M/S. Unique Line vs Principal Commissioner Of Customs

M. Ajit Kumar, Member (T)

The appeal is filed by the appellant against Order in Original No. 85349/2021 dated 22.7.2021 passed by the Principal Commissioner of Customs, Chennai – VIII.

The appellant herein is a Customs Broker and a is a proprietorship concern. The appellant filed three shipping bills for the exporter M/s. Sun Impex for export of 500 PP bags of goods declared as ’Organic Herbal Plinth Filing Termiticide’. Based on specific intelligence the goods were detained by SIIB and on examination it was found that the goods were overvalued. Samples were drawn and sent for testing. Based on the test report, it was noticed that the declared specifications were at great deviance with respect to the specifications mentioned in the tax invoice available with the shipping bills. Further the CHA had not verified the premises of the exporter or made him cooperate with the investigation. On completion of investigation, Show Cause Notice was issued to the exporter and the appellant herein. On adjudication, the adjudicating authority has under Regulation 17 of the Customs Brokers Licensing Regulations, 2018 imposed a penalty of Rs.50,000/- and ordered for forfeiture of Rs.25,000/- out of the security deposit amount of Rs.75,000/-. However, the adjudicating authority desisted from revocation of the Customs Broker license. Aggrieved against the said order, the appellants are now before the Tribunal.

No cross-objections were filed by the respondent-department.

Shri Derrick Sam, learned counsel appeared for the appellant and Shri N. Satyanarayanan, learned AR (AC) appeared for the respondent.

The learned counsel for the appellant Shri Derrick Sam stated that the goods covered under shipping bills Shipping Bills Nos. 3984398, 3982770 & 3983402 all dated 06.05.2019, were examined by the officers under mahazar dated 20.05.2019 and found to matching with the description. After testing the samples variation was found with respect to the specification of the goods mentioned in the invoice. The Hon’ble High Court of Delhi in the case of Kunal Travels (Cargo) Vs. CC (I&G), IGI Airport, New Delhi reported in 2017 (354) ELT 447, has held that the Customs Broker are only processing agent of documents for clearance of goods through Customs House and are not inspector to weigh genuineness of transaction. It has been held in the impugned order that the appellant has violated Regulation 10(a) of CBLR, 2018, as the appellant has not obtained a specific authorization letter. It is submitted that the appellant has obtained the authorization and the same was also recorded in the statement made before the Officers of SIIB. In the present case, there is not even an allegation that the appellant knew that the exporter has mis-declared the goods. Even the Customs Officers on examination of the goods found the same to be as per the declaration made in the shipping bills. The appellant had also requested for the chemical specification and advised the exporter to appear before the Officers of SIIB. However, the exporter along with the freight forwarder, who had referred the exporter to the appellant, had threatened the appellant through phone and in person at the appellant’s office. The appellant had also filed a police complaint on 12.11.2019 and also filed a writ petition before the Hon’ble High Court of Madras to register a criminal case which has also been recorded in the impugned order. If the exporter has failed to appear or submit the documents called for by the Customs Officer, the appellant cannot be held responsible. The Hon’ble Tribunal in the case of Thawerdas Wadhoomal Vs. Commr. Of Cus. (General), Mumbai reported in 2008(221) ELT 252 (Tri-Mumbai) has held that the CHA is not supposed to look into details of genuineness of the importer when IEC is produced by the importer. CHA files shipping documents on basis of materials given to him by his clients and if in case of such exercise of his functioning, he believes in good faith that these documents were genuine, he is not liable to penal action. The said judgment has been upheld by the Hon’ble High Court of Bombay as reported in 2009 (240) ELT A413 (Bom.) The appellant had verified the functioning of the appellant in his place of his business, even though there is no requirement of physical verification of the address of the exporter as per law. It is sufficient to obtain only KYC documents and the same has also been obtained in the said case. It is further submitted that the exporter M/s. Sun Impex, being a new client to the appellant, has obtained all the documents from the exporter and has registered the same with the Chennai Customs Department. The appellant has stated the said fact in his reply. The Hon’ble Tribunal in the case of APS Freight & Travel Pvt. Ltd., Vs. Commr. Of Cus. (General), New Delhi reported in 2016 (344) ELT 602 (Tri-Del), has held that there is no legal requirement for physical verification of the importer/exporter premises. It is further submitted that the impugned order imposing penalty has been passed without jurisdiction, as the Commissioner has imposed penalty under regulation 17, whereas the power to impose penalty is contemplated only under regulation 18 of CBLR, 2018. This Hon’ble Tribunal in the case of M/s. Svarad logistics (India) Pvt. Ltd., Vs. Principal Commissioner of Customs, (C/40811/2021), has held that penalty if any could have been imposed under regulation 18 and not under regulation 17. It is further submitted that the Inquiry Officer has not granted proper opportunity of personal hearing. It is submitted that as per CBEC Circular No. 1053/2/2017-CX dated 10.03.2017 read with Section 122A of the Customs Act, 1962, three opportunities of personal hearing have to be granted with sufficient interval of time and separate communication should be made to the noticee for each opportunity of personal hearing. Therefore, pre-fixing three dates in a single notice is violation of principles of natural justice. Therefore, it was prayed that the impugned order imposing penalty and forfeiting the security deposit be set aside.

The learned AR Shri N. Satyanarayanan reiterated the findings in the impugned order.

Heard both sides. I find that this is a case where the CHA has been engaged by an exporter who has allegedly been involved in a blame worthy act. It is Revenues case that the appellant has violated various provisions of the CBLR Regulations and hence as per the impugned order was visited with penalty.

7.1 In this case it is seen that;

a) At the stage of examination of goods by the officers under mahazar dated 20.05.2019 it was found to match the description.

b) It was only after testing the samples that variation was found with respect to the goods mentioned in the invoice.

c) Unlike stated in the SCN, the appellant had obtained the authorization from the exporter and the same was also recorded in the statement made before the Officers of SIIB.

d) The appellant had collected the KYC documents from the exporter and registered the same. Documents required as per the KYC are basically issued by government authorities and agencies and the presumption is that the details like name, address etc. shown there in are true.

e) The appellant has a branch office at Mumbai and the staff of the appellant’s branch office has visited the exporter’s premises and verified the functioning of the client as recorded in the statement. The Hon’ble Tribunal in the case of APS Freight & Travel Pvt. Ltd., Vs. Commissioner of Customs (General), New Delhi reported in 2016 (344) ELT 602 (Tri-Del), has held that there is no legal requirement for physical verification of the importer/exporter premises.

f) The appellant had advised the exporter to appear before the Officers of SIIB. However, the exporter was not amenable and had in fact threatened the appellant for which the appellant filed a police complaint on 12.11.2019 and also filed a writ petition before the Hon’ble High Court of Madras to register a criminal case. The said fact has also been recorded in the impugned order.

This being so, I find that there was no concrete proof of a blame worthy conduct by the appellant to impose penalties. Penalties should not be imposed merely because a legal provision provides for it. It is a discretion of the authority to be exercised judicially and in consideration of all the relevant circumstances, bound by the rules of reason and law. Such action cannot be taken on assumptions and presumptions devoid of concrete facts showing wrongdoing.

Based on the discussions above, I find that the impugned order merits to be quashed and is ordered accordingly. The appeal succeeds with consequential relief, if any, as per law.