Saturday, August 6 2022

The Chennai Customs, Excise and Service Tax Court (CESTAT) Appeals Tribunal upheld the revocation of the customs broker’s license for failure to produce the exporter’s KYC documents at all investigation stage.

The appellant, M / s Prabhu Shipping Systems is a licensed customs broker, is aggrieved by the Legislative Decree passed by the Chennai Customs Commissioner, finding that the appellant had violated rules 10 (b), 10 (d ), 10 (k), 10 (n) and 13 (12) of the Customs Brokers Licensing Regulations, 2018 and revoking the appellant’s license under Regulation 14 read with Regulation 17. The security deposit provided by the appellant was also confiscated and a fine of Rs. 50,000 / – was also imposed on the appellant under Regulation 18 of the CBLR, 2018.

The appellant was licensed as a customs broker by the Commissioner of Customs of Tuticorin, but he also operated in the Chennai and Mumbai police stations under the Form C procedure. Customs brokers licensed by a customs office can operate in other customs offices according to this procedure. The appellant filed 33 shipping invoices on behalf of “M / s. Sunrise Enterprises, Ghaziabad “to export” Ratchet Wrench Set and Water Saving Aerator Foam Flow “declaring abnormally high price allegedly to claim excessive reimbursement from IGST. Mumbai Customs CIU detained the goods, recorded the statements of Shri Harichandra Pandurang Kadam, the appellant’s G card holder, and also recorded the statement of A. Prabhu, the appellant’s partner.

The appellant filed shipping invoices on behalf of an exporter without even contacting the exporter and checking his KYC documents but simply accepting the documents provided by Mr. Kohli who was neither the exporter nor an employee. the customs broker or the customs broker himself. The prices of export goods have been greatly overstated with the intention of demanding excessive reimbursement from the IGST.

The coram headed by the president, Judge Dilip Gupta and technical member, PVSubba Rao, while maintaining the contested order, noted that the appellant had no idea who the exporter was. His employee, Shri Kadam, also had no contact with the exporter. The appellant or his employee did not perform any due diligence. They claimed to have obtained KYC documents by email, but did not produce them in front of the investigator or at any time. The compelling conclusion can only be that they have no such documents and also no idea who the exporter was and that they simply filed a shipping invoice heavily overcharging the goods.

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