Custom, Excise & Service Tax Tribunal
M/S. Interport Impex Pvt. Ltd vs Commissioner Of Customs ... on 11 February, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. C/86231/2014-Mum (Arising out of Order-in-Original No. 34/2014/CAC/CC(G)/PKA-CBS dt. 14.3.2014 passed by the Commissioner of Customs (General), Mumbai ) For approval and signature: Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. P.S. Pruthi, 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?
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M/s. Interport Impex Pvt. Ltd.
:
Appellant
VS
Commissioner of Customs (General),Mumbai
:
Respondent
Appearance
Shri S.N. Kantawala, Advocate for Appellant
Shri M.S. Reddy, Deputy Commissioner (A.R) for respondent
CORAM:
Mr. Anil Choudhary, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 11/02/2015
Date of pronouncement : /2015
ORDER NO.
Per : P.S. Pruthi
This appeal is directed against the impugned order passed by Commissioner of Customs Mumbai on 14.03.2014 revoking the Customs House Agent (CHA) License of the appellant and also ordering forfeiture of the entire amount of security deposit.
2. The facts of the case are that the appellant who is a CHA had accepted documents for export clearance of a consignment of Dal husk from one Mr Anand Kursija who had submitted the authorization letter along with a self attested IEC of M/s Crescent Trading and Impex Co., the importer, in the presence of a person portraying himself be this Company owners son Mr. Rashid Khan. Accordingly the appellant filed a shipping bill dated 23.08.2010 for the export of the consignment. On 25.08.2010, unsealed containers on a trailer with the export goods were carted into the CFS. When the goods were de stuffed for examination, some of the goods were found to be non-basmati rice (prohibited goods) concealed behind the bags of dal husk. It was claimed by the appellant that on being informed by his employee Shri Ramdas Gadge about this incident, the Director Sohel Kazani informed the CFS and Commissioner of Customs on the next morning about the incident. Investigations were undertaken by the Customs which resulted in the suspension of the CHA license under Regulation 20 (2) of the Custom House Agent Licensing Regulations( CHALR) Regulations vide order number 32/2010 dated 08.12.2010 passed by the Commissioner of Customs Mumbai. Thereafter the Commissioner of Customs vide his order number 37/2010 dated 14.02.2011 revoked the suspension order pending enquiry under Regulation 22 of the CHALR, 2004. The appellant was issued notice on 25.07.2011 under Regulation 22 for violation of Regulations 13 (a), 13 (d), 13 (e), 13 (n) and 13 (o). During the enquiry proceedings, the presenting officer cross-examined the persons concerned. On completion of cross-examination and inquiry, he came to the conclusion that violation of regulations 13 (a), 13 (e) and 13 (o) is not recommended as proved. Further, the enquiry officer dropped all charges as not proved. However the Commissioner of Customs disagreed with the enquiry report and issued a disagreement memo dated 03. O2.2014. After following principles of natural justice, the Commissioner of Customs vide his order dated 14. 03. 2014 held the CHA guilty of violation of all the sub regulations, namely a, d, e, n, o of Regulation 13 of CHALR 2004 and ordered revocation of the CHA license and also forfeiture of the entire amount of security deposit. The appellant is in appeal before us against this order of the Commissioner.
3. Heard both sides.
4. The learned counsel very forcefully argued that the mis-declaration of the goods which was detected on opening of the container for examination, was brought to the notice of Customs by Shri Sohel Director which is evident from the mobile phone records of the Director. Further that the culprit Mr Anand Kursija who was arrested has nowhere implicated the appellant in his statement recorded by the Customs. Regarding the alleged violation of CHALR regulations, he submitted that they had accepted the authorization from the exporter and the IEC code of the exporter was verified by them from the DGFT website. Therefore the violation of regulation 13 (a) is not established. About regulation 13 (d) which requires that the CHA shall advise his client to comply with the provisions of the Customs Act, he submitted that it has nowhere been brought on record that the appellant was aware of the dubious credentials of Mr Anand Kursija. Nor is the allegation of knowledge on his part of prohibited goods being exported, established. On the charge of violation of regulation 13 (e) which requires the CHA to exercise due diligence to ascertain the correctness of any information which he imparts to a client, the learned counsel contended that had it been the intention of the appellant to help the exporter to export the prohibited goods, they would not have asked for the examination of the goods on their own. Rather they helped the department to get hold of the exporter who had concealed the prohibited goods. On the violation of regulation 13 (o) which requires verification of antecedents of the exporter, it was stated that they had received the authority letter supported by the certified copy of IEC No of the exporter which was found correct on the DGFT website and therefore there was no reason for them to make further enquiries. Regarding the violation of regulation 13 (n) which requires the CHA to discharge duties with speed and efficiency, the plea is that they did not attempt to obtain the let export order on the same evening when the goods were carted in. The enquiry does not show that any specific customs officer was asked to expedite the let export order. On the finding that the appellant is a habitual offender having been penalised wide order dated 19.02.2013 issued by the Commissioner of Customs, it was submitted that Honble Tribunal vide order number S/730 732/13/CS T B/C 1 dated 06.05.2013 has granted stay.
5. The learned AR appearing on behalf of revenue reiterated the findings of the Commissioner. On the contention of the Learned Counsel that the appellant had no prior knowledge of prohibited goods were being exported, he stated that mens rea is not necessary to be established in cases of offences under the Licensing regulations. The Ld. AR relied on the judgment of Bombay High Court in the case of Delta Logistics Vs. Union of India 2012 (286) ELT 517 (Bom.) to contend that it cannot be said that if the inquiry report is in favour of the CHA, the Commissioner can not pass an Order against the CHA if he disagreed with the inquiry report.
6. We have considered the rival contentions. We find that the appellant has taken the plea that he had no prior knowledge of the forgery of authorization and also no prior knowledge of the identity of the person who pretended to be the authorized representative of M/s. Crescent Trading and Impex Co. who came with Mr Anand in February 2010. But there is no evidence on record to show that the appellant was sure of the true credentials of Mr Anand. It appears from the statement of Mr Sohel that Mr Anand had merely come in contact with him in May 2008 in connection with an export clearances of Dal husk in the case of M/s. Purifira Foods. There is no evidence of Mr Sohel knowing Mr Anand well enough to believe the identity of person who called himself a representative of the exporter M/s Crescent Trading and Impex. It also is an undisputed fact that Mr Anand prepared the letterhead of the exporting firm in his office computer, got a rubber stamp made of the export and signed as authorized signatory of the exporter on the authorization. Further, the IEC holder Shri Nadel Khan denied signing the subject shipping bill or authorizing any one to sign on his behalf or to give an authorization on his behalf. Both Shri Nadel Khan and Shri Sohel denied knowing each other. Therefore, the appellant has violated Regulation 13(a) for not taking any precaution whatsoever to obtain an authorization himself from the exporter and not checking the credentials of the person who came with Shri Anand pretending to be a representative of the exporter. If the CHAs are not held guilty in such cases, the commission of frauds would continue to be perpetrated and the CHAs would justify their conduct by claiming that they have verified the IEC code of the exporter on the DGFT website without actually verifying the credentials of the person who pretends to be the representative of the exporter or without caring to contact the exporter.
6.1. As regards the second charge relating to Regulation 13(d) which requires that the CHA should advise his client about the provisions of the Customs Act, we find that as the CHA did not know the credentials of the person who pretended to be a representative of the exporter nor did he verify personally from Shri Nadel Khan about the identity of Shri Anand, he obviously could not have given any advice to the exporter. Neither can it be said that the appellant made a genuine effort to find out the real exporter to whom advice could and should have been tendered. The inquiry officer in his report has referred to Para 22 of the Commissioners order 37/2010 dt. 14.2.2011 stating that The culprit Mr. Anand Khursiza who was arrested has nowhere implicated them in his statements recorded by SIIB. In absence of the same it cannot be said that the CHA was either having knowledge or had any connivance in the matter. Moreover, It is evident from the letter dated 21.09.2010 issued by SIIB (X), JNCH that that the SIIB Department was satisfied about the innocence of the CHA and therefore it was mentioned in the said letter that if he falls to bring the exporter before the investigating officer a serious view against the CHA would be taken. We find that this is only a preliminary finding of the Commissioner pending the detailed inquiry under Regulation 20. The question is not whether the appellant was misguided by Shri Anand who had no locus standi in the export. The real point is that the appellant did not even verify his credentials vis-`-vis the export consignment in question what to talk of the possibility of giving proper advice to follow the provisions of the Customs Act. Further, the appellant did not advise the IEC Holder (the IEC holder on paper only who gave a statement that he had nothing to do with the export). Therefore, the appellant-CHA cannot wriggle out of his responsibilities and must be held guilty for not verifying about the IEC Holder and suitably advising him of his responsibilities under the Customs Act.
6.2. The appellant have also been charged for violating Regulation 13(e) which requires them to exercise due diligence and ascertain the correctness of information which they impart to their client with reference to the clearance of Cargo. The appellant got the goods carted into the CFS in containers. The goods were contained in bags which did not bear marks and numbers. The appellant failed to ensure that the goods should have been carted in bags and not in the container itself, as per the check-list. This was clearly a violation of the proper procedure laid down. Had the proper procedure been followed it would have facilitated proper examination and easier detection of the prohibited goods which were detected when the containers were ordered to be emptied. Mr Anand had prepared the export invoices and fraudulently signed them and also gave the fake stamp of the exporter to the CHA in whose office someone signed the export declaration forms. Shri Sohail Director had also admitted that Mr Anand had liasioned with him in the name of the exporting firm. In these circumstances the appellant CHA certainly did not exercise due diligence to impart correct information to the real exporter with reference to the clearance of goods and therefore the appellant are guilty of violation of Regulation 13(e) .
6.3. Regulation 13 (o) requires a CHA to discharge his duties with utmost speed and efficiency. We find this provision deals with the performance of the CHA with reference to facilitating clearance of cargo efficiently. The present case is one of fraud. It has no bearing on the efficiency or inefficiency displayed by the CHA. In our view this Regulation has been wrongly and inappropriately invoked by the Department.
6.4. Regarding the last charge of violation of Regulation 13(n), we find that the appellant did not verify the antecedents of the exporter. It would be very naove on the part of the exporter to believe any person who comes forward with the IEC number of an exporter. Obviously any one can get hold of an exporters name and IEC number, forge authorizations of the exporter and then present the papers to a CHA for Customs clearance. The CHA cannot be exonerated of the serious mistake committed by him in not making true efforts to verify the credentials of the exporter. The CHA could have simply lifted the telephone and made an effort to speak to the exporter. The violation of Regulation 13(n) is certainly proved.
7. It was strongly argued by the Ld. Counsel that the IO had dropped all the charges, whereas the Commissioner established all charges to be true. We have gone by the facts of the case and have come to the conclusion that the charges are proved except the charge of violation of Regulation 13(o). In the case of Delta Logistics(supra) it was held by the Mumbai High Court that the Commissioner, being the deciding authority under the Regulations, can differ with the Inquiry officer.
7.1 The Ld. AR brought to our notice that in another case of duty evasion, the Director of the appellant-CHA was penalized under Sections 112(a) and Section 114AA of the Customs Act, vide Order-in-Original No. 20/2013/CAC/CC(I)/AB dt. 19.2.2013 issued by Commissioner of Customs. The Ld. Counsel informed us that the importer in that case paid duty and settled the matter in the Settlement Commission and the order against the appellant has been stayed by CESTAT.
However we have come to our decision on the basis of facts in the present case. Reliance is placed on the Honble Mumbai High Court decision in the case of Commissioner Vs Worldwide Cargo Movers 2010 (253) ELT 190 (Bom.) in which the revocation of CHA License was upheld by the Honble High Court which set aside the CESTAT order cancelling the revocation. It was held by the Honble Court that Honble Bombay High Courts decision [reported in 2010 (253) ELT 190 (Bom) in the of Commissioner of Customs (General) Vs. Worldwide Cargo Movers. In this case the CHA License was revoked earlier by the Commissioner for their failure in adhering to Regulations 13(d), (e), (i), (n) & 19(8) of the CHALR (not advising their clients correctly, not exercising due diligence, not ensuring that correct documents and information are given, not discharging their duties in accordance with law and vicarious responsibility of GHA for all acts or omissions of their employees). The revocation of CHA License by the Commissioner was set aside by Honble CESTAT. However the Honble High Court set aside the decision of CESTAT and upheld the Commissioners order stating that In a departmental proceedings one has to see whether the principles of natural justice are followed and the findings are justified from the material on record. Once both these aspects are satisfied if an outsider Tribunal interferes, its findings and order will be importer 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 its employees. In this case, the CHA has failed completely in discharging their obligations as mentioned above. Reliance is also placed on the Honble Mumbai High Court decision in the case of Shree Kamakshi Agency Vs. Commissioner of Customs, Madras 2001 (129) ELT 29 in which the Honble High Court held that the grant of license to a person to act as Custom House Agent is to some extent to assist the department with the various procedures such as scrutinizing the various documents to be presented in the course of transaction of business for entry and exist of conveyance or the import or export of the goods. In such circumstances, great confidence is reposed in a Custom House Agent. Any misuse of such position by the Customs House Agent will have far reaching consequences in the transaction of business by the Custom House officials. Therefore when the Applicant who had thirty years of experience as Custom House Agent, when he paved the way for his Power of Attorney to indulge in serious malpractices which ultimately resulted in loss of revenue to the Customs House to the extent of more than 80 lakhs, there is every justification in the respondents in treating the action of the applicant as detrimental to the interest of the nation and pass the final order of revoking his License-----.
8. The Ld. Counsel placed reliance on various judgements which are discussed below:
(a) In the case of Ashiana Cargo Services Vs. Commissioner 2014 (302) ELT 161 (Del.), the CHA had employees holding G Cards who were allowed to work for another firm and the use of the G Cards enabled smuggling of Narcotics. The Honble High Court held that there was no finding of any mala fide on part of CHA such that trust operating between CHA and Customs Authorities was violated, or irretrievably loss of future operation of license ..knowledge/mens rea, gravity of the infraction, the stringency of the penalty, the fact that the appellant has already been unable to work his license for a period of 8 years.... In the present case we find that the CHA could not be unaware of misuse of his license because he did not verify the exporter whose IEC No was being used. And the license has been revoked only one year back. Therefore, the facts and circumstances are different.
(b) The case of A.M. Ahamed & Co. Vs. Commissioner of Customs (Import) 2014 (309) ELT 433 (Mad.) dealt with a case where the time limits of inquiry under Regulation 20 /22 were not followed. And the importer had settled the matter before the Settlement Commission. In these circumstances the High Court observed that whereas the main importers matter was settled, the revocation throws the petitioner out of business and deprives it of its livelihood. Therefore, the High Court set aside the order of prohibition. Here too, the facts do not apply to the present case.
( c) The case of Jai Ambe Logistics Tribunal Order No. A/1750/14/CSTB/C-I dt. 19.11.2014 does not apply as it dealt with a case of sub-letting and the Tribunal held that procurement of business through an intermediary who is not an employee does not amounting to sub-letting of CHA License.
(d) We do not agree with the reliance on the case of Manilal Patel Clearing Forwarding Pvt. Ltd. 2013 (294) ELT 427 (Tri. Mum.) in which case the inquiry officer held the charges are not proved but the Commissioner held the charges proved but withdrew revocation after forfeiture of security deposit. In the said case the Tribunal was only bringing parity with the decision in the case of Standard Shipping Agency. We note that Mumbai High Court in the case of Delta Logistics (supra) held that .it would not be possible to hold that if the inquiry report is in favour of the CHA, the Commissioner cannot pass an order against the CHA even if the Commissioner disagrees with the inquiry report. We find that in the present case the Commissioner has given reasons for arriving at his decision
9. The appellant also referred to the case made under the Customs Act relating to the same consignment whereby the penalty on Shri Sohel Director of appellant was set aside by Commissioner (Appeals) vide order Dt. 26.6.2014. We note that the appellants Director was let off on the ground that he did not have prior knowledge about the smuggling of Basmati Rice. But in the present case, the issue is that the appellant has violated the CHALR Regulations as held by us. The serious negligence resulted in an attempt to smuggle prohibited goods.
10. In view of the above discussions, we find the appellant is guilty of violating the CHALR Regulations. However we also hold the view that the appellant cannot be disabled permanently for the violations as that would deprive him of his source of livelihood as well as deprive his employees of their source of livelihood. It would meet the ends of justice if the License is revoked for limited period. Having already suffered revocation for a year it would be sufficient punishment to continue the revocation till 31.12.015.
11. Accordingly we order that the revocation of the License would continue till 31.12.2015. From 1.1.2016 the License would become operative on forfeiture of the security deposit.
12. Appeal is disposed of in above terms.
(Pronounced in court on /2015)
(Anil Choudhary)
Member (Judicial)
(P. S. Pruthi)
Member (Technical)
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