Custom, Excise & Service Tax Tribunal
Solanki Shipping Agency vs Commissioner Of Customs (General) on 18 September, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.C/88024/13 (Arising out of Order-in-Original No.64/CAC/CC(G)/PKA/CHA (Admn) dated 07/05/2013 passed by Commissioner of Customs (General), Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) 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 :Yes 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? ========================================
Solanki Shipping Agency Appellant Vs. Commissioner of Customs (General) Respondent Mumbai Appearance: Shri.N.D.George, Advocate, for appellant Shri.Senthil Nathan, Addl. Comm. (Ar) for respondent CORAM: Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) Date of Hearing : 18/09/2014 Date of Decision : 18/09/2014 ORDER NO Per: P.R.Chandrasekharan
1. The appeal is directed against Order-in-Original No.64/CAC/CC(G)/PKA/CHA(Admn) dated 7-5-2013 passed by the Commissioner of Customs (General), New Custom House, Mumbai. Vide the impugned order, the said authority has revoked the CHA licence No.11/164 issued to the appellant, M/s Solanki Shipping Agency, Mumbai and also forfeited the security deposit of the appellant. Aggrieved of the same, the appellant is before us.
2. The facts relevant to the case are briefly as follows. A case of mis-use of Import-Export Code (IEC) of M/s Broaden Merit Export Holder was reported to the Customs in respect of a consignment imported vide B/E No.993561 dated 8-9-2008. On enquiry, it was found that one Mr. Yusuf had imported the consignment using the IEC of Broaden Merit Export Holder and the CHA involved was M/s Solanki Shipping Agency. The Directorate of Revenue Intelligence (DRI in short) was investigating a case of large scale import of miscellaneous goods hugely undervalued by one Mr. Salim Lalani of M/s Mahek Consultancy Services. Investigation revealed that they were using the CHA licence of Solanki Shipping Agency by paying Rs.30,000/- per month for undertaking such illicit imports. Further the investigation revealed that mis-use of the said CHA licence was done by other importers, namely, M/s Intership, Sagar Overseas, Parshwa Overseas, Raj Traders, Classic Enterprises and the partners/proprietors confessed to using the CHA licence of M/s Solanki Shipping Agency by paying huge sums on a monthly basis. Shri Narottam Maganlal Solanki, partner of Solanki Shipping Agency in his statement recorded under section 108 of the Customs Act admitted that he did not know any of the importers nor had he met them. However, he was sub-letting his licence and undertaking the transactions through Shri Manish Duggal of Menil International, Vijay Mange of Yash Forwarders and Javed, Shiraj and Rupesh of Mahek Consultancy Services, by wrongly showing them as his employees and obtaining customs passes. Similar mis-use was noticed in the case of M/s Catelite Enterprise and M/s Carol Enterprise which were fictitious firms but the actual importers were Mr. Nasir Ali Khan and Mr. Abdul Gani. In this case also the CHA involved was Solanki Shipping Agency. Imports mis-using the IEC codes of Elite Enterprises and Wanbury Creations were also noticed. Imports by Anmol Traders were also undertaken by using the CHA licence of Solanki Shipping Agency. Charges of mis-conduct and violation of Custom House Agent Licensing Regulations, 2004 were imputed against Solanki Shipping Agency for contravention of Regulation 12 for sub-letting the CHA licence, Regulation 13 (a) for not obtaining authorizations from the importers, Regulation 13 (b) for conducting the transactions by others who are not employees of the CHA, Regulation 13(d) for not advising the clients for compliance with the provisions of the Customs Act, Regulation 13 (e) for not exercising due diligence, Regulation 13 (n) for not discharging the functions with speed and efficiency and Regulation 19 (1) for undertaking transactions through persons who were not employees of CHA. The Inquiry Officer held that none of the charges against the CHA were proved by holding that Shri. Narottamdas Maganlal Solanki had retracted his confessional statement and the statements of others, though not retracted, are not convincing. Accordingly he gave benefit of doubt to the appellant. However, the Licensing Authority disagreed with the findings of the Inquiry Officer. He observed that Shri Narottamdas Solanki had confessed to sub-letting of his licence to various people for a consideration before different investigating agencies in different cases on different dates. The retraction was never brought to the notice of the investigating agency immediately and all his statements have not been retracted but only a few. Further, the sub-letting of the licence was also corroborated by others who had used the licence and their statements had not been retracted. Accordingly he held the CHA guilty in respect of all the charges and revoked the licence. Hence the appeal before us.
3. The ld. Counsel for the appellant makes the following submissions:-
3.1 Regulation 12 deals with selling or transferring of licence. Allowing unauthorised persons to use the licence does not amount to sale or transfer and hence, there is no violation of the said provision.
3.2 Shri. Solanki had retracted his confessional statement and therefore, no reliance can be placed on such retracted confessions. Reliance is placed on the decision of the apex Court in the case of K.I. Pavunny [1997 (90) ELT 241 (SC)] 3.3 During the inquiry proceedings, the appellant had produced salary slips of persons whom he had authorised to undertake the transactions to prove that they were his employees. This has not been given due recognition by the adjudicating authority.
3.4 The inquiry conducted by the Inquiry Officer and the statements made therein also are valid piece of evidence to prove the innocence of the appellant. It is a normal practice in the trade to procure business on commission basis. The adjudicating authority has treated such intermediaries as persons using the licence of the appellant CHA. Reliance is placed on the decision of the Tribunal in the case of Crown Shipping Agency [2004 (178) ELT 885] wherein it has been held that obtaining deposit or procurement of clients can not be considered as sale or transfer of licence.
3.5 The ld. Counsel pleads that the appellant was forced to engage intermediaries to obtain business because he was very old and was not able to canvass business on his own.
3.6 Lastly he pleads that the licence has remained under suspension since 2008 and that should be considered as sufficient punishment for the violations, if any, committed by the CHA and the punishment of revocation is not warranted in the facts and circumstances of the case.
4. The ld. Dy. Commissioner (AR) appearing for the Revenue re-iterates the findings of the adjudicating authority. He submits that the violations committed by the CHA are several and on many occasions. Therefore, the punishment of revocation is justified.
5. We have carefully considered the submissions made by both the sides. Our findings and conclusions are discussed in the ensuing paragraphs.
5.1 It is a settled position in law that under Regulation 22 of the CHALR, 2004, the Commissioner of Customs, the licensing authority is empowered to disagree with the findings recorded in the inquiry report and subject to intimating the CHA of the grounds of disagreement, he can continue with the proceedings under the said Regulation as held by the honble Bombay High Court in the matter of Delta Logistics [2012 (286) ELT 517 (Bom)]. In the present case, it is seen that the Commissioner has issued a Disagreement Memorandum dated 16-3-2013 bringing out the grounds for disagreeing with the findings of the Inquiry Officer. Thus there is no procedural irregularity committed.
5.2 From the records of the case, it is seen that the appellant CHA was involved in a number of cases investigated by different agencies where mis-use of IEC code, mis-declaration of goods under import, etc were noticed. To cite a few, the appellant was involved 1) in a case registered by SIIB (Import) of JNCH, Nhavasheva wherein mis-use of IEC code of M/s Broaden Merit Export Holder was involved; 2) 3 cases registered by DRI - 2 against Mahek Consultancy Services (under-invoicing of imports); one against Catellite and Carol Enterprises (mis-use of IEC code); 3) 2 cases registered by Nhava Sheva Preventive unit (mis-use of IEC code of Wanbury Creations and Elite Overseas and 4) case registered by SIIB (Imports) in respect of imports by Anmol Traders. In all these cases, the appellant had admitted to sub-letting of CHA licence to various parties for a consideration before the concerned investigating agencies. When a CHA is involved repeatedly in a number of cases, it cannot be a mere co-incidence. In all these cases, the persons who utilized the CHA licence of the appellant had also admitted to sub-letting of the licence for a consideration. The statements of S/Shri. Salim Lalani and Javed Salani of Mahek Consultancy Services, Sunil Atkari of M/s Intership, Rahul Jain and Amit Salecha of Sagar Overseas, Vijay Mange of Yash Forwarders, Pratik Sheth of Parshwa Enterprises, Taher Ringwala of Raj Traders and Salim Shaikh of Classic Enterprises recorded under section 108 clearly establish the sub-letting of the CHA licence for huge monetary considerations. None of these statements have been retracted. As regards the retraction of the statements recorded by DRI, the said retraction was not made before the authority who recorded the statement but by means of an affidavit and the same was never brought to the notice of the investigating authority or before the Licensing Authority at the time of post-decisional hearing when the CHA was suspended. Such retraction by way of affidavit was brought to the notice of the authorities only in 2010 in respect of statements made in 2008, that is, after a lapse of about 2 years. Therefore, no credence can be attached to such belated retractions which are nothing but afterthoughts. The honble Allahabad High Court in Zaki Ishrati Vs. CC & CX, Kanpur [2013 (291) ELT 161 (All) has held that if retraction is not addressed to whom the statement was given it could not take away the effect of the statement.
5.3 A confessional statement given before a Gazetted Officer of Customs under section 108 of the Customs Act is a valid piece of evidence under the Indian Evidence Act, as held by the honble apex Court in Ramesh Chandra Mehta vs. State of West Bengal [ 1970 AIR 940 SC ] and a lot of other decisions. Further in K.I. Pavunny Vs. Asst. Collector of Central Excise [1997 (90) ELT 241 (SC)], the honble apex court held that In a criminal trial punishable under the provisions of the IPC, it is now well settled legal position that confession can form the sole basis for conviction. If it is retracted, it must first be tested whether confession is voluntary and truthful inculpating the accused in the commission of the crime. Confession is one of the species of admission dealt with under Sections 24 to 30 of the Evidence Act and Section 164 of the Code..
In the present case, corroboration is available from the statements of a number of persons and appellants own statements which have been recorded before other investigating agencies, namely, Nhava Sheva Preventive Unit, SIIB, Nhava Sheva and New Custom House. Therefore, the reliance placed by the Commissioner of Customs on the inculpatory statement of the appellant CHA cannot be faulted at all and we hold accordingly.
5.4 When a licence is sub-let for huge monetary consideration repeatedly, it cannot be said that the appellant used the licence on his own account. It does amount to transfer of the licence for use by others. Therefore, the charge of contravention of Regulation 12 stands clearly established and we hold accordingly.
5.5 As regards the charge of contravention of regulation 13 (a) that the CHA did not have authorisation from the importers to undertake the transaction, this is evident from the fact that many of the cases investigated related to mis-use of IEC code. The actual owners of the IEC have complained to the department about the mis-use. The persons to whom the licence was sub-let have also admitted to such mis-use. The CHA has also admitted to never meeting any of his clients and receiving documents from unauthorised persons. Thus this violation stands established clearly. As regards contravention of regulation 13(b), that is, conducting business not through employees but through others, this charge is also proved from the statements of users of the CHA licence. Such users were running their own businesses. Therefore, they cannot be employees of the CHA. Though during the inquiry proceedings salary payments were sought to be established by submitting document, no evidence was led as to how and when these people were appointed. It is on record that the so called employees paid huge sums for using the CHA licence. Normally, it is the employer who pays salary to his employees and not the other way. Thus it is clear that in the present case the CHA used persons other than his employees to undertake transactions by masquerading them as his own employees. Once the violation of 13 (a) is established, violation of 13(d) automatically follows. If the CHA did not know who his clients were, he could not have advised them to comply with the provisions of the Customs Act. The very fact that the CHA did not bother to know who his clients were, there is lack of diligence on the part of the CHA. Hence violation of regulation 13(e) also stands proved. For the same reason, contravention of regulation 13(n) also ensues for it cannot be said that the CHA discharged his functions with efficiency and speed when the importers themselves were found to be bogus. Contravention of Regulation 19 (1) of transacting business with employees having certain minimum educational qualifications is also established when outsiders are used for undertaking the transactions. Thus, in our considered view that the finding of the Commissioner that the CHA contravened all the above provisions of CHALR, 2004, cannot be found fault with. The inquiry report submitted by the appointed officer is quite perverse and is a sham, especially when voluminous evidence on the mis-conduct of the CHA is available on records.
5.6 A case of sub-letting of licence by CHA, obtaining customs pass for non-employees, removal of goods without obtaining authorisation from importers was considered by the honble High Court of Gujarat in OTA Kandla Pvt. Ltd. [2011 (269) ELT 467 (Guj)]. The honble high court upheld the contention of the Revenue that sub-letting amounted to transfer of CHA licence and refused to interfere with the punishment of revocation of CHA licence awarded by the Commissioner of Customs, the Licensing authority. Similarly in a matter pertaining to HB Cargo Services [2011 (268) ELT 448 (A.P.)], wherein also the license was sub-let and no authorisations were obtained from the exporters, the honble AP High Court upheld the punishment of revocation of CHA licence by holding that in a Customs area, it is the Commissioner who is responsible for the happenings, discipline to be maintained and he is best placed to understand the importance of CHA and if he takes a decision for that purpose, CESTAT should not interfere on the basis of its own notions of difficulties likely to be faced by the CHA or its employees and should not be swayed by considerations of mis-placed sympathy. The honble Bombay High Court in the Commissioner of Customs vs. Worldwide Cargo Movers [2010 (253) ELT 190 (Bom)], while dealing with a case relating to smuggling of cars, held as follows:-
17. ..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 can not 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 the 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. Here, the CHA has brazenly defended his Regulation 8 employee who gave a fake name of his brother as importer for undervaluing the imported car. Thus, the employee of the CHA was party to the Firm. The CHA has not disowned him in the reply filed by him before the appellant. That being so, he is clearly responsible vicariously.
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 the 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 malafide. That is not the case here. (emphasis supplied)
6. In our considered view, the ratio of the above decisions apply squarely to the facts of the present case. Accordingly, we do not want to interfere with the decision of the Commissioner of Customs, the licensing authority for the reason that the punishment of revocation of CHA licence is justified considering the grave mis-conduct on the part of the appellant CHA in a number of cases. Therefore we dismiss the appeal as lacking in merits.
(Operative part of the order pronounced in the Court) (Ramesh Nair) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 13