In a recent case, the Delhi High Court held that mere allegations of import of goods by another person in the name of importers mentioned in bills of entry were not valid to the doubtful identity of the importer and upheld the order setting aside the suspension of the license of Customs House Agent (CHA).
The Commissioner of Customs filed an appeal under Section 130 of the Customs Act, 1962 challenging the impugned order passed by the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi, whereby the order dated 13 November 2019 revoking the license of the respondent/CB/CHA, was set aside.
M/S ICS Cargo, the respondent was issued a Customs Broker License valid up to 28 November 2026 by the appellant and the respondent was registered with the Customs at Mumbai, Ludhiana/Amritsar, Visakhapatnam, Noida and Kandla.
It was brought out that the DRI conducted search operations at the premises of several importer companies viz. M/s. Yuri Impex Pvt. Ltd., M/s. Yuri International and M/s. Ray Exim India Pvt. Ltd., companies which were being run by one Mr. Yusuf Pardawala. The raids were conducted about the import of various power tools from China, which were imported through several ports by the importers and allegedly undervalued.
During the investigation, the statements of Mr. Yusuf Pardawala as well as one of Mr. Sidharth Sharma were recorded under Section 108 of the Act and certain documents viz, various invoices and packing lists besides emails of the importers were seized unravelling the modus operandi adopted by the importers. During the investigation, it was also revealed that there were 5 containers containing the goods which were undervalued, four at Navasehara and one at Sea Port, Kolkata, which were also seized.
It was alleged that the respondent had facilitated clearance work for certain imported goods on a commission basis, without verifying the IECs numbers used for the imports and having due knowledge that the mastermind was Mr. Yusuf Pardawala, who was the real beneficiary or the beneficial owner.
A show cause notice (SCN) was issued to the respondent proposing that the clearance of imported goods at the Customs Ports by the respondent violated various provisions of the Customs Broker License Regulations, 2018. The SCN was eventually confirmed on the grounds of violation of regulations 10(a), 10(d) and 10(n) of the CBLR, and consequently, the license of the respondent was revoked invoking powers under regulations 14 and 17(7) of the CBLR. Further, a security deposit of Rs. one lac ten thousand made by the respondent was also forfeited and a penalty was imposed.
On appeal, the Customs Excise Service Tax Appellate Tribunal (CESTAT) decided the first two issues against the respondent/CB. It was further held that mere suspension of licence and later its revocation vide order dated 22 April 2019 under Regulation 16 of the CBLR did not preclude the Commissioner (Appeal) from conducting an inquiry against the CB/CHA in terms of the powers under Regulation 14 and 17 of the CBLR for the reason that an action under Regulation 16 is immediate depending upon the seriousness and gravity of the alleged offence whereas Regulation 17 prescribes a complete procedure for hearing the party concerned.
it is evident that the learned CESTAT conducted a meticulous exercise to examine and appreciate the evidence on the record and came to a categorical finding that the respondent/CHA was not guilty of non-performance of any of the statutory duties cast upon it.
It is brought out that there was a private arrangement between the two importers for which the respondent/CHA facilitated customs clearance in the name of companies, having valid IECs for the goods imported by the owners of the companies involved; and that the respondent/CHA had been duly authorized in this regard by Mr. Sidharth Sharma.
A division bench of Justice Yashwant Varma and Justice Dharmesh Sharma viewed that “There was proper verification on the part of the respondent/CHA about the genuineness of the IEC as also GSTIN and mere allegations that some other person was importing goods in the name of the importers, whose names were mentioned in the Bills of Entry, did not render the identity of the importer doubtful especially when there was an arrangement with mutual consent of the importer and the beneficial owner and in the said circumstances there was no basis for the Adjudicating Authorities to pass the impugned order thereby suspending the license of the CHA based on the statements of the importers, which were otherwise also retracted. “
The Court held that the CESTAT neither committed any patent illegality nor any manifest error in appreciating the evidence on the record and dismissed the petition.
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