The Customs Broker cannot be held liable under Section 114 of the Customs Act for employee misconduct unless it is established that the employer was complicit or negligent in verifying documents and actions directly impacting fraudulent claims.

Per M. Ajit Kumar,

These appeals arise out of three Orders in Original passed by the Commissioner of Central Excise, Salem. The appellant in these appeals i.e. M/s. Sanco Trans Ltd. is a Public Limited Company, incorporated under the provisions of the Companies Act, 1956. It carries on the business and functions of a Custom House Agent/ Customs Broker (CHA/ CB), governed by CHALR, 2004. The trigger in these cases originate from intelligence received by the Directorate of Revenue Intelligence (DRI) regarding certain individuals who allegedly exported consignments by inflating their values so as to unlawfully claim duty drawback benefits. They also allegedly mis-declared the port of discharge to be UK and other European Countries in the Shipping Bills to avoid a higher percentage of examination of export goods. But the goods were sent to Dubai, by manipulating Bills of Lading (BL), after obtaining the ‘Let Export Order’ (LEO). These alleged export of low- cost textiles was done by willfully misusing the Importer Exporter Codes (IEC) of third parties without the knowledge of the said actual IEC holders. It was further alleged that bank accounts were established by these individuals solely for the purpose of encashing duty drawback cheques claimed from the department, with no genuine realization of foreign exchange resulting from these exports. After obtaining the duty drawback proceeds, the individuals involved would allegedly abscond. M/s. Sanco Trans Ltd. was the CHA in all these transactions, who allegedly filed the Shipping Bills (SB), without verifying the genuineness of exporters and also by conniving with the exporters. The issue being common in all these appeals, they were heard together and are disposed by this common order.

2. Brief facts of the case in the following appeals:-

A. Appeal Nos. C176/2011

a. This appeal is filed against Order in Original No. 04/2011 (Customs) Commissioner dated 07.01.2011 passed by the Commissioner of Central Excise, Salem.

b. In light of the intelligence stated above, an investigation was launched into the exports purportedly made by M/s. Girijaa Exports, Chennai, among others. Shipments were seen to be made in the name of M/s. Girijaa Exports through ICD, Salem, under three shipping bills dated 6.7.2005 (two bills) and 7.7.2005 (one bill). A total duty drawback of Rs.5,19,894/- was disbursed under the name of M/s. Girijaa Exports. However, no bank realization certificate confirming receipt of foreign exchange for these exports was provided by the exporter within the timeframe stipulated by the Customs and Central Excise Duties Drawback Rules, 1995.

d. Upon inquiry made by ICD, Salem on 18.1.2007, with the IEC holder, M/s. Girijaa Exports, affirmed that they neither carried out the relevant exports nor received the associated duty drawback amount.

e. Subsequent correspondence on 21.2.2007 with Sanco Trans Ltd., Salem led to confirmation from the Senior Manager that shipping bills and related documentation were filed by forwarding agent Shri Kumar in the name of Girijaa Exports. The Senior Manager further stated that he managed exports under the duty drawback scheme for exporters represented by Shri A. Kumar @ A. Satishkumar of Chennai, Arulkumaran, J. Wison, and Dr. Shanmugasundaram. He confirmed that after all necessary documentation was filed, duty drawback cheques were provided to the exporters.

f. During the investigation, Dr. Shanmugasundaram acknowledged receipt of the duty drawback benefits and agreed to reimburse the erroneously sanctioned amounts. A Show Cause Notice dated 15.5.2009 was issued to the parties concerned. Following legal proceedings, the Ld. Commissioner demanded repayment of Rs.5,19,894/- co