The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that failure to meet obligations under regulation 10 (e) of Customs Broker License Management ( CBLR ) results in partial forfeiture of the Security Deposit.
The assessee Kismat Clearing Agency are a Custom House Agent ( CHA ) /Customs Broker ( CB ) holding a regular CB license No.11/847 issued by Mumbai Customs under Regulation 10(1) of the Customs House Agents Licensing Regulations ( CHALR ), 1984, corresponding to Regulation (1) of CHALR, 2004 and now Regulation 7(2) of Customs Brokers Licensing Regulations ( CBLR ), 2018.
Based on specific information received by Nhava Sheave Preventive Unit, Rummaging and Intelligence wing of Customs Preventive Commissionerate ( NSPU ), it was discovered that importer M/s Liberty Motors, Mumbai, had imported automobile spare parts from Shanghai. They mis-declared the goods’ weight and value to evade customs duty. Upon conducting necessary enquiries, it was found that the imported goods arrived at GDL, JNPT CFS under container No. SUDU-5933179 with a declared assessable value of Rs.3, 78,430/- and customs duty of Rs.96, 579/- already paid.
However, subsequent detailed examination revealed discrepancies: the actual gross weight of 24,010 kgs exceeded the declared 18,292 kgs, and the net weight of 12,689 kgs differed from the declaration. Moreover, the goods included 43 types of auto parts, branded Malex, where the country of origin was misrepresented as China, contrary to declarations. Further investigation concluded that these actions were an attempt to evade customs duty, leading to violations of CHALR, 2004/CBLR, 2018 by appellants CB.
The assessee CB felt that there was no mala fide on their part having been established in the investigation, they did not desire to have a formal inquiry proceeding. Accordingly, they had requested the Commissioner of Customs being the licensing authority to take up the case of adjudication without initiating inquiry proceedings
The Commissioner of Customs ( General ) had come to the conclusion that the CB had violated the provision of Regulation 10(e) ibid, on the ground that the appellants did not display meticulousness and thoroughness which was necessary when handling consignments so as to protect the interest of revenue. Further, he found that the appellants CB has displayed a casual and lackadaisical approach towards their work by carrying out the clearance work without exercising due diligence to ascertain the correctness of information.
The bench find that the appellants could have been proactive in fulfilling their obligation as Customs Broker for exercising due diligence, particularly when the import documents indicated the correct tariff classification. Thus, to this extent we find that the appellants CB are found to have not complied with the requirement of Regulation 10(e) ibid and thus partial forfeiture of security deposit for an amount of Rs.5000/- for not being proactive for fulfilling of obligation under Regulation 10(e) ibid alone, is appropriate and justifiable.
The two member bench of the tribunal comprising S.K. Mohanty ( Judicial member ) and M.M. Parthiban ( Technical member ) do not find any merits in the impugned order passed by the Commissioner of Customs (General), Mumbai in forfeiture of security deposit of Rs.15, 000/- for violations under Regulations 13(d), 13(e) and 13(n) of CHALR, 2004 corresponding to 10(d), 10(e) and 10(m) of CBLR, 2018.
However, in view of the failure of the part of assessee in not having acted in a proactive manner in fulfillment of the obligation under Regulation 10(e) ibid, corresponding to 13(e) of CHALR, 2004 particularly when they had received the documents indicating the correct HS code for the imported goods, further find that it was justifiable to partially forfeit the security deposit to the extent of Rs.5,000/-, which would be reasonable, commensurate with the violation and would be in line with the judgment of the Supreme Court in the case of K.M. Ganatra ( supra ), in bringing out the importance of the crucial role played by a Customs Broker, Accordingly, CESTAT allow the appeal in favor of the assessee.
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