"1 CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI. PRINCIPAL BENCH - COURT NO. II Customs Appeal No. 54037 of 2018-Cus. (Arising out of Order-in-original No. 70/MK/CONFIRMATION/ POLICY/2018 dated 22.11.2018 passed by the Commissioner of Customs (Airport & General) New Custom House, Near IGI Airport, New Delhi). M/s Transpeed Logistics Pvt. Limited Appellant Khasra No. 339/2, Shahbad Mohammadpur, New Delhi-110061. VERSUS Commissioner of Customs Respondent (Airport & General) New Customs House, Near IGI Airport New Delhi. APPEARANCE: Shri Akhil Krishan Maggu, Advocate for the appellant Sh. Rakesh Kumar, Authorised Representative for the respondent CORAM:HON’BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON’BLE MR. C. L. MAHAR, MEMBER (TECHNICAL) FINAL ORDER NO. 50782/2019 DATE OF HEARING: 06.02.2019 DATE OF DECISION: 19.06.2019 ANIL CHOUDHARY: This appeal has been preferred by the appellant viz a CHA against Order-in-Original dated 22.11.2018 confirming the suspension of their CB licence No. R-26/DEL/CUS/2007 (PAN: AABCT4959M) valid upto 04.09.2027. 2. Brief facts of the case are that an offence report (against appellant) dated 15.10.2018 was issued by the Deputy Director, Directorate of Revenue Intelligence, New Delhi was received by the 2 respondent Commissioner on 27.10.2018 alongwith a copy of show cause notice No. 121/2018 dated 28.09.2018 annexed to and forming part of the offence report. As per the report certain importers were importing maize-popcorn against Duty Free Import Authorisation (DFIA) by declaring it as maize-corn under HS code 10059000, thus availing undue benefit of DFIA. The report further indicated that the exporters had obtained the DFIAs by exporting the Corn Starch, Maize Starch Powder, Protein concentrate Corn Gluten, Liquid Glucose, Maize Corn Starch in which locally procured agricultural products like maize-corn/ sweet corn had been used as the main ingredient. The DFIA holders have either imported Popcorn by declaring the same as maize-Corn or transferred their DFIAs to others who had imported Popcorn by declaring the same as Maize-corn, which is in contravention to the provisions of Para 4.12 of the Foreign Trade Policy. In the offence report it is alleged that some of the parties engaged in mis-declaration of import and availing benefit of DFIA are M/s Chef Choice IEC no. 0507043588, M/s Hira Traders (IEC No. 0489005667) M/s Encanterra Traders Private Limited (IEC Number-0516951530). Out of these, M/s Encanterra Traders Private Limited have been found to be non- existing. Further, it has come out in the investigation that the appellant - CHA firm have facilitated the said M/s Encanterra Traders Private Limited in export of Protein concentrate Corn Gluten. Shri Lal Chand Sharma, F. Card holder of the CHA firm, in his statement admitted to have undertaken the custom clearance of export consignments pertaining to the said M/s Encanterra Traders Private Limited under DFIA. Shri Lal Chand Sharma admitted that KYC and 3 other documents were provided to him by the foreign counterpart of the CHA firm. He never met with the Director of the M/s Encanterra Traders Private Limited and never verified the KYC and other antecedents of M/s Encanterra Traders Private Limited. He has accepted his fault that he got cleared the export consignment of M/s Encanterra Traders Private Limited under DFIA, from ICD, Tuglagabad. Thus, it appeared that Shri Lal Chand Sharma failed to discharge his responsibilities and duties cast upon him as custom broker under the provisions of CBLR, 2013 and he appeared to have abetted for export of goods by not discharging his responsibilities, duties and obligations cast upon him, and thus rendered himself liable for penal action. 3. In para 17 of the show cause notice No. 121/2018 forming part of the offence report, it is alleged that on scrutiny of database it was noticed that M/s Encanterra Traders Private Limited had exported ‘Protein concentrate Corn-Gluten’ under DFIA from ICD, Tuglagabad vide six shipping bills during September, 2016 to August, 2017. The said export consignment was got cleared by custom broker – appellant. Accordingly, statement of Shri Lal Chand Sharma, F. Card holder was recorded who admitted the clearance of the aforementioned consignment from ICD, Tuglagabad under DFIA scheme. Further, stated that Shri Rakesh Kumar and Shri Manoj Kumar were the Directors of M/s Encanterra Traders Private Limited, and furnished the KYC details. He further stated that he has not personally met with the Directors of the said exporter - M/s Encanterra Traders Private Limited, but his employee Shri Anil and 4 Ms. Rinku have been in contact with the client and obtained the KYC documents and other necessary documents. Further, Shri Anil has visited the office of the said M/s Encanterra Traders Private Limited. The work of clearance for M/s Encanterra Traders Private Limited was introduced by M/s Reliance Freight LLC, Dubai. The KYC documents were sent by M/s Encanterra Traders Private Limited - Shri Rakesh Kumar and their employee shri Anil used to communicate with Shri Rakesh Kumar through e-mail and telephone. They also submitted the print out of the e-mails exchanged and after completion of the clearance work they raised their CHA bill in normal course. 4. Further, on being specifically questioned whether they verified the antecedent of the said M/s Encanterra Traders Private Limited , Shri Sharma replied that he did not verify the address of the said company and thus there appears to be some error on their part. Further, on being asked to submit authorisation received from the said company, it was replied that the same shall be submitted. 5. It further appeared to Revenue that one M/s Chef’s Choice, to whom maize pop-corn was despatched by the overseas seller, resold the goods to M/s Encanterra Traders Private Limited, on high sea sale basis, which appear to be a modus operandi for use of advance authorisation/ DFIA of M/s Encanterra Traders Private Limited, to get the imported corn released without payment of custom duty. After the import, the imported goods / corn was kept in the godown of M/s Chef’s Choice under their control and possession and they distributed the benefit of exemption between 5 them and the said M/s Encanterra Traders Private Limited. It further appear to Revenue that the said M/s Encanterra Traders Private Limited is a company only on paper, which has been used by M/s Chef’s Choice & M/s Hira Traders for import of Popcorn under DFIA and advance authorisation. The said company was started by Shri Pankaj Batra with connivance of one Anju. Evidently, the advance licence was got issued in the name of M/s Encanterra Traders Private Limited and Shri Vinod Kansal of M/s Chef’s Choice used this company to import popcorn, in order to avoid custom duty and for the purpose of diverting the same into the local market without satisfying the advance license. Similar was the modus operandi by M/s Hira Traders. Accordingly, the said show cause notice was issued. The said M/s Hira Traders, M/s Chef’s Choice, M/s Encanterra Traders Private Limited and their Directors, Partners, Prop. etc. proposing to deny the duty benefit exemption under Notification No. 19/2015-Cus., Claimed and availed at the time of assessment / passing of the Bill of Entry with proposal to confiscate of the goods, and also to demand customs duty at the normal rate alongwith interest and further penalty was also proposed. However, the present appellant M/s Transpeed Logistics Private Limited, was not made a party or co-accused in the said show cause notice. 6. Based on the aforementioned offence report the CHA license of the appellant was suspended firstly by order dated 30.10.2018 by the respondent Commissioner and thereafter by the same order post hearing was fixed on 09.12.2018. The appellant appeared and contested the suspension of the CHA license, by filing the written 6 submissions and also made oral submissions. However, the respondent - Commissioner was pleased to confirm the order of suspension by the impugned order, holding that prima facie the appellant appears to have violated the provisions of CBLR, 2018 particularly Regulation 10a, 10d, 10e and 10n. 7. Being aggrieved, the appellant is before this Tribunal. 8. Learned Counsel urges that the offence relates to usage of DFIA license by mis-declaring maize-popcorn as maize-corn. Admittedly, appellant CHA have not filed any Bill of Entry and thus are not part of any such fraud or mischief played by the said importer. The appellant CHA have only filed the shipping bills for export of corn based goods alongwith the entitlement of DFIA request. The said export proposal was duly investigated and verified by the proper officer of the custom and on being satisfied, they had given the ‘let export order’ of the said goods and also issued the eligibility for DFIA. Further, the said M/s Encanterra Traders Private Limited had imported the disputed goods vide two Bills of Entry, which were filed at Chennai Sea Port and goods were declared Pop Corn-maize under Notification No. 19/2015 dated 01.04.2015, and thus availed the DFIA benefit. During investigation by Revenue it has come on record that the said M/s Encanterra Traders Private Limited have filed various Bills of Entry for popcorn through various custom brokers namely M/s Embee Clearing and Shipping Services, SIP Dhanasekharan and Company, etc. Further, Shri Anil, employee of the CHA company was in constant touch with M/s Encanterra Traders Private Limited through its director Shri Rakesh 7 Kumar and their authorised signatory Shri Manoj Kumar and also visited their office and met with Shri Rakes Kumar, Director. Further, the necessary KYC documents were received by them alongwith the authorisation to do the clearance work of the shipping bill or export of goods. Further, there is no allegation in the offence report which shows that the appellant CHA was aware about the connivance between M/s Encanterra Traders Private Limited with M/s Hira Traders and M/s Chef’s Choice. Further, there is no allegation of any abetment on the part of the appellant CHA nor any allegation is there to have received any extra remuneration for filing the shipping bills for export of corn based product, on behalf of M/s Encanterra Traders Private Limited, under DFIA scheme. Further, the allegation of Revenue that the said M/s Encanterra Traders Private Limited is fake or fictitious is also not tenable as the said company exists on the register of the Registrar of the Company and is provided IEC code by the DGFT. Further, the appellant CHA received the necessary documents so as to satisfy about the genuineness of the said M/s Encanterra Traders Private Limited, which have got PA No., GST No., had turnover of about 1.5 crore during the financial year 2016-17, was also maintaining bank account No. 83250030100384 with Vijaya Bank. In the course of enquiry, appellant had produced the copy of authorisation issued in their favour by the said M/s Encanterra Traders Private Limited dated 19.09.2016 for clearance of their export shipment. That, there is no irregularity on the part of the appellant CHA in presenting the shipping bill on behalf of the said M/s Encanterra Traders Private 8 Limited. Thus, the allegations by the Revenue are vague and the impugned order is fit to be set aside. 9. It is further alleged that the offence report relates to transaction during the months of September, 2016 and August, 2017 when the appellant CHA presented the shipping bills. Whereas the offence report has been issued in October, 2018 after more than a year. Further, investigation started when the statement was recorded in November, 2017. Further, the CBEC Circular No. 09/2010 dated 08.04.2010, wherein para 7.2 it is stipulated that offence report have to be submitted within 30 days of offence or detection. But in the present case, admittedly, the offence report is furnished after almost one year of detection of the alleged offence. Further, as admittedly the allegation of Revenue is regarding misdeclaration at the time of import, wherein the appellant is not any more associated as the CHA. Hence, no offence is made out of any misuse of the DFIA, against the appellant CHA. That by no stretch of imagination the appellant is involved either in the issue of DFIA script nor its subsequent usage by import of maize popcorn by misdeclaring the same as maize-corn. Further, there is no averment in the offence report that the appellant CHA knowingly connived with the said M/s Encanterra Traders Private Limited. Further, appellant has discharged their obligation as required under CBLR, 2018 or the precedent regulation, and the respondent authority have mechanically suspended their licence on the basis of vague allegation, which have no legs to stand. 9 10. Learned Authorised Representative for Revenue have relied upon the impugned order. 11. Having considered rival contentions, we find that the allegations of Revenue against the appellant CHA are prima-facie vague for the reason that the offence report is based on one show cause notice No. 121/2018, issued in September, 2018 on the aforementioned parties being M/s Encanterra Traders Private Limited, M/s Chef’s Choice, M/s Hira Traders and their Directors/Partners / Prop. wherein the appellant CHA has not been made a co-noticee. Further, there is no allegation of connivance on the part of the appellant CHA firm with the aforementioned parties. Further, the offence report has been issued almost after one year when the offence was detected in October, 2017 and investigations began. We also find that the appellant have not violated any of the CHA regulations and have obtained proper documents required to meet the requirement of KYC. Further, no mens rea has been alleged against the appellant nor there is no any finding regarding illegal gain made against the CHA. Further, Shri Lal Chand Sharma of the CHA company have retracted his statement particularly answer given to Question No. 1 and 2 in the statement recorded on 04.09.2018 at the first opportunity by letter dated 10.09.2018, addressed to the Deputy Director, DRI, Delhi, stating there that the answer to the said questions were dictated by the officer threatening him of harassment, if he does not toe their line. It was further clarified that the appellant undertook work after proper authorisation. Further, we find that the subsequent non availability 10 of the said M/s Encanterra Traders Private Limited at their address or its Directors at their earlier residential address does not lead to any conclusion that the said M/s Encanterra Traders Private Limited is a fictitious company. We further find that it is nowhere alleged, in what way the appellant did any irregularity in handling export consignment, for which they have filed the Bill of Entry on behalf of the said M/s Encanterra Traders Private Limited. The appellant have had also verified the IEC code of the said client M/s Encanterra Traders Private Limited and found to be in order. Further, no physical verification of the premises or address of the IEC holder is mandated in the CBLR regulation, nor it is a general requirement. Thus, we find that there is no case made out against the appellant CHA, as alleged in the offence report or in the impugned order of suspension. Accordingly, we set aside the impugned order of suspension and allow the appeal. 12. We further direct the respondent –Commissioner to restore the license of the appellant CHA/ CB within a period of three weeks from the date of receipt of the copy of this order. Copy of order be issued dasti. (Pronounced on 19.06.2019). (Anil Choudhary) Member (Judicial) (C. L. Mahar) Member (Technical) Pant "