Custom, Excise & Service Tax Tribunal
S S Salkar & Company vs Mumbai on 6 May, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/89758/2013
[Arising out of Order-in-Original CAO No: 115/2013/CAC/CC(G)/ PKA/CHA dated 27/09/2013 passed by the Commissioner of Central Excise (General), Mumbai.]
For approval and signature:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri C J Mathew, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
S S Salkar & Company
Appellant
Versus
Commissioner of Customs (General)
Mumbai
Respondent
Appearance:
Shri Anil Balani, Advocate for the appellant Shri V.R.Reddy, Asstt. Commissioner (AR) for the respondent CORAM:
Honble Shri Ramesh Nair, Member (Judicial) Honble Shri C J Mathew, Member (Technical) Date of hearing: 06/05/2016 Date of decision: 04/11/2016 ORDER NO: ____________________________ Per: C J Mathew:
Proceedings for revocation of customs broker licence of M/s SS Salkar & Co (no. 11/245) under Customs Broker Licence Regulations, 2013 was initiated consequent upon penalty imposed under section 114 of Customs Act, 1962 on Shri Pramod Sahadeo Salkar for alleged involvement in misdeclared exports to avail undue benefit under the Duty Exemption Pass Book (DEPB) scheme. M/s Mars Overseas attempted to export calcium carbonate in the guise of amoxyccillin trihydrate under shipping bill no. 3295430/19.2.2005 which was ostensibly handled by M/s SS Salkar & Co but the work was executed by Shri Dattatray Chandrakant Bodke who, it was claimed, had no connections whatsoever with M/s SS Salkar & Co. The adjudicating authority who invoked the provisions of Customs Act, 1962 did find that to be so but also recorded his finding that Shri Pramod S Salkar, partner in the customs broking firm, had allowed Shri Bodke to use the licence for the exports handled by him. Consequently, penalty was imposed on Shri Pramod S Salkar.
2. The proceedings under Customs Broker Licencing Regulations, 2013, culminated in the impugned order no. 115/2013/CAC/CC(G)/ PKA/CHA dated 27th September 2013 revoking the licence and forfeiting the security deposit. The revocation followed the prescribed procedure of inquiry by a designated inquiry officer. The charges that were framed for inquiry were: contraventions of regulation 12 by selling or otherwise transferring the licence, of regulation 13(a) in not having obtained authorization from the exporter, of regulation 13(b) in failing to transact either personally or through employee, of regulation 13(d) in failing to advise his client to comply with Customs Act, 1962, of regulation 13(e) in filing to exercise due diligence to ascertain correct information of imparted to client, of regulation 13(k) in failing to maintain records and accounts, of regulation 13(n) in failing to discharge his duties with speed and efficiency and of regulation 19(8) in failing to ensure proper conduct of his employees.
3. Having heard both Learned Counsel for appellant and Learned Authorized Representative, we proceed to decide the appeal. Before we do so, we would like to draw attention to certain observations of the inquiry officer which displays a patent lack of understanding of the nature of duties assigned to him. The issue of a customs brokers licence is a licence of employment in customs brokering; though not remunerated by the licencing authority, it is, nevertheless, akin to serving in relation to specified activities under Customs Act, 1962. Revocation has the impact of dismissal requiring the same compliance as in disciplinary proceedings under labour laws. The same sanctity, diligence and adherence to principles of natural justice alone can accord credibility to the proceedings.
4. The inquiry officer has prefaced his report by laying down a constraining framework for the inquiry in a manner not contemplated by the Customs Broker Licencing Regulations. To begin with, reliance has been placed on the statements recorded under section 108 of Customs Act, 1962. That provision can be invoked by a gazetted officer either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under the Act. The said statements were recorded in furtherance of inquiry under Customs Act, 1962 into the attempt by M/s Mars Overseas to smuggle goods and not in proceedings under the Customs Broker Licencing Regulations, 2013. The conferment of status of judicial proceeding under section 193 and section 228 of the Indian Penal Code to inquiry under section 108 of Customs Act, 1962 is restricted to the intent and purposes of section 108. Customs Broker Licencing Regulations, 2013 is a self-contained provision framed and notified under section 146 of Customs Act, 1962. The statements under section 108 of Customs Act, 1962 may narrate the incidents leading upto initiation of proceedings under the Customs Broker Regulations but they cannot purport to substitute for the various roles assigned to the different persona or prescription that are to be complied with under the Regulations. The process under the Regulation must ascertain the facts thereof independently because the consequences are not fiscal penalties but loss of livelihood. Compounding this travesty of mandate of the Regulations, the inquiry itself is reduced to a farce by his assertive, though hardly authoritative, statement that 33. At the outset, I would like to make it clear that by reason of the Subsection (3) of Section 108 thereof the person, upon whom summons is issued, is bound to state the truth. A statement made pursuant to a summons under section 108 thus binds the maker of the statement. Therefore, statements recorded under section 108 will prevail over the arguments put forth during the hearings conducted before me and in the defence of the CCHA.
5. This makes it abundantly clear that the proceedings before the inquiry officer have not been in consonance with the principles of natural justice. The report of the inquiry officer is vitiated to that extent.
6. It is an admitted fact that Shri Bodke is neither a partner nor an employee of the appellant. It is also an admitted fact that it was Shri Bodke who signed the shipping bill and carried out all the activities of a customs broker in relation to the smuggled consignment. It is also indubitably clear that action under the Regulations were a follow-up of the penalty imposed under section 114 of Customs Act, 1962. In these circumstances, all charges other than that of sub-letting of the licence or allowing any other person to use the licence are mere embellishment without any scope for either evidencing or denial. For if there was unauthorized use of licence, none of the other mandates that flow from authorized use of licence are pertinent. It is admitted by the inquiry officer that no evidence other than statement of Shri Salkar and Shri Bodke has been placed on record. The relationship between the appellant and the one who, illicitly, used the name and style of the appellant has been inferred from statements that were not recorded in connection with the revocation proceedings. Mere assigning of oracular status to the statements recorded for some other purpose merely by drawing attention to lack of retraction in time is a leap that cannot substitute for several individual steps of a statutory inquiry into articles of charge supposedly based on firm grounds of imputations. There is no evidence of any agreement oral or written between the two that would fasten the responsibility for the misuse upon Shri Salkar. This has been admitted to in the inquiry report as reproduced in paragraph 51 of the impugned order:
51. I find that all other charges leveled against CCHA are consequential to the violation of Regulation 12 of the CHALR. It is established that CCHA allowed unauthorized use of CHA license by Shri Datta. CHA confined himself only to collect commission based on documents processed by Shri Datta using CHA license and left no scope to supervise or have control over the clients of Shri Datta. In this situation all the omissions and commissions on part of Shri Datta using CHA license becomes responsibility of the CCHA. but has attempted the leap without any dexterity whatsoever.
7. It would appear that the inquiry officer would have been satisfied that appellant had no part in the misdemeanour of Shri Bodke had a police complaint been filed by the appellant. It is moot if the inference of misdemeanour has any solid foundation given the lack of any such action by customs authorities, who, too, should have been galvanized with the integrity of their customs broker administration system having been mocked by this misdemeanor. To the extent that appellant did not suffer any pecuniary loss, there is no justifiable reason to expect the appellant to pursue a criminal complaint. It is not by failure to act according to behavioural expectations that charge-sheets are established as proved but by evidences presented in support of the imputation of misconduct.
8. It would appear that customs authorities had, figuratively speaking, failed to keep proper guard at the gate. Having been empowered under the Regulations to issue licences to be operated by authorized person and activities thereunder to be executed by employees, all of them registered with the Customs House under relevant provisions of the Regulations, there appears to be no system of ascertainment that it was the authorized person who did sign the shipping bill or that employees issued with prescribed passes were actually involved in handling the cargo. A licencing system, with stringent requirement of authorization and issue of passes, is of little avail if it fails in enforceability. Not only was a shipping bill, signed by an unauthorized person, allowed to be filed but it is stated authoritatively that the unauthorized person was present at the examination of the cargo. It is surprising that such person, lacking credentials, was allowed access to customs areas and indeed allowed to participate in proceedings. If such be the ease of insinuation, the contention of the appellant that they were unaware of the illicit use of their licence is acceptable as within the realm of the possible. It would appear that there is no let or hindrance to any person filing a bill of entry or shipping bill without the knowledge of the broker whose authority is usurped. In these circumstances, we find no merit in the acceptance of the report of the inquiry officer by the licencing authority as sufficient grounds for revocation of licence and forfeiture of security deposit.
9. We now turn to a most crucial aspect. The proceedings commenced with imposition of penalty under Customs Act, 1962 which was carried to Commissioner of Customs (Appeals) by appellant . Our attention is drawn to order-in-appeal no. 2244 (ADJN-EXP)/2014 (JNCH)/EXP-84 dated 20th May 2014 which set aside the penalty imposed on Shri Pramod Salkar. With that, the action that prompted the proceedings leading to the impugned order stands expunged as does the cause of action.
10. Admittedly, independent inquiry was not carried out before proceeding with penalty under regulation 20 of Customs Brokers Licencing Regulations, 2013. Action was based on evidence that was seemingly sufficient for initially imposing penalty under section 114 of Customs Act, 1962 but found to be inadequate in appellate proceedings. The evidence that was the foundation of the penalty having been discredited in its hierarchical progression, its tertiary use in proceedings under the Regulations, itself a vitiating factor, lacks sanctity.
11. In view of the above reasons, the appeal is allowed and the impugned order set aside.
(Pronounced in Court on 04/11/2016) (Ramesh Nair) Member (Judicial) (C J Mathew) Member (Technical) */as 9 9