Custom, Excise & Service Tax Tribunal
M/S. Jai Ambe Logistics vs Commissioner Of Customs(General), ... on 19 November, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. C/85140/14-MUM [Arising out of Order-In-Original No. 126/2013/CAC/CC(G)/PKA-CBS dated 30-10-2013 passed by the Commissioner of Customs (General), New Custom House, Mumbai] For approval and signature: Honble Mr. P.R. Chandrasekharan, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s. Jai Ambe Logistics
:
Appellant
VS
Commissioner of Customs(General), NCH, Mumbai
:
Respondent
Appearance
Shri. Vinay Ansurkar, Advocate for the Appellant
Shri. Senthil Nathan, Dy. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. P.R. Chandrasekharan, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 19/11/2014
Date of decision: 19/11/2014
ORDER NO.
Per P.R.Chandrasekharan
The appeal arises from Order-In-Original No. 126/2013/CAC/CC(G)/PKA-CBS dated 30-10-2013 passed by the Commissioner of Customs (General), New Custom House, Mumbai. Vide the impugned order, the ld. Adjudicating authority has revoked the CHA licence No.11/775 issued to M/s Jai Ambe Logistics, Mumbai and also forfeited the entire security deposit of Rs.75000/-. Aggrieved of the same, the appellant is before us.
2. The licensing authority received a report from the Directorate General of Vigilance in respect of a complaint received by them from Sri. Neelam Chabria of M/s Jayem Impex alleging illegal business practices followed by M/s Jai Ambe Logistics and others. It was reported that one Mr. Nirav Goradia was appointed by the CHA firm as their employee with effect from 1-10-2010 while was functioning as a Manager with M/s EmkayFreight Services Pvt. Ltd., a freight forwarding firm and also working in his fathers firm M/s Expimpo, who are exporters of fast moving consumer goods. It was also alleged that Mr. Nirav Goradia was issued with a G card by the CHA firm which enabled him to undertake customs transactions in respect of importers and exporters. Investigations were conducted by recording statements of all concerned and the investigation concluded that (i) by entrusting the customs clearance work to Mr. Nirav Goradia, the CHA has sublet his licence; (ii) there was no proper record keeping in the office of the CHA firm; (iii) the CHA did not know the importer M/s Jayem Impex. The CHA licence was suspended and inquiry proceedings were initiated under the CHALR, 2004.
2.1 On conclusion of preliminary investigation, a charge sheet was issued to the appellant CHA alleging contravention of - (a) Regulation 12 subletting of CHA licence to Mr. Nirav Goradia to clear the goods imported by Mr. Neelam Chabria of Jayem Impex; (b) Regulation 13 (b) for undertaking customs clearance work through a person who was not an employee; (c) Regulation 13 (k) for not maintaining proper records (muster roll of employees); Regulation 13 (n) for not discharging the duties as a CHA with utmost speed and efficiency; and Regulation 13(o) for not verifying the antecedents of importer. On completion of inquriy, the inquiry officer concluded that there is no bar under the CHALR in employing a person on part time basis and who is already working elsewhere and hence the charge of subletting is not proved. Since Sri. Nirav Goradia was in the employment of CHA and he had been issued with a valid G card, there is no contravention of Regulation 13(b). The other charges, that is, contravention of Regulation 13 (k), (n) and (o) were held to be proved as the muster rolls were not mainted properly, there was a delay in obtaining BIS certificate in respect of iclearance of goods imported by Jayem Impex and the CHA had not met the importer before clearance of export/import consignment and did not verify the antecedent, correctness of the importer and the exporter.
2.2 The adjudicating authority did not agree with the findings of the Inquiry officer with respect to contravention of Regulation 12 and 13(b) on the ground that Mr. Nirav Goradia apparently used the CHA licence for clearance of goods of importer on commission basis and Mr. Nirav Goradia , who was already employed elsewhere, was employed for fraudulent activity. Accordingly he held that all the charges imputed against the CHA were proved and consequently, he passed the impugned order reoking the CHA licence and forfeiting the entire security deposit furnished by the CHA. Hence the appeal.
3. The ld. Counsel for the appellant CHA made the following submissions:-
(1) There is no evidence on record that Mr. Nirav Goradia or M/s Emkay Freight Services paid any amount to the CHA for using the licence. On the other hand, it was the CHA who had to pay commission to M/s Emkay Freight Services. Mr. Nirav Goradias name appears in the muster roll maintained by the CHA and the salary vouchers on record. The bill of entry relating to imports of M/s Jayem Impex was signed by Mr. Satish Tole (Kardex No. T-1327) and not by Mr. Nirav Goradia. Hence the charges of sub-letting of CHA licence and contravention of Regulation 12 have not been established with any credible evidence.
(2) The bill of entry pertaining to the imports made by M/s Jayem Impex has been signed by Mr. Satish Tole, another employee of the appellant CHA and therefore, the charge of using a person who is not an employee is also not proved. Hence the finding of contravention of Regulation 13(b) is also not established.
(3) The charge of contravention of Regulation 13 (k) is not sustainable as the requirement of maintenance of financial records are under Regulation 18 which was not the allegation in the notice issued to the appellant. Even if there is any negligence in maintenance of records, it is only a technical breach of the law for which revocation of CHA licence is not justified.
(4) The delay in production of BIS certificate was because the importer did not produce the certificate in time and not on account of any fault of the CHA and therefore, contravention of Regulation 13(n) is not proved.
(5) As regards non-verification of the antecedent of the importer, the importer M/s Jayem Impex was not a fictitious firm and the appellant had verified the KYC documents such as IEC code, authority letter to undertake the transaction, etc. and none of these documents were found to be fake or bogus. Hence, contravention of Regulation 13 (o) is also not established.
(6) Reliance is placed on the decisions of this Tribunal in the case LMS Transport Co. [2014 (299)ELT 368}, K.S.Sawant & Co. [2012 (284) ELT 363] and Manilal Patel Clearing and Forwarding Pvt. Ltd. [2013 (294) ELT 472] and of the honble High Court of Delhi in the case of Ashiana Cargo Services [2014 (302) ELT 161 (del.)] in support of the above contentions.
4. The ld. Dy. Commissioner (AR) appearing for the Revenue re-iterates the findings of the adjudicating authority. He submits that Mr. Nirav Goradia in his statement has admitted that he was employed as Manager of M/s Emkay Freight Services Pvt. Ltd. and also worked in his fathers firm. Therefore, his employment by the CHA and the issue of a Customs Pass is suspect and the only motive could have been to facilitate unauthorised imports. Therefore the charge of contravention of Regulation 12 and 13(b) are established. He further submits that it is an admitted position that the muster rolls were incomplete and some names of the employees were missing establishing contravention of 13(k). Since the appellant CHA had not met the importer, it cannot be said that he had verified the antecedents of the importer thereby contravening regulation 13 (o). Accordingly he pleads for upholding the impugned order.
5. We have carefully considered the rival submissions very carefully.
5.1 During the course of the arguments, we had enquired with the CHA as well as the AR representing Revenue as to whether any contravention of the provisions of the Customs Act, 1962 has been committed by the CHA in the impugned transactions and whether any loss to the exchequer has been caused; both the sides confirmed that there has been no such contravention or any loss caused to the Revenue. We were also informed that the appellant has been functioning as a CHA for more than two decades and has not come to the adverse notice of the department previously.
5.2 The first charge against the CHA is one of sub-letting of CHA licence and the basis for this charge is that they had employed Shri. Nirav Goradia as a part time employee when he was already in the employment of two other firms and he had been issued with a G card. In our considered view this action by itself can lead to the conclusion that the CHA has been sub-let. From the records, it is seen that no evidence has been adduced by the Revenue to show that any consideration has been received by the appellant CHA for sub-letting the licence either from Sri. Nirav Goradia or from M/s Emkay Freight Services. Further we notice that though Sri. Nirav Goradia has been issued with a G card, in the transaction relating to Jayem Impex, he has not attended to any clearance work. In this factual scenario, the charge against the CHA of sub-letting the licence has no basis whatsoever. The Inquiry officer has examined at length this issue in his inquiry report and has also come to the same conclusion. We agree with his finding in this regard.
5.3 As regards the second charge of contravention of Regulation 13 (b), that is employing somebody else for undertaking the customs clearance work other than an employee, in the present case the clearance work relating to the transactions was undertaken by Sri. Satish Tole, an employee of the CHA and not by Sri. Nirav Goradia. Therefore, the finding of the inquiry officer that this charge is not proved cannot be faulted at all and there was no other material available with the adjudicating authority to come to a different conclusion. Therefore, we agree with the finding of the Inquiry Officer that this charge is not proved.
5.4 The next charge is contravention of Regulation 13 (k) regarding non-maintenance of records properly. The said regulation provides for maintenance of records and accounts in the manner prescribed by the Asst./Deputy Commissioner of Customs. Maintenance of accounts and inspection of the same is governed by Regulation 18 and the said regulation provides that the CHA shall maintain such accounts in an orderly and itemised manner and keep them current; and reflect all financial transactions as CHA. In the article of charge issued to the appellant there is no specific allegation of contravention of Regulation 18. The only charge is that the muster roll of the employees has not been properly maintained and non-maintenance of cash register. However, in respect of Mr. Nirav Goradia, this allegation does not sustain because his name figures both in the muster rolls and the salary vouchers. There is no allegation whatsoever that the transactions undertaken in respect of Jayem Impex or other customers were not reflected in the records maintained by the appellant. If that be so, the infractions, if any, are only minor or technical in nature.
5.5 As regards the contravention of regulation 13(n) as to not discharging the functions with utmost speed and efficiency, the only charge is the delayed submission of BIS certificate in respect of the goods imported. The appellant has explained that there was a delay on the part of the importer in furnishing the same and hence the delay on his part. It is not evident from the records that the delayed submission of BIS certificate had any adverse impact on the payment of customs duty. In fact no action has been initiated either against the CHA or against the importer under the provisions of the Customs Act. Thus there is no material evidence available on record to prove this charge.
5.6 The last charge against the appellant is contravention of regulation 13 (o) relating to non-verification of the antecedents of the importer, Jayem Impex and the basis for this allegation is that the appellant had not met any authorised person of Jayem Impex. However, the appellant has produced a copy of the authorisation issued by Jayem Impex for undertaking the transactions. It is not the case of the revenue that M/s Jayem Impex was a fictitious or bogus firm. In the absence of any such finding, the issue is merely academic and technical in nature and we hold accordingly.
5.7 Similar issues have been considered by this Tribunal in several cases in the past. In K.S. Sawant & Co. (supra), this Tribunal held that procurement of business through an intermediary who is not an employee does not amount to sub-letting of CHA licence and there was no requirement of obtaining authorisation to undertake the transaction directly from the importer/exporter and even if they are obtained indirectly, no violation of CHALR could said to have taken place. A similar view was taken in L.M.S. Transport Co. and other decisions relied upon by the appellant (supra). In Ashiana Cargo Services (supra), the honble High Court of Delhi held that punishment must be proportional to the gravity and nature of infraction by CHA and only grave and serious violations justify revocation of licence. In our considered view, there are no grave and serious violations committed by the CHA in the facts of the present case and the infractions , if any, are only technical in nature and revocation of the CHA licence is not warranted nor the forfeiture of the entire amount of security deposit of Rs. 75000/-.
6. In view of the factual and legal analysis as discussed above, we set aside the revocation of CHA licence No.11/775 issued to M/s Jai Ambe Logistics, Mumbai and order forfeiture of an amount of only Rs. 25000/- (Rupees Twenty five thousand only). Consequently, the said CHA licence shall be restored forthwith and the balance of Rs. 50000/- (Rs. Fifty thousand only) be recredited to the CHAs account. Thus the appeal is disposed of in the above terms.
(Operative part of the order pronounced in the court) Ramesh Nair Member (Judicial) P.R. Chandrasekharan Member (Technical) sk 11