Custom, Excise & Service Tax Tribunal
H G Mehta & Co Pvt Ltd vs Commissioner Of Customs-Mumbai - ... on 5 August, 2024
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
CUSTOMS APPEAL NO: 85759 OF 2022
[Arising out of Order-in-Original CAO No: 122/CAC/PCC(G)/SJ/CBS-Adj dated
10th January 2022 passed by Principal Commissioner of Customs (General),
Mumbai.]
H G Mehta & Co Pvt Ltd
No. 15, Friends Union Premises Co Op Society Ltd
227 P D'Mello Road, Mumbai - 400001 ... Appellant
versus
Principal Commissioner of Customs (General)
New Customs House, Ballard Estate, Mumbai - 400001 ...Respondent
WITH CUSTOMS APPEAL NO: 85787 OF 2022 [Arising out of Order-in-Original CAO No: 120/CAC/PCC(G)/SJ/CBS-Adj dated 10th January 2022 passed by Principal Commissioner of Customs (General), Mumbai.] H G Mehta & Co Pvt Ltd No. 15, Friends Union Premises Co Op Society Ltd 227 P D'Mello Road, Mumbai - 400001 ... Appellant versus Principal Commissioner of Customs (General) New Customs House, Ballard Estate, Mumbai - 400001 ...Respondent AND CUSTOMS APPEAL NO: 85803 OF 2022 [Arising out of Order-in-Original CAO No: 123/CAC/PCC(G)/SJ/CBS-Adj dated 10th January 2022 passed by Principal Commissioner of Customs (General), Mumbai.] C/85759, 85787 & 85802/2022 2 H G Mehta & Co Pvt Ltd No. 15, Friends Union Premises Co Op Society Ltd 227 P D'Mello Road, Mumbai - 400001 ... Appellant versus Principal Commissioner of Customs (General) New Customs House, Ballard Estate, Mumbai - 400001 ...Respondent APPEARANCE:
Shri Jhamman Singh, Advocate for the appellant Shri A Pathan, Deputy Commissioner (AR) for the respondent CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) FINAL ORDER NO: 85745-85747/2024 DATE OF HEARING: 07/02/2024 DATE OF DECISION: 05/08/2024 PER: C J MATHEW It was in an altogether different context that we find '....that we can die but once...' in Joseph Addison's Cato but it is no less germane, even if in less savoury circumstances, to the three 'deaths' and three 'forfeitures' ordered on the same day in the three disposals of three separate proceedings under Customs Broker Licencing Regulations, 2018 by C/85759, 85787 & 85802/2022 3 Principal Commissioner of Customs (General), New Customs House, Bombay. We have heard of sentencing by criminal courts on different counts to run concurrently but never with capital punishment. And that is what the licencing authority has ordered under regulation 14 of Customs Broker Licencing Regulations, 2018 which the saving grace of not having been extended to penalty of ₹ 50,000 under regulation 18 of Customs Broker Licencing Regulations, 2018 does not, by any stretch, mitigate in puzzling credulity. For, how can the same licence be revoked again and again after being revoked once, and how can that same security deposit be forfeited again and again after being forfeited once, unless the licencing authority has also been vested with the power to resuscitate a revoked licence or to unforfeit a forfeited deposit. We find no such empowerment in the Customs Broker Licencing Regulations, 2018. Either there is an unbefitting understanding of the scope of the said Regulations or the licencing authority is hedging against possible failure of one or more of the orders in appellate recourse and neither dignifies the loftness of Commissioner of Customs in the discharge of functions as licencing authority. Learned Authorized Representative is unable to isolate the appeal that should be taken up first to render the other two infructuous and that it is not unnatural considering that all were ordered on the same day. Learned Counsel preferred that we reject randomly two for being 'overkill' and to proceed with the remnant which, according to him, would render justice C/85759, 85787 & 85802/2022 4 as the proceedings in all three were not tenable to start with.
2. The appellant, holder of licence no. 11/362, was proceeded against in connection with three diverse investigations into these separate offences by three different importers: M/s Ramniklal & Sons for diversion of goods imported under 'export promotion schemes' in the Foreign Trade Policy (FTP), M/s Chandrashekhar Industries and M/s Shine Metal Industries (said to be dummies of one Jayant Shantilal Mirani of M/s Nikon Cooper & Conductors Pvt Ltd) as well as M/s SR Enterprises for having diverted 'electrolytic tough pitch copper rods' instead of being used in manufacture of 'lead wire for electronic parts' as required in terms of Customs (Imported Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. These alleged acts of omissions and commissions leading to proceedings under Customs Act, 1962 in the latter two have occurred outside the 'customs area' and after clearance of goods impugned therein and in the first for the 'customs broker' having been aware of the intentions of the operators. The roles of the 'customs broker' were elicited from statements recorded during the course of investigations into each of the breaches of law.
3. The proceedings were initiated on identical charges of having breached regulation 10 (a), regulation 10 (d), regulation 10(e), regulation 10 (m) and regulation 10 (n) of Customs Broker Licencing C/85759, 85787 & 85802/2022 5 Regulations, 2018 and each of them based on the same imputation of misconduct, viz., that the 'customs broker' did not ever deal directly with the importer on record and all the activities were undertaken at the behest of, as well as payment received from, certain persons connected with the diversion. This, again, is not consistent with the mandate of Customs Broker Licencing Regulations, 2018 which segregates obligations devolving on 'customs broker' stakeholdewise. It is also moot if 'customs brokers', who, as logistics service providers, undertake business activities that are related to, but distinct from, the scheme of 'customs brokerage' envisaged in section 146 of Customs Act, 1962, can be charged with continuing obligation under Customs Broker Licencing Regulations, 2018 across the spectrum of all activities. It is no less moot that statements of interested persons and 'confessions' alone, and at face value suffices to conclude that the requirements of principles of natural justice have been adhered to.
These were canvassed by Learned Counsel for appellant in his submissions. Learned Authorized Representative also made elaborate submissions in support of the detriments in the impugned orders.
4. We notice that regulation 10(a) of Customs Broker Licencing Regulations, 2018 pertains to obtaining of 'authorisations' from the importer before taking up work for a client. We notice that regulation 10(d) of Customs Broker Licencing Regulations, 2018 pertains to advising client to comply with provisions of Customs Act, 1962. We C/85759, 85787 & 85802/2022 6 notice that regulation 10(e) of Customs Broker Licencing Regulations, 2018 pertains to due diligence in ascertaining correctness of information imparted to a client. We notice that regulation 10(m) of Customs Broker Licencing Regulations, 2018 pertains to discharging duties with speed and efficiency. We notice that regulation 10(n) of Customs Broker Licencing Regulations, 2018 pertains to verifications and antecedent checks of the client. The sole imputation of misconduct, however, does not appear to relate most of these and, considering that the Central Board of Indirect Taxes & Customs (CBIC) has set these out painstakingly, it was incumbent on the licencing authority to have inquired into, and to decide upon, the various facts and circumstances from which breach of each of the obligations could be imputed. Those are glaringly deficient except in relation to regulation 10(n) of Customs Broker Licencing Regulations, 2018.
5. It is also apparent that the licencing authority has presumed that the obligations exist solely for the purpose of initiating proceedings for revocation of licence issued to 'customs broker' and, therefore, to be dealt with thus. Obligations of 'customs brokers' are manifold. The institution has been established under the authority of Customs Act, 1962 to act as a bridge between customs houses, or more properly speaking, between 'proper officer' and importers/exporters in making their knowledge and experience available for facilitation of clearance of cargo. There are, therefore, obligations towards the 'proper officer' C/85759, 85787 & 85802/2022 7 and, doubtlessly, towards clients. It is not to be presumed, as the licencing authority appears to have, that any misconduct on the part of importer or exporter is, by default, a breach of obligations because there are a litany of obligations in Customs Broker Licencing Regulations, 2018 to all of which a single offence may not attach. The 'to do' and/or 'not to do', implicit in each obligation, should have been specified and the contrary act highlighted in the inquiry report as well as impugned order under Customs Broker Licencing Regulations, 2018. Every government servant of the Union is aware, or should be, about the requirements under the Central Civil Service (Classification, Control and Appeal) Rules, and its linkage with Central Civil Service (Conduct) Rules, for invoking detriment to conditions of service of their employment under the Union; detriment to the continuation of licenced service of 'customs broker', whose appointment and renewal are governed by Customs Broker Licencing Regulations, 2018, is not dissimilar. A similar diligence in the approach to proceedings that jeopardize the livelihood of 'customs brokers' is warranted.
6. The purpose of 'authorization' is to establish that 'customs broker' is contracted agent of importer or exporter for each transaction and, thereby, bring section 147 of Customs Act, 1962 into play. The manner in which it is to be obtained is not set out in regulation 10(a) of Customs Broker Licencing Regulations, 2018 and, obviously, considering its purpose, is only required to be produced when asked for.
C/85759, 85787 & 85802/2022 8 It is not open to the licencing authority to insinuate more stipulations into this obligation than contemplated in the Regulation.
7. It is certainly beyond the stretch of credulity that advise to a client includes explaining all the provisions of Customs Act, 1962 with the presumption of not having done so because a breach of Customs Act, 1962 has occurred. Moreover, it does not escape attention that advise does not extend beyond Customs Act, 1962. It should not be lost sight of that the first part of the obligation is to be discharged to the client and the second to the licencing authority; impliedly, advice should have been sought and responded to which, if the client appeared to be disinclined to comply, triggered obligation to the customs administrator. It would appear that such charge would arise when a client alleges that the 'custom broker' failed to advise properly and reporting of non-compliance then becomes a ground of defence against the charge. The obligation to ascertain the correct procedure and position is also obviously in relation to a client who would have to allege having been misled by 'customs broker' for this charge to hold. Likewise, speed and efficiency are in interests of the client and it is for the client to fire the opening salvo before the charge to the contrary becomes meaningful.
8. We have no wish to dilate further on the normative aspect of the obligations. They exist; for, if it were otherwise, every proceedings C/85759, 85787 & 85802/2022 9 against an importer or exporter must be attended by proceedings against 'customs broker' under Customs Broker Licencing Regulations, 2018 which is too nightmarish a consequence for customs administration to contemplate let alone enforce. Suffice it to say that none of three impugned orders have attempted to connect appropriate imputations of misconduct to each charge and are, in consequence, incomplete culmination of proceedings.
9. Added to that is the gross impropriety of taking up three proceedings for three consequences, of which two are rendered infructuous, to affect a single licence and single security deposit. It is no different from combining the outcome of three proceedings in one order of revocation and forfeiture. The proceedings are flawed and the outcome is, accordingly, flawed. That warrants fresh proceedings in each, and not simultaneously or in common, for which purpose the three impugned orders are set aside and remanded to the licencing authority for decisions in accordance with the framework set out supra.
10. Appeals are allowed by way of remand.
(Order pronounced in the open court on 05/08/2024) (AJAY SHARMA) (C J MATHEW) Member (Judicial) Member (Technical) */as