Custom, Excise & Service Tax Tribunal
M/S. Gursharan Singh Walia vs Commissioner Of Customs (Preventive) on 9 August, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-DB
COURT III
Customs Appeal No.C/575/2011-CU [DB]
[Arising out of Order-in-Original No.C.No.04/CHA/2011 dated 11.08.2011 passed by the Commissioner (Appeals), Customs, Central (Preventive), Jaipur]
For approval and signature:
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HONBLE MR. R.K. SINGH, 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?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. Gursharan Singh Walia Appellant
Vs.
Commissioner of Customs (Preventive) Respondent
Present for the Appellant : Mr.L.P. Asthana, Advocate, Ms. Reena Khair, Advocate, Ms. Rita Jha, Advocate, Ms. Shreya Dahia, Advocate, Present for the Respondent: Mr.Ranjan Khanna, D.R., Mr.Rajiv Gupta, D.R. Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) HONBLE MR. R.K. SINGH, MEMBER (TECHNICAL) Date of Hearing : 11.05.2016 Date of Pronouncement: 09.08.2016 FINAL ORDER NO. 52959/2016 PER: R.K. SINGH Appeal is filed against order No.4/CHA/2011 dated 11.08.2011 in terms of which CHA license of the appellant was cancelled in terms of Regulation 20 of CHALR/2004 and security deposit of Rs.75,000/- (as per corrigendum dated 18.10.2011) was also forfeited. Penalty of Rs.1,00,000/- was also imposed under Section 117 of the Customs Act, 1962. The facts briefly stated are as under:-
2. The appellant held CHA license issued by Commissioner, Customs (Preventive), Jodhpur. It did not have its own setup at Kandla Port, and therefore, for last 2, 3 years (with reference to the date of statement of Gurcharan Singh Walia dated 16.10.2010) Shri Kamal Inder Raj Gurnani was attending the Customs clearance work in the name of appellant CHA firm. Shri Gurnani was holding H Card of the appellant and used to pay Rs.900 per 200 foot container to the appellant. The DRI seized mureate of potash (MOP) attempted to be illegally exported and out of the seized quantity, Shri Gurnani had filed shipping bills No.116 9823 and 116 9824 both dated 29.04.2010 for 175 M.T. of MOP. Export of MOP is restricted and Shri Gurnani admitted in his statement that the exports in the name of M/s. Dadi Impex were being attended to by him as the appellant CHAs H card holder and that the Managing Director of M/s. Dadi Impex had told that he wanted to export MOP in the guise of salt and would give payment of actual expenses + Rs.20,000/- per container. The Commissioner held the CHA appellant guilty of violation of provisions regulations 12, 13 (a) 13 (b), 13 (d) 13 (0), 19 (5) and 19 (8) of CHALR/ 2004 and passed the order as above.
3. The appellant essentially contended as under:-
1) Principles of natural justice have been violated inasmuch as the cross examination of Shri Gurnani was not allowed.
2) It did not authorize/ consent to filing of the impugned shipping bills covering 175 tones of MOP.
3) The CHA license cannot be revoked for acts committed by an employee in his personal capacity and cited the decision of Tribunal in the case of Bharat Overseas Communicators vs. Commissioner of Customs, Mumbai - 2007 (209) ELT 142.
4) There was no subletting of the license by the appellant.
5) That Shri Gurnani was employed by the appellant till December, 2009 on a temporary employment basis and thereafter he started undertaking the CHA related work of the appellant as its H card holder.
6) The appellant did not receive any payment in respect of the said 2 containers.
7) There is no contravention of any provision of CHALR.
8) He cited the judgments in the case of Asiana Cargo Service vs. Commissioner of Customs ING 214 (302) ELT 161 (Del.) to assert that punishment should be commensurate with the gravity of offence.
4. Ld. D.R. on the other hand, contended that the appellant had allowed its license to be misused by a person who was a mere H card holder without any supervision and violated Rules 12, 13 & 19 for CHALR 2004, which is a grave offence for a custom house agent and therefore, the impugned order is sustainable.
5. We have considered the contention of both sides.
6. As regards the cross-examination of Mr. Gurnanai, the only possible consequence of denial of his cross examination would be that Shri Gurnanais statement may not be relied upon as an evidence. However, we find that the statement of Shri Gurcharan Walia is quite in harmony with the statement of Shri Gurnanai, and therefore, to the extent the statement of Shri Gurnani is in harmony with that of Shri Walia himself, it certainly is of corroborative value as Shri Walia in cross-examination could not have questioned those aspects which he himself admitted. Shri Gurnani in his statement dated 02.07.2010 interalia stated as under:-
* during December, 2009, he started business of clearing and forwarding from Mundra and Kandla Ports in the name of M/s. Glorex Shipping Services. He was holding H card of CHA firm M/s. Gursharan Singh Walia and had recently appeared in G Card exam which was sponsored by CHA firm M/s. Gursharan Singh Walia;
* at Kandla, he himself handled the export shipments of M/s. Dadi Impex Pvt Ltd., Mumbai for CHA firm M/s. Gursharan Singh Walia. At Kandla, he used to file shipping Bills on RES export (software used for uploading S/Bs and B/Es in ICEGATE) and get it cleared and submit the same to the Container Line;
* he had understanding with CHA Shri Gurusharan Singh Walia for Rs. 900/- per container for the export through Kandla Port.
* he had H card of CHA firm M/s. Gursharan Singh Walia, but he did not receive salary from them, instead, he used to pay Rs. 900/- per 20ft. container to Shri Gursharan Singh Walia.
* Shri Gurusharan Singh Walia is the Director of CHA firm M/s. Gursharan Singh Walia, A-213, Saraswati Nagar, Basni, Jodhpur. At Kandla, no one insisted for signature of CHA and at Mundra Shri Asif, a G Card Holder used to sign the documents on behalf of CHA M/s. Gursharan Singh Walia;
* he was using the said CHA licence for clearances of goods of his parties and billing through his firm M/s. Glorex Shipping Services, which amounted to sub-letting of CHA licence.
7. Shri Kamal Inderraj Gurnani in his statements dated 13.10.2010 (Annexure-II), inter-alia, further stated that:-
* Shri Anand Prakash Chaudhary (Managing Director of M/s. Dadi Impex Pvt. Ltd., Mumbai) told him that he had to export MOT (Muriate of Potash) packed in 50kgs. PP bags in containers in the guise of salt. Shri Anand Prakash Chaudhary also informed that he would give payment of actual expenses plus Rs. 20,000/- per container. He accepted that proposal of handling the export of MOP.
* he was aware of the fact that MOP (Muriate of Potash) is not freely exportable.
* in respect of clearances of exports of M/s. Dadi Impex Pvt. Ltd. , Mumbai through Kandla, he was attending clearance work on CHA licence of M/s. Gursharan Singh Walia, Jodhpur. He was not an employee of CHA firm M/s. Gursharan Singh Walia but with the understanding of payment of Rs. 900/- (Rs. 500/- for agency and Rs. 400/- for misc. expenses) Shri Gursharan Singh Walia had allowed him sub-letting of the CHA licence No. AAJPW7765MCH001 and he was regularly attending clearance work at Kandla on that licence. Therefore, he decided to attend clearance of MOP through Kandla and in respect of clearance through MP & SEZ, Mundra, arranged for other CHA.
* Shri Gursharan Singh Walia came in touch with him through his relative Shri Pritpal Singh during the year 2007, when he was working in M/s. Nakoda Forwarders and since last more than two years he was using the above mentioned CHA licence.
* he was aware of the fact that sub-letting of CHA licence is not allowed. In respect of exports through Kandla he had filed shipping bills in M/s. Gursharan Singh Walias CHA firm.
* he had not obtained authorization letter for the CHA firm from M/s. Dadi Impex Pvt. Ltd. He admitted that it was his fault. Though he was aware of the fact that MOP was not freely exportable, he attended the same. It was his fault. In the greed of getting business he attended the same. He knew that the way of using licence of CHA, as he had used the CHA licence of M/s. Gursharan Singh Walia, was termed as subletting, which was not allowed in terms of CHA Licensing Regulations. He knew that it was not proper.
8. Shri Gursharan Singh Walia, Proprietor of M/s. Gursharan Singh Walia, CHA in his statements dated 16.07.2010 inter-alia, stated that:-
* at Kandla, he did not have their own set up/office but started attending clearance work through Shri Kamal Inderraj Gurnani since last three years. At Mundra they were having office at 206, Ravi Avenue, Port Road, Mundra. Two persons were employed there and one of them Shri Gurjinder Singh Sandhu as H Card Holder.
* through his nephew Shri Pritpal Singh, having transport business at Gandhidham, he met Shri Kamal Inderraj Gurnani during 2007 when Mr. Gurnani was working with M/s. Nakoda Forwarders. Since last two-three years Shri Kamal Inderraj Gurnani was attending customs clearance work in the name of their CHA firm at Kandla Port.
* he did not pay salary to Shri Kamal Inderraj Gurnani. Shri Gurnani is not on roll of his CHA firm. Shri Gurnani was doing business of forwarding in the name of M/s. Glorex Enterprises and used to bring business to him and used to attend clearance work at Kandla. For that Shri Gurnani used to give him Rs. 500/- per container (irrespective of size of the containers) after keeping his charges, he did not pay Shri Gurnani any charges. He was not aware as to how much amount Shri Gurnani used to charge to the customers.
* during March, 2010, Shri Kamal Inderraj Gurnani informed him over phone that an Export House namely M/s. Dadi Impex Pvt. Ltd. wanted to get export clearance of salt through his CHA firm. He informed that it would be voluminous work. He initially hesitated because due to some changes in staff etc. he was not able to cope up with all the works. But when Shri Kamal Inderraj Gurnani insisted that it was a big salt exporter, he agreed and consented for attending clearance work of M/s. Dadi Impex Pvt. Ltd. While filing first two shipping bills in the name of M/s. Dadi Impex Pvt. Ltd., Shri Kamal Inderraj Gurnani had not informed him. When he received acknowledgements from icegate site on his e-mail address, i.e., [email protected], he came to know that two Shipping Bill No. 1169823 and 1169824 both dated 29.04.2010 were filled by Shri Kamal Inderraj Gurnani in the name of M/s. Dadi Impex Pvt. Ltd., Mumbai. Then he called Shri Kamal Inderraj Gurnani over phone and Shri Gurnani informed him that as per previous talk, he had filed those two shipping bills.
* for the said two shipping bills of M/s. Dadi Impex Pvt. Ltd., he had not received any payment. It was Rs. 500/- as per prevailing arrangement/practice between him and Shri Kamal Inderraj Gurnani. Initially it was informed to him by Shri Gurnani that the export goods were salt but after detection of the case by DRI, he came to know that MOP was being exported in the guise of salt by concealing bags of MOP behind some bags of salt in all the seven containers covered under the said two shipping bills. He was aware that it was a restricted item for export.
* no extra charges were fixed for said illegal export of MOP in the guise of salt. Shri Kamal Inderraj Gurnani informed him that it was salt. Till detection by DRI, he was not aware that MOP was being exported. He had never met/talked to Ananad Prakash Chaudhary or any person of M/s. Dadi Impex Pvt. Ltd.
* while sending seizure memo, Shri Kamal Inderraj Gurnani informed him that all the seven containers covered under the said two shipping bills were stuffed at factory premises mentioned in the Annexure C-1s. He had not verified the same. Till date, he had not verified any of the information provided by Shri Kamal Inderraj Gurnani.
* being CHA, it was his responsibility to make proper enquiry about the exporter, export goods and other relevant facts but trusting Shri Kamal Inderraj Gurnani he had not made such enquiries. He also relied on the export documents as informed by Shri Gurnani and had not doubted it because the goods were factory stuffed. Being CHA, it was not proper for him to allow Shri Kamal Inderraj Gurnani to file Shipping Bills on his behalf.
9. Perusal of Shri Walias statement makes it evident that he allowed Shri Gurnanai to engage in customs clearances using the appellants license for about 3 years and was regularly receiving the payments for having done so. The appellant had granted Shri Gurnani H card that Shri Gurnani was acting on behalf of the appellant as its H card holder. H Cards are sponsored by the CHA only for its employees and if Shri Gurnani was not an employee of the appellant, sponsoring his H card was in clear violation of CHALR 2004. The Gujarath High Court in the case of Rajendra Purohit reported in 2012 (278) ELT 54 (Guj.) essentially held as under.
The CHA failed to supervise the action of its employee, neither any contact was made with exporter nor was authorization obtained from it - CHA when engages the employee for conducting his business he acts through him and when alleged illegalities committed are in the course of employment and while discharging his function as CHA he cannot dissociate himself from those act when not having fulfilled is part of the obligation - Order of prohibition can not be said to be passed without any substantiating material. It clearly comes out from the statement of Shri Walia himself and which is also in harmony with the statement of Shri Gurnanai that he had allowed Shri Gurnanai to handle customs clearance using the appellants CHA licence without exercising proper supervision over the activities of Shri Gurnani. Shri Walia has himself asserted that he did not sublet the license to anybody including to Shri Gurnanai which means that the appellant was directly responsible for the action of its H card holder as a H card holder works only for and behalf of the CHA licencee. Shri Walia was duly informed by Mr. Gurnani that the impugned shipping bills for export of goods of Dadi Impex will be filed (as admitted by Shri Walia himself) but Shri Walia did not ensure that proper authorization from the exporter is obtained. This is a clear violation of Regulation 13 (a) as CHA is mandated to obtain an authorization from each of the companies, firms or individuals by whom he is for the time being employed as a customs broker. It is also evident that the appellant did not advise M/s. Dadi Impex to comply with the provisions of the Act. Indeed, leave alone advising the exporter to comply with the provisions of Customs Act, it did not even try to ascertain the bonafides of the exporter, the details of the exports etc. Thus, there is a clear violation of Customs Regulation 13 (d) which mandates the custom house agent to advise his client to comply with provisions of the Act and in case of non-compliance bring the matter to the notice of the Dy. Commissioner of Customs. It also clearly comes out from the evidence that the appellant transacted the business not personally or through an employee as Shri Walia has insisted in his statement that Shri.Gurnani was not an employee, and thus, the violation of Regulation 13 (b) is also established, inasmuch as, as per Regulation 13 (b) a CHA is mandated to transact business either personally or through an employee duly approved by the Dy. Commissioner of Customs or Assistant Commissioner of Customs as the case may be. The appellant also violated Regulation 19(5) as it did not file with the Dy. Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, a written authority as required under the Regulation 19 (5) of the said Regulation which stipulates as under:-
19 (5) where the customs broker has authorized any person employed by him to sign documents relating to his business on his behalf, he shall file with the Dy. Commissioner of Customs a written authority in this behalf.
11. The judgment in the case of Asiana Cargo Service (supra) cited by the appellant does not come to its rescue, inasmuch as, in that case the Honble High Court came to a finding that there was no finding that the trust operating between CHA and customs authorities was violated or irretrievably lost for future operation of licence and that proportionality doctrine escaped the analysis in the order revoking the license and further that the only proved infraction was issuance of G cards to non-employees. In the present case, the appellant allowed its license to be used and operated by Shri. Gurnani, for whom it sponsored H card even though it claimed he was not its employee ( and therefore, sponsoring of H card itself was illegal). The appellant allowed using of its CHA license by Mr. Gurnani not as a one-off but for about 3 years and during this long period did not even take basic precaution to ensure that the license was not misused and that the obligations cast upon the licensee under CHALR 2004 were being fulfilled. The result was that the license got misused for attempted export of MOP which was restricted for export. The CHA licensee is reposed with a great degree of trust by the Customs Authorities and such conduct of the appellant was more than enough to irretrievably breach such trust. Such dereliction of duty on the part of a CHA, can potentially have even graver financial/security consequences. Thus, the appellant gravely failed to discharge its duties as CHA and thereby grossly violated Regulations 13 & 19 of CHALR, 2004 as discussed above. Such serious violation on the part of the CHA can hardly deserve any condonation or leniency. It is also clear from the above analysis that Shri Gurnani was not acting in his personal capacity but in the capacity of the appellants H card holder and therefore the judgement of CESTAT in the case of Bharat Overseas Communicators (supra) hardly comes to the appellants rescue. The above analysis remains valid in the wake of the submissions of the appellant. Indeed, we find that in the case of Worldwide Cargo Movers (supra), the Bombay High Court apart from upholding the principle of liability of the CHA for the act of its employees analyzed this issue in detail and went on to observe as under :
27.We have noted what the Tribunal has observed in the impugned order. In our view, the finding given by the Enquiring Officer and thereafter the order passed by the appellant in original are fully justified on the facts of the case. The authorities relied upon by Mr. Kantawala undoubtedly are mostly of the Tribunal. Even the judgment of the Calcutta High Court speaks about the suspension of licence not to be continued indefinitely. Here, we are concerned with revocation which has been resorted to after a due enquiry. We are conscious that the punishment has to be commensurate with the misconduct and that by revocation the respondent and its employees are going to suffer. At the same time, we cannot forget that though it is the right of a citizen to carry on his business or profession, it is subject to reasonable restrictions and conditions. In the present case, those conditions were already stipulated. In the case of Arvind Bhagat (supra), the order of Madras High Court has been left undisturbed by the Apex Court. It was a case where the CHA had failed to discharge his obligation to exercise proper supervision. In the case of Sri Kamakshi Agency (supra), the CHA was held responsible for the fraudulent activities of a third party whom it had delegated its functions. That was also left undisturbed by the Supreme Court. The present case is some what similar to one of Sri Kamakshi Agency, if not worse. Here, the CHA has brazenly defended his Regulation 8 employee who gave a fake name of his brother as an importer for undervaluing the imported car. Thus, the employee of the CHA was party to the Firm. The CHA has not disowned him and has, in fact, defended him in the reply filed by him before the appellant. That being so, he is clearly responsible vicariously. (emphasis added).
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. (emphasis added).
29. In the circumstances, we allow Customs Appeal No. 37 of 2006 filed by the appellant-Commissioner of Customs since the CESTAT was not justified in setting aside the revocation of the CHA licence in the facts and circumstances of the case and on the material on record. The order of the CESTAT setting aside the order of the appellant-Commissioner of Customs was clearly perverse in law. Appeal No. 37 of 2006 is, therefore, allowed. The order dated 4-4-2006 passed by the CESTAT is set aside and the order dated 17-1-2006 passed by the appellant-Commissioner of Customs is restored.
12. The ratio contained in the above reproduced paras (specially in para 28) of the High Court judgement in the case of World Wide Cargo Movers (supra) is squarely applicable to the present case.
13. Andhra Pradesh High Court in the case of H.B. Cargo Services (supra) in para 16 has also held as under :
While great emphasis is placed by Shri 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) A-SCC-54. (emphasis added)
14. In the light of the above analysis, we do not find any infirmity in the impugned order. Appeal is therefore, rejected.
[Pronounced in the open Court on 09.082016) (R.K. SINGH) (S.K. MOHANTY) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Anita ??
??
??
??
15