Custom, Excise & Service Tax Tribunal
M/S. Cargo Concept (Bombay) Pvt Ltd vs Commissioner Of Customs(Gen), Mumbai on 28 June, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. C/85924/15 [Arising out of Order-in- Original No. 20/CAC/CC(G)/SRP/CBS(Admin) dated 27/3/3015 passed by the Commissioner of Customs (General), Mumbai-I ] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. C.J. Mathew, Member(Technical) =======================================================
1. Whether Press Reporters may be allowed to see : No
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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
=======================================================
M/s. Cargo Concept (Bombay) Pvt Ltd
:
Appellant
VS
Commissioner of Customs(Gen), Mumbai
:
Respondent
Appearance
Shri. A.K. Prabhakar, Advocate for the Appellants
Shri. D.K. Sinha, Asstt.Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr Ramesh Nair, Member(Judicial)
Honble Mr. C.J. Mathew, Member(Technical)
Date of hearing: 28/6/2016
Date of decision: /2016
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in- Original No. 20/CAC/CC(G)/SRP/CBS(Admin) dated 27/3/3015 passed by the Commissioner of Customs (General), Mumbai-I, by which Ld. Commissioner ordered revocation of CHA License of M/s. Cargo Concepts (Bombay) Pvt Ltd and also ordered forfeiture of entire amount of security deposit of the appellant under provisions of regulation 22(7) and 20(1) of then CHLR 2004( now Regulations 20(7) and 18 of CBLR, 2013).
2. The fact of the case is that as per the intelligence received by the DRI, it was found that M/s. Cosmos Enterprises having IEC No. 3706000555 is indulged in misuse of drawback. On development of intelligence it was gathered that M/s. Cosmos Enterprises had filed certain shipping bills in respect of container No. RWAU 1202394, which was lying in NSICT Terminal OF JNPT, Nhava Sheva. The said container was called back from NSICT Terminal JNPT to the premises of container Coporation of India Ltd, Dronagiri Rail Terminal and it was examined under Panchanama on 1/11/2006. It was noticed that consignment of Gents T Shirts covered under five shipping bills Nos. 463726, 4693727, 4693728, 4693732 and 4693732 all dated 23/10/2006 with declared value of Rs. 87,64,800/- and drawback involved Rs. 6,83,654/- filed in the name of M/s. Cosmos Enterprises had been stuffed in the said container. The description of the goods covered under all the above five shipping bills was given as Readymade Garments-Gents T Shirts, the declared price was USD 6.40 per pc and Drawback per piece was claimed @ 7.8 % of the FOB value i.e. Rs. 22.79. The representative samples of the said consignment were sent to The Textile Committee. The Textile Committee forwarded the Test Report stating that all the samples of the Gents Garments-T Shirts were made of 100% cotton fabrics. The said good were classified under the Customs Tariff Item No. 6109.9090 pertaining to T-Shirts made of other textile material other than synthetic fibres, silk, wool or fine animal hair. This description appeared to be misdeclared as the subject goods were actually found to be made of 100% cotton and hence correctly classifiable under Customs Tariff item No. 6109.1000 whereas garments made of cotton fabric were classifiable under drawback tariff items No. 6109.01 which is eligible for drawback @ 6.7% of the FOB value as per the Table of drawback rates 2006-07, thus it appeared that M/s. Cosmos Enterprises had mis-declared their goods as garment made of manmade fibers in order to avail higher drawback, though the same were actually garments made of cotton. It was noticed from the said shipping bills of M/s. Cosmos Enterprises, that M/s. Cargo Concepts (Bombay) Pvt Ltd had handled the Customs clearance of the goods covered under the said shipping bills. Inquiry was conducted from one Shri. Tukaram Dongre, Director of M/s. Cargo Concepts(Bombay) Pvt Ltd, in his statement stated that he has joined M/s. Cargo Concepts (Bombay ) pvt Ltd as a director after passing Custom House examination in 2005. He had been mainly looking after operation department of the said CHA firm. In his statement, he stated that they had handled the custom clearance of the export shipments of M/s. Cosmos Enterprises, Kutch and further stated that they had received the said client through one Mr. Satyajit Sinha, Marketing Executive of M/s. Almighty International Logistics (I) Ltd (shipping firm); that they had handled the customs clearance of the export consignments of M/s. Cosmos Enterprises on 13/10/2006 and 23/10/2006; that they had attended to shipping bills processing, examination of goods possessing of EP copy of the shipping bills pertaining to M/s. Cosmos Enterprises; that they had charged Rs. 500/- per shipping bill for this work; that Shri. Satyajit Sinha informed that Shri. Hamid Majid Shaikh was the owner of M/s. Cosmos Enterprises, who was out of station. Shri. Tukaram Dongre stated he had neither met nor seen Shri. Hamid Majid Shaikh personally and that he had not obtained any authority letter from M/s. Cosmos Enterprises in respect of handling of Customs clearance of their goods. Report on misuse of drawback scheme was communicated by the DRI officers vide show cause notice dated 23/10/2008 and the same was received in the office of commissioner on 11/11/2008. In view of the above inquiry, proceedings against appellant, invoking of provisions of regulations 20(2) of CHALR, 2004 was initiated. License of the appellant was placed under suspension vide order No. 70/2008 dated 19/11/2008, however suspension was revoked subsequently by the commissioner vide order No. 140/2009 dated 4/3/2009. During the inquiry proceedings notice dated 23/12/2008 was issued to the appellant wherein article on charges were leveled for the alleged contravention of Regulation 13(a), 13(d) and 13(n) of the CHALR, 2004. A disagreement memo dated 20/2/2015 was issued to the CHA and hearing was also granted on 10/3/2015. As per the ground of disagreement memo in respect of the three charges it was discarded and held that appellant have violated the regulations of 13(a), 13(d) and 13(n) of CHALR, 2004. After considering the submission of the CHA and submissions made in the personal hearing, Ld. Commissioner has passed an order for revocation of the license. Extract of the Commissioners findings on all the regulation is under:
(a) In respect of regulation 13(a) of CHALR 2004 it was held that authority letter submitted by the appellant is in respect of earlier 8 consignments cleared by the CB and not for the consignment covered in the present case. The authorization letter also not accepted on account that signature appearing on the said letter is not tallying with the signature which was figuring on the face of PAN card, IEC certificate and bank opening forms of Shri. Hamid Majid Shaikh. As regard the authority letter dated 21/10/2006 for impugned five shipping bills submitted by the appellant vide their letter 2/3/2015 was not accepted on the ground that the same was submitted on the belated stage and same was never presented before any authority thus Shri Dongre also admitted in his statement that they received client through middle man and not directly from the exporters therefore Ld. Commissioner held that appellant has violated the provision of regulation 13(a) of CHALR, 2004.
(b) As regard the violation of regulation 13(d) of CHALR, 2004, Ld. Commissioner contended that it is accepted fact that appellant have not met exporter. It is obligatory on the part of the CHA to direct their client to comply with all the rules and regulations. In the present case CHA was is no position to advise their client as they were having no idea about the whereabouts of the exporter. CB has failed in his obligation. Ld. Commissioner also observed that in the present case it is clear case of mis-declaration and as well as mis-classification with view to avail higher rate of drawback. With the expertise of CHA, it was mandatory on the part of the CHA to exercise due diligence in respect of drawback consignment. CHA has blindly accepted documents and not advised their client therefore the CHA violated Regulation 13(d) of CHALR, 2004.
(c) Ld. Commissioner as regard the 13(n) contended that since CHA did not possess authority letter, acceptance of clearance work through unauthorized person indicates that the lapses of CHA in carrying out clearance work properly, hence CHA has failed in efficiently discharging of their obligation as Custom House Agent. Therefore they are culpable for violation of regulations 13(n) of CHALR, 2004. In view of the above findings, the Ld. Commissioner passed revocation order which is under challenge before us.
3. Shri. A.K. Prabhakar, Ld. Counsel for the appellant submits that the revocation order passed by the Ld. Commissioner holding that there is violation of provisions of Regulations 13(a), 13(d) and 13(n) of the CHALR, 2004. For holding this, entire basis is that appellant has not obtained authorization and on this basis itself, it was held that all the three regulations were violated. He submits that appellant indeed submitted the authorization letter, it was discarded by the Ld. Commissioner on the basis that signature is not tallying with some other documents, however it was not proved that authorization letter is not genuine. Secondly much emphasis was given to the statement of Shri. T. Dongre, wherein he stated that they did not possess authorization letter. He submits that genesis of the case is the allegation of mis-declaration of classification of readymade garment in view to avail excess drawback. He submits that it is undisputed that as per the documents submitted by the exporter, it does not appear that there is any mis-declaration of the classification. It is undisputed that the nature of the goods attempted to be exported could found out only after testing of the goods by the Textile Committee, therefore even customs authority on eye estimation could not know which quality of garment it is. It is allegation that garments were made of 100% cotton and not other than 100% cotton. This being highly technical aspect, cannot be expected from CHA to know about characteristic of the product. It is general practice that CHA carries out his job mainly on the basis of documents produced before him and if he finds any apparent mistake in the documents, he suppose to point out otherwise it is not possible for CHA to check content of consignment. He submits that the whole case was decided only on the basis of Shri. T. Dongres statements, however as regard the authorization letter from the exporter, Shri. T. Dongre was not aware of the same, as authorization letter was lying in the office of CHA. Apart from this charge, which is not been substantiated there is not a single incidence which shows that the CHA has not acted efficiently. As regard the charge that the appellant has not advised, he submits that it is not general practice to advise the client in each and every case. If any discrepancy is found either in the documents submitted by the exporters, it is obligatory on the part of the CHA to advise their client. But in the present case there was no apparent discrepancy either in the goods or in the documents therefore contention of the Ld. Commissioner that appellant have not advised their client does not stand. He further submits that it is fact on record that appellant was paid only Rs. 500/- per documents which is very reasonable as CHA charges, even this proved that appellant are nowhere concerned with any malafide act, if any, on the part of the exporter, as appellant has not been benefited on that account. He also refers that penalty against the appellant has been set aside by the Commissioner (Appeals) vide Order-in-Appeal No. 38(Adj-Exp)/2016(JNCH)-Appeal I dated 31/3/16 which was imposed by the Adjudicating authority under Section 114(iii) of Customs Act. He submits that since in the customs case related to present CHALR proceedings, the appellant was exonerated from the penalty, this proved that appellant had no role in the exporters attempt to avail higher and undue drawback by exporting impugned goods. In the said order it was established that CHA had no prior knowledge therefore penalty was dropped. As regard the Ld. Commissioners findings that appellant violated the provisions of regulation 13(n), he submits that the said the charge of violation of said regulation does not sustain for the reason that there is no dispute that the present appellant has acted as CHA in filing the shipping bills of the exporter and they have been paid Rs. 500/- per documents by the exporter. This itself shows that appellant have been authorized by the exporter. In support of his submission, he placed reliance on following judgments:
(a) P.P. Dutta Vs. Commissioner of Customs, New Delhi[2001(136) ELT 1042(Tri. Del.)]
(b) Dominic & Co. Vs. Commissioner of Customs(G), Mumbai[2013(296) ELT 494(Tri. Mumbai)]
(c) Natraj Shipping Agency Vs. Commr. Of Cus. (General), Mumbai-I[2014(308)ELT 103(Tri. Mumbai)]
(d) Commissioner of Customs( General), Natraj Shipping Agency[2016(332) ELT 237(Bom.)]
(e) Dakor Clearing & Shipping P ltd Vs. Commr. Of Cus. (General). Mumbai[2015(326) ELT 178(Tri. Mumbai)]
(f) K.S. Sawant & Co. Vs. Commissioner of Customs (General), Mumbai[2012(284) ELT 363)Tri Mumbai]
(g) Maruti Transports Vs. Commissioner of Customs, Chennai[2004(177) ELT 1051(Tri. Chennai)]
(h) Peak Agencies Vs. Commr. Of Cus., (General), Mumbai[2015(327) ELT 572(Tri. Mumbai)]
4. On the other hand, Shri. D.K. Sinha, Ld. Asstt.Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that appellant was involved in export of garment wherein exporter mis-declared the goods with intent to claim higher drawback. The appellant being CHA was duty bound to give proper advice, act speedily and efficiently which they failed to do which resulted the fraudulent claim of the drawback of the exporter therefore appellant is responsible for illegal act and the Ld. Commissioner rightly revoked the license. In support of his submission, he placed reliance on following judgments:
(a) Commissioner of Customs Vs. M/s. K M Ganatra & Co [2016-TIOL-13-SC-CUS]
(b) P.B. Nair C& F Pvt Ltd Vs. Commissioner of Customs(General) Mumbai[2015(318) ELT 437(Tri. Mumbai)]
(c) Delta Logistics Vs. Commissioner of Central Excise, NCH, Mumbai [2014(309)ELT 171(Tri. Mumbai)]
(d) Noble Agency Vs. Commissioner of Customs, Mumbai[2002(142) ELT 84(Tri. Mumbai)]
5. We have carefully considered the submissions made by both sides and also gone through case laws cited by rivals.
6. We find that in the present case the offence on the part of exporter is that they mis-declared the goods inasmuch as readymade garment made of 100% cotton falling under chapter heading 6109.01 was mis-declared under tariff item No. 6109.03 thus drawback, instead of 6.7% it was claimed @ 7.8 %. The difference of the quality could be known only after the samples were got tested by the customs authority from Textile Committee. This itself shows that anybody from eye estimation cannot know, even custom authority could not know that the garment is made of 100% cotton or otherwise. Appellant being CHA acted as a CHA of the exporter on the basis of documents submitted to him. As per the document description declared was not incorrect i.e. readymade garment /T shirt therefore we do not see any involvement of the appellant and even there was no reason to doubt the nature of goods. Therefore we are very clear that appellant was not involved in whatsoever mis-declaration made by the exporter. It is also observed that as regard the custom proceedings whereunder the appellant was also implicated and penalty of Rs. 15 lacs was imposed by the adjudicating authority, the same was dropped by the Commissioner (Appeals) on the ground that appellant was not involved in any mis-declaration made by the exporter. We also found that the appellant were paid Rs. 500/- per document for their clearance in respect of exports of the impugned goods, there is nothing on record to show that the appellant have benefited extraneously over and above the actual CHA fees i.e. Rs. 500/- per document. In view of this position there is no doubt that appellant CHA was nowhere involved in any mis-declaration of the goods made by the exporter. As regard the authorization letter, we find that the said charge was made by the Commissioner only on the basis of statement of one Shri. T. Dongre, who said to have stated that they did not possess the authority letter from their client, M/s. Cosmos Enterprises. In this regard, we find that appellant during the proceedings indeed submitted the authorization letter before the Commissioner, though said letter was in respect of earlier eight shipping bills. We are of the view that once the exporter gave the authority letter and thereafter the business is continuing, the same authority letter will be sufficient for carrying out the business in future also therefore we do not see that in each and every consignment or each and every shipping bill separate authorization is required. Once the authorization was given by the exporter it is sufficient compliance of regulation 13(a) of CHARL, 2004. As regard the allegation by the Ld. Commissioner that signature on the authority letter was not tallying. We find that the Ld. Commissioner has not made any efforts to investigate in the matter of signature therefore it was not conclusively proved that authority letter is not genuine. Ld. Commissioner in one hand contended that the signature on the letter is not tallying and on the other hand said that authority letter is in respect of earlier exports this itself contradicts his stands. We further observed that when the shipping bill was filed by the CHA and it has been accepted by the exporter, this fact itself shows that appellant has been duly authorized by the exporter for carrying out clearance work of exports consignments. As regard the violation of the regulation 13(d) and (n), we find that Ld. Commissioner held that there is violation under regulation 13(d), contending that appellant was given CHA work not directly by the exporter but through one shipping line, therefore appellant have never met to the exporter, accordingly appellant have not advised the exporter. In this regard, we find that this is general practice in the CHA business that CHA work is brought by the various intermediary but ultimately it is CHA and importer or exporter which are under contract regarding the CHA clearance as well as payment term. Therefore merely because some shipping line brought client to the appellant does not lead to any conclusion that there was no relation between appellant and exporter. As regard the charge on the appellant that they have not advised to the exporter, we do not find any substance in this charge for the reason that in the present case as regard the documents there was no discrepancy. Even after detection different nature of the goods the description of the goods remained same. Therefore there was no occasion for CHA to advise client, hence this charge is not sustainable. As regard the charge of delay and deficiency in the performance by the CHA, we find that the appellant have performed their clearance work of export consignment in usual course and nothing brought on record that appellant as CHA have delayed in the clearance work or there is any deficiency in the performance of clearance work on the part of the appellant. Therefore this charge under Regulation 13(n) does not establish. We have gone through the judgments cited by the rivals and considered the same, however we do not need to discuss each judgment as every case of revocation of CHA licence is based on fact of individual case. As per our above discussion, we are of the considered view that the impugned order is not sustainable, hence the same is set aside. Appeal is allowed.
(Order pronounced in court on______________) C.J. Mathew Member (Technical) Ramesh Nair Member (Judicial) sk 14 C/85924/15