Custom, Excise & Service Tax Tribunal
Per: P.R. Chandrasekharan vs H.B. Cargo Services Reported In 2011 ... on 8 September, 2011
Per: P.R. Chandrasekharan: 8. I have carefully gone through the order recorded by my learned brother Member (Judicial). However, I am unable to subscribe to the views expressed by him on the matter. 9. Learned Member (Judicial)allowed the appeal and set aside the impugned order on the ground that no proper opportunity was given to the appellant to put forth their defence before the Enquiry Officer and the Enquiry Officer has not conducted the enquiry as per Regulation 22(3) and (4) of the CHALR, 2004. Since enquiry has not been conducted in the proper manner and the punishment of revoking the CHA licence is harsh, the impugned order has been set aside. 10. From the records, of the case, it is seen that during the personal hearing held on 24/01/2008 by the Enquiry Officer the CHA did not reiterate/insist for cross-examination of the officers listed as witnesses. Further, the CHA did not attend the personal hearings fixed on 05/08/2008 and 12/08/2008. If the CHA chose not to appear for personal hearing and put up their defence, they cannot complain about sufficient and proper opportunity not being given to them for putting up their defence. Therefore, the argument that they did not get sufficient opportunity cannot be prima facie, accepted. In any case, it is not the Enquiry Officer who decides the matter. The Enquiry Officers findings are only recommendatory and it is for the Commissioner of Customs to decide whether the charges against the CHA have been proved or not. In the instant case the Commissioner has given sufficient opportunity to the appellant to argue their case and, therefore, even if some short-comings might have been there in the manner of conducting the enquiry, that does not mean that the appellant did not get sufficient opportunity to defend their case. 10.1. The grounds of imputation of alleged mis-conduct against the CHA is that the CHA did not obtain authorisation from the exporter on whose behalf he was undertaking the export which was in violation of Regulation 13(a) of the CHALR, 2004 and secondly the CHA did not advise his client to comply with the provisions of the Customs Act and in the case of non-compliance, bring the matter to the notice of the Deputy/Assistant Commissioner of Customs as required under Regulation 13(d) of CHALR, 2004. 10.2. As regards the first charge, it is on record that the CHA did not know the owner of M/s. Balaji Traders, New Delhi and the work relating to export was given by Shri S.K. Maheshwari, proprietor of Hindustan Shipping, a shipping agent. No letter of authorization was also obtained from the exporter to undertake the work. An argument has been put forth by the CHA that he has seen the IEC code issued to the exporter and accepted the same to be genuine. IEC code issued by the DGFT is not an authorization as envisaged under the CHALR for undertaking work on behalf of the exporter. In the instant case, in the adjudication order dated 26/12/2003 in respect of the proceedings under the Customs Act, it has been found that on the summons issued to the exporter during the investigation or after the issue of show cause notice, none appeared on behalf of the exporter. Further, all the letters addressed to the exporter in the address given in the IEC code came back undelivered and the exporter appeared to be a fictitious entity. The transaction in the instant case is one of exports involving claim for duty drawback to the extent of Rs. 12,03,024/-. Therefore, the CHA should have obtained a proper authorisation from the exporter to act on his behalf, which has not been done in the instant case. Merely on the recommendation of Shri S.K. Maheshwari, who is the proprietor of M/s. Hindustan Shipping, the CHA could not have or should not have undertaken the export work and, therefore, the charge that the CHA did not have proper authorisation to undertake the transaction before the Customs is proved and violation of Regulation 13(a) of CHALR, 2004 is clearly established. 10.3. The second charge is that the CHA did not advise his client properly with respect to the transaction and did not bring to the notice of the Customs when discrepancies were noticed. In the instant case, when the consignments were taken up for detailed examination, it was the responsibility of the CHA to bring the exporter or his authorised representative before the Customs which he failed to do. Instead, he brought Shri S.K. Maheshwari who was only a proprietor of the Hindustan Shipping and he was not authorised by the exporter to appear on his behalf. Shri S.K. Maheshawri was present, witnessed the examination and also signed the shipping bill as Export Manager of the exporting firm for which he has no powers to do. The CHA having fully known that Shri S.K. Maheshwari is not an employee of the CHA firm and was not authorised to sign on behalf of the CHA firm, kept the matter a secret and did not bring this matter to the notice of the Customs and instead silently abetted the act of impersonation by Shri Maheshwari who signed as Export Manager of the exporting firm. Therefore, the violation of Regulation 13(d) is clearly established by the very conduct of the CHA without any supporting evidence. It is further found that in the Customs proceedings, both the CHA and Shri S.K. Maheshwari have been found guilty of abetment and have been imposed with a penalty of Rs. 1 lakh and Rs. 5 lakhs respectively under Section 114 of the Customs Act. When the CHA and Shri Maheshwari preferred appeals against the said order (which is pending final disposal), this Tribunal directed them make a pre-deposit of Rs. 30,000/- and Rs. 1.5 lakhs each vide order No. S/143-144/WZB/2005/ CIII dated 21/02/2005 as a prima facie case was found against them.Therefore, enough material exists in the records of the case to prove the allegations made against the CHA for violation of the provisions of CHALR, 2004 and, therefore, CHA is liable for punishment. 10.4. The next question is whether the violations by the CHA merits revocation of his licence. The learned Member (Judicial) has come to the conclusion that the punishment already suffered by the appellant is sufficient as the CHA has been out of business for almost three years since the suspension of his licence. When it is established that the CHA has violated the provisions of CHALR, as discussed above, the CHA has to be punished for his mis-conduct. It should be remembered that the CHA licence is not a licence to commit or abet commission of frauds. It is a privilege given to a person to conduct the business of a CHA in accordance with law and to assist the Customs in ensuring compliance to the provisions of Customs and allied laws. Thus the CHA plays a very important role in ensuring compliance of law. 10.5. The Honble High Court of Andhra Pradesh in Commissioner of Customs, Hyderabad II vs. H.B. Cargo Services reported in 2011 (268) ELT 448 (A.P.) held as follows: 16.While great emphasis is placed? by Sri C. Kodandaram, Learned Senior Counsel appearing on behalf of the respondent, on the previous unblemished record of the CHA, it must be borne in mind that a single act of corruption is sufficient to award the maximum penalty which, under the CHALR, is of revocation of the license. (State of Punjab v. Ex-Constable Ram Singh - (1992) 4 SCC 54. That the respondent has been found guilty under Section 114 of the Customs Act, which proceedings have attained finality, is also a factor which must be borne in mind. While Tribunals constituted under the Customs Act, and this Court exercising jurisdiction under Section 130 of the Customs Act, are required to ensure that the punishment imposed is commensurate to the proved acts of misconduct, the present case which not only involves negligence on the part of the CHA in issuing blank shipping bills, but also an act of corruption in receiving Rs. 150/- as consideration for each such blank shipping bill would necessitate imposition of the maximum punishment which, under the CHALR, is of revocation of the license of the CHA. Mere suspension of license, in the facts of the present case, would be wholly unjustified. Ordinarily, matters of discipline lie in the realm of the competent authority i.e., the Commissioner of Customs who is best placed to understand the importance of the CHA in a customs area, and the trust and confidence reposed on him by the customs department. In an appeal, preferred against an order imposing punishment under the CHALR, the CESTAT should not be swayed by considerations of misplaced sympathy. Interference with the punishment imposed would be justified only when it shocks the conscience of the CESTAT. No indulgence can be shown to persons indulging in acts of corruption. The punishment imposed on the respondent, by the Commissioner of Customs, of revocation of their license, when viewed in the light of the grave and serious acts of misconduct held established, is justified. The punishment imposed is not one which can be said to shock the conscience of courts/Tribunals. The order passed by the CESTAT on mere surmises and conjectures and their interference, with the punishment imposed by the Commissioner, on grounds of misplaced sympathy is in excess of their jurisdiction, and gives rise to a substantial question of law necessitating interference by this Court under Section 130 of the Customs Act. The order of CESTAT is, therefore, set aside, and the order of the Commissioner, revoking the license of the respondent CHA, is affirmed. The appeal is, accordingly, allowed. However, in the circumstances, without costs.
10.6. Further, the Honble High Court of Bombay in Commissioner of Customs (General) vs. Worldwide Cargo Movers reported in 2010 (253) ELT 190 (Bom.) held as follows:
28.?In our view, the Tribunal has committed a grave error in interfering with the decision of a domestic authority. In a departmental proceeding one has to see whether the principles of natural justice are followed and the findings are justified from material on record. Once both these aspects are satisfied if an outsider Tribunal interferes, its findings and order will be improper and perverse which is what has happened in the present case. Similarly when one comes to the disciplinary measures, one must not lose sight of the fact that the appellant-Commissioner of Customs is responsible for happenings in the Customs area and for the discipline to be maintained over there. If he takes a decision necessary for that purpose, the Tribunal is not expected to interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or his employees. The decision is best to be left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or mala fide. That is not the case here. 10.7. In the light of the decisions of the Honble High Courts (supra) I am of the view that there is no case for display of sympathy in the instant case. Further, in the emerging security environment, wherein export and import transactions are used to smuggle out or smuggle in arms and ammunitions, drugs and so on, the responsibility on the CHA is very onerous and if any one is found acting in a manner in complete disregard of such responsibility, exemplary punishment needs to be meted out.
11. Therefore, I am of the view that the revocation of the CHA licence by the Commissioner of Customs in the impugned order is sustainable in law and should not be interfered with.
(P.R. Chandrasekharan) Member (Technical) 8