Karnataka High Court
M/S Capricorn Logistics Pvt Ltd vs Commissioner Of Customs on 21 November, 2017
Author: Vineet Kothari
Bench: Vineet Kothari
1/16
R
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 21st DAY OF NOVEMBER 2017
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION No.52739/2017 (T-CUS)
BETWEEN:
M/S CAPRICORN LOGISTICS PVT. LTD.,
HAVING ITS REGISTERED OFFICE AT
No.13 & 13A, KEYTUO INDUSTRIAL ESTATE
220, KONDIVITA ROAD
ANDHERI (E), MUMBAI - 400059
(REPRESENTED BY ITS DGM - LEGAL
Mr. ANIL KUMAR T BHASKAR).
... PETITIONER
(BY SMT. RUKMANI MENON, ADV.,)
AND:
COMMISSIONER OF CUSTOMS
P.B. No.5400, C.R. BUILDING
QUEENS ROAD
BANGALORE- 560001.
... RESPONDENT
THIS W.P. IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
ORDER DTD:13.11.2017 [ANNEXURE-A] PASSED BY THE
RESPONDENT. GRANT AN INTERIM ORDER TO STAY THE
OPERATION OF THE IMPUGNED ORDER VIDE ANNEXURE-A
DTD:13.11.2017 PASSED BY THE RESPONDENT AND PERMIT
THE PETITIONER TO CARRY ON THE BUSINESS PENDING THE
DISPOSAL OF THEIR WRIT PETITION.
THIS W.P. COMING ON FOR PRELIMINARY HEARING THIS
DAY, THE COURT MADE THE FOLLOWING:-
Date of Order 21-11-2017 W.P.No.52739/2017
M/s. Capricorn Logistics Pvt. Ltd.,
Vs. Commissioner of Customs
2/16
ORDER
Ms. Rukmani Menon, Adv. for Petitioner
1. Heard the learned counsels.
2. The petitioner-M/s.Capricorn Logistics Pvt.
Ltd., has filed this petition in this Court on 17.11.2017 aggrieved by the order Annexure-A dated 13.11.2017 passed by the Respondent-Commissioner of Customs, Bangalore city, under Regulation 23 of the Customs Brokers Licensing Regulations, 2013 ('CBLR', 2013 for short) framed under Section 146(2) of the Customs Act, 1962, prohibiting the operation of the said Customs Broker M/s.Capricorn Logistics Pvt. Ltd., within the jurisdiction of the Bangalore Customs viz., Principal Commissionerate, Airport and Air Cargo Complex, Bangalore and Commissionerate of Customs, Bangalore City, with immediate effect and until further orders.
3. The reasons assigned by the Respondent-
Commissioner of Customs in the impugned order are quoted from the relevant order itself as under:-
Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 3/16 " 5. In the light of the investigations conducted, admissions made by the persons connected with the exports it appeared that:
a) The Proprietor of M/s Logo Trading Shri Mohamed Zubril and Partners of M/s Azomatrix Impex Shri Ravindranath Tagore Subramania Bharathi and Smt. Amritha Priya Rammohan appear to have floated similar fictious firms M/s Shakthishka Exports (Propreitor Smt. Amirtha Priya), M/s Sara Fashions (Partners:
Shri Ravindranath Tagore Subramania Bharathi and Shri. Jayaraman), M/s Trendy Knitz (Partners: Ms. Amirtha Priya and Shri Mohamed Zubril), M/s Saviour Zara Creations (Proprietor: Shri Ravindranath Tagore Subramania Bharathi) and M/s STI International (Proprietor: Shri Ravindranath Tagore Subramania Bharathi) and fraudulently availed drawback.
b) Investigation revealed that M/s Logo Trading and M/s Azomatrix. Impex, both located at Coimbatore, Tamil Nadu, M/s Shakthishka Exports, M/s Sara Fashions, M/s Trendy Knitz, M/s Saviour Zara Creations and M/s STI International were fictitious firms and were floated with an intention to avail post export benefits.
Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 4/16
c) None of the Exporters appeared/responded to the summons issued by the department and are absconding. It appeared that that it was Shri Ravindranath Tagore Subramania Bharathi was the person who was co-ordinating for clearance of the consignments of M/s Logo Trading and other Companies.
d) It also appears that Shri. Prabhu M (Senior Executive Exports in M/s Capricorn Logistics) has actively involved himself in getting the customs clearance of the exports of the above said fraudulent exporters. He also appears to be aware of the nature of the cargo and failed to report the same to the customs and Shri. Prabhu M has done the same for monetary consideration.
e) It appears that the Customs Broker has not verified the KYC of the exporters and was not in touch with them, there by violating the obligations under the/not complying with the Customs Broker Licensing Regulations, 2013.
f) The Customs Broker has not exercised due control over their employee and because of such failure, Shri. Prabhu gained access to customs area based on the H card given as employee of CB company and attended Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 5/16 clearances and drawback process on behalf of the fraudulent exporters.
6.1 Regulation 11 of Customs Broker Licensing Regulations, 2013 reads as follows:
11. Obligations of Customs Broker. - A Customs Broker shall -
(a) obtain an authorization from each of the companies, firms or individuals by whom he is for the time being employed as a Customs Broker and produce such authorization whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;
(b) transact business .........
(d) advise his client to comply with the provisions of the Act and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;
(e) exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage;
............................
............................
(h) not procure or attempt to procure directly or indirectly, information from the Government Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 6/16 records or other Government sources of any kind to which access is not granted by the proper officer;
(n) verify antecedent, correctness of Importer Exporter Code (IEC) number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information; and ..........................
6.2 Regulation 17 of CBLR, 2013 reads as follows:
17. Employment of persons. -
(1) A Customs Broker may, having regard to the volume of business transacted by him, employ any number of persons to assist him after verifying their antecedent and identity..... (9) The Customs Broker shall exercise such supervision as may be necessary to ensure the proper conduct of his employees in the transaction of business and he shall be held responsible for all acts or omissions of his employees during their employment.
13.3 It is admitted by the Authorised Employee of Customs Broker M/s. Capricorn Logistics Pvt Ltd that they have not obtained Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 7/16 the authorization from the exporter nor have they obtained KYC documents. Further, they were not in touch with the Exporter M/s. Trendy Knitz. It is also seen that their employee Shri. Prabhu had been acting on behalf of the other Exporters who were not their clients. The Customs Broker has failed to exercise proper supervision on the activities of their employee who was given access to customs area based on their employment. Despite knowing/suspecting the activities of their employee acting on behalf of other exporters they have not taken proper corrective action.
7. Whereas, having carefully perused the Investigation Reports dated 15.3.2017 and 26.9.2017/04.10.2017 forwarded by the Additional Director, DRI, Bangalore Zonal Unit, the undersigned is of a considered view that the contraventions committed by the said CHA are grave and serious and therefore immediate action is called for. In view of the above, I, Parag Chakor Borkar, Commissioner of Customs, Bangalore, under the provisions of Regulation 23 of CBLR 2013, hereby prohibit the operation of said Customs Broker viz., M/s. Capricorn Logistics Pvt. Ltd., within the jurisdiction of Bangalore Customs viz., Principal Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 8/16 Commissionerate, Airport & Air Cargo Complex, Bangalore and Commissionerate of Customs, Bangalore City, with immediate effect and until further orders.
Sd/-
13/11/17 (Parag Chakor Borkar) Commissioner"
4. The learned counsel for the petitioner Ms.Rukmani Menon relying upon the decision of the Division Bench of the Madras High Court in Commissioner of Customs, Thoothukudi vs. Daniel and Samuel Logistics Pvt. Ltd., [2016 (336) E.L.T. 437 (Mad.) ] has submitted that in view of the gross violation of the principles of natural justice in the present case, in as much as, the impugned order has been passed by the Respondent-Commissioner of Customs without giving any notice and prior opportunity of hearing before passing the said order, the said order deserves to be quashed by this Court under Articles 226 of the Constitution of India.
Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 9/16
5. The aforesaid Regulations of 2013 namely, Customs Brokers Licensing Regulations, 2013 vide Regulation No.21 provides for an alternative remedy by way of an appeal to such aggrieved Customs Broker under Section 129A of the Customs Act, 1962 before the Customs Excise and Service Tax Appellate Tribunal (CESTAT) established under Section 129(1) of the Act.
6. To prevent evasion of customs duty and illegal duty draw backs, these Regulations have been framed for regulating the business of Customs Brokers under the provisions of Customs Act, 1962 and the stringent conditions stipulated in the said Regulations requires a rigorous exercise of verification of documents by the Exporters and Importers operating through the territorial jurisdiction of the Authorities of the Customs Department. Regulations 11 and 17 of the said CBLR, 2013, which are alleged to have been breached by the Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 10/16 present Customs Broker have been quoted by the Respondent-Commissioner of Customs in the impugned order itself.
7. It is true that prima-facie, this order appears to have been passed without giving any prior notice and opportunity of hearing to the petitioner, but a perusal of different Regulations particularly, Regulation Nos.18, 19, 20, 22 and 23 indicates that various kinds of penalties and actions are envisaged under these Regulations to be taken against the erring Customs Broker.
8. Regulation 19 provides for Suspension of licence, while Regulation 20 provides the Procedure for revoking licence or imposing penalty. Regulation 22 provides for the Penalty for contravention of any provisions of these Regulations extending up to Rs.50,000/-. Regulation 23, which has been invoked in the present case is a non-obstante provision in the Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 11/16 said Regulations, where by the competent authority namely, the Prl.Commissioner of Customs or Commissioner of Customs may prohibit any Customs Broker from working in any one or more sections of the Customs Station, if he is satisfied that such Customs Broker has not fulfilled his obligations under Regulations 11 or 17 in relation to work in that section or sections.
9. Thus, to secure the immediate result and prohibit any continuation of illegal activities, such authority has been vested with a power to take immediate action under Regulation 23 as aforesaid. The operative portion of the impugned order also shows that the said order is passed with immediate effect and until further orders. The said order is dated 13.11.2017.
10. The petitioner, in these circumstances, not only has an opportunity to show-cause and establish its Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 12/16 innocence and compliance with the Regulations before the concerned authority itself even now, but has equal, adequate and efficacious remedy by way of appeal against the impugned order even before the CESTAT under Regulation 21, which is quoted below for ready reference:-
"REGULATION 21. Appeal by Customs Broker. - A Customs Broker, who is aggrieved by any order passed by the [Principal Commissioner of Customs or Commissioner of Customs, as the case may be] under these regulations, may prefer an appeal under section 129A of the Act to the Customs, Central Excise and Service Tax Appellate Tribunal established under sub-section (1) of section 129 of the Act".
11. As far as the ground raised before this Court of breach of principles of natural justice is concerned, this Court would like to observe that even the said ground can very well be raised before the appellate forums like CESTAT in the present case. The principles of natural justice as held by the Hon'ble Supreme Court Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 13/16 also is not an unruly horse but should enure to the benefit of a citizen or a corporate entity or a person, who comes to the Court of law for protection of his fundamental and legal rights and comes to the Court with clean hands. If the challenged actions of the authorities of the Department which are meant to prevent tax evasions and leakage of revenue and even the crime in the form of illegal duty drawback etc., like in the present case, were to be lightly interfered and tinkered with on the anvil of breach of principles of natural justice, the very basis and foundation for invoking these principles would be set at naught and the Courts in exercise of their extraordinary jurisdiction under Article 226 of the Constitution of India should desist from doing so.
12. A lenient and conveniently held out tool of ground of natural justice cannot be used to protect those who have indulged in gross violation of Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 14/16 Regulations and Rules and which has resulted in evasion of tax and duties and has caused revenue loss.
On the face of it, this ground invoked in the writ jurisdiction, may appear to be attractive to exercise the discretion under Article 226 of the Constitution of India but the malaise in such cases is indeed deep-rooted, where the Courts in its extraordinary jurisdiction, on the basis of the Affidavits only cannot even easily reach into. Such cases should essentially come to the Constitutional Courts after being screened by the fact finding Departmental Authorities, which hierarchy of authorities is already set up to exercise the appellate and revisional jurisdiction under the relevant laws.
13. The protection, relief and quashing of the impugned orders in such cases on such vaguely worded grounds on a misplaced sympathy can cause more damage to the Society than even protecting the Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 15/16 semblance of legal rights which the petitioners may have.
14. This Court would not like to comment upon the facts of the present case, as the matter appears to be still pending under investigation and the appellate order, the petitioner may have his own opportunity to lead his evidence in the matter at this stage, but prima-
facie reading of the order, shocks the conscience of this Court. The manner in which the shell companies or the paper companies are created to 'show' the export of goods on these fake documents, which leads up to the claim of the duty drawbacks, which empties the Treasury of the Government, by draining out the public money by the mischievous elements, does not require any sympathy of the Court. The immediate ban in such cases on the Customs Brokers, who are the real identified persons before the Customs Authorities and whose activities only leads to such tax evasion or false Date of Order 21-11-2017 W.P.No.52739/2017 M/s. Capricorn Logistics Pvt. Ltd., Vs. Commissioner of Customs 16/16 duty drawbacks in the name of such shell companies may be the real persons were doing all this in the name of such companies.
15. Therefore, the temporary ban of such persons or Customs Brokers for the time being subject to the further investigation and even the permanent ban, if the case against them is proved, does not call for any interference by the Constitutional Courts. Therefore, in such circumstances, the alleged ground of breach of principles of natural justice need not prompt this Court to immediately interfere in such cases at such premature stage of the matter.
16. The writ petition is therefore dismissed without interfering in the impugned order. No costs.
Copy of this order be sent to the Respondent forthwith.
Sd/-
JUDGE Srl.