Custom, Excise & Service Tax Tribunal
M/S. Sainath Clearing Agency vs Commissioner Of Customs (General) ... on 2 March, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. C/221/2008-Mum. (Arising out of Order-in-original No. 37/2007-08 dated 20.12.2007 passed by the Commissioner of Customs (General), Mumbai For approval and signature: Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. Sahab Singh, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see : Yes
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?
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M/s. Sainath Clearing Agency
:
Appellant
Vs.
Commissioner of Customs (General) Mumbai.
Respondent
Appearance:
Shri Arun Mehta, Advocate for appellant
Shri M. Manish Mohan, Authorized Representative (DR), for respondent
CORAM:
Mr. P.G.Chacko, Member (Judicial)
Mr. Sahab Singh , Member (Technical)
Date of hearing : 02/03/2011
Date of decision : 03/03/2011
ORDER NO.
Per : P.G. Chacko
M/s. Sainath Clearing Agency (Proprietor : Shri Dinesh P. Mehta) is the appellant who is aggrieved by the Commissioners order revoking CHA licence No.11/1030 and forfeiting security deposit under Regulation 22(7) of the Customs House Agents Licensing Regulations, 2004 (CHALR). The said licence was obtained by the appellant under the relevant provisions of the erstwhile Customs House Agents Licensing Regulations, 1984. It was suspended by the respondent-Commissioner on 4.5.2005 under Regulation 20(2) of the CHALR upon receipt of a report from the DRI regarding the alleged involvement of the CHA in a case of misuse of Advance Licence Scheme by one M/s. Tony Enterprises. The suspension was ordered pending enquiry under Regulation 22 of the CHALR, but the same was set aside by this Tribunal by order No. A/529/WZB/2005/C-II dated 24.6.2005 in appeal No. C/447/2005-Mum. filed by the CHA. The Tribunals order, however, granted liberty to the Commissioner to proceed against the CHA for revocation or otherwise of the licence under the appropriate provisions of the CHALR. Subsequently, by an order dt. 12.8.2005, the respondent-Commissioner revoked the suspension of the licence. Since then, the appellant had been functioning as CHA.
2. Later on, a notice of enquiry was issued on 24.10.2005 by the Commissioner to the CHA under Regulation 22(1) of the CHALR for alleged violation of certain regulations. The notice alleged that, in connection with the import of a consignment of blank audio and video cassettes by M/s. Tony Enterprises vide bill of entry No. 7227 dated 31.8.2000 under Advance Licence Scheme, the appellant violated Regulations 12, 13(a), 13(d) & 13(k) of the CHALR. These allegations were based inter alia on statements recorded under Section 108 of the Customs Act from Shri Dinesh P. Mehta (CHA), Shri Dilip Shah, Shri Shantaram Dongre and Shri Dhirej K. Bhanushali, as also on certain documents. All the four charges leveled against the appellant were denied in a defence reply. After completing the enquiry, the inquiry officer submitted his report dt. 30.5.2007 to the Commissioner, wherein only Charge III was held proved and Charges I, II & IV were held not proved'. After examining the inquiry report, the Commissioner disagreed with the findings of the inquiry officer with regard to Charges I, II & IV. The reasons for disagreement were communicated to the CHA, whereupon the CHA filed a defence reply. Thereafter, the Commissioner, after giving the appellant an opportunity of being heard, passed the impugned order revoking the CHA licence and ordering forfeiture of the security deposit.
3. In the present appeal of the CHA, the appellant has relied on the Tribunals order No. A/529/WZB/2005/C-II dated 24.6.2005 and also on the findings of the inquiry officer in support of the challenge against the Commissioners decision on Charge I. The learned counsel for the appellant submits that this Tribunal held that Shri Dilip Shah and Shri Shantaram Dongre were regular employees of the CHA holding Customs House pass on behalf of the CHA and that the acts of commission and omission narrated by the Commissioner were not strictly related to the clearance of goods handled by the CHA. It is submitted that the Tribunals order has not been challenged by the department and, therefore, its decision is binding on them. Accordingly, counsel submits, the view taken by the Commissioner against the appellant by assuming that the aforenamed persons were not employees of the CHA and were acting independently cannot be sustained. The learned counsel submits that the respondent has no case that the CHA licence was sold or otherwise transferred to the aforenamed persons. Therefore, according to counsel, there is no question of the appellant having committed breach of Regulation 12 of the CHALR. The learned SDR has opposed the above arguments of the learned counsel by relying on the findings of the respondent-Commissioner.
4. After considering the submissions, we agree with the learned counsel. Referring to Shri Dilip Shah and Shri Shantaram Dongre, this Tribunal vide order No. A/529//WZB//2005/C-II dated 24.6.2005 ibid held thus:
The two persons who were acting on behalf of the CHA were the employees of the appellant. They were not (sic.) being paid a regular monthly salary. All the same they were holding a Customs House pass on behalf of the CHA and therefore should be considered as the CHAs employees.
The above finding of the Tribunal is binding on the department as, admittedly, it was not appealed against. The inquiry officer rightly relied on the above finding of the Tribunal and treated Shri Dilip Shah and Shri Shantaram Dongre as employees of the CHA. Where the employees of the CHA have used the CHA licence for clearance of the imported goods, it cannot be said that the licence was sold or otherwise transferred by the CHA in violation of Regulation 12 of the CHALR. The reasons stated by the learned Commissioner to disagree with the finding of the inquiry officer stems from misinterpretation of the conclusive sentence of para (1) of the Tribunals order dated 24.6.2005, which reads However the Commissioner is at liberty to proceed against the CHA under the Regulations for revocation or otherwise of the licence under appropriate Regulation. This sentence only meant that the setting aside of the suspension of CHA licence did not stand in the Commissioners way of proceeding against the CHA under Regulation 22 of the CHALR. It did not mean anything else. The aforequoted finding of fact recorded by the Tribunal, having attained finality, was rightly followed by the inquiry officer to arrive at the right conclusion. Therefore, the appellant shall stand discharged in so far as Article of Charge I is concerned.
5. With regard to Article of Charge-II, the learned counsel for the appellant has claimed that they cannot be held to have violated Regulation 13(a). This regulation reads thus:-
A Custom House Agent shall obtain an authorization from each of the companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorization whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs.
It is submitted that there was no proforma prescribed for CHAs to obtain authorization from clients and that the signature of the importer on the bill of entry is enough to show that the CHA was authorized to file the document. In this connection, the counsel has claimed support from the Tribunals decision in P.P. Dutta Vs. Commissioner of Customs, New Delhi 2001 (136) ELT 1042 (Tri.-Del.). The learned counsel has further submitted that the Commissioner erred in relying on the statement of Shri Dinesh Mehta (CHA). He has argued that a statement recorded under Section 108 of the Customs Act was not to be used as evidence under the CHALR. The learned SDR has opposed by submitting that such statements are also admissible as evidence in proceedings against a CHA. In this connection, he has relied on Jasjeet Singh Marwaha Vs. Union of India 2009 (239) ELT 407 (Del.), wherein it was held that a statement recorded under Section 108 of the Customs Act was admissible in evidence for suspending CHA licence if the statement was voluntary and truthful.
6. We have considered the submissions. In his statement dated 19.3.2004, Shri Dinesh Mehta categorically stated that he had not personally dealt with any person from M/s. Tony Enterprises and that the business was procured and handled exclusively by his employees. Shri Dilip Shah, in his statement dated 19.3.2004, confirmed that he along with Shri Shantaram Dongre attended to the Customs clearance of the consignment of M/s. Tony Enterprises covered by Bill of Entry No. 7227 dated 31.8.2000. It would appear from these statements of Dinesh Mehta and his employee Dilip Shah that the former was not directly involved in the Customs clearance of the above consignment. The statements were voluntary and hence, could be relied on as per the High Courts ruling in Jasjeet Singh Marwahas case. No valid authorization in writing of M/s. Tony Enterprises authorizing the appellant to handle any particular import consignment has been produced in this case. One undated letter of M/s. Tony Enterprises addressed to M/s. Sainath Clearing Agency has been produced, which does not contain anything to indicate that the appellant was engaged to handle the import consignment in question. It is true that there is no prescribed format for an authorization under Regulation 13(a). However, this does not mean that Regulation 13(a) does not require an authorization in writing. The said regulation makes it obligatory for a CHA to obtain authorization from his client and keep the same to be produced as and when required by the Assistant/Deputy Commissioner of Customs. Obviously, it should be in writing. In the normal course of importation and clearance of goods, the importer would supply the import documents such as Import General Manifest, Invoice, Packing List etc. to his CHA with a covering letter wherein the CHA is authorized to file bill of entry and attend to all other requirements for clearance of the goods and also the particulars of the import documents are mentioned. This covering letter of the importer would easily constitute his authorization for the CHA for purposes of Regulation 13(a). The appellant has not produced any such authorization in this case. The decision in the case of P.P. Dutta (supra) cited by the learned counsel does not appear to be fully supportive of the appellants case inasmuch as, in the cited case, the specific requirement of the CHA having to produce authorization whenever required by an Assistant Commissioner of Customs was not considered. Charge-II, therefore, stands proved.
7. Referring to Charge III, the learned counsel has submitted that the appellant had no occasion to advise M/s. Tony Enterprises, whose consignment was not directly handled by the appellant. Therefore, the charge that the appellant violated Regulation 13(d) of the CHALR is not sustainable. On the other hand, the learned SDR has submitted that the goods imported by M/s. Tony Enterprises under DEEC Scheme and cleared without payment of duty were diverted instead of being taken to their factory for use in the manufacture of finished goods to be exported under the said scheme for discharge of export obligation. He has submitted that the transportation of the goods diverted by the importer was arranged by Shri Shantaram Dongre with the knowledge of the CHA. He has submitted that the appellant did not inform the Deputy Commissioner or Assistant Commissioner of Customs that the goods were being diverted. According to him, this conduct of the CHA amounted to breach of Regulation 13(d). The learned SDR has also relied on the findings of the inquiry officer, who held the above charge to have been proved.
8. After considering the submissions, we are of the view that the charge against the CHA cannot be held to have been proved. The charge is based on Shri Shantaram Dongres conduct post-importation. Once the goods are cleared upon completion of Customs formalities and out-of-Customs-charge order under Section 47 of the Customs Act is obtained by the CHA and delivered to his client, there is nothing else to be done by the CHA. It is not the CHAs obligation under the CHALR to arrange post-clearance operations like transportation of the goods for his client. If Shri Shantaram Dongre arranged any such transportation of the goods of M/s. Tony Enterprises, it cannot be said that he did so in discharge of CHAs obligation under the CHALR. The CHA cannot be held liable for anything done or omitted to be done by their employee beyond the purview of the CHAs obligations under the CHALR. Nothing contained in Section 147 of the Customs Act nor anything held by the Honble High Court in the case of Commissioner of Customs (General) Vs. Worldwide Cargo Movers (judgment dated 29.11.2006 in Customs Appeal No. 37/2006) can be applied to such commissions/omissions of an employee of the CHA. Therefore, the reliance placed by the learned SDR on Section 147 of the Customs Act and on the decision of the Honble High Court in the case of Worldwide Cargo Movers case in his bid to show that Shri Shantaram Dongre and his employer CHA have vicarious liability in respect of the alleged post-clearance diversion of the goods cannot advance the respondents case. In the result, Charge III framed against the appellant is untenable.
9. Charge IV against the appellant is that they committed breach of Regulation 13(k) by not maintaining records and accounts in the prescribed manner for the purpose of inspection by the Deputy Commissioner of Customs or the Assistant Commissioner of Customs or any officer authorized by him whenever required. The inquiry officer held this charge not proved after noting that, during the course of inquiry, the CHA produced a zerox copy of the register of import which showed the documents to be accounted for. The Commissioner disagreed with the finding of the inquiry officer. The learned counsel has challenged the Commissioners finding on the strength of the inquiry report. The learned SDR has submitted that the CHAs employee Shri Dilip Shah had himself admitted that he had not kept copies of the documents pertaining to the goods imported by M/s. Tony Enterprises. He has also submitted that the original register of import was never produced by the CHA. The learned counsel has not been able to disprove this submission of the learned SDR. We also required the appellant to produce the original register of import, whereupon the counsel submitted that the appellant was not in a position to produce the register. In the circumstances, we hold that Charge IV (violation of Regulation 13(k) of the CHALR) stands proved.
10. Out of the four charges, two have been proved by the respondent but these are not enough for continued operation of the Commissioners order. The CHA has already suffered for over three years on account of revocation of their licence. In our view, at this length of time, the CHA licence needs to be revived. However, the Commissioners order for forfeiture of security deposit has to be sustained for breach of Regulation 13(a) and Regulation 13(k).
11. In the result, the revocation of licence is set aside, but the forfeiture of security deposit is sustained. The appellant may be allowed to resume business as CHA in accordance with the CHALR subject to fresh security deposit. The appeal is accordingly disposed of.
(Pronounced in Court ) (Sahab Singh) Member (Technical) (P.G. Chacko) Member (Judicial) Sm 9