Custom, Excise & Service Tax Tribunal
Ajay Clearing Enterprise vs Commissioner Of Customs (Gen) on 9 October, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.C/86507/13 (Arising out of Order-in-Original CAO No.54/2003/CAC/CC/ (G)/PKA-CHA (Admn) dated 28/03/2013 passed by Commissioner of Central Excise & Customs (G), Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) 1. Whether Press Reporters may be allowed to see :No 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? ========================================
Ajay Clearing Enterprise Appellant
Vs.
Commissioner of Customs (Gen), Respondent
Mumbai
Appearance:
Shri.A.K.Prabhakar, Advocate for appellant
Shri.Senthil Nathan, Dy. Comm. (AR), for respondent
CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of Hearing : 09/10/2014
Date of Decision : /10/2014
ORDER NO
Per: P.R.Chandrasekharan
1. The appeal arises from Order-in-Original No. 54/2013/CAC/CC(G)/PKA-CHA (Admn) dated 25-3-2013 passed by the Commissioner of Customs (General), New Custom House, Mumbai. Vide the impugned order, the ld. Commissioner has revoked the CHA licence No. 11/803 issued to M/s Ajay Clearing Enterprise, Mumbai, for contravention of Regulations !3 (a), 13 (d) and 13 (e) of CHALR, 2004. Aggrieved of the same, the appellant is before us.
2. The facts relating to the case are briefly as follows. A case of abuse of CHA licence No.11/803 issued to M/s Ajay Clearing Houses was reported by the Add. Commissioner of Customs, SIIB, JNCH, Nhava Sheva in respect of an export transaction vide shipping bill No. 4339055 dated 2-6-2006 wherein the goods under export were declared as furniture wood. On examination, it was found that the goods were in fact red sanders wood an item banned for export. M/s Ajay Clearing House, the CHA, had filed the shipping bill on behalf of the exporter M/s Angel Impex by declaring the goods under export as wood furniture valued at Rs.1,26,927.60. On examination of the consignment , the goods were found to be 10000 kgs. of red sanders wood valued at Rs.75 lakhs which was seized for further proceedings. On investigation, it was found that the CHA had not met the exporter nor did he know him and the export documents were received from Mr.Baburao K Chinta of Max Shipping Services, a freight forward er, who had signed the documents on behalf of the exporter M/s Angel Impex. The exporter firm was also found to be fictitious. Accordingly inquiry proceedings were initiated against the CHA under the provisions of CHALR 2004 and charges were imputed against the CHA of contravening Regulation 13 (a) of not obtaining proper authorisation from the exporter before undertaking the transaction, Regulation 13(d) not advising the client to comply with the provisions of the Customs Act and in case of non-compliance, not bringing the matter to the notice of the Asst./Dy. Commissioner of Customs, and Regulation 13 (e) for not exercising due diligence to ascertain the correctness of any information which he imparts to a client with reference to the work related to clearance of cargo or baggage. The inquiry proceedings were completed and the inquiry officer found the charges to be proved. Thereafter, a copy of the enquiry report was furnished to the appellant CHA for his defence submissions and after considering the submissions, the Commissioner of Customs (General), the licensing authority has revoked the CHA licence of M/s Ajay Clearing House. Hence the appeal before us.
3. The ld. Counsel for the appellant made the following submissions.
3.1 The matter had come up before this Tribunal earlier when the CHA licence was under suspension and vide order No. A/200/08/WZB/CSTB/C-I dated 29/2/2008 , this Tribunal had revoked the suspension while allowing the department to conduct/continue with the regular inquiry proceedings. While passing the said order, the Tribunal had agreed with the appellants contention that they had not contravened the provisions of Regulation 13 (d) and 13 (e) and observed that only the charge of violation of Regulation 13(a) stands proved. Therefore, only the charge of contravention of Regulation 13(a) of not obtaining proper authorization from the exporter stands established. However, the adjudicating authority has concluded in the impugned order that the appellant has contravened regulations 13(a), (d) and (e) which is contrary to the findings recorded by this Tribunal.
3.2 The punishment of revocation for contravention of regulation 13(a) is quite disproportionate to the offence committed. Therefore, forfeiture of security deposit, if at all, required should be sufficient punishment. Reliance is placed on the decision of the honble High Court of Delhi in the case of Ashiana Cargo Services [2014 (302) ELT 161 (Del)] in support of this contention. Reliance is also placed on the decision of the honble High Court of Bombay in the case of Shri Venkatesh Shipping Services Pvt. Ltd. [2013 (287) ELT 266 (B0m)] where in a case of contravention of Regulations 13 (a), (b), (d) and (e), the punishment of suspension for a period of 4 years and 5 months was considered sufficient and the penalty of revocation of licence was set aside. Reliance is also placed on a few decisions of this Tribunal in the case of K.S. Sawant & Co. [2012 (284) ELT 363], Dominic & Co. [2013 (296) ELT 494] and Sainath Clearing Agency [2011 (269) ELT 106].
3.3 It is also contended that the inquiry proceedings were not conducted properly and the appellant was not given adequate opportunity to make their submissions.
In the light of the above, it is pleaded that the impugned order revoking the CHA licence be set aside.
4. The ld. Dy. Commissioner (AR) appearing for the Revenue re-iterates the findings of the adjudicating authority. He submits that in the present case, the goods sought to be exported were red sanders an endangered plant species and a banned item and therefore, the gravity of the offence is quite grave. Further the exporting firm was found to be fictitious and the appellant was not able to produce the exporter before the customs authorities during investigation. The evidence available on record clearly shows the connivance of the CHA in the illegal export of a banned item. Further in the customs proceedings pertaining to the said transaction, a penalty of Rs.50,000/- has been imposed on the Manager of the CHA firm Mr. Prakash Charatkar, which decision has not been appealed against and has thus become final. In this factual scenario, it is his submission that the penalty of revocation along with forfeiture of security deposit is justified. Accordingly he pleads for upholding the impugned order.
5. We have carefully considered the submissions made by both the sides.
5.1 We have perused the enquiry officers report. The said report gives the details of the enquiry proceedings conducted date wise, details of the departmental witnesses examined and cross-examined, details of other witnesses examined and cross-examined, the presenting officers brief and the inquiry officers findings and conclusions. A copy of the said report has also been given to the appellant CHA for their comments. The enquiry officer has concluded that all the charges imputed against the appellant CHA stood proved. All these have been forwarded to the Licensing authority for his consideration. The appellant CHA has been heard by the Licensing authority and their contentions taken note of. Thereafter, the impugned has been passed. Therefore, we do not find any merit in the contention of the appellant that the inquiry proceedings were not conducted in a proper manner.
5.2 As regards the argument that this Tribunal in its order dated 29-2-2008 had observed that the contravention of regulation 13(d) and 13(e) is not established is only a preliminary observation. The said observation was made prior to the conduct of the inquiry proceedings. The inquiry proceedings were conducted during June to November, 2008 and the report submitted in June, 2013. Regulation 22 of CHALR, 2004 envisages conduct of an enquiry by an officer appointed for this purpose and submission of an inquiry report based on which the decision to revoke the licence or not is taken by the Licensing authority. This Tribunal cannot give any finding or definite conclusion about the contravention before the completion of the inquiry and the subsequent proceedings before the Licensing authority. Therefore, any observation made cannot be taken as a finding of this Tribunal but can only be considered as a preliminary observation and nothing more. Therefore, no credence can be attached to such observations.
5.3 During the enquiry proceedings, Shri. Prakash Charalkar, Manager of the appellant CHA has admitted that he had obtained the authorisation for export from the freight forwarder M/s Max Shipping Services and not from the exporter. Shri. Baburao K Chinta, the proprietory of M/s Max Shipping Services has admitted that he did not obtain any declaration from the exporter but had signed the export documents himself. Both the CHA as well as the freight forwarder had failed to produce the exporter before the Customs authorities when they were called upon to do so. Efforts made to serve summons to the exporter Mr. Rizwan Yakub Qureshi, Proprietor of M/s Angel Impex at the declared address at Arsiwala Compound, Mazgaon, Mumbai, revealed that the said premises were occupied by some other persons and M/s Angel Impex did not exist at the said address. These evidences produced by the investigation clearly establish the fact that the exports were undertaken in a fictitious name. The export goods on examination were found to be red sanders wood which is a banned item being a protected species. Therefore, it is clear that the appellant CHA had completely failed in following the CHALR provisions. Thus the contravention of regulation 13(a) which mandates that the CHA should have a proper authorisation to transact the business on behalf of the importer or exporter, as the case may be,stands clearly established. The second charge of contravention of regulation 13(d) of advising the client to comply with the provisions of the Customs Act and in case of non-compliance to bring the matter to the notice of the Customs Authorities is also established for the reason that to advise the client, the CHA should know the client. In the present case, they have not met the client at all and they have received the documents through a freight forwarder. Therefore, the question of advising the client would not arise at all. As regards the third charge of not exercising due diligence in ascertaining the correct of the any information, to undertake this task, the CHA should know his client. If he does not know who the client is, he cannot exercise any diligence in ascertaining the correctness of the information furnished. Therefore, the charge of contravention of regulation 13(e) also stand clearly established. It is also relevant to note that in the customs proceedings in respect of the impugned transaction, both Sri. Prakash Charatkar, Manager of the appellant CHA firm as also Shri. Baburao K Chinta, Proprietor of Max Shipping Services, the freight forwarder have been found guilty and penalised under the provisions of section 114 of the Customs Act vide order dated 29-6-2007. We are informed that this order has not been appealed against and has become final. Thus the order of the adjudicating authority in the customs proceedings also support the departments case in the CHALR proceedings. Therefore, we do not find any fault in the conclusion drawn by the Licensing authority that the appellant CHA had contravened the provisios of Regulation 13(a), (d) and (e) of CHALR, 2004.
5.4 The next question for consideration is whether the punishment of revocation of licence is proportionate to the gravity of the offence committed. The appellant has relied on the decisions of the honble Bombay High Court in the case of Shri Venkatesh Shipping Services Ltd. (supra). The said case dealt with a situation where the contravention of regulations 13(a),(b),(d) &(e) were involved. In the said case the goods were cleared for export by the customs authorities. Later on it came to light that the CHA did not have authorisation from the exporter, the customs clearance work was carried out by persons other than the employees of the CHA and so on. However, the goods involved therein were not prohibited/banned goods and the exporter was also not fictitious. Therefore, considering the breach as technical violations and considering the fact the CHA was a first time offender, a lenient view was taken in the facts of the said case. That is not the situation obtaining in the present case. Here is a case where the goods sought to be exported were banned items. The exporter was found to be fictitious and not existing in the address given. Thus the facts are different and distinguishable. As regards the reliance on Ashiana Cargo Services decided by the honble High Court of Delhi, in the said case there was a concurrent finding by the Licensing authority and the Tribunal that the CHA did not have knowledge that illegal exports and smuggling of narcotics was effected using G cards given to the employees of another firm. In that context, it was held that revocation is not justified. In the facts of the case before us, it is the appellants Manager who was found abetting the illegal exports of a banned item. Further the exporter was also found to be fictitious. Thus the facts involved are different and distinguishable. So is the position in respect of the various decisions of this Tribunal relied upon by the appellant. It is a settled position in law that a ratio of a decision would apply only when the facts are identical. In Alnoori Tobacco Products Ltd. case [2004 (170) ELT 135 (SC)] the honble apex court held as follows:-
..Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. . There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case."
Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 5.5 A case of sub-letting of licence by CHA, obtaining customs pass for non-employees, removal of goods without obtaining authorisation from importers was considered by the honble High Court of Gujarat in OTA Kandla Pvt. Ltd. [2011 (269) ELT 467 (Guj)]. The honble high court upheld the contention of the Revenue that sub-letting amounted to transfer of CHA licence and refused to interfere with the punishment of revocation of CHA licence awarded by the Commissioner of Customs, the Licensing authority. Similarly in a matter pertaining to HB Cargo Services [2011 (268) ELT 448 (A.P.)], wherein also the license was sub-let and no authorizations were obtained from the exporters, the honble AP High Court upheld the punishment of revocation of CHA licence by holding that in a Customs area, it is the Commissioner who is responsible for the happenings, discipline to be maintained and he is best placed to understand the importance of CHA and if he takes a decision for that purpose, CESTAT should not interfere on the basis of its own notions of difficulties likely to be faced by the CHA or its employees and should not be swayed by considerations of mis-placed sympathy. The honble Bombay High Court in the Commissioner of Customs vs. Worldwide Cargo Movers [2010 (253) ELT 190 (Bom)], while dealing with a case relating to smuggling of cars, held as follows:-
17. ..We are conscious that the punishment has to be commensurate with the misconduct and that by revocation the respondent and its employees are going to suffer. At the same time, we can not forget that though it is the right of a citizen to carry on his business or profession, it is subject to reasonable restrictions and conditions. In the present case, those conditions were already stipulated. In the case of Arvind Bhagat (supra), the order of the Madras High Court has been left undisturbed by the Apex Court. It was a case where the CHA had failed to discharge his obligation to exercise proper supervision. In the case of Sri Kamakshi Agency (supra), the CHA was held responsible for the fraudulent activities of a third party whom it had delegated its functions. That was also left undisturbed by the Supreme Court. Here, the CHA has brazenly defended his Regulation 8 employee who gave a fake name of his brother as importer for undervaluing the imported car. Thus, the employee of the CHA was party to the Firm. The CHA has not disowned him in the reply filed by him before the appellant. That being so, he is clearly responsible vicariously.
18. In our view, the Tribunal has committed a grave error in interfering with the decision of a domestic authority. In a departmental proceeding one has to see whether the principles of natural justice are followed and the findings are justified from material on record. Once both these aspects are satisfied if an outsider Tribunal interferes, its findings and order will be improper 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 the 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 his employees. The decision is best to be left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or malafide. That is not the case here. (emphasis supplied) In our considered view, the ratio of the above decision applies to the facts of the present case before us and the decision is best left to the disciplinary authority, which is the Licensing authority.
5.6 In view of the factual and legal analysis as above, we do not find any reason to interfere with the findings and decision of the Licensing authority in the impugned order. Accordingly we dismiss the appeal as devoid of merits.
(Operative part of the order pronounced in the Court on /10/2014) (Ramesh Nair) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 13