CESTAT upholds Imposition of penalty for failure in not being proactive for fulfilling regulation 10(d) of CBLR [Read Order]

The Mumbai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) imposed penalty for the failure of not being proactive for fulfilling regulation 10(d) of Customs Brokers Licensing Regulations (CBLR) 2018 on Ramesh Transport Company (the Appellant), in the appeal by them against Principal Commissioner of Customs (General) (The Respondent).

On an investigation by Serious Fraud Investigation Office (SFIO) of Ministry of Corporate Affairs in the matter of ABC Cotspin Pvt. Ltd (ABCCPL) on report by many banks namely RBI, SBI, Axis Bank which stated that ABCCPL had committed fraud on them by availing export finance by submission of export bills without making any exports and the owner of the company, Ashish Jobanputra as its Director, was influencing the CHAs namely, RSS Shipping P Limited and Kotak Multilink Logistix (Hardik Kotak) and the employees/directors of freight forwarding companies were in a criminal conspiracy  to misrepresent  the banks to avail credit facilities. The director of RSS Shipping P Limited (RSSSPL) was doing CHA work under the authority of M/s Ramesh Transport Co., i.e., the appellants. Thus, the department alleged that appellants had handled exports in respect of RSSSPL and ABCCPL.

The Commissioner revoked the CB license issued to the appellants for acting as a Customs Broker besides imposition of penalty of RS.50,000/- and forfeiture of entire security deposit furnished by the appellants to the customs authority.

The counsel who appeared on behalf of the appellant submitted that they were not a party to the larger export fraud; as they had handled the accused only once on 12.02.2015 by issuing 26 check lists in respect of export consignments and the fact that actual exports never happened and that they never verified the non-compliance of previous issued Bills of lading and continued to issue check lists, were contrary to the facts and documentary evidences  as we never issued any Bill of Lading(B/L)/ Multimodal Transport Documents (MTDs) as these were issued by RSSSPL, therefore they had no role to play in the fraud committed against the banks by ABCCPL and there was no violation of any provisions of the Customs Act, 1962.

The counsel further stated that the SFIO report clearly states that the entire fraud could have averted if the Bank officials had followed the guidelines issued by their banks and RBI in letter and spirit and thus the complicity of the appellant in the fraud does not arise and the consequential action taken alleging violations of CBLR cannot be sustained.

The counsel who appeared on behalf of the revenue reiterated the findings recorded in the impugned order and submitted that the appellants had no interaction with the exporter; they had processed the shipping bills without proper verification of exporters by using any reliable means, and never brought non-filing of shipping bills to the knowledge of Customs. Hence, the impugned order was sustainable.

The two-member bench consisting of S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) after hearing both sides held that “the appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, when the exports goods were not brought to Customs within 15 days time, by bringing it to the notice of the Customs department about the non-compliances in export transactions of ABCCPL. Thus, to this extent we find that imposition of penalty for failure in not being proactive for fulfilling of regulation 10(d) of CBLR, 2018 is appropriate and justifiable.”

The bench further held that “we do not find any merits in the impugned order passed by the learned Principal Commissioner of Customs (General), Mumbai in revoking the license of the appellants and for forfeiture of security deposit, inasmuch as there is no violation of regulations 10(d), 10(e) and 10(m) and the findings in the impugned order is contrary to the facts on record” and the appeal was allowed.

To Read the full text of the Order CLICK HERE

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