination of Mr. Abid Ali and Mr. Maswood Ahmed. We find that this Bench vide

above order has directed as follows:

“9. After carefully considering the facts of the case, we are of the view that there are discrepancies between the statements given by Mr.

Abid Ali as well as Mr. Maswood Ahmed. The appellant has sought cross-examination of both the witnesses. Though one of the witnesses is

said to have appeared on 12.03.2018, no personal hearing took place on that date. Since cross-examination of the two witnesses is claimed

to be significant to the defense for the appellant, we are of the view that the matter needs to be remanded to the adjudicating authority to

pass de novo orders after extending an opportunity for cross-examination of Mr. Abid Ali as well as Mr. Maswood Ahmed.

In view of the above, the impugned order is set aside and the matter is remanded for passing de novo orders after granting cross-

examination as above. Since the Customs Broker License of the appellant stands revoked as on date, we direct the Commissioner to

complete the de novo proceedings to pass orders expeditiously, in any case within a period of one month from the date of receipt of this

order.â€​

After going through the impugned order, we find that the learned Commissioner has not allowed cross-examination at his level but depended on the

enquiry report wherein the cross-examination of Mr. Maswood Ahmed but it was held that cross-examination of Shri Abid Ali could not be

undertaken. We find that this is not the spirit of the order of this Bench. Instead of delegating the directions given by this Bench to the Enquiry

Officer, the Commissioner should have himself allowed the cross-examination as directed by this Bench during the personal hearing. Moreover, we

find that Commissioner has given cryptic findings on the alleged violation of Regulation 11 (n) of CBLR, 2013 by the Custom Broker. As submitted by

the appellants, he has not given any reasoning or findings of his own. To this extent, learned Commissioner has again violated the principles of natural

justice.

Coming to the alleged violation of Regulation 11(n) of the Customs Broker Regulations, 2013, we find that the said Regulation stipulates that: -

“A Customs Broker shall 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.â€​ We find that though the Customs

Broker has been maintaining that as the importer Shri Abid Ali was always present during the course of investigation and presented himself before the

authorities a need for independent verification had not arisen. We find that such an argument is not acceptable. In the instant case, the IEC holder was

one Shri Maswood Ahmed and Shri Abid Ali were attending to the imports and signing the documents. Any Customs Broker would immediately

differentiate between the original IEC holder and those others who are using the IEC of other persons. It has been held by various Benches that

lending of IEC in itself is not an offence, under Customs Act, in the following cases:

(i). Hamid Fahim Ansari Vs. CC(Imports), Nhava Sheva [2009(241) ELT 168 (Bom.)]

(ii). Gopal Agarwal Vs. CC, New Delhi [2015(326) ELT 593 (Tri. Del.)]

(iii). Proprietor, Carmel Exports & Imports Vs. CC, Cochin [2012(276) ELT 505 (Ker.)]

Looking into the circumstances of the case where it is not the case of the department that the importer is either absconding nor traceable, the

omission on the part of the Customs Broker becomes a bit less serious. Shri Abid Ali has presented himself as the importer and signed all the

documents. He has also submitted himself before the authorities for questioning, recording of statement and investigation. Under the circumstances,

we hold that though there was lapse on the part of the Customs Broker, the same has not caused the commission of offence by the importer.

Therefore, we find that the Customs Broker erred inasmuch as nonverifying the antecedents of the importer. However, we find that the punishment

meted out to the Custom Broker should be commensurate with such omission. It is a settled law that penalty should be proportionate to the offence

committed. It would be too harsh to revoke the license of the Customs Broker and to leave the right to livelihood of the Customs Broker as well as his

employees to the wind. We find that the fact that the Customs Broker’s license was suspended/revoked for a considerable period also needs to be

taken on to account.

We find that tribunal in the case of Him Logistics Pvt. Ltd Vs CC, New Delhi 2016 (338) E.L.T. 725 (Tri. â€" Del), held that

We find that the impugned order did not make out a sustainable case for revocation of license. In the case of Setwin Shipping Agency v.

CC (General), Mumbai - 2010 (250) E.L.T. 141 (Tri.-Mumbai), the Tribunal held that there is no requirement for the CHA to verify

physically the premises of importer/exporter. The Tribunal also observed that it is a settled law that the punishment has to be commensurate

and proportionate to the offence committed. In the present case, we notice that the punishment of revocation is not justifiable even if it is to

be admitted that physical verification of the importer’s premises could have avoided the filing of the bill of entry by the appellant. Even

in such a situation, the violation in respect of the cargo viz. the non-declaration of the RSP on the auto parts, a debatable point of

interpretation, cannot be held against the appellant to result in the revocation of their license. Here, it is to be noted that the bill of entry was

filed after the detention of the goods for inquiry by the DRI Officers and request for physical verification of the cargo before assessment has

been made in the form of first check bill of entry. We find that the impugned order passed on dis-agreement with the inquiry report has not

brought out clear sustainable ground for such extreme action of revocation of license. Violation of CBLR, 2013 has not been brought out as

all the points have been elaborately discussed in the inquiry report and no sustainable ground for differing with the same could be made out.

Similarly, in the case of R.S.R. Forwarders Vs CC, New Delhi 2018(364) ELT 541(Tri-Delhi) held that

The role of the CHA in the Customs procedures is significant. The CHA is expected to safeguard the interest of exporter of the goods as

well as the Customs. The adjudicating authority, in his detailed findings, have concluded that the appellant is guilty of violation of various

regulations of CBLR, 2013. But, in the facts and circumstances of the case, we are of the view that even though the appellant is guilty, the

violations are not so grave as to justify the revocation of the customs license. We are of the view that ends of justice will be met with the

forfeiture of security deposit of Rs. 75,000/- and in addition imposition of penalty of Rs. 50,000/-.

We also find that Tribunal in the case of Sadanand Chaudhary Vs CC, New Delhi 2018 (363) E.L.T. 1018 (Tri. â€" Del) held that

It is seen from the record that the appellant had filed Bill of Entry dated 20-1-2017 declaring the goods as “Vinyl coated paper clip

(Made of Iron)†but the same was found to be Measuring Tape of ‘Zebra’ brand. The adjudicating authority has held that the

appellant is guilty of violations of Regulations 11(a), (b) and (d) of the CBLR. From the record, we find that the appellant had filed import

documents with the Customs Department without carrying out the verification of KYC, but on the basis of the documents obtained from Smt.

Rambha Gupta who was not the importer of the said consignment. It is further seen that he has allowed the imported consignment to be

cleared not by authorised agent but Smt. Rambha Gupta herself. He has also failed to advice his client about proper knowledge of Customs

Act including the BIS certification import of the items i.e. Measuring Tape of ‘Zebra’ brand. Customs department has found serious

misdeclaration on the part of the importer and the appellant has also facilitated such misdeclaration and attempted to clear the goods which

has violated the provisions of the Customs Act, Foreign Trade Regulation Act and also the provision of Legal Metrology Act, 2009.

In the facts and circumstances of the case, we are of the view that for violation of CBLR, 2013 which stands established during the

enquiry proceedings, the revocation of the Customs Broker License is too harsh a punishment and hence, revocation is set aside. We uphold

the forfeiture of the security deposit as well as penalty of Rs. 50,000/- imposed by the adjudicating authority on Sh. Sadanand Chaudhary.

We further find that Tribunal in the case of Customs Appeal No. 21036 of 2019 Sri Manjunatha Cargo Pvt Ltd Vs CC, Bangalore, held that

6.2. Further we find that in the impugned order, the Commissioner has held that the appellant has not directly interacted with the IEC

holders and is guilty of violation of Regulation 17(d) of CBLR 2013. This finding is factually incorrect because in the statements of Mr.

Mohammad Yusuf Siddique, G Card holder and Power of Attorney of the appellant at Mumbai, he has stated in his statement dt. 25/05/2017

that he had interacted with the IEC holders. Further we find that as per the Commissioner, the appellant has not brought to the knowledge

of the Department that IEC holders have lent their IECs to other persons. We find that there is no evidence on record brought by the

Department to show that the appellant had knowledge regarding the lending of IEC. Further we find that the lending of IEC is not an

offence under the Customs Act, 1962 as held in various decisions cited supra. As far as allegation against the appellant that he had not

verified the antecedents of IEC holders, we find that as per Regulation, the Customs Broker is to verify the correctness of IEC number,

identity of client and functioning of them at the declared address using reliable, independent, authentic documents data or information.

Further physical inspection of the premises of the importer or exporter is not required under the law as well as under the Board’s

Circular No.9/2010-Cus dt. 08/04/2010. In the present case, the appellant had obtained copies of PAN card, Aadhaar Card, GST

registration certificate, IEC certificate from all the three exporters concerned. Further we find that in the case of G.N.D. Cargo Movers

cited supra, the Division Bench of the Tribunal had held in para 5 & 6 as under: -

We further note that Regulation 11 (e) requires the Customs House Agent to exercise due diligence to ascertain the correctness of any

information which he imparts to clients with reference to work relating to clearance of cargo / baggage. Merely because the importer have

accepted their mistake of misdeclaration of brand and quantity and have shown their willingness to pay differential duty, fine and penalty,

it cannot be concluded that Customs Broker did not exercise due diligence to ascertain correctness of the information. If the said fact only

is relevant for holding against the Customer Broker, then in each and every case of mis-declaration by the importer, it can be concluded

that Customs Broker did not suitably informed his clients. There has to be some evidence on record to show that either the Customs Broker

was aware of such mis-declaration and suppressed the same with a mala fide mind or he has taken efforts to get the goods cleared from the

Customs on the basis of wrong declaration made by him or has connived with the importer so as to aid and abet the wrong declaration.

Similarly, for the violation of Regulation 11(n), the adjudicating authority has observed that the Customs broker did not verify the

antecedents, correctness of the IEC number, identity of his client and the declared address etc. We again find no merit in the charge of the

Revenue inasmuch as that IEC number has been found to be correct as also the address of the importer. Further, all the importers have

joined in the investigations and have given their statements. In such a scenario, it cannot be said that the Customs Broker has not adhered

to KYC norms.

In view of the facts and circumstances of the case and the case cited above, we partially allow the appeal. The impugned order is modified by

setting aside the revocation of Custom Broker License and upholding the forfeiture of security deposit.

(Pronounced in the open Court on 19 Nov. 2020)