Custom, Excise & Service Tax Tribunal
M/S. S.K.D. Shipping Agency vs Commissioner Of Customs (G), Mumbai on 19 February, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. C/87693/2013-Mum (Arising out of Order-in-Original CAO No. 56/2013/CAC/CC (G)/PKA-CHA (Admn) dt. 05.04.2013 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. S.K.D. Shipping Agency,
:
Appellant
VS
Commissioner of Customs (G), Mumbai
:
Respondent
Appearance
Shri S.N. Kantawala, Advocate for Appellant
Shri S.J. Shahu, Assistant Commissioner (A.R) for respondent
CORAM:
Mr. Anil Choudhary, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 19/02/2015
Date of decision : /2015
ORDER NO.
Per : P.S. Pruthi
This is an appeal against the order of Commissioner of Customs (G) Mumbai revoking the CHA License of M/s. SKD Shipping & Forwarding Pvt. Ltd. (appellant) and also forfeiting the entire amount of security deposit of the CHA.
2. In this case on the basis of prior intelligence DRI recovered and seized large quantity of 2GB memory Cards valued at Rs.1,29,73,840/-which were not declared in the relevant two Bills of Entry both dt. 29.2.2012 filed through the appellants-CHA. Apparently, one Shri Manish Sanghani was using the License of the CHA. Further, the IEC Code of M.S. International in whose the name the goods were imported was lent to one Shri Manoj Kumar for monetary consideration. In his statement, Shri Manish Amlani, Director of Appellant CHA admitted having allowed use of the CHA License to Mr. Manish Sanghani whose own License under the name of M/s. National Shipping Agency had been suspended earlier. The Bills of Entry in the present case filed by Mr. Manish Sanghani using the CHA License of the appellant were presented for examination and assessment by the employees of the suspended licensee (M/s. National Shipping Agency) working under the control of Shri Manish Sanghani. The CHA License of the appellant was suspended vide Order No. 13/2012 dt. 29.5.2012 under Regulation 20 of CHALR 2004, for violation of Regulations 13 (a), 13(b), 13(d) & 13(e) and 13(o). After an opportunity of hearing, the suspension of license was continued by Commissioner of Customs vide Order No. 25/2012-13 dated 31.07.2012, pending inquiry under Regulation 22 of the CHALR. On conclusion of enquiry, the Inquiry Officer in his report dt. 11.2.2013 proved six Articles of charge out of the seven Articles which were levelled against the appellant. The Commissioner disagreed with the Inquiry Officer in respect of one Article which was not proved by the Inquiry Officer. After hearing the appellant the Commissioner passed the impugned order dt. 5.4.2013 upholding contravention of Regulation 13(a), 13(b), 13(d)m 13(e), and 13(o) besides Regulation 19(5) & (12) and revoked the license and also ordered forfeiture of the entire amount of security deposit of the CHA.
3. Heard both sides.
4. The Ld. Counsel appearing on behalf of the appellant submitted that while considering the appeal of the appellant against the suspension of License, CESTAT by Order dt. 19.11.2012 had directed the Commissioner of Customs (General) Mumbai to conclude the proceedings under Regulation 22 of CHALR within 90 days from the date of Tribunals Order. However, the Inquiry Officer submitted his report later on 11.2.2013 which delayed the proceedings and time limit laid down in Board Circular No. 0/2010 dt. 8.4.2010 was not followed. On the specific charges it was his contention that the Commissioner had relied on some statements recorded under Section 108 of the Customs Act which cannot be used as evidence against CHA under CHA Regulations. He relied on the case of Jasjeet Singh Marwaha Vs. Union of India 2009 (239) ELT 407 (Del. H.C.). On the charge of sub-letting of License [Regulation (9)] he submitted that Shri Manish Sanghani is their Directors cousin and the appellant had only taken logistic assistance from Shri Manish Sanghani. The Customs passes issued to employees of Shri Manish Sanghani were operative even though the CHA License of Shri Manish Sanghani had been suspended . According to him, there is no evidence to prove the involvement of the appellant in the import of offending goods. The appellant cannot be penalized for an offence committed by the importer as they had filed Bills of Entry on the basis of documents furnished by the importer. He relied on Saffire Lithographers Vs. Commissioner of Customs, Tuticorin 2007 (215) E.L.T. 210 (Tri.-Chennai). According to him, violation of Regulation 13(a) is not established because the Department had placed reliance on Shri Manoj Kumars statement under Section 108 of Customs Act. Further that Shri Manoj Kumar was not allowed to be cross examined. Therefore, credence cannot be given to the statement of Shri Manoj Kumar stating that he had appointed Shri Manish Sanghani as CHA and had given blank letterheads of the importer. Ld. Counsel further stated that the appellant had cleared consignments of this importer through Nhava Sheva 3 years back and they had a bona fide belief that the importer was genuine. He further contended that no monetary consideration was received by them and, therefore the reliance placed by Commissioner on the Andhra Pradesh High Court judgment in the case of Commissioner of Cus. & C. Ex. Hyderabad-II Vs. H.B. Cargo Services 2011 (268) ELT 448 (A.P.) is not correct.
4.1. The Ld. Counsel further stated that even the licence of Shri Manish Sangani (National Shipping Agency) has since been reinstated. In the present case, the importer had paid the duty on the appellants persuasion and the appellant had not been made a party in the show cause notice issued under the Customs Act. In his written submissions, the Ld. Counsel contended that the Inquiry Officers report on violation of Regulation 13(o) states that the person accused of using the License of appellant had deposed that he had taken copies of signatures of authorized signatory from the bank account, PAN Card etc. of the importer. Therefore, according to the Inquiry Officer, it cannot be conclusively said that steps had not been taken to verify the antecedents of the importer.
5. The Ld. AR appearing for Revenue reiterated the findings of the Commissioner. He added that the License was used for 5 months with the knowledge of the appellant. Whereas in the statement given after the incident, the appellant had agreed that no authorization had been obtained from the importer, yet an authorization was produced later after 11 months which cannot be relied upon.
6. We have considered the submissions of both sides. It is a fact that the appellant had allowed Shri Manish Sangani to use the appellants License because his own License of National Shipping Agency had been suspended. Strangely, although the license of National Shipping Agency was suspended, the employees holding G-Cards of National Shipping Agency continued to operate in the Customs area and did Customs clearance work in respect of documents filed in the name of the appellant CHA. How this was permitted by Customs needs to be answered.
7. Shri Manish Amlani, Director had stated before the Inquiry Officer that all aspects of Customs clearance work was attended to by Shri Manish Sangani and his employees. Regulation 12 of the CHALR (earlier Regulation 10) clearly prohibits transfer of License. In the present case the transfer of License did not take place physically. But Regulation 12 states no License shall be sold or otherwise transferred. As the law itself prohibits transfer of a License, the act of a person allowing another person to use his License, would amount to transfer of a License. Otherwise the language and requirement of Rule 12 would become otiose. Therefore, it is clear that Regulation 12 has been violated in this case. As regards Regulation 13(a), it is clear from the provisions that the CHA has to take an authorization from the importer. An authorization given to a person (other than License holder) who actually used the CHA License does not become a true authorization in the sense and spirit of Regulation 13(a). An authorization addressed to the appellant was produced during the inquiry but this was much later and no authorization was produced at the time of seizure of the goods. We have seen the authorization. It does not even show any contact number or telephone number of M.S. International. Further there is a huge gap between the words yours truly and the signature on the authorization. Therefore, the Commissioners view that Shri Manish Sanghani was in possession of blank letterheads of the importer M/s. M.S. International is not an unreasonable conclusion. Especially when the Director of the appellant had made no efforts to contact the importer regarding clearance of the subject consignment which was seized. It would not be difficult to obtain someones IEC registration Number. Therefore the violation of Regulation 13(a) is established. Regulation 13(b) is clearly violated because the appellant allowed Shri Manish Sanghani to transact the business and also allowed the employees of Shri Manish Sanghani holding G-Cards in the name of National Shipping Agency, to transact business on documents of appellant-CHA. Even though, the plea taken is that the employees of National Shipping Agency had valid G-Passes, this does not give them authority to enter the Customs area and indulge in Customs clearance work on basis of documents which are filed by the appellant CHA. Regulation 13(d) stands violated for the simple reason that when the appellant has allowed his License to be used by another person, the requirement of advising his client to comply with the provisions of the Customs act cannot be met by him. The appellant has also failed to fulfill the condition of Regulation 13 (e) because he had allowed Shri Manish Sanghani to use his License and did not exercise due diligence to impart correct knowledge to the importer. As regards Regulation 13 (o) which requires the CHA to verify the antecedents of the importer, the appellant have tried to evade the charge by producing copies of PAN, IEC of the importer and a copy of the signature verification of the importer by the Bank. As mentioned above, any person can produce such documents at a later stage. We find that the signature verification bears no date. The account number in the stamp of the Bank appears to be overwritten. No prudent banker would put his signatures without affixing the date of the signature and without understanding the significance of the purpose for which it will be used. The signature verification paper is not on a letterhead. Thus the attempt of the appellant to create evidence is rather weak. We, therefore reject the defence put up in respect of violation of Regulation 13 (o). Regarding regulation 19(5), it is noted that the Director of the appellant Shri Manish Amlani had in his examination in the inquiry on 18.1.2013 and on 22.1.2013 admitted that he had allowed Shri Manish Sanghani to do the business related to Customs clearance work. Shri Manish Sanghani had filed the Bill of Entry online on behalf the appellant. Therefore the violation of Regulation 19(5) is proved.
8. The Commissioner has stated in his order that the appellant have been show caused for imposition of penalty in two other cases. But fairly enough, he has not linked his decision in the instant case pending the outcome of the show cause notices.
9. In his written submissions, the Ld. Counsel relied on certain case laws. The first case is A.M. Ahamed & Co. Vs. Commissioner of Customs (Imports), Chennai 2014 (309) E.L.T.433 (Mad.). In that case, the main party had settled their case in the Settlement Commission and the High Court observed that the revocation deprives the petitioner of his livelihood, although, the importer had escaped with a nominal fine after making full disclosure. Here, the facts are different and the importer has not escaped yet with a nominal fine.
10. In the case of S.S. Clearing & Forwarding Agency Pvt. Ltd. 2011 (263) ELT 353 (Bom.), the Honble High Court held that the CHA cannot be penalized under CHALR when it has not been made party in the main case, and therefore held that revocation is disproportionate to the offence. Although, in the present case also CHA has not been made a party in the main case enough evidence has been provided to establish violation of CHALR Regulations. In fact, in the case of SS Clearing & Forwarding Agency Ltd. the Honble Bombay High Court observed that merely because the CHA was not joined as a co-noticee cannot be a ground to hold that the inquiry proceedings initiated against the CHA were vitiated. In the case of SS Clearing (supra) the goods had already been cleared and were seized subsequent to clearance. In the present case, the goods were seized on proper intelligence before clearance. The mischief was conducted by Shri Manish Sanghani, who was using the CHA License of the appellant. By allowing such misuse the appellant was certainly negligent in performing his duties as required under the CHALR. Thus, the facts and circumstances of the present case and the case of SS Clearing & Forwarding Agency are different.
11. The case of Jai Ambe Logistics vide Order No. A/1750/14/CSTB/C-I dt. 19.11.2014 passed by CESTAT concerned the procurement of business through an intermediary. In the present, case the appellant has not procured business through an intermediary; it has simply allowed unfettered use of his License by another person.
12. In the case of Shri Venkatesh Shipping Services Pvt. Ltd. Vs. Union of India 2013 (287) E.L.T. 266 (Bom.), the Honble High Court considered that another person acting on behalf of the exporter had approached the petitioner. The Honble High Court held that Tribunals order that major charges leveled against the appellant ( in that case) stands proved cannot be verified. Further the High Court held that since appellant was found guilty for the first time and had already suffered for 4 years and 5 months, the penalty for such period would be justified. We do not understand how this judgment of the Bombay High Court can come to the aid of the appellant in the circumstances of the present case, when the appellant consciously allowed his License to be used by another person.
13. In view of the above, the charges against the appellants stand established. However, we also hold the view that the appellant cannot be disabled permanently for the violation as that would deprive him and his employees of their source of livelihood. The License has remained in operative since 29.5.2012. We find that the three years period uptill now during which he has not been able to use the License is sufficient punishment.
14. Therefore, we cancel the order of revocation. The license would become operative immediately. However, the forfeiture of security deposit is upheld.
(Pronounced in court on /2015)
(Anil Choudhary)
Member (Judicial)
(P. S. Pruthi)
Member (Technical)
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