Custom, Excise & Service Tax Tribunal
M/S. Marks Logistics vs The Commissioner Of Customs, Custom ... on 12 May, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal (s) Involved: C/21062/2015 (Arising out of Order-in-Original No.COC-CUSTM-00-COM-05-15-16 dated 29.4.2015 passed by the Commissioner of Customs, Cochin.) For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes M/s. Marks Logistics Mahavir & Co. Building, Mine Road, W/Island, Cochin - 682 003. Appellant(s) Versus The Commissioner of Customs, Custom House, Cochin - 682 009. Respondent(s)
Appearance:
Mr. P. A. Augustian, Advocate Faizal Chambers, Pulleppady Cross Road, Cochin 682 003.
For the Appellant Mr. S. K. Singh, Commissioner (AR) For the Respondent Date of Hearing: 07/08/2015 Date of Decision: 07/08/2015 CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK KUMAR ARYA, TECHNICAL MEMBER Interim Order No.: 155/2015 Final Order No.: 20326/2016 Per : ARCHANA WADHWA The appeal is against the order of the Commissioner of Customs, Cochin, revoking the appellants Customs Broker Licence.
2. After hearing both the sides duly represented by Mr. P. A. Augustian, Advocate for the appellant and Mr. S. K. Singh, Commissioner (AR) for the Revenue, we find that the appellants have been granted Customs Broker Licence in 2012, valid till 2022 by the Commissioner of Customs, Cochin. The appellant opened another office in Mumbai and appointed one Shri Naresh Makwana, who was granted G Card by the Customs. The said appointment of Shri Naresh Makwana, G Card holder of the appellant was in accordance with the provisions of Rule 15 of the Customs Broker Licensing Regulation, 2013. Shri Naresh Makwana, G Card holder was running the appellants office in Mumbai.
3. As a result of certain investigations, it appeared that said Shri Naresh Makwana, G Card holder of the appellant, indulged in some alleged illegal activities in respect of imports made by one M/s. Abhay Enterprises in respect of clearances of the consignments of mobile phones and accessories. As a result, the appellants activities at Mumbai were suspended immediately. The appellants licence in Cochin was also suspended. Subsequently, however, after grant of personal hearing, the said order of suspension was revoked and the matter was referred for detailed investigations. As a result of detailed enquiry report, proceedings stand initiated against the appellant for revocation of their licence on the allegations that their G Card holder in Mumbai has contravened certain provisions of Customs Broker Licensing Regulations, 2013.
4. It is seen that the Commissioner in the present impugned order has exonerated the appellant from the allegations of violation of provisions of Regulation 11(d), 11(f) and 11(n). However, he revoked the licence of the appellant by concluding that he has sub-letted his licence to the said Shri Naresh Makwana. For better appreciation, we reproduce paragraph 10 of his order.
The case before me is not a case of minor infraction of the provisions of CBLR, 2013, but a major one involving subletting of the licence to the third party for monetary consideration, with complete disregard to the rules therein. The very purpose of granting licence authorizing a person to act as customs broker on behalf of importers and exporters is to facilitate import and export of goods at any customs station in accordance with the provisions of Customs Act, 1962 and any law for the time being in force. Though a customs broker is employed by and is representing the importers/exporters, he has been granted licence by the Department and hence can work only to the extent the law permits and within the procedures laid down by the statutes. The Customs Brokers Licensing Regulations, 2013, enjoins certain duties and obligations on the customs brokers while transacting business on behalf of the importer/exporter/trade. Thus, the object of granting licence to a customs broker is to ensure that he acts in a responsible manner as the agent of the importer/exporter, while providing prompt, correct advice and guidance and simultaneously making certain that all rules and regulations are followed. The obligations of a customs broker covers not only certain procedural aspects, but also their conduct and character. Hence a person so licenced by the Department is expected to abide by all the provisions of the statute. Therefore, sub-letting the licence granted to CB tantamount to abdicating the responsibilities cast on him as a customs broker; further the act of CB in giving authority and responsibility to a person who is not authorized to exercise them poses a serious challenge to the revenue. Such actions as sub-letting of licence have serious and far reaching consequences and hence should not be allowed to happen or recur. Since the quantum of punishment has to be proportionate with the gravity of proved acts of misconduct or infraction, I am constrained to impose the maximum punishment prescribed under the provisions of the CBLR, 2013, on the CB for subletting his licence to another, for monetary consideration, thereby contravening provisions of Regulation 10 of CBLR, 2013. As it is seen from the above, there is no allegation sustained against the appellant that he was associated with the clearances of the goods by Shri Naresh Makwana on behalf of M/s. Abhay Enterprises, neither is there any allegation nor any finding to the effect that he has abetted either his G card holder or the importer M/s. Abhay Enterprises in respect of any alleged illegal activities. The only ground adopted by the Commissioner is that he has sub-letted his licence to Shri Naresh Makwana and has thus violated the provisions of Regulation 10 of the said Customs Broker Licensing Regulation, 2013.
5. We find that admittedly Shri Naresh Makwana was a G Card holder, employee of the appellant. In terms of the provisions of Regulation 15, a person qualified in the examination referred to in Regulation 6 can be engaged by the Customs Broker for doing the work relating to clearance of goods. Engaging of the said qualified person has to be communicated by the Customs Broker to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, who shall be allowed to work in the customs station as a duly authorized employee on behalf of that firm or company. As such, as per the appellant the said Shri Naresh Makwana was a qualified person in terms of Regulation 15 and was given a G Card by the Revenue itself.
6. As such, the only question to be decided in the present appeal is as to whether the grant of G Card to Shri Naresh Makwana amounts to sub-letting of licence by the present broker so as to hold contravention of Regulation 10 against him. The Revenues stand is that inasmuch as G Card holder was meeting all the expenses of the Mumbai Office of the present appellant, the same would amount to sub-letting of his licence. On the other hand, the assessees stand, right from the beginning has been that their Mumbai office was running into losses and on account of financial difficulties they were not able to run the same. As such, the G card holder was appointed therein who was meeting all the expenses of the Mumbai office and as such, in said terms it cannot be said that the licence was sub-letted.
7. We find favour with the above contention of the learned advocate. In the impugned order, the Commissioner has repeatedly referred to Shri Naresh Makwana as the G card holder of the present broker. Such appointment of G Card holder is permissible in terms of Regulation 15. Whatever is the arrangement between the Customs Broker and the G card holder is a matter of economics between two of them and cannot be said to have led to any contravention of the provisions of the Regulations in question. As such, we are of the view that when the law itself permits engaging a G Card holder for running an extended office of the CHA at any other place then the place of appellants commissionerate and when such G card holder stands engaged, by following the due processes of law and with the knowledge and consent of the Customs authorities, it cannot be held to be sub-letting of the licence. Inasmuch as the said ground is the only ground adopted by the Commissioner for revoking the licence in question and having held that appointment of a G card holder does not amount to subletting of the licence, we are of the view that the impugned order is not sustainable.
8. At this point, we may also refer to a decision of the Honble Delhi High Court in the case of Ashiana Cargo Services vs. Commissioner: 2014 (302) E.L.T. 161 (Del.), which is against the majority order of the Tribunal wherein it was held that any violations done by the G Card holder would not ipso facto lead to revocation of the Customs Broker unless there are evidences to show the involvement of the Customs Broker. The Honble Delhi High Court referred to the then provisions of Custom House Agent Regulations and Clauses 13 and 19 of the same. Clause 19 of CHA Regulation provided engagement of the person to assist the broker. The Honble High Court observed that when the CHA did not have knowledge about the illegal activity of the G Card holder and in the absence of any active or passive facilitation by the CHA, the serious punishment of revocation of the licence should not be adhered to. Accordingly, the Honble High Court observed that in the absence of any mens rea and the violations concerning the G Card holder, the extreme penalty of revocation of licence is not to be encouraged. By observing so, the Honble Delhi High Court set aside the majority order and restored the minority order setting aside the revocation of the licence. The said judgment of the Honble Delhi High Court was challenged by the Revenue before the Honble Supreme Court and was dismissed reported as Commission vs. Ashiana Cargo Services: 2015 (320) E.L.T. A175 (S.C.).
9. At this stage, we may deal with the contention of the learned DR appearing for the Revenue for upholding the forfeiture of the security deposit. First of all, having set aside the revocation of the licence, upholding of forfeiture of security deposit would be a self-contradictory order inasmuch as we have not found anything against the customs broker. Secondly, we find that the Commissioner himself in his impugned order has held that there is no reliable evidence to prove involvement of the customs broker in the said smuggling attempt by the importer or assistance by the G Card holder. He has further concluded that Shri Naresh Makwana has willfully collided with the importer to evade payment of duty and this negates the allegation that customs broker contravened the provisions of the CBLR 2013. Accordingly he has dropped the charges leveled against the broker in terms of Regulations 11(d), 11(f) and 11(n) of CBLR 2013. As such, forfeiture of security amount which is nothing but a penal action against the customs broker cannot be upheld, especially when the revocation of his licence has already been set aside by us. As such, we find no merits in the said plea of the learned DR.
10. In view of the foregoing discussions, we set aside the impugned order and allow the appeal with consequential relief to the appellant.
(Order pronounced in open court) Separate order ASHOK KUMAR ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER Order Per: Ashok K. Arya
11. As per the facts on record, the appellant allowed one Shri Naresh Makwana to run his office of Customs Broker in Mumbai and accept business for clearance of the goods meant for import or export as the case may be. In this case, it has been accepted by the appellant that the Mumbai office was transacting business under the charge of one Shri Naresh Makwana, who is a G-Card holder, and the appellant was not able to supervise and completely control the activities and the conduct of Shri Naresh Makwana, who was made in-charge of his Mumbai office.
12. The impugned order sustains the charge that the appellant allowed his licence to be used by Shri Naresh Makwana on certain monetary consideration which has been mentioned in the findings as Rs.35,000/-. The impugned order inter alia mentions that Shri Naresh Makwana has not worked as an employee or authorized representative of the appellant but as a person who handled obligations of the appellant independently. The impugned order also says that this amounts to sub-letting of the licence of Customs Broker to another person for monetary consideration. It is pointed out that if Mumbai office is to run as the office of the appellant then there has to be proper supervision and control of the appellant, which was absent during the relevant period, which is proved from the facts of the record.
13. The impugned order consequently ordered revocation of the customs broker licence of the appellant issued by the Customs House, Cochin. The learned advocate, Mr. P. A. Augustian, appearing for the appellants, however mentions that as the appellant was running into losses and Shri Naresh Makwana came forward to run his office and give him business, the appellant therefore allowed him to run his office in Mumbai. The learned advocate points out that the mis-conduct which came to the appellants notice later in respect of certain imports by M/s. Abhay Enterprises, it was the first instance and because of this mis-conduct, his licence was prohibited by the Commissioner of Customs, Mumbai, who issued the prohibition order thus not allowing him to operate under his licence in Mumbai.
14. From the facts, it is clear that there was no supervision, no control of the appellant on his Mumbai office and the activities of the G Card holder Shri Naresh Makwana, who was projected as an employee of the appellant. From the facts, it has come on record clearly that the appellant was getting a monetary consideration of Rs.35,000/- per month. However, the learned advocate for the appellant says that it was rather the maintenance of office money which was being paid to the appellant by G Card holder Shri Naresh Makwana. The learned advocate further clarifies that this monetary consideration of Rs.35,000/- was not being paid but rather used by G Card holder Shri Naresh Makwana in maintenance of the office at Mumbai itself. However, the findings given in para 8 of the impugned order of the Commissioner of Customs, Cochin points out as below:
8. . That Sri Naresh Makwana had been independently operating the Mumbai office of CB and transacting business using the license of CB without any supervision or control of CB, for which CB was being paid a remuneration of Rs. 35000/- by the said person. Thus Sri Naresh Makhwana emerges not as an employee or authorized representative of CB, but as a person who has handled the responsibilities and obligations of CB, for monetary consideration. Thus, in practical terms, amounts to sub-letting the license of CB to another person in return for monetary consideration. Therefore, I concur with the findings of the Inquiry Officer in this regard and hold that CB had abdicated all the duties of a responsible customs broker and sublet his license to a third person for monetary consideration, thus contravening provisions of Regulation 10 of CBLR 2013. 14.1 Further, in para 9 of his order, the Commissioner of Customs, Cochin gives the findings that 9. This is a situation where CB granted power of attorney to Sri Naresh Makhwana, who was initially employed by CB and held a G-card on behalf of CB, Sri Naresh Makhwana later offered to run the business of CB in Mumbai, for a consideration of Rs. 35000/- per month, if granted power of attorney, which was accepted by CB. By granting power of attorney and unmonitored used of the office and licence of CB in return for the monthly remuneration, CB has sub-let his license to the said person.
15. From the facts on record, findings in the impugned order mentioned above and the averments of the learned advocate appearing on behalf of the appellant, I am of the considered view that the licence of Customs Broker which was granted to the appellant has been misused in the jurisdictional area of Mumbai Customs because of which their licence was suspended. The Commissioner of Customs, Cochin in his impugned order has treated this as a subletting of the licence which is a violation of Regulation 10 of the Customs Broker Licensing Regulation, 2013. After examination of full facts on record and the findings given in the impugned order, I am of the considered view that the appellant has been negligent and because of his conduct and activities of running unsupervised and uncontrolled office in Mumbai, the appellant has definitely violated the terms of the Regulation 10 of Customs Broker Licensing Regulation, 2013. Because of his actions, the appellant practically transferred his licence of Customs Broker to the G Card holder, Shri Naresh Makwana. Considering the above activities and operations in the jurisdictional area of Mumbai Customs, one cannot judiciously say that the appellant has not violated Regulation 10 of Customs Broker Licensing Regulations, 2013.
16. I find that impugned order dated 29.4.2015 has ordered revocation of the appellants Customs Broker Licence with forfeiture of whole of security deposited. The implication of this is that the appellant is out of his business of running customs broker operations since 29.4.2015. The appellant has thus almost been without business for about over three months. However, it is important to mention that there has not been any mens rea involved on the part of the appellant in the misuse of his licence in Mumbai; this is definitely a diminishing factor in favour of the appellant thus making a case for lesser punishment to the appellant. It is pointed out that punishment imposed by the impugned order has got two facets viz., revocation of Customs Broker Licence and forfeiture of whole of security deposited. Considering facts and circumstances on record and the law prevalent today, now it is to be examined and considered that what punishment here is warranted to meet the ends of justice.
16.1. Here I would like to refer to the CESTAT, Mumbais decision in the case of Manilal Patel Clearing Forwarding P. Ltd. Vs. Commissioner of Customs (General), Mumbai [2013 (294) E.L.T. 472 (Tri.-Mumbai)], wherein it was held that the punishment suffered by the appellant was sufficient and the revocation of CHA licence was withdrawn but after forfeiture of entire security deposit.
16.2. There is another decision of the CESTAT, Mumbai in the case of Vipul Pranlal Doshi Vs. Commissioner of Customs (General), Mumbai [2012 (279) E.L.t. 427 (Tri.-Mumbai)], wherein also the Tribunal ordered withdrawal of revocation of CHA licence of the subject appellant but with forfeiture of security amount.
16.3. There is also a case of Shri Venkatesh Shipping Services Pvt. Ltd. Vs. Union of India {2013 (287) E.L.T. 266 (Bom.)], wherein the Honble Bombay High Court expressed regarding the concerned appellant, Shri Venkatesh Shipping Services Pvt. Ltd., that the revocation of CHA licence along with forfeiture of security deposit is too harsh and confirmed the order of the forfeiture of security deposit only;, the Honble High Court ordered that the licnece of the said appellant namely Shri Venkatesh Shipping Services Pvt. Ltd. shall stand restored. The Honble High Court here clarifies that this arrangement has to be taken as restricted to the facts of the case and cannot be treated as precedent. However, the Honble High Courts rational and the reasoning justifying this decision cannot be completely ignored; it has, got its own value and weight for application to the facts of this appeal.
16.4. It is important to note that above case laws have interpreted and applied the predecessor of the present Regulations on the subject namely Customs Brokers Licensing Regulations, 2013. The predecessor Regulations were called Customs House Agents Licensing Regulations, 2004. I find that Regulation 18 of the current Regulations namely Customs Brokers Licensing Regulations (CHALR), 2013 are almost similar to the Regulation 20 of the earlier Regulation i.e. the Customs House Agents Licensing Regulations, 2004 and the case laws quoted above, therefore, would be very much applicable to the present facts.
17. Considering the facts that the appellant has been completely out of his business and losing his earnings and livelihood for about last three months on account of revocation of his licence (which has also been a punishment for him) and when there was no mens rea involved on the part of the appellant in mis-use of the licence in Mumbai and the decisions pronounced in above cases (though the Honble Bombay High Court order in the case of Shri Venkatesh Shipping Services Pvt. Ltd. supra says that it was restricted to the facts of that case and could not be treated as precedent), I am of the considered view that the present appellant deserves restoration of his Customs Broker Licence but the security deposit given to the Customs has to be forfeited and the impugned order can be sustained only to this much extent. When we are ordering here restoration of Customs Broker Licence and forfeiture of security deposit, it is to meet the ends of justice so that the violation of Regulation 10 of Customs Broker Licensing Regulations, (CBLR), 2013 does not go completely unpunished. It has been proved beyond doubt from the facts and findings on record mentioned earlier that the appellant actually violated Regulation 10 of CBLR, 2013 and therefore deserve to be penalized under the provisions of Regulation 18 of CBLR, 2013. After carefully considering the full spectrum of facts, activities and operations of the appellant and the case laws quoted earlier, the above order of forfeiting whole of the security deposit of the appellant has been made.
17.1 However order to continue the operations of the Custom Broker Licence, the appellant will have to deposit firstly the required security amount again with the Cochin Customs. The learned advocate for the appellant points out that under the Regulation 8 of new Regulations i.e., Customs Brokers Licensing Regulations, 2013, a security for the new licence has to be furnished for an amount of Rs.5 lakhs to carry out the business as Customs Broker. As the appellants licence (which was granted to him under the predecessor law i.e., CHALR, 2004), has been restored by this order, it is ordered that the appellant is required to pay the security of only Rs.75,000/-, which was the valid amount when the licence had initially been granted to the appellant. The appellants Customs Broker licence would be operative with effect from the date he deposits the said security amount of Rs. 75,000/- with the Cochin customs.
17.2 Further Regulation 22 in the Customs Broker Licence Regulation, 2013 provides provision of penalty of upto Rs. 50,000/- on the Customs Broker, who contravenes any provision of these Regulations. However, as the appellant has to give the security again after forfeiture of his earlier security under this order, there would not be any justification to impose any additional penalty on the appellant under the Regulation 22 of the Customs Broker Licence Regulation, 2013.
18. It is made clear that regarding withdrawal of revocation of licence i.e. restoration of the licence of the appellant, I have agreed with the learned colleague Member (Judicial) but regarding the issue of forfeiture of security, I have respectfully differed from her in the terms given above.
(Order pronounced in the open court) ASHOK KUMAR ARYA TECHNICAL MEMBER Difference of Opinion Since there was a difference of opinion as regards the forfeiture of the security amount and since both the Members have agreed to set aside the order of revocation of licence, we accept the prayer of the learned advocate for restoration of the licence with immediate effect and the point of difference of opinion of forfeiture penalty can be resolved by the third Member.
ASHOK KUMAR ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER rv [Order per: Sulekha Beevi, C.S.]
1. This difference of opinion was referred as per orders of Honble President for resolving the following points of difference which arose between the Members while deciding the above appeal.
The points referred are:
(i) When both the members have set aside the revocation of the licence, whether the appellants licence should be restored with immediate effect or the same would become operative from the date of deposit of the fresh security amount of Rs.75,000/- as ordered by the learned Member(Technical);
(ii) Whether the forfeiture of security amount has to be set aside in toto, as held by learned Member(Judicial) or the same has to be upheld to the extent of Rs.75,000/- as ordered by learned Member(Technical) ; and
(iii) Whether the appeal has to be allowed fully as held by learned Member(Judicial) or the same has to be allowed partially requiring the customs Broker to deposit an amount of Rs.75,000/- for restoration of his license.
2. Before entering into the analysis of the issue, it needs to be mentioned that after recording the difference of opinion by the Members, the appellant, M/s Mark Logistics, has approached the Honble High court of Kerala by filing a Writ Petition (WP( c) No.29888/2015). The Honble High Court vide Order dated 09-10-2015 as well as the order passed later in the Review Petition No. 948/2015 directed that the license of the appellant shall be provisionally restored on such terms and conditions to be imposed by Commissioner of Customs, Cochin. At the time of hearing, the learned counsel for appellant submitted that the license has been restored. The Honble Court had also directed the Tribunal to dispose the appeal within three months from the date of receipt of judgment. The matter was posted for hearing before me (Third member) on 16-12-2015 at the regional Bench at Hyderabad, which was newly formed w.e.f 14-12-2015. The counsel for appellants sought adjournment on 16-12-2015. Thereafter, the case was adjourned to 19-02-2016 and was taken up on the same day. The time limit stipulated by the Honble Court could not be complied for the above reasons.
3. I have perused the order passed by learned Member (Judicial) Ms. Archana Wadhwa and learned Member (Technical) Shri Ashok. K.Arya and also the differences of opinion referred to me. The facts having been already narrated, I do not think it necessary to repeat the same. The difference of opinion referred also raises a little doubt and confusion as there is a hand written remark by the learned Technical Member, which reads as under:
regarding the difference of opinion X on page 16 not entirely represent the right position, later part I agree
4. From the totality of all the differences of opinion I understand that both members agree that the impugned order to the extent of revocation of license of appellant requires to be set aside. The learned Member(Judicial) has held that the order to forfeit the security also is to be set aside.
Whereas, the learned Member(Technical) has held that the security deposit of Rs.75,000/- made at the time of taking the license has to be forfeited. In the impugned order, the Commissioner has revoked the license and ordered forfeiture of security deposit. The Commissioner observed that appellant has sub let the Customs Broker License to Shri Naresh Makhwana and therefore, ordered revocation of license and forfeiture of security. The learned Judicial Member while considering the issue whether appellant has sub-let his license to Shri Naresh Makhwana and has thus violated the provisions of Regulation 10 of the Customs Brokers License Regulations, 2013, observed as under:
when the law itself permits engaging a G card Holder for running an extended office of the CHA at any other place than the place of appellants Commissionerate and when such G card holder stands engaged, by following the due processes of law and with the knowledge and consent of the customs authorities, it cannot be held to be sub-letting of the license Thus the Judicial Member has arrived at the conclusion that Shri Naresh Makhwana is a person engaged by appellant to act on his behalf and that there is no sublet of license.
5. The learned Member(Technical) has observed that the appellant had no supervision or control of his Mumbai office or on the activities of G.Card Holder, Shri Naresh Makhwana. That this is clear from the fact that appellant was getting monetary consideration of Rs.35,000/- per month form Shri Naresh Makhwana. That therefore, the appellant has practically transferred his license to G Card Holder Shri Naresh Makhwana and thus violated Regulation 10 of Customs Brokers License Regulations, 2013. At this juncture, it would be worthwhile to notice Regulation 10 of Customs Brokers License Regulations, 2013 which reads as under:
Licence not transferable: - Every licence granted or renewed under these regulations shall be deemed to have been granted or renewed in favour of the licensee, and no licence shall be sold or otherwise transferred.
6. Regulations 15 and 17 of Customs Brokers License Regulations, 2013 permit a Customs Broker to engage/employ other persons to assist him. The case of the appellant is that when the appellant was about to close the activities of Customs Broker in Mumbai, due to heavy loss and recurring establishment cost, Shri Naresh Makhwana put forward an assurance that he will make minimum business for meeting the running cost of Rs.35,000/- per month. On such assurance by an experienced and qualified G-card Holder, the appellant agreed to continue operations in Mumbai and directed Shri Naresh Makhwana to supervise day to day activities as the appellant is in Cochin. That the appellants above statement was twisted by the department to the effect that Shri Naresh Makhwana was giving Rs.35,000/- as commission and that appellant has sub-let the license to Shri Naresh Makhwana in return of the monetary consideration. The learned Member (Technical) has heavily relied upon the findings made in the impugned order to arrive at the conclusion that the license was sub-let and there is violation of Regulation 10 of Customs Brokers License Regulations, 2013 .
7. Whereas, the Learned Member (Judicial) has observed that the Commissioner has repeatedly referred to Shri Naresh Makhwana as the G-card Holder of the present broker. Such appointment of G.Card holder is permissible in terms of Regulation 15. Whatever is the arrangement between Customs Broker and the G-card Holder is a matter of economics between two of them and cannot be said to be contravention of provisions of Customs Brokers License Regulations, 2013. The learned Member (Judicial) held that appointment of G-card Holder does not tantamount to sub-letting of license.
8. The difference revolves around the question, whether there is any evidence to conclude that there was sub-letting of license or not. The learned Member(Technical) has placed reliance on the findings of the Commissioner in the impugned order which states that there was return of monetary consideration of Rs.35,000/- paid by Shri Naresh Makhwana per month to the appellant for sub-let of license. It is seen form records that Shri Naresh Makhwana is the power of attorney holder of M/s Mark Logistics. Shri Naresh Makhwana can engage in customs agent activities only upon such authorisation. It is not disputed that such authorisation is given by appellant to Shri Naresh Makhwana with the knowledge of the department. The power of attorney/or authorisation does not mention about any consideration. In fact, the power of attorney is granted without consideration. The only evidence relied by the department to hold that consideration of Rs.35,000/- per month is paid by Shri Naresh Makhwana for sublease of license is the statement of appellant. During the investigation regarding seizure of import consignment of M/s Abay Enterprises, the statement of appellant was recorded on 16-04-2014. It is the case of department that the appellant deposed that he has given power of attorney to Shri Naresh Makhwana at Mumbai to operate his license and for that appellant will be paid Rs.35,000/- per month. On 01-09-2014 and 20-10-2014, the appellant has given detailed reply denying this statement. In this reply, the appellant has explained that Shri Naresh Makhwana had told him that on giving an authority(power of attorney), he would be able to generate income, and that the cost of maintaining office which is around Rs.35,000/- per month can be recovered. That this statement was twisted by the department to the effect that Shri Naresh Makhwana was giving the appellant a commission of Rs.35,000/- per month. The appellant has strongly denied and retracted his earlier statement. It is to be noted that the said retraction dated 20-10-2014 has not been countered or disproved by department.
9. Apart from the above discussed statement, on examination of evidence, there is nothing on record to arrive at the conclusion that Shri Naresh Makhwana paid Rs. 35,000/- per month to the appellant as consideration for sub-letting his license. There is no document evidencing the sub-let or the payment or promise to pay monthly consideration. The bank account of Shri Naresh Makhwana or the appellant have not been placed on record to show that there was any such monthly payment made by Shri Naresh Makhwana to appellant. Not even a single instance of payment of Rs.35,000/- is proved. Thus the retracted statement of the appellant is not corroborated by any independent evidence. This has to be read together with the fact that the department issued notice to the appellant for the alleged imported consignment of M/s Abay Enterprises in which the documents were prepared and presented by Shri Naresh Makhwana. It is not disputed that there was a valid authorisation given by appellant to Shri Naresh Makhwana. When department has issued notice to appellant for documents prepared by Shri Naresh Makhwana, it can only mean that department is aware that only an authority has been granted to Shri Makhwana to operate on the license of appellant and that the appellant is responsible for activities in Mumbai office also. So the contention of department that there is no supervision or control by appellant and that the license has been sub-let to another and the whole activities in Mumbai are carried out by Shri Naresh Makhwana is not tenable.
10. The Tribunal in the case of Jai Ambe Logistics Vs Commissioner of Customs(General) NCH, Mumbai 2015(327) ELT 730 (Tri-Mumbai) has held that where no evidence has been adduced by the revenue to show that any consideration has been received by the CHA for sub-letting of license the allegation has no basis whatsoever. Similar view was taken by the Tribunal in the case of Unison Clearing Pvt.Ltd Vs Commissioner of Customs (General) Mumbai 2015(329)ELT 269(Tri-Mum). In that case, while deliberating on the main allegation of sub-letting of the CHA license, it was held that as there is no evidence to show a sale or transfer of license, the allegation of sub-let is not sustainable. No consideration is shown for such transfer nor any transfer agreement. The allegation of payment having not proved by supporting data, the charge of sub-letting of license is not proved.
11. On appreciating of facts presented by the case on hand, I am of the view that department has failed to establish the flow of consideration from Shri Naresh Makhwana to appellant and the sub-let of license. The Honble Member(Technical) has ordered forfeiture of security on the finding that there is subletting of license and that appellant violated Regulation 10 of Customs Brokers License Regulations, 2013. From the foregoing discussions, I am afraid I have to disagree with the view of Member (Technical). On this point, I agree with the Member(Judicial) that the revocation of license and forfeiture of security amount has to be set aside in toto and the appeal has to be allowed fully. The points of reference are answered as above.
(SULEKHA BEEVI. C.S.) MEMBER(JUDICIAL) dks FINAL ORDER No. 20326/2016 In view of the Majority Order, it is held that the impugned order for revocation of the licence and forfeiture of the security deposit is set aside and appeal allowed fully with consequential relief to the appellant.
(Pronounced in open court on 12.05.2016 )
(ASHOK K. ARYA) (S. S. GARG)
TECHNICAL MEMBER JUDICIAL MEMBER
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