Mere Statement of G-Card Holder Insufficient: CESTAT Quashes Penalty Action Against Customs Broker Firm

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that mere reliance on the statement of a G-Card holder is insufficient to sustain penal action against a Customs Broker firm in the absence of supporting documentary evidence.

Dutta Clearing Agent Pvt. Ltd., the appellant, is a licensed Customs Broker firm. The Commissioner of Customs (Preventive), Patna passed an Order-in-Original revoking the Customs Broker licence of the appellant, forfeiting the security deposit, and imposing a penalty of Rs. 50,000 under the Customs BrokerLicensing Regulations (CBLR), 2018.

The case arose from an offence report alleging fraudulent exports of goods such as tiles and automobile parts to Nepal through LCS Bhimnagar. The investigation suggested that the goods mentioned in invoices and e-way bills were never actually transported or exported. The department relied on the statement of Shri Ganga Singh, a G-Card holder employed with the appellant, who admitted to uploading invoices and KYC documents on e-Sanchit based on fake or manufactured documents.

The department issued proceedings alleging violation of Regulation 10 of the CBLR, 2018 and took action against the appellant. Aggrieved by the Commissioner’s order, the appellant approached the CESTAT.

The appellant’s counsel argued that the firm had no role in the impugned export shipments and that the Shipping Bills clearly showed that the exports were filed by the IEC holders themselves and not through the appellant as Customs Broker.

The counsel also argued that there was no documentary evidence linking the appellant to the exports and that the entire case was based only on the statement of the G-Card holder. The appellant further argued that the findings of violation under Regulation 10 were without basis.

The revenue counsel argued that fraudulent exports had taken place and that the appellant’s G-Card holder played a central role in facilitating them. It was submitted that he had uploaded fake documents and acted on behalf of the appellant firm, and that his statement established the involvement of the firm.

The two-member bench comprising R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member) observed that the Shipping Bills on record clearly showed that the exports were filed as “by IEC himself” and not through the appellant. The tribunal observed that there was no documentary evidence to connect the appellant firm with the impugned shipments.

The tribunal further observed that the statement of the G-Card holder only indicated his employment with the appellant firm and did not establish that the firm had handled the exports. The tribunal explained that documentary evidence such as Shipping Bills carries greater evidentiary value and cannot be disregarded based on a solitary statement.

The tribunal pointed out that there was no finding in the impugned order to directly link the appellant with the alleged fraudulent exports. In the absence of such evidence, the allegations of violation of Regulation 10 were not sustainable.

The tribunal set aside the order revoking the Customs Broker licence, forfeiting the security deposit, and imposing penalty on the appellant. The appeal was allowed.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates