Madras High Court
Commissioner Of Customs vs M/S.Mansa Impex Services on 26 July, 2017
Author: S.Manikumar
Bench: S.Manikumar, V.Bhavani Subbaroyan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26.07.2017 CORAM: THE HONOURABLE MR.JUSTICE S.MANIKUMAR and THE HONOURABLE MRS. JUSTICE V.BHAVANI SUBBAROYAN C.M.A.No.1783 of 2017 Commissioner of Customs, Central Excise & Service Tax, Coimbatore 641 018. .. Appellant versus M/s.Mansa Impex Services, New No.223, Old No.229 & 300, Kamarajar Road, Upplipalayam, Coimbatore 641 015. .. Respondents Prayer: Civil Miscellaneous Appeal is filed under Section 35G of Central Excise Act, 1944, against the Final Order No.41012 of 2016, dated 13.06.2016, on the file of Customs, Excise and Service Tax Appellate Tribunal (CESTAT), South Zonal Bench, Chennai 600 006. For Appellant : Mr.T.R.Senthil Kumar For Respondent : Mr.R.Mansoor Elahi for Mr.S.Murugappan JUDGMENT
(Judgement of this Court was made by S.MANIKUMAR, J.) Civil Miscellaneous Appeal is directed against the Final Order No.41012 of 2016, dated 13.06.2016, on the file of Customs, Excise and Service Tax Appellate Tribunal (CESTAT), South Zonal Bench, Chennai 600 006, by which, the Tribunal, after considering the facts and circumstances of the case, materials taken behind the back of the respondent, the decision of the Andhra Pradesh High Court in Commissioner of Customs & Central Excise, Hyderabad-II Vs H.B. Cargo Services reported in 2011(268) E.L.T. 448 (A.P.), on proportionality, set aside the revocation of licence.
2. Short facts leading to the appeal are that the respondent is a Customs House Agent (In short, CHA), licensed to deal with the processing of import and export of consignments for customs clearance. Certain investigations were carried out by the officers of Customs, during the year' 2006, regarding possible over-valuation of export products with the intent to avail ineligible draw-back and concession available on such export items. Investigation has been concluded, resulting in various proceedings, under Customs Act, 1962.
3. Proceedings against the respondent, under Customs House Agents Licensing Regulations, 2004 [In short, CHALR, 2004] has also been initiated, vide show cause notice, dated 08.06.2006, alleging that the respondent has failed to obtain authorization from his clients for proper compliance of Customs Act and also failed to exercise due diligence to ascertain the correctness of the information required to handle the work as a CHA.
4. On the allegation that there was violation of CHALR, 2004, the respondent's license was suspended on 15.02.2006, initially for a period of six months. Pursuant to an enquiry, conducted by the Assistant Commissioner, he submitted a report, dated 06.10.2006, holding that the allegation against the respondent as proved. Thereafter, a personal hearing was given on 07.02.2008, by the Commissioner. Thereafter, the Commissioner of Customs, Cental Excise and Service Tax, Coimbatore, vide Order-in-Original, dated 13.05.2010, has revoked the license of the respondent and also forfeited the security deposit of Rs.1,10,000/-, furnished to the department.
5. Being aggrieved by the same, the respondent filed an appeal before the CESTAT, South Zonal Bench, Chennai, contending inter alia that there was substantial delay in concluding the proceedings, against him, from the date of suspension, ie., on 15.02.2006, to the date of impugned order, ie., on 13.05.2010. The respondent has further contended that the order of revocation travelled beyond the show-cause notice, subject matter of adjudication. Before the Tribunal, a contention has also been made that the order of revocation has resulted in loss of business for more than 10 years.
6. Objections were made by the appellant, stating that the respondent has been actively involved in processing, more than 400 shipping bills, which resulted in mis-declaration and loss to the Government, by way of ineligible export concessions. The respondent has not acted, as per the mandate, stipulated in CHALR, 2004. As violations were proved, revocation of license is legally sustainable. Regarding delay, the appellant has submitted that considering the voluminous documents and investigation, with reference to Customs Act, 1962, parallel proceedings under CHALR, 2004, were delayed.
7. After hearing the parties, the Tribunal has found that there was a delay of four years, in issuing the revocation order and at the appellate stage, another six years have lapsed. Going through the material on record, the Tribunal has also found that though a show cause notice, dated 08.06.2006, has been issued, alleging violation of Regulation 13(a), 13(d) and 13(e), the Commissioner of Customs, Original Authority, had quoted and relied on certain details, which were not referred to, in the show-cause notice. The Commissioner has also relied on certain details, viz., adjudication proceedings, under Customs Act, 1962.
8. Upon Order-in-Original, dated 13.05.2010, of the Commissioner of Customs, the CESTAT, Chennai, has also noticed that in paragraph 13.03 of the Order-in-Original, the Original Authority has relied on investigations and the subsequent adjudication proceedings concluded during May to August 2009-10, to hold that the respondent has failed to get authorization of the exporters and did not observe due diligence in verifying the correctness of the information given by their clients. Inquiry report of the Assistant Commissioner, was dated 06.10.2006. Personal hearing was given on 07.02.2008. On the basis of the investigation and adjudication proceedings, concluded during May to August 2009-10, ie., two years after the conclusion of the inquiry, an Order-in-Original, dated 13.05.2010, has been passed by the Original Authority, revoking the licence and forfeiture of security deposit.
9. Thus, CESTAT, Chennai, has found that the Original Authority had traveled beyond the contents of the show cause notice and considered the materials behind the back of the respondent, to pass an order of revocation, which is held as violative of principles of natural justice. For the abovesaid reasons, CESTAT, Chennai, has set aside the Order of Original Authority. On the aspect of proportionality of punishment, the Tribunal has relied on a decision of the Andra Pradesh judgment in Commissioner of Customs & Central Excise, Hyderabad-II Vs H.B. Cargo Services reported in 2011(268) E.L.T. 448 (A.P.), wherein, at Paragraph 11, the High Court held as follows:
11. While issuance of signed blank shipping bills would, by itself, amount to negligence on the part of the CHA, their doing so for a consideration of Rs. 150/- per shipping bill is an act of corruption. It is in this context that the proportionality of punishment imposed on the respondent, and the scope and amplitude of this doctrine, is required to be examined. 'Proportionality' is a principle where the court is concerned with the process, method or manner in which the decision-maker has ordered his priorities, reached a conclusion or arrived at a decision. The very essence of decision-making consists in the attribution of relative importance to the factors and considerations in the case. The doctrine of proportionality places in focus the true nature of the exercise - the elaboration of a rule of permissible priorities. 'Proportionality' involves 'balancing test' and 'necessity test'. While the former (balancing test) permits scrutiny of excessive onerous penalties or infringement of rights or interests, and a manifest imbalance of relevant considerations, the latter (necessity test) limits infringement of human rights to the least restrictive alternative. [Judicial Review of Administrative Action (1995), pp. 601-05, para 13.085; Wade & Forsyth: Administrative Law (2005), p. 366; Mukul Kumar Choudhuri - (2009) 15 SCC 620]. What is otherwise within the discretionary domain and sole power of the decision maker to quantify the punishment, once the charge of misconduct stands proved, is exposed to judicial intervention if exercised in a manner which is out of proportion to the fault. Award of punishment, which is grossly in excess of the allegations, cannot claim immunity and remains open for interference under limited scope of judicial review. One of the tests to be applied, while dealing with the question of quantum of punishment, would be: would any reasonable person have imposed such punishment in like circumstances? Obviously, a reasonable person is expected to take into consideration the measure, magnitude and degree of misconduct and all other relevant circumstances, and exclude irrelevant matters before imposing punishment [Mukul Kumar Choudhuri - (2009) 15 SCC 620]. The CHALR enables both suspension and revocation of the license of a CHA for violation of any of the conditions specified therein. If any such ground exists, two courses are open to the Commissioner. One is to suspend the license and the other is to revoke it. Suspension would mean that the license would be inoperative for a particular period. An order of revocation would mean that the license is totally inoperative in future, it loses its currency irretrievably. Suspension/revocation, as the case may be, has to be directed looking to the gravity of the situation in the background of the facts. For minor infraction, or infractions which are not of a serious nature, an order of suspension may suffice. On the contrary, when revocation is directed it has to be only in cases where the infraction is of a serious nature warranting exemplary action on the part of the authorities for, otherwise, two types of actions would not have been provided for. Primarily it is for the Commissioner to decide as to which of the actions would be appropriate but, while choosing any one of the two modes, the Commissioner has to consider all relevant aspects, and draw a balance sheet of the gravity of the infraction and the mitigating circumstances. The difference in approach for consideration of cases warranting revocation or suspension has to be borne in mind while dealing with individual cases. The proportionality question is of great significance as action is under a fiscal statute, and may ultimately lead to a civil death. [Falcon Air Cargo and Travels (P) Ltd. - 2002 (140) E.L.T. 8].
10. Assailing the correctness of the same, the instant Civil Miscellaneous Appeal, has been filed on the following substantial questions of law, (1) Whether on the facts and circumstances of the case, the Appellate Tribunal has committed substantial error in law by setting aside the Order-in-Original and cancelling the revocation of CHA licence to the Respondent?
(2) Whether on the facts and circumstances of the case, the Appellate Tribunal was correct in restoring CHA licence to the respondent, when Regulation 20(1) of CHA Licence Regulations, clearly provides that the Commissioner of Customs may, subject to provisions of Regulations 22, revoke the licence of a Custom House Agent and order forfeiture of security deposit?
11. Though Mr.T.R.Senthil Kumar, learned counsel for the CESTAT, Chennai, made submissions, in support of the above substantial questions of law and further contended that the respondent had filed 440 shipping bills, for export of readymade garments, thereby, facilitating the exporters to avail an amount of Rs.7.91 Crores, as draw back and further failed to produce the required BRC, against the said exports and also violated Regulation 13(a), 13(d) and 13(e) of CHALR, 2004, this Court is not inclined to countenance the same, for the reason that the CESTAT, Madras, vide Final Order, dated 13.06.2016, has found that the Original Authority had relied on investigation and subsequent adjudication proceedings, concluded during May to August 2009-10, to hold that the respondent has failed to get authorization of the exporters and did not observe due diligence in verifying the correctness of the information given by their clients.
12. Admittedly, the Original Authority had taken note of the materials behind the back of the respondent, to pass an order of revocation. Suspension of licence has been made on 15.02.2006. Show cause notice was issued on 08.06.2006. Thereafter, the Assistant Commissioner has submitted a report on 06.10.2006, holding that the allegation against the respondent as proved. Thereafter, a personal hearing was given on 07.02.2008, by the Commissioner. Pursuance to the report, dated 06.10.2006, no order has been passed. However, on 13.05.2010, the Commissioner of Customs, Cental Excise and Service Tax, Coimbatore, has revoked the license of the respondent and also forfeited the security deposit, furnished to the department.
13. Delay of four years, between the date of suspension, ie., on 15.02.2006, and the date of revocation order, ie., on 13.05.2010, lead to filing of an appeal before the CESTAT, Chennai and that the same has been disposed of on 13.06.2016, after 6 years. Therefore, as rightly observed by the Tribunal that the order of revocation has resulted in loss of business for more than 10 years. Having regard to the above, the CESTAT, Chennai, has considered a decision of the Andhra Pradesh High Court in Commissioner of Customs & Central Excise, Hyderabad-II Vs H.B. Cargo Services reported in 2011(268) E.L.T. 448 (A.P.).
14. From the perusal of Order-in-Original, it is abundantly clear that the said authority had traveled beyond the contents of the show cause notice and considered materials behind the back of the respondent, in determining the guilt of the petitioner, to pass an order of revocation, which is a violation of principles of natural justice. Though the appellant has sought for reversal of the final order passed by the CESTAT, Chennai, in the light of the above discussion, this Court is not inclined to set aside the order of the Tribunal, setting aside the order of revocation.
15. On the facts and circumstances of the case, the substantial questions of law are answered in negative, as against the appellant. Hence, the S.MANIKUMAR, J.
AND V.BHAVANI SUBBAROYAN, J.
skm Civil Miscellaneous Appeal is dismissed. No costs. Consequently, connected Miscellaneous Petition is closed.
Index: Yes/No (S.M.K., J.) (V.B.S., J.)
Internet: Yes/No 26.07.2017
To
The Customs, Excise and Service
Tax Appellate Tribunal (CESTAT),
South Zonal Bench, Chennai 600 006.
C.M.A.No.1783 of 2017