SUB LETTING CUSTOMS BROKER LICENCE IS CREATING AN OPEN CHANNEL FOR SMUGGLING
A Customs Broker sublet his licence to another person, for monthly payment .The other person misused license and crated fake documents including ARE1 ( before GST case ) and declared cargo as accessories of sanitary ware but loaded container with red sanders. DRI intercepted container and based on subsequent investigation Customs Broker licence revoked. Customs Broker has appealed before CESTAT and let us see its important observations ;
In the present case, the Directorate of Revenue Intelligence (DRI) received information that in a container in respect of which the shipping bill was filed by the CB, declaring the goods as accessories of sanitary ware, was indeed containing Red Sanders - an endangered species of wood - whose export is prohibited. On examination, it was found to be true.
In Customs operations, the Customs Broker plays a very vital role. He acts as an interface between the Customs Officers responsible for implementing and enforcing the Act and the importer or exporter. Therefore, Customs Brokers licence is not given to everyone. The applicant must pass the examination conducted by the department for the purpose which tests his knowledge of the Customs law and procedures. The licensed Customs Broker is required to guide and undertake activities on behalf of, the importer or the exporter only after checking his background, etc.
Just as a person, who is licensed to drive or run a pharmaceutical shop or practice medicine cannot transfer or sub-let his licence to another person, the Customs Broker is also prohibited from transferring or selling his licence.
Revenue submits that the facts of the case speak for themselves. At the time of investigation and even when the statement of the partner of the CB firm was recorded by the DRI, they had no documents whatsoever pertaining to the export consignment. In fact, he gave a statement that they will be available with another person to whom they have sub-let their licence.
The Customs Broker had nothing on record to show that the ARE-1 was genuine. The Customs Broker did not have any knowledge of the export of the exporter in whose name the export was attempted.In this case the Customs Broker has done nothing except the claim that the IEC was verified online as per their own claim and they have not conducted any enquiry. Therefore, they have violated the conditions of his licence.
The Customs Brokers Licensing Regulations, 2013, do not permit the CB to sub-let their licence. They have to conduct their business directly through their own employees. In fact, in the statement given by Customs Broker, he said that he allowed another person to handle export and import work using their licence and therefore all original documents are lying with them.
Evidently, the Customs Broker has transferred his licence or sublet it to allow unlicensed person to clear exports and imports. Not only with respect to this consignment, but the CB also had no records of the previous consignments exported in the name of the same exporter where the shipping bills were filed indicating the appellant as the Customs Broker.
The Customs Broker was required to verify not only the correctness of the IEC, but also his antecedents, identity, declared address etc. using reliable, independent, authentic document data or information. The CB’s claim now, is that they have verified the IEC from the DGFT website. The IEC number can be verified by anybody on the DGFT website. It is not a substantive compliance of the requirement under Regulation 11(n) of CBLR, 2013.
Considering the totality of the circumstances we find that the violations in the present case are very serious. It would have been a different case if the exports documents were filed properly by the CB and the exporter had either mis declared the contents of the sealed container or at some stage replaced the declared contents with the contraband. In fact, in this case the exporter is not in picture.
Thus, the CB has, by subletting their licence to another person in complete violation of CBLR, 2013 has created an open channel through which any contraband can be smuggled out of India with impunity. Since export consignments, especially if the documents show that the container was sealed by the Central Excise Officer, are not checked by the Customs officers, by creating fake ARE-1s shown to have been signed by the Central Excise Officers, an open channel for smuggling has been created by the CB by sub-letting their licence.
We do appreciate that the Customs Broker was not directly involved in the attempted smuggling but has only allowed another person to open such a channel of smuggling using their licence. This is serious enough to warrant revocation of the licence of the Customs Broker and for forfeiture of the Security Deposit.
CUSTOMS BROKER VERSUS COMMISSIONER OF CUSTOMS (AIRPORT & ADMINISTRATION) , KOLKATA, CESTAT KOLKATA, Order pronounced on 28.07.2020
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