Bank Officials Failed To Detect Fake Documents, How Can One Expect From CHA To Unearth The Dubious Plan Of Exporter: CESTAT

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the bank officials, despite verification, are not able to detect the fraudulent nature of the documents. How can one expect a Customs House Agent (CHA), who is not even a public official, to unearth the dubious plan of the exporter?

The bench of Binu Tamta (a judicial member) has observed that no violation can be attributed to the appellant being a customs house agent. The department has failed to establish the allegations that the appellant did not verify the KYC documents of M/s Anand Enterprises, which was a bogus firm created with forged documents.

The specific intelligence was gathered by the officers of the Directorate of Revenue Intelligence, Delhi Zonal Unit, that a non-existent firm, M/s Anand Enterprises, had filed 52 shipping bills for the export of ready-made garments (RMG) under the duty drawback scheme, and an amount was sanctioned to the firm towards duty drawback. Acting on the intelligence, DRI requested to withhold the duty drawback pending for any Anand Enterprises.

On investigation, it appeared that the dubious plan was hatched by Anand Sharma, proprietor of the bogus firm M/s Anand Enterprises. The forged documents were created.

The allegations against the two appellants who were CHA were for violation of the provisions of regulation 11(n) of the Customs Broker Licensing Regulation, 2013, (CBLR). Regulation 11(n) casts a duty on the customs broker to verify the antecedents of the exporter and the KYC documents before facilitating the clearance of goods.

The tribunal held that it is absolutely impossible to expect a CHA to act with such diligence that he could ascertain the veracity of the documents, which even the departmental authorities could not ascertain. A pre-planned modus operandi that the importer had adopted could not have been detected in the ordinary course.

Case Title: M/S Kvs Cargo Versus Commissioner, Customs (Export)- New Delhi

Case No.: Customs Appeal No. 50038 Of 2023

Date: 10/05/2023

Counsel For Appellant: Anjali Gupta

Counsel For Respondent: Devesh Tripthi

Click Here To Read The Order