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SRI MANJUNATHA CARGO PVT LTD v. COMMISSIONER OF CUSTOMS, BANGALORE

CESTAT

Jun 5, 2020

Judgment

Subsequent
References

CaseIQ

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CESTAT, Bangalore — Customs Appeal No. 21036 of 2019 (Final Order No. 20356/2020)

Factual and Procedural Background

The appeal challenges the Commissioner of Customs' order dated 29/10/2019 revoking the Customs Broker licence of Sri Manjunatha Cargo Pvt. Ltd., forfeiting its security deposit and imposing a penalty of Rs.50,000 under Regulation 14 read with Regulations 17 and 18 of the Customs Broker License Regulations, 2018 (CBLR 2018). The appellant, a Customs Broker operating in Mumbai and Nhava Sheva, was the subject of three prohibition orders issued by the Commissioner of Customs (General), Mumbai dated 03/01/2019, 16/01/2019 and 20/02/2018. The prohibition orders arose from allegations that the appellant filed shipping bills on behalf of certain exporters (M/s. A.R.K. Enterprises, M/s. YK Trends and M/s. Otex Overseas) and colluded with them to overvalue goods to obtain excess duty drawback. The principal allegation was non-fulfillment of obligations under Regulations 11(b), 11(d), 11(e) and 11(n) of CBLR 2013.

Based on the Mumbai prohibitions, the Commissioner of Customs, Bangalore suspended the appellant's licence by order dated 06/02/2019, granted a post-decisional hearing on 19/02/2019 and continued the suspension thereafter. A show-cause notice proposing revocation, forfeiture and penalty was issued on 16/04/2019. An Inquiry Officer was appointed and submitted an Inquiry Report dated 15/07/2019 (received by the appellant on 07/08/2019 according to the appellant). The Inquiry Officer dropped charges under Regulations 11(b) and 11(e) of CBLR 2013 but sustained charges under Regulations 11(d) and 11(n). The Commissioner thereafter passed the impugned order revoking the licence, forfeiting security and imposing penalty.

Legal Issues Presented

Whether the appellant violated Regulations 11(d) and 11(n) of the Customs Broker License Regulations (CBLR 2013) so as to justify revocation of licence, forfeiture of security and imposition of penalty under Regulation 14 of CBLR 2018.
Whether the appellant directly interacted with IEC holders and/or had knowledge that IECs were being lent to other persons, and whether such lending is an offence under the Customs Act, 1962.
Whether the appellant fulfilled its verification/KYC obligations under Regulation 11(n)/10(n) (correctness of IEC/GSTIN, identity of client, functioning at declared address) and Board's Circular No.9/2010-Cus dated 08/04/2010.
Whether the time limits prescribed under Regulation 17(5) and Regulation 17(7) of CBLR 2018 (for submission of Inquiry Report and passing of final order) were complied with, and if not, whether non-compliance renders the impugned order invalid (i.e., whether those time limits are mandatory or directory).

Arguments of the Parties

Appellant's Arguments

The impugned order is legally unsustainable because the Commissioner did not properly apply the provisions of CBLR 2013/2018 and failed to consider Tribunal and High Court decisions relied upon by the appellant.
The Commissioner's finding that the Customs Broker did not directly interact with the IEC holders (ground for violation of Regulation 11(d)) is factually incorrect; statements of the appellant's G-card holder/Power of Attorney (Mr. Mohammad Yusuf Siddique) dated 25/05/2017 state that he had interacted with the IEC holders.
There is no evidence that the appellant knew IEC holders had lent their IECs to others; the Commissioner recorded no evidence showing the appellant's knowledge of such lending. Even if known, lending of IEC is not an offence under the Customs Act, 1962, as held in several authorities cited by the appellant.
Regarding Regulation 11(n)/10(n), the appellant contended that verification required the use of reliable documents/data information, not physical inspection of premises. The appellant complied with KYC norms under Board's Circular No.9/2010-Cus by obtaining PAN, Aadhaar, GST registration certificate and IEC certificate from the three exporters. Physical verification is not required and several Tribunal decisions support this position.
The time limits in CBLR 2018 were not complied with: although the show-cause notice was dated 16/04/2019 and the Inquiry Report dated 15/07/2019, the Report was received by the appellant on 07/08/2019 and the impugned order was passed later (the appellant points to violation of Regulation 17(5) and Regulation 17(7)). Appellant relied on authorities holding these time limits mandatory.

Respondent's (AR) Arguments

The learned AR reiterated the impugned order's findings and submitted that the Inquiry Report was submitted within the time prescribed under Regulation 17(5), i.e., the 90-day period for report submission was met.
The AR argued that the time limits under the Regulations are directory (not mandatory) and relied on several Tribunal/Bombay High Court decisions to that effect.
The AR also contended that the appellant did not cooperate with the Inquiry Officer, repeatedly sought adjournments and caused delay; that the appellant was aware IEC holders were not actual exporters and that IECs were being used by other persons but did not inform the Department; and therefore the appellant violated the Regulations justifying revocation.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Hamid Fahim Ansari Vs. CC (Imports), Nhava Sheva [2009(241) ELT 168 (Bom.)]	Cited by appellant to support that lending of IEC is not an offence under the Customs Act, 1962.	The court accepted that lending of IEC is not an offence as held in the decisions cited by the appellant and treated this line of authority as supporting the appellant's contention.
Gopal Agarwal Vs. CC, New Delhi [2015(326) ELT 593 (Tri. Del.)]	Cited by appellant to support that lending of IEC is not an offence under the Customs Act, 1962.	The court relied on the principle indicated by this decision in holding that lending of IEC is not an offence and that no evidence existed showing the appellant's knowledge of such lending.
Proprietor, Carmel Exports & Imports Vs. CC, Cochin [2012(276) ELT 505 (Ker.)]	Cited by appellant to support that lending of IEC is not an offence under the Customs Act, 1962.	The court noted and relied upon this and similar decisions in concluding lending of IEC is not an offence under the Act.
G.N.D. Cargo Movers Vs. CC, New Delhi [2017(357) ELT 1184 (Tri. Del.)]	Cited by appellant for the proposition that physical verification of premises is not required and that mere mis-declaration by importer does not automatically establish mala fide conduct or connivance by the Customs Broker; due diligence must be shown by evidence.	The court reproduced and relied on paras 5 & 6 of this decision to hold that the appellant had complied with KYC/documentary verification and that mere mis-declaration by exporters does not establish connivance by the broker without evidence.
Kunal Travels (Cargo) Vs. CC (I&G), IGI Airport, New Delhi [2017(354) ELT 447 (Del.)]	Cited by appellant to support that physical verification is not required and documentary KYC suffices.	The court treated this decision as supporting the appellant's position that documentary verification met Regulation 11(n) requirements.
APS Freight & Travels Pvt. Ltd. Vs. CC, New Delhi [2016(344) ELT 602 (Tri. Del.)]	Cited by appellant to support that physical verification is not required and KYC via documents suffices.	The court relied on the line of authorities including this decision in concluding that the appellant's documentary verification was adequate.
HIM Logistics Pvt. Ltd. Vs. CC, New Delhi [2016(338) ELT 725 (Tri. Del.)] (decision upheld by High Court: 2017(348) ELT 625 (Del.))	Cited by appellant to support the proposition that physical verification is not necessary and KYC/documentary checks are sufficient.	The court referenced this decision as part of the binding line of Tribunal/High Court authorities supporting the appellant's KYC compliance argument.
KTR Logistics Solutions Pvt. Ltd. Vs. CC, Chennai (Order dt. 28/11/2019 in WP No.3366 of 2019) (Madras HC)	Cited by appellant to support that the time limits under CBLR (Regulation 17) are mandatory and non-compliance invalidates action.	The court regarded this and other authorities cited by the appellant as supporting the conclusion that the Regulation 17 time limits are mandatory, and applied that principle to set aside the impugned order for delay.
Santon Shipping Services Vs. CC, Tuticorin (Order dt. 13/10/2017 in CMA No.730 of 2016) (Madras HC)	Cited by appellant for the proposition that time limits are mandatory under CBLR.	The court relied on this decision as part of the array of authorities establishing the mandatory nature of the time limits and applied that ratio.
Impexnet Logists Vs. CC(General) [2016(338) ELT 347 (Del.)]	Cited by appellant in support of time limits being mandatory.	The court treated this as part of the precedent base supporting that Regulation 17(7) is mandatory and that the Commissioner's order suffered from delay.
R.M. Purushotham Vs. CC, Chennai [Final Order No.40609/2019 dt. 26/03/2019 (CESTAT, Chennai)]	Cited by appellant to support the mandatory character of Regulation 17 time limits.	The court included this decision among those whose ratio supported setting aside the impugned order for breach of the time limit.
Leo Cargo Services Pvt. Ltd. Vs. CC, New Delhi [2019(370) ELT 1750 (Tri. Del.)]	Cited by respondent to argue that CBLR time limits are directory (not mandatory).	The court recorded this as a respondent-cited authority but did not accept the directory view; the court held the time limits mandatory based on the decisions cited by the appellant.
CC(General) Vs. Razvi Shipping Agency [2019(368) ELT 850 (Bom.)]	Cited by respondent to support the contention that the Regulations' time limits are directory.	The court noted this authority but ultimately found the appellant's cited authorities persuasive that the time limits are mandatory; it did not adopt the directory view advanced by the respondent.
Shasta Freight Services Pvt. Ltd. Vs. Pr. Commissioner of Customs, Hyderabad [2019(368) ELT 41 (Telangana)]	Cited by respondent to argue time limits are directory.	The court acknowledged this citation but concluded the contrary on the facts, relying on decisions cited by the appellant.
Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing Pvt. Ltd. [2018(361) ELT 321 (Bom.)]	Cited by respondent to support that time limits are directory.	The court recorded this authority as cited by the respondent but did not accept it as overriding the appellant's authorities; the court found the time limit breach fatal.

Court's Reasoning and Analysis

The Tribunal examined the charges sustained by the Inquiry Officer: violations of Regulations 11(d) and 11(n) of CBLR 2013. The court reproduced the text of both Regulations (11(d): obligation to advise clients to comply with the Act and bring non-compliance to the notice of the Deputy/Assistant Commissioner; 11(n): verify correctness of IEC/GSTIN, identity of client and functioning at declared address using reliable documents/data).

On the allegation that the Customs Broker did not directly interact with IEC holders (a basis for finding violation of Regulation 11(d)), the Tribunal found the Commissioner's conclusion to be factually incorrect. The statements of Mr. Mohammad Yusuf Siddique (G-card holder and Power of Attorney), dated 25/05/2017, indicated that he had interacted with the IEC holders. The Tribunal further observed there was no evidence on the record to demonstrate that the appellant knew of the lending of IECs by the IEC holders to other persons. The Tribunal also accepted the appellant's submission — supported by authorities — that mere lending of IEC is not an offence under the Customs Act, 1962.

Regarding the allegation of failure to verify antecedents under Regulation 11(n), the Tribunal analysed the regulatory text and the Board's Circular No.9/2010-Cus (08/04/2010). The court concluded that Regulation 11(n) contemplates verification by use of reliable, independent, authentic documents/data, and does not mandate physical verification of premises. The appellant had obtained PAN, Aadhaar, GST registration certificate and IEC certificate from the exporters. Relying on precedents (notably G.N.D. Cargo Movers and related decisions), the Tribunal held that documentary KYC compliance satisfied the verification requirement and that mere mis-declaration by exporters does not automatically establish broker's mala fides or connivance absent evidence.

On the procedural issue of time limits under Regulation 17(5) (report submission within 90 days) and Regulation 17(7) (final order within prescribed period), the Tribunal considered the dates in the record: the Inquiry Report bore the date 15/07/2019. The Tribunal noted that even accepting submission on that date, the Commissioner was required by Regulation 17(7) of CBLR 2018 to pass the final order within 90 days. The Tribunal observed that the Commissioner passed the order beyond the prescribed period (the opinion records the Commissioner's order date as being beyond the 90-day limit — the impugned order date is recorded elsewhere in the opinion as 29/10/2019 while the Tribunal's calculation references a Commissioner action on 20/09/2019 beyond the 90 days). Relying upon the ratio of the decisions cited by the appellant, the Tribunal concluded that the time limits under Regulation 17 are mandatory and that breach of the time limit vitiates the impugned order.

Synthesising the factual findings and precedent, the Tribunal concluded that (a) there was no evidence of the appellant's knowledge of lending of IECs or of collusion to overvalue goods, (b) documentary KYC complied with Regulation 11(n), (c) physical verification was not required, and (d) the Commissioner failed to comply with mandatory time limits under Regulation 17(7), rendering the impugned order voidable. On both merits and limitation grounds, the Tribunal set aside the impugned order.

Holding and Implications

HOLDING: The Tribunal set aside the impugned order (Final Order No. 20356/2020) of the Commissioner of Customs and allowed the appellant's appeal. The impugned revocation of the Customs Broker licence, forfeiture of security deposit and imposition of penalty were set aside.

Implications:

The direct consequence is that the appellant's appeal succeeds and the adverse actions (revocation, forfeiture and penalty) imposed by the Commissioner are quashed by the Tribunal.
The Tribunal's decision rests on both merits (insufficient evidence of breach of Regulations 11(d)/11(n) and adequate documentary KYC) and procedural infirmity (breach of the mandatory time limit under Regulation 17(7)).
The opinion does not purport to lay down any broader novel legal principle beyond application of existing precedent: the Tribunal applied prior decisions to hold that documentary KYC suffices and that time limits under Regulation 17 are mandatory in the circumstances of this case.

Order pronounced in open court on 05/06/2020. Judicial Member: S.S. Garg; Technical Member: P. Anjani Kumar.

Show all summary ...

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

BANGALORE

REGIONAL BENCH - COURT NO. 1 Appeal(s) Involved:

Customs Appeal No. 21036 of 2019

[Arising out of No. CUSTM-CTY-COM-08-09-20 dated 29/10/2019 passed by Commissioner of CUSTOMS , BANGALORE-I( Appeal) ]

Sri Manjunatha Cargo Pvt Ltd.

No 416 Pai Layout 14c Cross 1st Main Road Old Madras Road Appellant(s)

BENGALURU

KARNATAKA

560016

VERSUS

Commissioner Of Customs, Bangalore

C.R. BUILDING,QUEENS ROAD,

P.B.NO. 5400, Respondent(s) Bangalore

Karnataka

560001

Appearance:

Shri G. Derrick Sam, Advocate

AGOL ASSOCIATES

NO 17 I ST CROSS STREET 4TH AVENUE

BESANT NAGAR For the Appellant

CHENNAI

TAMILNADU

600090

Shri K.B. Nanaiah, Asst. Commissioner(AR) For the Respondent

CORAM:

HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI P. ANJANI KUMAR, TECHNICAL MEMBER

Date of Hearing: 10/02/2020 Date of Decision:05/06/2020

Final Order No. 20356/2020 Per : S.S GARG

The present appeal is directed against the impugned order dt. 29/10/2019 passed by the Commissioner of Customs whereby the

appellant's Customs Broker license is revoked under Regulation 14 read with Regulation 17 of Customs Broker License Regulations, 2018 (CBLR, 2018, for short) and also forfeited the security deposit furnished by the appellant. Further the Commissioner has imposed penalty of Rs.50,000/- on the appellant under Regulation 14 read with Regulation 17 and 18 of CBLR 2018.

2. Briefly the facts of the present case are that the appellant is a Customs Broker operating in Mumbai and Nhava Sheva also. The Commissioner of Customs (General), Mumbai issued three prohibition orders dt. 03/01/2019, 16/01/2019 and 20/02/2018. These prohibition orders were issued on the ground that the appellant had filed certain shipping bills on behalf of M/s. A.R.K. Enterprises, M/s. YK Trends and M/s. Otex Overseas and that the appellant had colluded with the said exporters to over value the goods for obtaining excess duty drawback. The principal allegation against the appellant was that they had not fulfilled the obligations cast upon them under Regulations 11(b), 11(d), 11(e) and 11(n) of CBLR 2013. Based on these prohibitions, the Commissioner of Customs, Bangalore suspended the licence of the appellant vide Order dt. 06/02/2019 and granted post- decisional hearing on 19/02/2019 and after hearing the appellant, the order of suspension was continued. Thereafter on 16/04/2019, a show-cause notice was issued to the appellant proposing to revoke the licence and forfeit the security deposit and impose penalty in terms of Regulation 14 of CBLR 2018. After taking the reply of the appellant, the Commissioner appointed the Inquiry Officer who submitted the Inquiry Report on 15/07/2019. The Inquiry Officer dropped the charge of violation of Regulation 11(b) and 11(e) of CBLR 2013. However, the Inquiry Officer sustained the charge of violation of Regulations 11(d) and 11(n) of CBLR 2013. thereafter, the Commissioner after considering the submissions of the appellant vide the impugned order revoked the licence of the appellant and forfeited the security and also imposed penalty of Rs.50,000/-.

3. Heard both the sides and perused the records.

4.1. The learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the provisions of the CBLR 2013 / 2018 and without considering the decisions rendered by the Tribunal and High Court. He further submitted that in para 13.1 of the impugned order, the Commissioner has held that the Customs Broker has not directly interacted with the IEC holder, hence is guilty of violating Regulation 11(d) of CBLR 2013. The learned counsel submitted that this finding of the Commissioner that the appellant had not directly interacted with the IEC holder is also factually incorrect. Further he argued that in the statements dt. 25/05/2017, referred in paras 3.4.1, 3.4.2 and 3.4.3 of the impugned order, the G card holder and Power of Attorney of the appellant at Mumbai, Shri Mohammed Yusuf Siddique has clearly stated that he had interacted with the IEC holders. He further submitted that as per the Commissioner, the IEC holders have lent their IEC to other persons and that the appellant has not brought the same to the knowledge of the Department. This finding according to the learned counsel, is without any evidence because the Commissioner has not recorded any evidence in the impugned order that the appellant knew about lending of IEC so as to bring the same to the knowledge of the Department. He also submitted that even assuming without accepting that the appellant knew about lending of IEC, the same is not an offence under the Customs Act, 1962 as held by the following judgments:-

a. Hamid Fahim Ansari Vs. CC(Imports), Nhava Sheva [2009(241) ELT 168 (Bom.)]

b. Gopal Agarwal Vs. CC, New Delhi [2015(326) ELT 593 (Tri. Del.)]

c. Proprietor, Carmel Exports & Imports Vs. CC, Cochin [2012(276) ELT 505 (Ker.)]

4.2. The learned counsel further submitted that the next allegation against the appellant is that they have not verified the antecedents of IEC holders and hence violated the provisions of Regulations 11(n)/10(n) of CBLR 2013/2018. As per the said Regulation, the Customs Broker is required to verify the correctness of the IEC number, identity of the client and functioning of the client at the declared address using reliable, independent, authentic documents data or information. As per the counsel, what is contemplated is a verification of the premises of the importer or exporter on the basis of documents /information but not the physical verification of the premises. Further the Customs Broker had followed the KYC norms as prescribed in Board's Circular No.9/2010-Cus dt. 08/04/2010. Further the Customs Broker has obtained the copies of the PAN card, Aadhar card, GST Registration Certificate, IEC certificate from all three exporters concerned. This fact is recorded in the impugned order by the Commissioner recorded in the statements of Shri Mohammad Yusuf Siddique reproduced in paras 3.4.1., 3.4.2. and 3.4.3. The learned counsel submitted that it is a settled law that physical verification of the premises of the IEC holder is not required. For this, he relied upon the following judgments:-

a. G.N.D. Cargo Movers Vs. CC, New Delhi [2017(357) ELT 1184 (Tri. Del.)]

b. Kunal Travels (Cargo) Vs. CC (I&G), IGI Airport, New Delhi [2017(354) ELT 447 (Del.)]

c. APS Freight & Travels Pvt. Ltd. Vs. CC, New Delhi [2016(344) ELT 602 (Tri. Del.)]

d. HIM Logistics Pvt. Ltd. Vs. CC, New Delhi [2016(338) ELT 725 (Tri. Del.)] - this decision has been upheld by the Hon'ble High Court of Delhi as reported in 2017(348) ELT 625 (Del.)]

4.3. He further submitted that the only allegation against the exporter is overvaluation and there is no evidence brought in the impugned order that the appellant had colluded with the exporter in overvaluing the goods. The learned counsel also submitted that the

time limit as prescribed in the CBLR 2018 has not been complied with. In the present case, show-cause notice was issued on 16/04/2019 and the Inquiry Report dt. 15/07/2019 has been received by the appellant only on 07/08/2019 and hence the time limit prescribed under Regulation 17(5) of the CBLR 2018 has been violated. He further submitted that the impugned order has been passed on 29/10/2019 which is beyond the time limit prescribed as per Regulation 17(7) of the CBLR 2018. The learned counsel submitted that it has been consistently held that the time limit prescribed under the Regulation is mandatory in view of the following decisions:-

a. KTR Logistics Solutions Pvt. Ltd. Vs. CC, Chennai [Order dt. 28/11/2019 in WP No.3366 of 2019 passed by the Hon'ble High Court of Madras]

b. Santon Shipping Services Vs. CC, Tuticorin [Order dt. 13/10/2017 in CMA No.730 of 2016 passed by the Hon'ble High Court of Madras]

c. Impexnet Logists Vs. CC(General) [2016(338) ELT 347 (Del.)] d. R.M. Purushotham Vs. CC, Chennai [Final Order

No.40609/2019 dt. 26/03/2019 passed by CESTAT, Chennai]

5.1. On the other hand, the learned AR reiterated the findings of the impugned order and submitted that the time limit of 90 days prescribed under Regulation 17(5) is for submission of report and in the present case, the Inquiry Report has been submitted within the time prescribed under Regulation 17(5). he also submitted that the time limit prescribed under the CBLR regulations are only directory and not mandatory as held in the following decisions:-

a. Leo Cargo Services Pvt. Ltd. Vs. CC, New Delhi [2019(370) ELT 1750 (Tri. Del.)]

b. CC(General) Vs. Razvi Shipping Agency [2019(368) ELT 850 (Bom.)]

c. Shasta Freight Services Pvt. Ltd. Vs. Pr. Commissioner of Customs, Hyderabad [2019(368) ELT 41 (Telangana)] d. Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing Pvt. Ltd. [2018(361) ELT 321 (Bom.)]

5.2. He further submitted that the appellant did not cooperate

with the Inquiry Officer and kept taking adjournments and caused delay. He further submitted that the appellant was aware of the fact that the IEC holders are not the actual exporters and the same were being used by other persons. But the same was not brought to the notice of the Department. He also submitted that the appellant had violated of the Regulation and hence the licence has rightly been revoked.

6.1. After considering the submissions of both the sides and perusal of the material on record, we find that the allegation against the appellant is that they have violated the Regulations 11(d) and 11(n) of CBLR 2013. It is pertinent to reproduce the said Regulations which is as under:-

11(d) - advise his client to comply with the provisions of the Act, other allied Acts and the rules and

regulations thereof, and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;

11(n) - verify correctness of Importer Exporter Code (IEC) number, Goods and Services Tax Identification Number (GSTIN),identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or

information;

6.2. Further we find that in the impugned order, the Commissioner has held that the appellant has not directly interacted with the IEC holders and is guilty of violation of Regulation 17(d) of CBLR 2013. This finding is factually incorrect because in the statements of Mr. Mohammad Yusuf Siddique, G Card holder and Power of Attorney of the appellant at Mumbai, he has stated in his statement dt. 25/05/2017 that he had interacted with the IEC holders. Further we find that as per the Commissioner, the appellant has not brought to the knowledge of the Department that IEC holders have lent their IECs to other persons. We find that there is no evidence on

record brought by the Department to show that the appellant had knowledge regarding the lending of IEC. Further we find that the lending of IEC is not an offence under the Customs Act, 1962 as held in various decisions cited supra. As far as allegation against the appellant that he had not verified the antecedents of IEC holders, we find that as per Regulation, the Customs Broker is to verify the correctness of IEC number, identity of client and functioning of them at the declared address using reliable, independent, authentic documents data or information. Further physical inspection of the premises of the importer or exporter is not required under the law as well as under the Board's Circular No.9/2010-Cus dt. 08/04/2010. In the present case, the appellant had obtained copies of PAN card, Aadhaar Card, GST registration certificate, IEC certificate from all the three exporters concerned. Further we find that in the case of G.N.D. Cargo Movers cited supra, the Division Bench of the Tribunal had held in para 5 & 6 as under:-

5. We further note that Regulation 11 (e) requires the Customs House Agent to exercise due diligence to ascertain the correctness of any information which he imparts to clients with reference to work relating to clearance of cargo / baggage. Merely because the importer have accepted their mistake of mis- declaration of brand and quantity and have shown their willingness to pay differential duty, fine and penalty, it cannot be concluded that Customs Broker did not exercise due diligence to ascertain correctness of the information. If the said fact only is relevant for holding against the Customer Broker, then in each and every case of mis-declaration by the importer, it can be concluded that Customs Broker did not suitably informed his clients. There has to be some evidence on record to show that either the Customs Broker was aware of such mis-declaration and suppressed the same with a malafide mind or he has taken efforts to get the goods cleared from the Customs on the basis of wrong declaration made by him or has connived with the importer so as to aid and abet the wrong declaration.

6. Similarly, for the violation of Regulation 11(n), the

adjudicating authority has observed that the Customs broker did not verify the antecedents, correctness of the IEC number, identity of his client and the declared address etc. We again find no merit in the charge of the Revenue inasmuch as that IEC number has been found to be correct as also the address of the importer. Further, all the importers have joined in the investigations and have given their statements. In such a scenario, it cannot be said that the Customs Broker has not adhered to KYC norms.

6.3. As far as time limit prescribed under Regulation 17(7) is concerned, we find that the Inquiry Report is dated 15/07/2019 and if we accept that the said report was submitted on the same date, even then, as per Registration 17(7) of CBLR 2018, the Commissioner is supposed to pass the order within 90 days but the Commissioner in this case has passed the order on 20/09/2019 which is beyond the time limit prescribed under Regulation 17(7) of the CBLR 2018 and as per the ratio of the various decisions cited supra by the appellant, the time limit prescribed under CBLR is mandatory and not directory. We therefore hold that the impugned order is liable to be set aside for violation of Regulation 17(7) of CBLR 2018.

7. In view of our discussion above, we set aside the impugned order on merits as well as on limitation. Consequently, the appeal of the appellant is allowed.

(Order was pronounced

in Open Court on 05/06/2020)

(S.S GARG)

JUDICIAL MEMBER

(P. ANJANI KUMAR)

TECHNICAL MEMBER

Raja...