Customs broker not liable for CBLR violations where KYC verified with standard documents via intermediary, no knowledge of forgery allowed by customs at export; revocation, forfeiture, penalty set aside.

PER : M.M. PARTHIBAN

This appeal has been filed by M/s Bablani Clearing Forwarding & Logistics Company Private Limited, Andheri (East), Mumbai (herein after, referred to as ‘the appellants’), holders of Customs Broker License No. 11/238 assailing Order-in-Original CAO No. 81/CAC/PCC(G)/SJ/CBS-Adj dated 08.03.2024 (herein after, referred to as ‘the impugned order’) passed by the learned Principal Commissioner of Customs (General), New Custom House, Ballard Estate, Mumbai-I.

2.1. Briefly stated, the facts of the case are that the appellants herein is a Customs Broker (CB) holding a regular CB license issued by the Mumbai Customs under Regulation 7(2) of Customs Brokers Licensing Regulations (CBLR), 2018. An offence report in the form of Investigation Report F. No. SG/Misc-101/2016-17 CIU/JNCH dated 15.12.2022 received in Customs Brokers (CB) Section, New Custom House (NCH), reporting violation of CBLR, 2018. Preliminary investigation revealed that two Shipping Bills (S/Bs) No. 2014912 and 2014929, both dated 02.11.2016, was filed by an exporter M/s Neminath Industries, Thane with fake/non-genuine Factory Stuffing Permission; further, Central Excise invoices submitted to the Customs authorities at the port of export for effecting export of consignment was different from the invoices produced to Central Excise department at the time of factory stuffing and the name of exporter was mentioned differently as M/s Arihant Industries and the quantity and net weight also varied.

2.2 Further, search conducted at the business premises of the exporter M/s Neminath Industries revealed that the Gala No.6 premises was non-existent and at Gala No.1 certain documents pertaining to such exporter was recovered under panchanama proceedings dated 11.11.2016. Further investigation conducted on all such export firms indulging in several fake Factory Stuffing Permissions (FSPs) revealed that out of total 1474 SBs filed by five exporters, only 384 S/Bs were using genuine FSPs and the remaining 1090 S/Bs were filed using forged FSPs, invoices, packing lists and central excise examination reports. It was found that the appellants CB firm had played the role of facilitating fraudulent exports by mis-use of Factory Stuffing permission, forgery of customs documents with the intention of availing undue drawback and other export incentives in a fraudulent manner.

2.3 On the above basis the jurisdictional Principal Commissioner of Customs (General), Mumbai-I had concluded that there is a prima facie case against the appellants for having contravened Regulations 10(a), 10(d) and 10(n) of CBLR, 2018. Accordingly, he had initiated show cause proceedings by issue of notice No. 16/2022-23 dated 22.05.2023 for initiating inquiry proceedings under Regulation 17 ibid, against violations of CBLR as above.

2.4 Upon completion of the inquiry, a report dated 14.12.2023 was submitted by the Inquiry Authority concluding that the appellants CB has failed to adhere to/abide by the provisions of Regulations 10(a), 10(d) and 10(n) of CBLR, 2018. Accordingly, the Principal Commissioner of Customs (General), Mumbai, being the licensing authority had passed the impugned order dated 08.03.2024 under Regulations 17(7), 14 and 18 ibid, for revocation of CB License of the appellants and for forfeiture of entire amount of security deposit, besides imposition of penalty on the appellants. Feeling aggrieved with the impugned order, the appellants have preferred this appeal before the Tribunal.

3.1 Learned Advocate for the appellants contends that all the allegations of violation of Regulations 10(a), 10(d) and 10(n) of CBLR, 20