The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the failure of the Customs House Agent (CHA) to verify the KYC document of a bogus firm created with forged document does not amount to abetment of export and set aside the penalty imposed.
M/s KVS Cargo and M/s Him Logistics Pvt Ltd, the appellants challenged the order-in-appeal. The specific intelligence was gathered by the officers of the Directorate of Revenue Intelligence, that non-existent firm M/s Anand Enterprises, having Import Export Code (IEC) had filed 52 shipping bills for export of Ready Made Garments (RMG) at Inland Container Depot, New Delhi to various countries under duty drawback scheme and an amount of Rs. 1,88,23,316/- was sanctioned to the firm towards duty drawback.
The DRI requested to withhold the duty drawback pending any to M/s Anand Enterprises. On further investigation, it appeared that the dubious plan hatched by Shri Anand Sharma, (proprietor of bogus firm M/s Anand Enterprises forged the documents of one Shri Anand Sharma by superimposing his photograph on Election Card No. TVN1668904 which was issued to real Shri Anand Sharma who was holder of PAN Card No. DLCPS7098Q.
It was found that he obtained a bogus PAN card to obtain IEC Code from DGFT, New Delhi and the bank account was opened in Punjab National Band. The real Shri Anand Sharma PAN No. DLCPS7098Q appeared in the DRI office and denied having any firm in the name of M/s Anand Enterprises, he also denied that he had ever exported any goods to any firm.
It was found that Shri Anand Sharma (PAN No. FXNPS4247E) had created the bogus firm to avail the duty drawback of the huge amount of Rs. 1,88,23,316/- for making fraudulent export of readymade garments.
The department issued a show cause notice dated to M/s Anand Enterprises, M/s KVS Cargo and M/s Him Logistics Pvt Ltd. Penalty was proposed under Section 114 and/or 114AA of the Customs Act, 1962 upon M/s KVS Cargo,(Customs Broker) and M/s HIM Logistics Pvt Ltd. (Customs Broker).
The allegations against the two appellants are for violation of the provisions of regulation 11 (n) of the Customs Broker Licensing Regulation, 2013, (CBLR) which cast a duty on the customs broker to verify the antecedents of the exporter and the KYC documents before facilitating clearance of goods.
It was observed that neither the Income Tax Department verified the genuineness of the election voter card before issuing the PAN card nor DGFT while issuing the IEC code raised any objections on the authenticity of the documents. Even the Bank officials before opening the bank account did not verify the documents or the identity of Anand Sharma.
“If the Bank officials despite verification are not able to detect the fraudulent nature of the documents, how can one expect CHA who is not even a public official to unearth the dubious plan of the exporter.”, the CESTAT held.
While allowing the appeal, the single-member bench comprising Ms Binu Tamta, (Judicial)held that the appellants have not done any act of omission or commission attracting penalty under section 112 of the Customs Act.
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