Customs, Excise and Gold Tribunal - Tamil Nadu
Maruti Transports vs Commissioner Of Customs on 2 September, 2004
Equivalent citations: 2005(99)ECC218, 2004(177)ELT1051(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The appellant is a Customs House Agent, whose CHA licence stands revoked and security deposit forfeited as per the impugned order of the Commissioner of Customs (Port-Import) under Regulation 21 (1) of the Customs House Agents Licensing Regulations, 1984. The facts of the case are briefly as follows:
The appellant had filed Bill of Entry No. 2263 dated 30.1.2002 for M/s Galaxy Exports for the clearance of a certain quantity of upholstery fabrics under DEEC scheme Investigations revealed that M/s Galaxy Exports (importers) were a fictitious firm and had no manufacturing activity. It further appeared to the Department that 3 persons namely, Shri Ashfaq Ahmed (with numerous aliases), Shri Atoeq Rehman alias Altaf Ahmed and Shri Mohammed Zacria had submitted fake Bank Guarantees to Customs, with the assistance of the appellant and one Shri Dasarathan Partner of M/s Goodwill Shipping Company, for the purpose of availing DEEC benefit for the import. The goods were seized under a Mahazar for further action under the Customs Act and such action culminated in Order-in-Original No. 795/2003 dated 18.7.2003 of the Commissioner of Customs (Exports), Chennai, whereby, apart from confiscation of the goods and imposition of penalty on the importer, a penalty of Rs. 1 lakh was imposed on the appellant under Section 112 of the Customs Act. The appellant is said to have filed separate appeal against that penalty and the same is said to be pending before this Tribunal.
From investigations, it also appeared to the Department that the appellant had failed to comply with Regulation 14 of the CHALR, 1984. Therefore, a show-cause notice was issued to them proposing suspension/revocation of the CHA licence and forfeiture of security deposit under Regulation 21 (1) {b) of the CHALR, 1984. In their reply to the show-cause notice, addressed to the Deputy Commissioner of Customs (Inquiry Officer), they denied the above charge. The Inquiry Officer reported that the appellant had failed to comply with the provisions of Clauses (a), (b), and (l) of Regulation 14. He recommended for immediate suspension of the CHA licence but suggested that a lenient view be taken with regard to forfeiture of security deposit as a penalty had already been imposed on the CHA by the Commissioner of Customs (Exports). The appellant was provided with a copy of the Inquiry Report and subsequently heard by the adjudicating authority viz. Commissioner of Customs (Port-Import), before whom they inter alia pleaded as under:
(i) The Bill of Entry was filed and steered by a person who was not on their pay rolls and this fact was brought to the attention of the Customs authorities.
(ii) The forged Bank Guarantees were not submitted by them.
(iii) They did not collude with the importer in respect of clearance of the subject import.
(iv) They had not violated entire Regulation 14 and any lapse of theirs was only a minor one, which did not cause revenue loss.
The appellant, in a subsequent letter, took the contention that any penal action under CHALR would amount to double jeopardy as they had already been penalised by the Commissioner (Exports) on the same set of facts.
2. The adjudicating authority rejected the plea of double jeopardy and proceeded to determine the liability of the appellant under CHALR, 1984. It held that the CHA was responsible for the commissions and omissions of their employees in terms of Regulation 20(7). It further held that the appellant had failed to discharge their obligations under Regulation 14 (a), (b), (d) and (l). After noting that "the gross defiance, negligence and callous attitude of the CHA have resulted in a serious fraud leading to great revenue loss to the Department", and that the CHA had already been held, by the Commissioner of Customs (Exports), to have "abetted smuggling," the adjudicating authority took the view that the acts and omissions of the CHA could not be treated leniently and it would not be legal and proper to permit them to operate as CHA any further. In the result, after rejecting the recommendations of the Enquiry Officer, Ld. Commissioner of Customs revoked the CHA licence and ordered forfeiture of the security deposit of Rs. 25,000. The appeal is against this order.
3. Heard both sides. Ld. Counsel for the appellant submitted that, though the Bill of Entry was filed in their name, the connected documents were only handled by one Shri Dasarathan, who himself had admitted that the Bank Guarantees in sealed covers given to him by the importers were handed over to the Customs by himself. There was no requirement under Regulation 14 that a CHA should verify the bona fides of the importer/exporter or the genuineness of the documents produced by the importer/exporter. Hence the CHA had no liability to scrutinise the documents. They acted only as a coordinating agency between the importer/exporter on one side and the Customs on the other. The subject Bill of Entry was filed as orally authorised by the importer. A written authorisation was not necessary. Shri Dasarathan was admittedly authorised by the importer to handle their documents and, therefore, it had to be presumed that the appellant had implied authority from the importer for filing the documents through Dasarathan. Therefore, there was no case of non-compliance with Regulation 14 (a). Ld. Counsel conceded that there was breach of obligation under Regulation 14 (b). However, with regard to Regulation 14 (d), it was submitted that there was no basis for the charge levelled in terms of this provision inasmuch as the factum of submission of forged Bank Guarantees was not known to any person including the Customs House till a communication from the Bank was received by the Customs. Whatever documents were prepared and filed on behalf of the appellant was in accordance with orders relating to presentation of such documents. The impugned order did not disclose as to what document had been prepared and filed in breach of such orders and in what manner any such breach was committed. Therefore, the charge made with reference to Regulation 14 (1) was also not sustainable. It was argued that a violation of Regulation 14 (b) alone would not constitute sufficient ground for revocation of CHA licence, which was an extreme step resulting in the CHA and his employees being deprived of their livelihood. The licence could not be revoked on the basis of a finding of minor lapses or omissions of the CHA. It would be revoked only in the rarest of rare cases. Ld. Counsel relied on the following decisions:
(i) C.J. Joshi & Sons v. Commissioner, 1999 (113) ELT 900 (Tri.).
(ii) Lohia Travel & Cargo v. Commissioner, 2001 (96) ECR 276 (Tri.).
(iii) Falcon Aircargo & Travel (P) Ltd., v. Commissioner, 2002 (141) ELT 284 (Tri.-Del.).
(iv) Trans Shipping Service v. Commissioner, 2004 (163) ELT 484 (Tri.-Mum.).
(v) Final Order No. 474/2004 dated 9.6.2004 in Appeal No. C/640/2000. (Nanda International v. Commissioner).
It was pointed out, on the strength of the above decisions of the Tribunal, that it was not legal or proper to revoke a CHA licence on the ground of non-compliance with one or the other clause of Regulation 14. In the instant case, the breach committed by the appellant was only in respect of the obligation under Clause (b) of Regulation 14 and, therefore, the revocation of licence and forfeiture of security deposit were unwarranted.
4. Ld. JDR referred to the statements of Shri Dasarathan and Shri Udaya Bhaskar and submitted that it was Shri Dasarathan who filed the Bill of Entry. He was not an employee of the CHA. The filing of the Bill of Entry was also without the necessary authorisation from the importer, whereby Regulations 14 and 20 were contravened. In such circumstances, the CHA licence could be revoked. In this connection, reliance was placed on the decision in Skyways v. Commissioner, 2004 (163) ELT 474 (Tri.-Del). Ld. JDR also relied on the decision in Trans Shipping Service v. Commissioner (Supra), wherein revocation of a CHA licence was sustained on the ground that the CHA had violated Regulations 13 and 14 by not obtaining authorisation letter from his client. Ld. DR further submitted that, though the appellant was aware of the importer's fraudulent intention to obtain undue benefit under the DEEC scheme, they did not inform this to the Customs authorities. CHA was not merely an agent of the importer but also one who should act in aid of the Customs. The appellant's omission to keep the Customs authorities informed of the importer's fraud was misconduct under Regulation 14 (d), which could warrant revocation of the CHA licence. In this connection, reliance was placed on the decision in Damani Bros. v. Collector, 2000 (125) ELT 582 (Tri.). Ld. DR also sought to distinguish the cases cited by the Counsel.
5. In his rejoinder, Ld. Counsel contended that it was not necessary for a CHA to get specific authorisation in writing from his client for dealing with import or export. It was enough to get the signature of the importer/exporter on the Bill of Entry or the Shipping Bill, as the case may be. The very signing of the Bill of Entry/Shipping Bill by the importer/exporter amounted to authorisation. Therefore, in the instant case, the charge against the appellant that he had not obtained authorisation from Galaxy Exports for filing the Bill of Entry was not sustainable. In this connection, reliance was placed on the decision in P.P. Dutta v. Commissioner, 2001 (136) ELT 1042. Ld. Counsel also sought to dinstinguish the cases of Skyways (supra) and Trans Shipping Service (supra) cited by the DR.
6. We have carefully considered the submissions and examined the case law. The Ld. Commissioner found against the appellant breach of obligations under Clauses (a), (b), (d) and (l) of Regulation 14 of CHALR, 1984. With reference to Clause (a), it was found that the appellant had filed Customs documents without getting authorisation from the importer. We find that there is no dispute of the fact that the Bill of Entry, which was filed in the name of the appellant-CHA, was duly signed by the importer. According to the Tribunal's decision in P.P. Dutta case (supra), filing of a Bill of Entry duly signed by the importer, without importer's written authorisation, is not to be treated as breach of obligation under Regulation 14 (a). Following the decision in P.P. Dutta's case, we reject the Commissioner's finding that the appellant had failed to comply with Regulation 14 (a). As regards the Commissioner's finding, against the appellant, of non-compliance with Regulation 14 (b), we have to affirm it as it has not been challenged in this appeal. On the other hand, the finding has been accepted by the appellant. The Commissioner has found non-compliance with Regulation 14 (d), against the appellant. This conclusion is, apparently, based on the following findings contained in the impugned order:
"The CHA has indulged in the illegal activities by signing Customs documents and filing Customs documents/Bank Guarantee in the name of a fictitious firm. The Customs documents are found filed by Maruti Transports, the CHA in the name of M/s. Galaxy Exports and it was the duty of the CHA to advice the importers to comply with the provisions of the Customs Act."
We have found nothing on record to show that the appellant was aware of the forged nature of the Bank Guarantees at the time of filing of the documents. Apparently, it was the Customs authorities, who first came to know, through a communication received from the Bank, that the Bank guarantees were fake.
The appellant came to know the forgery only subsequently. Hence the charge framed against the appellant with reference to Regulation 14 (d) cannot be sustained. As regards the Commissioner's finding that the documents prepared and filed on behalf of the appellant were not in accordance with the departmental orders relating to presentation of such documents, we observe that this finding is non-speaking inasmuch as it does not specify the departmental orders relating to presentation of import documents and also does not disclose as to how, and to what extent, the preparation and filing of the Bill of Entry and other documents were contrary to any departmental orders or instructions. Hence, we are unable to sustain the charge framed against the appellant with reference to Regulation 14 (l). The only charge against the appellant, which has been conceded by them, is breach of Regulation 14 (b) which cast an obligation on CHA to transact business in the Customs station either personally or through an employee duly approved by the Assistant Commissioner (Customs) or Deputy Commissioner (Customs) designated by the Commissioner. In the instant case, admittedly, the Bill of Entry was filed by Shri Dasarathan, who was not an employee of the CHA at the material time. But it is an admitted fact that Shri Dasarathan had been authorised by the importer to file the documents and that such filing of the documents was done in the name of the CHA. The only defect pointed out is that Shri Dasarathan was not duly authorised by the Customs authorities for the purpose. In our view, this defect did not constitute grave offence for the CHA to be visited with the extreme penalty of revocation of licence. Any punishment should be commensurate with the gravity of the offence. Revocation of CHA licence can hardly be said to be commensurate with the above offence found against the appellant. The view taken by the Inquiry Officer appears to be preferable in the facts and evidence of the case. Regulation 21 empowers the Commissioner to suspend or revoke CHA licence depending on the gravity of the offence committed by the CHA. The Inquiry Officer appears to have reasonably assessed the gravity of offence committed by the appellant and, accordingly, recommended suspension of licence. The Commissioner chose to revoke the licence after his own assessment. But he has not stated good reasons to resort to the extreme step of revoking the licence. The reliance placed by the appellant's Counsel on Falcon Aircargo & Travel (supra) seems to be apposite in this context.
In that case, the Tribunal set aside revocation of licence after recording a finding that the offence found against the CHA was not grave enough to warrant revocation of the licence. We have considered the other decisions also and we find that this Tribunal exonerated Customs House Agents, where there was no evidence on record to show that the CHAs had knowledge of their employees' fraudulent acts. In the instant case, we have also not come across any evidence of fraud or collusion involving the appellant. In the totality of the facts and evidence, we hold that the licence issued to the appellant was not liable to be revoked. However, we are not inclined to interfere with the forfeiture of the security deposit which shall remain as a fine for the breach of Regulation 14 (b).
7. In the result, the revocation of CHA licence is set aside and the forfeiture of security deposit is upheld. The order of the Commissioner will stand modified accordingly. The appeal stands disposed of.