Statements Recorded Under Section 108 Of Customs Act, 1962 Are Admissible Before Court Of Law: CESTAT

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that statements recorded under Section 108 of the Customs Act, 1962, are admissible before a court of law.

The bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Judicial Member) has observed that the Customs Broker, in his statement recorded under Section 108, accepted that he has not verified the antecedents of the importer as the documents were handed over by Shri Badlani, an associate of Shri Rajesh Bansal, who is not the IEC holder, and he also admitted that the imports were made through a dummy IEC holder. The importer was using the IEC of another importer, and CHA knowingly did not verify the antecedents and correctness in terms of Regulation 11(n).

The appellant, being the Customs Broker (CB), has challenged the order by which the Commissioner of Customs revoked the Customs Broker Licence and ordered forfeiture of the security deposit of Rs. 75,000, but refrained from imposing any penalty on the appellant.

The statement of the customs broker was also recorded under Section 108. The customs broker stated that M/s. Royal International authorized them to file B/E No. 2253896 dated May 28, 2013. Sunil Badlani, authorized representative of M/s. Royal International, provided them with the invoice and packing list by hand. After customs clearance, they used to deliver the goods to Shri Sunil Badlani. The agency charges were paid in cash by Shri Sunil Badlani. They had started handling the work of this importer in March 2013. Since the documents were delivered at the office by Shri Sunil Badlani, whom he knew for a long time, they had not visited the office of the importer given in IEC; however, they met the importer, and when the Customs officers visited the office of the importer, they came to know that he had shifted his office from there.

Apart from the contraventions of the Customs Act, the 'CB' had also contravened the provisions of the Customs Broker Licence Regulations, 2013 (CBLR), and hence a show cause notice dated May 29, 2018 was issued as the 'CB' failed to comply with the provisions of Regulation 11(d) and (n) of the CBLR and was therefore liable for action under Regulation 18 read with Regulations 20 and 22. The Inquiry Officer was appointed, who submitted the inquiry report dated August 23, 2018, observing that the 'CB' has infringed the provisions of CBLR, 2013 and is, therefore, liable for penal action.

On adjudication, the allegation under Section 11(d) was held to be not sustainable; however, the 'CB' was held guilty for violation of Regulation 11(n) of the CBLR. The license was revoked along with the order for forfeiture of the whole amount of the security deposit.

The appellant denied that M/s. Royal International was a dummy importer, as the proprietor, Shri Praveen Singh Patwal, being busy with other fieldwork, had appointed Sh. Rajesh Bansal to attend his day-to-day work. Under Regulation 11(n), the customs broker is not required to personally and physically visit the declared address of the IEC holder to verify their antecedent as to whether they are operating from the address given in the IEC certificate. The appellant having duly adhered to KYC norms by obtaining two IDs and an IEC certificate and by verifying from the sites of the Income Tax Department and DGFT, respectively, the extreme punishment of revocation of the licence was not sustainable.

The tribunal held that the adjudicating authority had taken a balanced view that CB cannot escape his duty of KYC verification just by obtaining photocopies of two identity and interest proof documents, and therefore, having violated regulation 11(n), rightly revoked the CB licence and forfeited the security deposit amount but refrained from imposing a separate penalty on the appellant.

Counsel For Appellant: Reena Rawat

Counsel For Respondent: Rakesh Kumar

Case Title: M/s.GND Cargo Movers Versus Commissioner of Customs

Case No.: Customs Appeal No.50776 of 2019 (DB)

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