Top Stories CHA Not Obliged to Verify Genuineness Of IE Code For Each Import/Export Transaction: CESTAT [Read Order] The bench held that there was no need for any proceedings under CBLR to have been initiated against the appellant and set aside the order confirming violation. By Yogitha S. Yogesh – On October 23, 2024 5:20 pm – 4 mins read The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that CHA is not obliged to verify genuineness of Import Export ( IE ) Code for each import/export transaction. The bench held that there was no need for any proceedings under CBLR to have been initiated against the appellant and set aside the order confirming violation. Akansha Logistics, the appellant/assessee is a customs broker having a license valid up to 04.10.2027.

Office of Commissioner of Customs (Airport & General), New Delhi received an investigation report regarding investigation in respect of goods exported by M/s. Neminath Industries, M/s. Adinath Industries and M/s. Arihant Industries with respect to 1474 number of shipping bills by misuse of factory stuffing permission, forgery of customs documents with the intention of availing drawback and other incentives fraudulently. Effortless Faceless Appeals – File with GPT Precision – Click here to Register

The intelligence gathered indicated that several factory stuff containers were exported in the name of above mentioned companies and similar modus operandi have taken place on inflated value by manipulation of documents. It was found that no factory stuffing permission had been issued to three of the exporters. They were found to have filed a total number of 1474 shipping bills with total FOB value of Rs. 5,43,58,38,842/-. The customs brokers of these exporters were also investigated. Statements of all concerns were recorded by the department. Effortless Faceless Appeals – File with GPT Precision – Click here to Register

The department alleged that these customs broker, owning to their acts of commission and omissions have aided and abetted the fraud committed by the exporter i.e. of willfully indulging themselves in making of fabricated export documents endorsing fake stuffing permission at both levels in central excise during stuffing of the containers and in customs during filing of the shipping bills, despite having no factory stuffing permission with them. The Show Cause Notice was served upon all the concerned exporters and the above named Custom House Agents (CHA) including the present appellant. The appellant M/s. Akansha Logistics was proposed to be imposed with penalty under Section 114 (iii) of Customs Act, 1962. Effortless Faceless Appeals – File with GPT Precision – Click here to Register A suitable action as per regulation 19, 20 and any other regulation under Customs Brokers Licensing Regulations, 2013 was also proposed against the appellant. The appellant was accordingly alleged to have contravened Regulation 11 (d) and 11 (n) of CBLR, 2013.

Another show cause notice has been served upon the appellant proposing revocation of his licence and imposition of penalty upon the appellant. The said proposal has been confirmed. The appellant contended that the licence has been revoked observing that the appellant has failed to advise their clients regarding filing of authentic/correct documents and has also failed to verify the KYC documents submitted by the exporters resulting into mis-declaration of the goods in order to claim inadmissible drawback benefits. Once goods were factory-stuffed, the CHA who is handling the container at port cannot be held liable for any other alleged mis-declaration. Effortless Faceless Appeals – File with GPT Precision – Click here to Register The appellant contended that all the KYC documents were available with the appellant, hence, the appellant has wrongly been held liable for the alleged violation of Regulation 11 (n) of CBLR, 2013.

The documents such as GST registration, bank account details, excise registration, PAN card etc. were all government/bank issued documents. The appellant submitted that he as CHA is not supposed to verify the correctness of those documents and cannot be held liable if any fault is found with those documents. Hence, the findings arrived at by the adjudicating authority are liable to be set aside. The Order as has been passed with respect to the customs show cause notice has already refrained from recommending any action against CHA under CBLR, 2013. Effortless Faceless Appeals – File with GPT Precision – Click here to Register The department contended that show cause notice has been issued based on the investigation report regarding the misuse of factory stuffing permission and the forgery of customs documents by few exporters involving 1474 shipping bills. The report has clearly highlighted the involvement of present appellant and its employees in filing of the said Bills of Entry as customs brokers have failed to verify the identity of their clients, validity of their address.

The exporters were found to be non-existent. The tribunal noted that there is nothing or record to show that the appellant/CHA had prior knowledge about the exporters mentioned in the IE code to be non-existing persons.The two member bench of Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that irrespective the exporters are found non-existent but since the IE code is issued after the background check of the importer/exporter had been undertaken by the customs authorities there can be no reason to doubt the identity of the importer or exporter. Effortless Faceless Appeals – File with GPT Precision – Click here to Register While allowing the appeal, the CESTAT held that there was no need for any proceedings under CBLR to have been initiated against the appellant and set aside the order confirming violation. It was found that the department could not produce any evidence proving violation of 11(d) and 11(n) of CBLR, 2013.