Custom, Excise & Service Tax Tribunal
M/S. H.B. Cargo Services vs Cc, Hyderabad on 17 February, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 03/12/2009
Date of decision:..
Appeal No.C/357/09
(Arising out of Order-in-original No.20/08-09-Adjn(Cus) dt. 12/12/2008 passed by CC&CE, Hyderabad )
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
Honble Mr. P.Karthikeyan, 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?
Yes
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 Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. H.B. Cargo Services
..Appellant(s)
Vs.
CC, Hyderabad
..Respondent(s)
Appearance Mr.Domnic George, Advocate for the appellant.
Mr.M.Vivekanandan, SDR for the Revenue.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2010 Per P.Karthikeyan This is an appeal filed M/s. H.B.Cargo Services, Hyderabad, a CHA seeking to vacate Order-in-Original No.20/08-09-Adjn(Cus) dt. 12/12/2008 passed by the CC&CE, Hyderabad revoking the CHA licence issued to the appellant under Regulation 20 of the Custom House Agent Licensing Regulations, 2004(CHALR).
2. The facts of the case are that on examination of goods covered by 4 shipping bills all dated 17/3/2004 bearing signature of the appellant, CHA, it transpired that the goods entered for export were rags and cheap clothes as against Ladies Nightwear as declared in the 4 shipping bills. The total FOB value of Rs.1,05,42,576/- was found to be inflated to avail inadmissible DEPB credit of Rs.11,59,683/-. The adjudicating allegations of contravention of various provisions of export and several persons including the exporter and the CHA, the Commissioner confiscated the goods denying the claim for DEPB credit and imposed penalties including penalties under Section 114 of the Customs Act, 1962(the Act) on various persons. A penalty of Rs.25,000/- was imposed on Shri C.N.Rajendra Kumar under Section 114 of the Act for facilitating the illegal attempt to export the consignment of cheap clothes under the guise of Ladies Nightwear and over invoicing its value. Separate action was initiated against CHA under the CHALR. The subject license was suspended on 08/04/2004 under Regulation 20(2) of CHALR. An enquiry was conducted in terms of the regulations and the enquiry officer filed a report with the Commissioner. From the various statements recorded from Shri C.N.Rajendra Kumar, Partner and authorized signatory of M/s. H.B. Cargo Services, the Commissioner found that the CHA had not exercised adequate caution/diligence while signing the blank shipping bills without knowing the exporter or the nature of the goods to be exported. The careless and irresponsible behaviour of the CHA in the course of discharge of functions as CHA has been proved beyond doubt as they have failed to comply with the provisions of CHALR and rendered themselves unfit to continue operations as CHA. He rendered the following finding as regards the failure of the CHA in comply with the various clauses of Regulation 13 of the CHALR
10. . The CHALR 2004 emphasize that while the Custom House agent should be in a position to act as agent for the transaction of any business relating to the import or export of goods at any Customs station, he should also ensure that he does not act as agent for carrying on any illegal activities of any of the persons who avail his services as CHA. Regulation 12 & 13 of the CHALR provides that every license granted or renewed under the Regulations should be deemed to have been granted in favour of the Licensee and no license should be sold or otherwise transferred. The sub clauses under Regulation 13 provides that the CHA should obtain an authorization from each of the companies, firms or individuals by whom he is for the time being employed as CHA and produce such authorization whenever required by the Assistant Commissioner, that he should transact business in the Customs station either personally or through an employee duly approved by the Assistant Commissioner of Customs designated by the Commissioner of Customs, that he should advise his client to comply with the provisions of the Act and in case of non-compliance should bring the matter to the notice of the Assistant Commissioner, that he should exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related clearance of cargo and that he should ensure that all the documents prepared or presented by him or on his behalf are strictly in accordance with the regulations prescribed under CHALR 2004. Sri C.N.Rajendra Kumar, Partner and Authorised signatory of M/s.H.B.Cargo Services, has not exercised adequate caution/diligence while signing blank shipping bills without knowing the exporter or the nature of the goods proposed to be exporter. The careless and irresponsible behavior of the CHA in the course of discharge of functions as CHA has been proved beyond doubt as they have thoroughly failed to comply with the provisions of Regulation 13 of CHALR 2004 and renders themselves unfit to continue operations as CHA in the Customs station.
3. Accordingly, the Commissioner revoked the license of the CHA under Regulation 20 and also forfeited the security furnished with the Department.
4. In the appeal before the Tribunal, the impugned order is assailed mainly on the following grounds:-
The enquiry officer had arranged to record a statement of Shri C.N.Rajendra Kumar under Section 108 of the Act. This was contrary to provisions of Regulation 22 of CHALR. As the enquiry officer himself had to hear the CHA. As per the enquiry report, the appellant himself (Shri C.N.Rajendra Kumar) had filed the shipping bills on behalf of the exporter as well therefore the finding that Shri C.N.Rajendra Kumar had signed the blank shipping bills without knowing the exporter was incorrect. The appellant knew the exporter. The consignments was stuffed in the four containers at the manufacturers premises in the presence of Central Excise officers and the stuffed containers arrived at the Customs station with intact seals. The officers who had supervised the stuffing of the containers at the exporters premises had been excluded with the connivance with the exporter. The CHA could not be blamed for something happened without his knowledge. They relied on various case laws as follows:-
Falcon Air Cargo & Travel (P) Ltd. Vs. CC, New Delhi [2002(141) ELT 284] wherein, it was held that the punishment accorded to a clearing agent had to be commensurate with the offence committed. The Tribunal held that improper employees supervision, sub-letting of license and negligence concerning value resulting in excess claim of drawback were grave enough to invite revocation of license, which deprives of CHA which means of livelihood. In passing the said order, the Tribunal had followed the judgments of the Honble High Court of Delhi, wherein it was observed that proportionality should be important consideration while awarding punishment which resulted in deprivation of livelihood of a person in addition to hampering his right to carry on trade guaranteed under Article 19(l)(g) of the Constitution. They also relied on the following decisions in support of the belief that livelihood of a person should be an important consideration and an adjudicating officer should have in mind before awarding punishment to a person.
1. Nanda Intl. Vs. CC, Chennai [2004(176) ELT 524]
2. Maruti Transporters Vs. CC, Chennai [2004(177) ELT 1051]
3. Alankar Shipping & Clearing Pvt. Ltd. [2007(217) ELT 76] The Tribunal has held in the above ___________ that suspension of license itself is enough for minor infractions.
5. During the hearing ld. Consultant reiterated arguments already advanced and also cited decisions of the Tribunal in the case of Global Linkerz United Agencies Vs. CC, New Delhi [2009(238) ELT 76 (Tri. Del.)]. In the said case, the Tribunal had vacated an order of revocation holding that the CHA had not been knowingly involved in the attempt to export poor quality goods and to obtain in admissible drawback.
6. The Revenue has sought to sustain the impugned order and has relied on the decision of the Honble High Court of Delhi in the case of Jasjeet Singh Marwaha Vs. UOI [2009(239) ELT 407(Del.)] and the judgment of Honble High Court of Madras in the case of Sri Kamakshi Agency Vs. CC, Madras [2001(129) ELT 29 (Mad.)].
7. We have carefully perused the case records and considered rival submissions. We find that it is reliably established that the proceedings that the appellant Shri C.N.Rajendra Kumar had sold 10 signed blank shipping bills to M/s. Transasia Shipping Services for consideration of Rs.150/- per shipping bill. Various statements recorded from Shri C.N.Rajendra Kumar and his depositions during hearing before the Commissioner, the impugned order was passed establishing these finding. The appellant was punished for his role in abetting the attempt to illegally export consignments of rags and cheap clothes under the claim for inadmissible DEPB credit and penalty of Rs.25,000/- was imposed on him under Section 114 of the Act by the Commissioner. The system of clearance of consignments import and export through authorized CHA has been putting in place to ensure that illicit trade does not take place and they legally constituted against the accountable for the goods imported or exported through the Customs Stations by selling signed shipping bills or bills of entry is a grave offence which warrants severe punishment. Considering the potential in ____________ mischief including loss of revenue to the exchequer and danger to national security, revocation of license in such cases may not be unjustified. In the instant case, however, the Commissioner imposed a small penalty of Rs.25,000/- for the role of the appellant in the attempt to abet illicit export. Moreover, the recurring of the appellants through the proceedings has been ________ financial difficulty. It has not paid the penalty imposed on it on the stated ground of financial difficulty. It is also a recurrent claim not reviewed by the authorities that the CHA has an unblemished record. It is claimed that the appellant has been reduced to penury. In these circumstances, the several case laws relied on by the appellant assumed relevance.
8. We find that the enquiry officers who submitted his report after completing the enquiry prescribed in the regulations basic to the impugned order concluded as follows:-
As far as the allegations leveled against Mr.C.N.Rajendra Kumar are concerned, it has been found established that he had signed on blank shipping bills without knowing the Exporter or his whereabouts and the nature of goods attempted to be exported inspite of being in the field for more than a decade. It is also worth mentioning that, had this misdeclaration of description and value of the export goods was not noticed by the Customs Department, the exporter would have acquired huge revenue as DEPB credit which is ineligible. The reckless and irresponsible behaviour of Mr. C.N.Rajendra Kumar in the course of discharge of functions as custom house agent license is proved as stated in the above paragraphs. while finding that the appellant was guilty of violating the provisions enumerated under Regulation 13.
8. We find that in the instant case the export consignment presented were in sealed containers stuffed at the factory premises of the exporter under the supervision of the Central Excise officers. Even if the exporter had engaged any other CHA for entering the consignment for export, the CHA would have filed the shipping bills with the description and value following the advice of the exporters. That the exporter in the instant case had used the signed shipping bills which the Department held to have been sold for consideration by the appellant would not have made any difference to the subsequent developments that unfolded. Goods stuffed under the supervision of Central Excise officers and arriving at the customs station in sealed containers are not usually subjected to examination before export. Examination and detection of the infractions came about obviously on account of the specific intelligence received by the investigating agencies. Therefore, the conclusion of the enquiry officer as regards the complicity of the appellant and his contribution to the attempted fraud do not appear to be correct. To that extent the impugned order is based on an incorrect report.
9. The various case laws cited by the appellant support his claim for a lenient decision. In the Falcon Air Cargo & Travel (P) Ltd. case (supra) dealing with a similar case, where an exporter claimed undue drawback on account of the negligence of the CHA, it was held by the Tribunal that the charges against the appellants in that case were not so grave that to deserve a grave punishment of revocation of license. It was also a case where the CHA had signed the shipping bill and allowed the exporter to use it as ________________ though the CHAs complicity was not established. While adjudicating the offences involving contravention of provisions of related customs case, a penalty of Rs.35,000/- only was imposed on CHA whereas a penalty of Rs.2.5 lakhs had been imposed on the exporters. The enquiry officer had highlighted this aspect of the order passed for contravention of provisions of the Act. We also find that decision was passed by the Tribunal following the remand directions contained in Falcon Air Cargo & Travel (P) Ltd. Vs. UOI [2002(140) ELT 8 (Del.)] wherein the Honble High Court of Delhi had held that when revocation of license was directed it had to be only in cases where infraction of very serious nature warranting exemplary action on the part of the authorities. Their Lordships observed as follows:-
13. . Though we have not dealt with the question of proportionality, it is to be noted that the authorities while dealing with the consequences of any action which may give rise to action for suspension, revocation or non-renewal have to keep several aspects in mind. Primarily, the effect of the action vis-a-vis right to carry on trade or profession in the background of Article 19(l)(g) of the Constitution has to be noted. It has also to be borne in mind that the proportionality question is of great significance as action is under a fiscal statute and may ultimately lead to a civil death.
10. In the Global Linkerz United Agencies case(supra) cited by the ld. Consultant, this Tribunal vacated the order of revocation of license finding that the CHA was not ware of the poor quality of the consignment sought to be exported with the intention to claim ineligible drawback. In the Maruti Transporters Vs. CC, Chennai [2004(177) ELT 1051(Tri. Chennai)], the Tribunal vacated revocation of license on the grounds of non-compliance with the various conditions prescribed under Regulation 14 of CHALR, 1984 relying on the decision of the Tribunal in the Falcon case (supra) finding that in the absence of any evidence or fraud or collusion involved by the appellant, the offence found against a CHA was not grave enough to warrant revocation of the license.
11. We have also considered the judicial authorities relied on by the Revenue. The important ratio of Jasjeet Singh Marwaha case (supra) is as follows:-
7.4?In so far as question no. 4 is concerned, we are of the view that since a CHA acts on behalf of the importer, it is not only his obligation to ensure that the entries made in the bill of entry are correct but also that a true and correct declaration of value and description of goods is made, and in the event of any infraction such as misdeclaration, he can be penalized under the Regulation 20 of CHALR, 2004 if it results in a misconduct which is of the nature which renders him unfit to transact the business of a CHA, at the Customs Station.
The Honble High Court also held that also contrary to various earlier decisions of the Tribunal, held that statement recorded under Section 108 of the Act was admissible in evidence in proceedings under CHALR. In Sri Kamakshi Agency case(supra), the Honble High Court of Madras upheld the revocation of license of the CHA as justified as the CHA had operated through its power of attorney which had __________ facilities available to a CHA for a price which could never be condoned. The appellant therein which had experience of 30 years of CHA by his action have paved the way for his power of attorney to indulge in serious malpractice which resulted in loss of exchequer to the revenue. There was enough justification for the authorities to treat the action of the appellant as detriment to the interest of the nation as ordering revocation of its license.
12. We have applied our anxious consideration to the facts of the case of the several case laws cited by both sides. We find that the CHA involved apparently has unblemished record and is an impecunious circumstances; it has not appealed of penalty of Rs.25,000/- on its offer, paid the same. There is no finding of any fraudulent contact of the appellant in the instant transactions. In the normal course also any CHA engaged by the exporter in question would have filed shipping bills as were presented in the instant case. We do not find that the infrance of the enquiry officer that transactions detected by the authorities could have been avoided had the appellant not handed over blank signed shipping bills to the exporter involved. The ___________ of the several judicial authorities strongly support a decision in favour of the appellant in the instant case. We find that the following decision of the Tribunal in Nanda International case (supra) squarely applies to the facts of the present case. The ratio is as under:-
5.We have given our careful consideration to the submissions as well as to the cited case law. In the cases cited by the ld. Counsel, co-ordinate Benches of the Tribunal apparently took into account the hardships already suffered by the CHAs on account of suspension/revocation of their licences, and, in a sound exercise of discretion, terminated the suspension/revocation. In the case cited by ld. SDR, the CHA had allowed his licence to be used by some other persons in connection with exports. The Bench noted that such an act of the CHA facilitated commission of fraud on the revenue and hence required to be seriously dealt with under the CHA Licensing Regulations. The Bench was not inclined to take a lenient view. On the other hand, it held that the Tribunal had no power to take such a view. On our part, we observe that exercising discretion, having regard to the peculiar facts and circumstances of a given case, could necessarily result in taking of lenient view vis-a-vis the stance of lower authority. No line can be drawn between lenient view and discretion. Both go side by side depending upon the facts and circumstances of the case. It has been held by the Apex Court that statutory Tribunals do have discretion which, however, should be exercised in accordance with sound judicial principles. Therefore, with great respect to the WZB, we are of the considered view that, in sound exercise of discretion, this Tribunal can take an appropriate view in a case involving revocation of CHA licence, having regard to the peculiar facts and circumstances of the case. In the present case, admittedly, the licence was suspended as early as in 1998 and was revoked in September, 2000. Apparently, the appellant has suffered enough on account of the orders of the Commissioner. The appellant has gone without CHA business as a means of livelihood ever since 1998. Nearly 6 years have elapsed. Consequently his employees too must have suffered. In these facts and circumstances, we are of the view that the revocation of the licence should be undone at this juncture. Accordingly, we hold that the order of revocation of the appellants CHA licence, passed by the Commissioner of Customs, shall not be in force beyond 30-6-2004. Consequently, the CHA licence will stand revived with effect from 1-7-2004. We, however, make it clear that the Commissioners order for forfeiture of security shall stand. It is up to the Commissioner to require the party to make fresh security deposit incidental to revival of the licence.
13. Following the ratio of the above decision, we vacate the revocation of the CHA licence. The appeal is disposed of in the above terms.
(Pronounced in court on ..) (P.KARTHIKEYAN) Member (Technical) (M.V. RAVINDRAN) Member (Judicial) Nr 12