Allegation of Fraud on Act of Customs Broker: CESTAT set aside Penalty in the absence of Evidence Showing Violation of CBLR [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal set aside the penalty imposed on the Customs Broker alleging acts of fraud. The penalty was set aside in the absence of Evidence Showing Violation of the Customs Broker Licensing Regulations 2013 (CBLR). M/s. JKG InfralogisticsPvt. Ltd, the appellant is a Customs Broker who was issued the Customs Broker License in terms of Regulation 7 of the Customs Broker Licensing Regulations 2013 (CBLR), (now Customs Broker Licensing Regulations 2018). During business, the appellant handled the export of ball bearings, exported vide four Shipping Bills all dated 21.09.2020 filed by M/s. Gupta Vyapaar. Earlier the appellant had handled several export consignments on behalf of the said exporter for which no anomalous report at the time of export has been brought on record. During the investigations regarding the said four live consignments it came to notice that the said consignment was highly over-valued allegedly with intent to defraud the government and avail higher amount of ITC, IGST and other export-related incentives. Scrutiny of previous records of M/s. Gupta Vyapaar (Proprietor Shri Udit Gupta), was also therefore carried out by the department in respect of 17 previous exports for which the Shipping Bills were filed by the present Customs Broker- the appellant in the present matter. Based on certain alleged damning evidence gathered by the authorities and the replies of Shri Udit Gupta thereto being allegedly evasive and with no sufficient financial backing to undertake such high-valued exports, the authorities arrested Shri Udit Gupta. In his statement concerning an email sent to the department (DC SIIB), Shri Udit Gupta informed the authorities that the same was done either by Shri Jitesh Gupta of M/s. JKG InfralogisticsPvt. Ltd. or one Shri Wasim Bhai as his Email ID was used by the two of them. Shri Udit Gupta also denied any knowledge about the chartered engineer one Shri Siya Ram Jha, who had submitted the valuation report in respect of the consignments of the ball bearings. On the other hand Shri Jitesh Gupta in his testimony had informed the authorities that the exporter Shri Udit Gupta had contacted him and though he had not personally visited the premises of the exporter, his staff had done so and that the documents from the exporter were received on email, as also the nomination of the chartered engineer was done by the exporter. Based on preliminary investigations a show cause notice under the Customs Broker Licensing Regulations 2018, came to be issued to the appellant on 4.06.2021, alleging violations of Regulation 10 (d), (m), (n) and (q) of the Customs Broker Licensing Regulations 2018. The appellant was also charged with violation of Regulation 13(12) of CBLR, 2018 concerning the failure to exercise supervision required to ensure proper conduct over the employee. For the sake of ready reference Regulation 10 (d), (m), (n) and (q). While deciding the question of overvaluation on the part of the exporter, there is nothing on record to in any way conclusively link the conduct of the said offence with the connivance of the Customs Broker. There is nothing to decisively link the appellant with the commissioning of the said fraud and mere oral, unverified testimony cannot substitute as proof in the matter. There is nothing on record to show that the Customer Broker did not have the requisite mandatory documents like the IGST registration, PAN and other details of the exporter. Therefore, no case for violation of any of the regulations 10 (d), (m) and (n) can be made out against them. The circumstantial evidence led by the department is not backed by independent corroborative evidence to substantiate the allegations. A two-member bench comprising Ashok Jindal Member (Judicial) and Mr Rajeev Tandon Member (Technical) observed that there is no infringement of Regulation 10(q) as well in the matter as it is on record that the appellant has always co-operated in the enquiry. Further held that “to implicate the appellant with the commissioning of the fraud. The charge has to be led by positive and reliable evidence and vague hypothesis and presumptions cannot be the basis for any unilateral action initiated against the Broker. “ Since the department has failed to make out any sustainable case of violation of the provisions of the CBLR, 2018 by the Customs Broker. The order passed by the Commissioner was not legal and correct. The CESTAT quashed the same and annulled the order of revocation of the Customs Broker license, with all consequential benefits as accrue in law. Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates

Allegation of Fraud on Act of Customs Broker: CESTAT set aside Penalty in the absence of Evidence Showing Violation of CBLR [Read Order]

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