Custom, Excise & Service Tax Tribunal
M/S Flyjac Logistics Pvt. Ltd vs Commissioner Of Central Excise, ... on 13 February, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20225 / 2014 Appeal(s) Involved: C/27291/2013-DB [Arising out of Order-in-Original (Order of Prohibition of Customs Brokers License) No. VIII/13/24/2000-Cus-Tech-7066 dated 11.7.2013 passed by Commissioner of Customs, Bangalore.] M/s Flyjac Logistics Pvt. Ltd No.414, 'Connection Point Next to MSIL Cargo Complex, Old Airport Exit Road, BANGALORE-560017 Appellant(s) Versus Commissioner of Central Excise, Customs and Service Tax - BANGALORE-I POST BOX NO 5400, CR BUILDINGS, BANGALORE-560001 Respondent(s)
Appearance:
Mr. S. Murugappan, Adv.
C-4,LEVEL-3,ANMOL PALANI, NO.88,G.N.CHETTY R0AD CHENNAI-600017 For the Appellant Mr. S. Teli, A.R. For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HONBLE SHRI S.K. MOHANTY, JUDICIAL MEMBER ________________________________________ Date of Hearing: 13/02/2014 Date of Decision: 13/02/2014 Per B.S.V. MURTHY This appeal is filed against the order of prohibition passed under the provisions of Regulation 23 of the Customs Brokers Licensing Regulations, 2013 (the Regulations) against the appellant prohibiting them from operating within the jurisdiction of Bangalore Customs Commissionerate with immediate effect until further order.
2. The Commissioner has passed the order which is very brief and the observations of the Commissioner for coming to the conclusion that prohibition required are contained in paragraph 4 of the impugned order which is reproduced below:
4. Whereas, having carefully perused the aforesaid Order-in-Original No. 20864/2013 dated 7.5.2013 passed by the Commissioner of Customs, (Seaport-Import), Customs House, Chennai, and other records the undersigned is of a considered view that the CHA has contravened the provisions of the Regulation 13 of the erstwhile CHALR 2004. It is also found that the contraventions committed are grave and serious. Further, it would appear that a large number of consignments of similar nature are in pipeline. Therefore, if immediate action is not taken, the interest of revenue is likely to be seriously prejudiced. In view of the above, I, Sandeep Prakash, Commissioner of Customs, Bangalore, hereby prohibit the said CHA, M/s Flyjac Logistics Pvt. Ltd., in terms of powers conferred on me under the provisions of Regulation 23 of the CBLR, 2013, from operating within the jurisdiction of Bangalore Customs Commissionerate, with immediate effect and until further orders. This order is passed subsequent to the Order-in-Original No. 20864/2013 dated 7.5.2013, passed by the Commissioner of Customs (Seaport-Import), Chennai revoking suspension of CHA licence of the appellant.
3. The appellant is in appeal against the order of prohibition dated 11.7.2013.
4. For better appreciation of the facts, we consider that it would be necessary to reproduce a portion of the Order-in-Original dated 7.5.2013 passed by Commissioner of Customs (Seaport-Import), Chennai, which contains details of the case against the appellant:
2. The DRI, Chennai, vide their letter F. No. VIII/26/193/2012-DRI/VIII/48/31/2012-DRI dated 19.2.2013 informed that they received specific intelligence that some unscrupulous importers are importing and clearing dietary supplements in the guise of medicaments by resorting to classify them under CTH. 30045020 (10% of BCD) instead of CTH 21069099 (30% of BCD) CHA and that they are also clearing the said goods without payment of CVD on the basis of Retails Sale Price (RSP), as required under proviso to section 3(2) of the Customs Tariff Act, 1975 read with Section 4A of the Central Excise Act, 1944 and Central Excise Notification No. 049/2008-NT dated 24.12.2008, in order to evade payment of appropriate customs duties. Accordingly, they took up for investigation all the imports made by M/s Itspossible Marketing Ltd., New Delhi; M/s Health Code India Pvt. Ltd., Chennai; M/s Cell Code Nutrition (India) Pvt. Ltd., Chennai; M/s Health Care Impex, Chennai and M/s Health Care Impex (India) Pvt. Ltd., Chennai.
3. In this connection, searches were conducted and impugned goods with a total value of Rs. 13, 44, 09,035/- were seized form the premises of the said importers. Further, voluntary statements were recorded from Shri Sivasakthivelu, managing Director of M/s Health Code India Pvt. Ltd., Chennai and M/s Cell Code Nutrition (India) Pvt. Ltd., Chennai; Sh. G.V. Hentry, Proprietor of M/s Health Care Impex (India) Pvt. Ltd., Chennai and Sh. Ashish Khetarpal as well as Sh. Vipin Kumar, Directors of M/s Itspossible Marketing Ltd., New Delhi.
4. During the course of investigation, it came to the fore that CHA M/s Flyjac Logistics Pvt. Ltd., acted as Customs House Agent (CHA) and facilitated clearance of 3 consignments imported by M/s Itspossible Marketing Ltd. (2 at ACC, Bangalore vide Bills of Entry Nos. 2571807 dated 12.1.2011 and 2663420 dated 28.1.2011 and 01 at New Customs House, New Delhi vide Bill of Entry No. 3030554 dated 24.3.2011. As regards to the bill of entry filed at ACC, Bangalore, the description of the goods were found to be mis-stated inasmuch as the expressions like Mineral Substances, for mfg purpose which were not available in the corresponding suppliers invoices, have been added to the item description. Further, the officers of the DRI could lay hands on a copy of export declaration being No. 5770 dated 23.12.2010 filed by the supplier of the impugned goods with US Customs at the time of export of the said consignment which showed that the description of the goods as Oral Supplements and the Tariff Heading as 2106.09.7090. This document in fact was submitted by Mr. Mohammed Kaleem, Manager, Import Clearance of the said CHA, during course of deposing his voluntary statement dt. 24.9.2012.
5. However, contrary to the above, the goods were classified as medicaments under CTH 30045020 by willfully adding the expressions Mineral Substances and for mfg purpose to the description of the goods to justify its classification and to avoid payment of CVD on RSP basis. In this connection, statements were recorded from Sh. Mohammed Kaleem, Manager of the said CHA and Sh. Chinta Ravikumar, Regional Head of M/s Health Code India Pvt. Ltd.
6. Sh. Mohammed Kaleem, in his voluntary statement dated 24.09.2012 interalia stated that he attended to the clearances of goods related to bills of entry Nos. 2571807 dated 21.1.2011 and 2663420 dated 28.1.2011 filed on behalf of M/s Itspossible Marketing Pvt. Ltd., through ACC, Bangalore; that he came into contact of the said importer through Sh. Shivanarayan, Service Tax Consultant, who is known to Sh. Shivanand, Manager (Accounts), of M/s Flyjac Logistics Pvt. Ltd., Bangalore; that Sh. Shiavanand introduced his to Sh. Chinta Ravikumar, Marketing Director in M/s Health Code India Pvt. Ltd. and asked him to help them in getting some import consignment cleared; that Sh. Ravikumar produced an authorization from Sh. Ashwini Kaushik, Director of the said importer; that with respect to Bill of Entry No. 2571807 dated 12.1.2011 they declared the description of the goods as 005-010-859/CMC 1 oz IPM Natural Concentrated Mineral Drops (30 ml) No Shrink (Mineral substances) (For mfg purpose) and classified the goods under CTH 30045020; that the goods were cleared under RMS without assessment/examination on payment of duty of Rs. 2,13,631/-; that he agree that the goods were in ready to use retail packages and could be sold without any further activity on it.
7. When questioned as to why the goods were classified under CTH 30045020 when the export declaration filed by the US supplier showed the Tariff Heading as 2106.90.7090 and why the expressions mineral substances and for mfg purpose were added to the description, Sh. Kaleem in his voluntary statement dated 24.9.2012 interalia stated that in order to describe the goods in detail for classification of the goods, they enquired with Sh. Chinta Ravikumar informed them that Concentrated Mineral Drops are used by them for manufacturing purpose; that accordingly they declared the description of the goods in the bill of entry and they classified the goods under CTH 30045020. When asked to clarify whether they have any manufacturing unit, he stated that it was not done. When asked why he classified the goods as medicaments under CTH 30045020 when the airway Bill and Cargo arrival notice mentioned the goods as Oral Supplement and the shipper documents mentioned the goods as Oral Supplement-2106.90.7090, he stated that he was very well aware that the said product was not a medicament but he classified the goods as medicaments because Sh. Ravikumar insisted to classify the goods under CTH 30045020.
5. Learned advocate on behalf of the appellant submitted that the prohibition order has been issued after the appellant had undergone suspension from 29.4.2013. He submitted that the order of prohibition affects the livelihood of employees of the CHA and in any case, the enquiry for revocation of licence is still in progress. He also submits that two Bills of Entry in question were filed in Bangalore in January 2011 and if we consider timeline, the suspension has to be revoked immediately and therefore, enquiry has to be conducted for revocation. In this case, the suspension itself happened after two years and enquiry for revocation is still in progress. He also submitted that prescribed timeline for proceedings under Regulation 23 has not been followed in this case.
6. Learned AR submits that the order of the Commissioner is in accordance with law and the CHA had knowingly involved in mis-declaration of the goods and classification of the goods and was availing exemption and therefore, order of prohibition passed in exercise of power is perfectly an end order. He also submits that Regulation 23 has empowered to the Commissioner to prohibit the CHA in operating from any section or sections.
7. We have considered the submissions made by both sides, for the convenience sake, we consider the Brokers Licence Regulation which came into force only in 2013. Regulation 13 lists the obligations of Customs Broker and Regulation 19 empowers the Commissioner to suspend the licence subject to conditions therein. Regulation 20 gives the procedure for revocation of licence and Regulation 23 provides for prohibition. The relevant Regulations are reproduced below:
13. Change in constitution of any firm or a company. (1) In the case of any firm or a company, holding a licence under these regulations, any change in the constitution thereof shall be reported by such firm or company, as the case may be, to the Commissioner of Customs as early as possible, and any such firm or a company indicating such change shall make a fresh application to the said Commissioner of Customs within a period of sixty days from the date of such change for the grant of licence under regulation 7, and the Commissioner of Customs may, if there is nothing adverse against such firm or company, as the case may be, grant a fresh licence :
Provided that if the existing firm or company moves an application for such changes, then such firm or company may be allowed to carry on the business of Customs Broker with the approval of the Commissioner of Customs till such time as a decision is taken on the fresh application of such firm or company.
(2) Notwithstanding anything contained in sub-regulation (1), in case of any firm or a company where a licence has ceased to be in force because of the death or retirement of any partner or director or an authorised employee has passed the examination referred to in regulation 6, the firm or the company may apply for replacement of the name of the demised person by the name of another partner, director or authorised employee who has passed the examination referred to in regulation 6:
Provided that if there is no such person in the firm or company, then such firm or company, as the case may be, may authorise any other partner, director or authorised employee who is a G card holder, referred to in sub-regulation (7) of regulation 17, to pass the examination referred to in regulation 6 within a period of two years from the date of the demise or retirement of such person, and the firm or company may be permitted to carry on the business of a Customs Broker with the approval of the Commissioner of Customs till such time such partner, director or authorised employee passes the said examination . .
19. Suspension of licence. (1) Notwithstanding anything contained in regulation 18, the Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the licence of a Customs Broker where an enquiry against such agent is pending or contemplated.
(2) Where a licence is suspended under sub-regulation (1), the Commissioner of Customs shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose licence is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs Broker:
Provided that in case the Commissioner of Customs passes an order for continuing the suspension, the further procedure thereafter shall be as provided in regulation 20.
20. Procedure for revoking licence or imposing penalty. (1) The Commissioner of Customs shall issue a notice in writing to the Customs Broker within a period of ninety days from the date of receipt of an offence report, stating the grounds on which it is proposed to revoke the licence or impose penalty requiring the said Customs Broker to submit within thirty days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs Broker desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs.
(2) The Commissioner of Customs may, on receipt of the written statement from the Customs Broker, or where no such statement has been received within the time-limit specified in the notice referred to in sub-regulation (1), direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, to inquire into the grounds which are not admitted by the Customs Broker.
(3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall, in the course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the inquiry in regard to the grounds forming the basis of the proceedings, and he may also put any question to any person tendering evidence for or against the Customs Broker, for the purpose of ascertaining the correct position.
(4) The Customs Broker shall be entitled to cross-examine the persons examined in support of the grounds forming the basis of the proceedings, and where the Deputy Commissioner of Customs or Assistant Commissioner of Customs declines to examine any person on the grounds that his evidence is not relevant or material, he shall record his reasons in writing for so doing.
(5) At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall prepare a report of the inquiry and after recording his findings thereon submit the report within a period of ninety days from the date of issue of a notice under sub-regulation (1).
(6) The Commissioner of Customs shall furnish to the Customs Broker a copy of the report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, and shall require the Customs Broker to submit, within the specified period not being less than thirty days, any representation that he may wish to make against the said report.
(7) The Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs Broker, pass such orders as he deems fit either revoking the suspension of the license or revoking the licence of the Customs Broker or imposing penalty not exceeding the amount mentioned in regulation 22 within ninety days from the date of submission of the report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, under sub-regulation (5) :
Provided that no order for revoking the license shall be passed unless an opportunity is given to the Customs Broker to be heard in person by the Commissioner of Customs.
. .... ......
23. Prohibition. Notwithstanding anything contained in these regulations, the Commissioner of Customs may prohibit any Customs Broker from working in one or more sections of the Customs Station, if he is satisfied that such Customs Broker has not fulfilled his obligations as laid down under regulation 11 in relation to work in that section or sections.
8. The action to suspension a licence or a revocation of a licence can be taken only by licence issuing authority. In the scheme of Customs Broker licensing, if a Customs House issues licence, with the permission of jurisdictional Commissioner, a CHA can operate in other Commissionerate. Action for suspension or revocation can be taken only by licence issuing authority as already observed and when we consider scheme of Regulations, it is obvious that provision to prohibit a CHA from operating in any section or sections of a Commissionerate has been provided for to enable the Commissioner who has given a permission to CHA to operate to prohibit him acting in any section or sections if does not fulfill any of the obligations under Regulation 13. After prohibition, a regular complaint/report will be made to the licensing authority to suspend the licence or revocation of licence as the case may be. Once the concerned Commissioner who has issued licence takes a final decision, as a result of proceedings against the CHA, the prohibitory order should reach logical end. Therefore, if the licence is revoked, naturally no action need be taken on the order issued by prohibiting a CHA from working. However, if the licence issuing authority does not revoke the licence of the CHA the prohibitory order will have to be withdrawn. According to the Regulations, prohibition should precede suspension and revocation of the licence after completion of proceedings and not other way. The observations made by the Commissioner while revoking the suspension in paragraph 24, in our opinion, are relevant and are reproduced below:-
24. Thus, prima facie, the allegations mentioned at Para 15(a) to 15(e) and 16(a) to 16(c) are found to be true and the requirement of Regulation 13(d), Regulation 13(o) and Regulation 19(8) of the CHALR, 2004 have not been complied with. However, it is also seen that the CHA is operating across the country through their 22 branches in which a large number of people are employed; that the CHA is operating without any adverse notice against them for the past fifteen years; that they have paid customs duty to the tune of Rs. 3,500 crores during the past financial year; that based on a single incident a general perception cannot be made that the CHA has not proper supervision over their staff; that immediate suspension of the CHA has affected the livelihood of 1800 people employed under them; that aberration of a staff at a particular customs station is not sufficient to suspend the operation of the CHA across the country without issuance of any show-cause notice. From the above, it can be seen that the Commissioner herself who is the licensing authority has observed that what happened in Bangalore was an aberration and it is not sufficient to suspend operation of the CHA across the country without issuance of any show-cause notice. The Commissioner has come to the conclusion that what has happened is aberration. This in our opinion shows that there is no justification for prohibiting the CHA in operating in any of the sections in any Custom House. As regards suspension, there is a requirement of a compulsory enquiry that should follow and within specific time limit, an order has to be passed whereas in respect of prohibition, there is no such restriction and the order passed by the Commissioner prohibits CHA from working until further orders. It does not even say that prohibition order will be reviewed as and when action is initiated by jurisdictional Commissioner (licensing authority) is completed. Either suspension or prohibition in a particular Commissionerate should precede an enquiry and if prohibition succeeds suspension and revocation of suspension, in our opinion, the prohibition should be for specific period and should be subject to the conclusion that will be reached after the enquiry is over and final decision is given by the Commissioner who should specifically indicate the quantum of punishment and nature of punishment of the CHA.
9. There was no provision for prohibition in the earlier Regulations and there are no precedent decisions before us to consider the issue. Therefore, we have no option but to take a holistic view after considering the relevant provisions of Regulations to come to a logical conclusion which, in our view, would meet the ends of justice. There is only one decision which has been cited by the appellant. This decision is of the Honble High Court of Madras in the case of A.M. Ahamed & Co. Vs. Commissioner of Customs, Tuticorin [2013 (288) E.L.T. 497 (Mad.)]. In this case also, the challenge was only on the ground that no personal hearing was granted before passing the order of prohibition and therefore, the order was set aside and liberty was given to the Commissioner to pass a fresh order in accordance with law after giving opportunity of hearing to the petitioner. However, we are not in a position to follow this order since we have already noticed a prima facie finding of the Commissioner of Customs (Imports), the license issuing authority who, after revoking suspension, left the matter to the Commissioner of Customs, Bangalore with regard to prohibition. The Commissioner of Customs, Bangalore promptly prohibited the CHA from working in any of the sections in his jurisdiction. It is also noticed that revocation of suspension is subject to the condition of the CHA undertakes to pay the differential duty along with fine and penalty in respect of the two Bills of Entry filed in Bangalore if it is found they are in anyway responsible to revenue loss. Such being the case, prohibiting the CHA from operating in the jurisdiction of Bangalore Commissionerate totally, in our opinion, is not justified. In fact, the provisions of Regulations 19 & 20 are considered, the suspension can continue till the enquiry is over, which, going by Regulation 20 can take up to 330 days. Once the suspending authority has decided that CHA can operate in other places, a prohibitory order, in our opinion, cannot be justified.
10. In view of above observations, we find no justification for sustaining order of prohibition and accordingly, we set aside the impugned order. However, to safeguard the interest of Revenue, we direct the Customs House Agent to give an undertaking to make good the loss of revenue, if any, caused by them because of their activity in Bangalore Customs till the enquiry and proceedings thereon are over. The order of the prohibition shall be lifted by the Commissioner once the appellant executes a bond to this effect.
(Operative portion of the order has been pronounced in open court) (S.K. MOHANTY) JUDICIAL MEMBER (B.S.V. MURTHY) TECHNICAL MEMBER /vc/