The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) upheld the penalty as there was failure on part of the customs broker ( CB ) to verify genuineness of person who claims to be the authorised representative of exporter.
The DRI officers intercepted export consignments pertaining to M/s. TEAC Engineers where the products were declared as “Ductile Industrial Pipes” but on examination the consignment, it contained red sanders logs which are prohibited items for export. Since the appellant had filed these shipping bills and had violated the Customs Brokers Licensing Regulations ( CBLR ) 2018 and therefore, they were issued with show-cause notice which culminated into impugned order wherein the Commissioner revoked the license and ordered for forfeiture of entire security deposit and imposed penalty of ₹50,000/-. The appellant is in appeal against this impugned order.
On behalf of the appellant, the counsel submitted that one Satishkumar claiming to be representative of the exporter sought the services of the appellant to export ‘Industrial Ductile Pipes’. Satishkumar submitted all the export documents along with the KYC documents attested by the exporter in original. With these documents, the genuineness of the exporter was verified online from the webpages of the Government Authorities and also that of the exporter and all the documents were found to be genuine. Hence, the appellant filed the shipping bills for export of ‘Industrial Ductile Pipes’.
It was further claimed that several others including the Department Officials were issued with show-cause notice and the notice is still pending, but based on the offence report, the authorities proceeded to proceed against the appellant by issuing notice and adjudicating the case against the appellant alleging violation of Regulation 10 (e) and 10 (n) of CBLR 2018 and that the offence report dated 22.7.2022 was issued by the principal Commissioner of Customs, Bengaluru while the enquiry report stated referred to the investigation report dated 20.2.2022.
On merits, it was submitted that Regulation 10(e) is about exercising diligence while imparting instructions to the client and admittedly there is no finding on this aspect but the only allegation was that authorisation was not obtained from the exporter which is incorrect since the appellant had verified the genuineness of the exporter from the online webpages. To substantiate their claim on merits, the following decisions were relied on to claim that online verification was sufficient to verify the genuineness of the exporter.
A Two-Member Bench comprising PA Augustian, Judicial Member and R Bhagya Devi, Technical Member observed that “However, the fact remains that the goods that were declared as ‘Industrial Ductile Pipes’ were found to be ‘red sander logs’ and the shipping bills were filed by the appellant. For having violated the Regulations of CBLR in not verifying the genuineness of Mr. Satishkumar who claims to the authorised representative of the exporter will warrant penalty under CBLR 2018. Accordingly, we uphold the penalty of Rs.50,000/- (Rupees Fifty Thousand Ony). The appeal is allowed partly.”
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