Custom, Excise & Service Tax Tribunal
M/S. Shuvam Enterprise vs Commissioner Of Customs (Airport & on 8 October, 2015
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Customs Appeal No. C/75663/2015
(Arising out of the Order-in-Original No.KOL/CUS/AIRPORT/ADMN/07/2015 dated-27/02/2015 passed by the Commissioner of Customs (Airport & Admn.), West Bengal, Kolkata)
For approval and signature of:
SHRI D.M. MISRA, HONBLE JUDICIAL MEMBER
SHRI H.K. THAKUR, HONBLE 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?
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 :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
M/s. Shuvam Enterprise
APPELLANT(S)
VERSUS
Commissioner of Customs (Airport &
Admn.), Kolkata
RESPONDENT(S)
APPEARANCE
Shri R.K. Chowdhary & Sri B.N. Pal, Advocates
FOR APPELLANT(S)
Shri A. Kumar, A.C., (A.R.)
FOR THE RESPONDENT(S)
CORAM:
SHRI D.M. MISRA, HONBLE JUDICIAL MEMBER
SHRI H.K. THAKUR, HONBLE TECHNICAL MEMBER
DATE OF HEARING: 8/10/2015 Date of Pronouncement:09/12/15
ORDER NO : FO/A/75722/2015
Per SHRI H.K. THAKUR
This appeal has been filed by the appellant against Order-in-Original dated 27/2/2015 passed by Commissioner of Customs (Airport & Administration) Kolkata under which CHA License No.S-115 (PAN No. ABLF 5594 B) of the appellant was revoked under Regulation 20 (1) of the Customs House Agents Licensing Regulation 2004 and security deposit of the appellant was also ordered to be forfeited.
2. Shri R.K. Choudhary (Advocate) and Shri B.N. Pal (Advocate) appeared on behalf of the appellant. Shri R.K. Choudhary argued that appellant had a valid CHA License under Customs House Agents Licensing Regulations 2004 (CHALR). That appellant was engaged by a Nepali Exporter for shipment of 24 MT of Mustard Oil Cake (Khali) to be consigned to Hong Kong via South Africa. That two containers with the goods, duly inspected by the Customs Authorities at Jogbani, were bottle sealed by Nepalese Customs and forwarded to Kolkata for shipment. That CTD (Custom Transit Declaration) was filed by the appellant on the basis of documents provided by the Nepalese Exporter through its agent in India.That the containers were intercepted by DRI in the docks at Kolkata and upon inspection by DRI, in the presence of representative of the appellant, one of the two bottle seals was found to be tampered but the second seal of the other container was found to tally with the declared seal number mentioned in the covering document. That on examination by DRI, the containers were found to contain 19.65 MT of Red Sanders wood. That after necessary investigation appellant was alleged to have violated Regulation 13 (a), 13 (b) and 13 (c) of the CHALR 2004 (comparable to Regulation 11 (a) 11 (b), 11 (c) & 11 (n) of the CBLR 2013). That after conducting necessary inquiry proceedings CHA License of the appellant was revoked by adjudicating authority under order dated 27/2/15 read with a corrigendum dt. 13/4/15.
2.1 It is the case of the appellant that CHA was approached for the clearance of Export consignment only from Kolkata Port and cannot be held responsible for any substitution of goods done before the containers reached the Docks in Kolkata. That CHA deputed his person at Nepal for witnessing the stuffing of declared export goods and Customs at Nepal put the seals on the containers and endorsed the CTD. That when the containers were brought to Jogbani LCS the Indian Customs checked the sealed containers and found the same to be in order and accordingly endorsed CTD for onward transit of containers to Kolkata Port. That role of the CHA was to start only by filing CTD and other related documents with Kolkata Customs. That DRI intercepted the containers on 29/11/2012 before the containers could be checked and inspected by the CHA. That DRI called for the representative of the CHA for investigation and as per the DRI investigation container seal was tampered and goods substituted between Jogbani LCS and Kolkata port for which CHA is not responsible. That the job of transit between Jogbani and Kolkata was assigned to Freight Forwarder appointed by the Exporter.That the Enquiry report was submitted beyond the stipulated period of 90 days from the date of issue of notice under CBLR 2013.
2.2 Learned Advocate appearing for the appellant made the bench go through the relevant regulations and further argued that Regulation 13 (a), (b), (d) and (o) of CHALR 2004 (equivalent to Regulation 11(a), (b), (d) & (n) of CBLR 13)were not violated by the CHA & order of revokation was not proper as department did not even suspend the License of the appellant from the date of DRI interception (29/11/2012) till the license was revoked (27/2/15). That for the entire period 29/11/12 to 27/2/15 appellant was allowed to carry out his business and no irregularity was committed by the CHA . That as no necessity to suspend the license was considered appropriate, therefore, order of suddenly revoking the license is perverse and should be set aside. Appellant relied upon the following case laws to argue that in the absence of any malafide revocation of CHA License is not justified.
i) Ashiana Cargo Services Vs. CC (I & G) [2014 (302) ELT 161 (Del.)]
(ii) CC & CE Hyderabad-II Vs. H.B. Cargo Services [2011 (268) ELT 448 (A.P.)]
3. Shri A. Kumar, A.C. (A.R.) appearing on behalf of the Revenue argued that it is evident from the statement dated 30/11/12 that 7/5/2013 of Shri Chandan Chatterjee, partner of M/s. Shubham Enterprises, that:
(i) he was engaged as CHA for clearance of export of M/s. Osia Enterprises-Nepal by Sri Sanjoy Singh of M/s. Global Marine Agency-Kolkata.
(ii) Smt. Bimla Parak is the proprietor of M/s. Osia Enterprises-Nepal;
(iii) he or any of his authorized person never visited M/s. Osia Enterprises-Nepal and also no one from M/s. Osia Enterprises-Nepal ever visited their office or even talked to their office over phone;
(iv) he received authorization by e-mail but never submitted to the office;
(v) over phone and e-mail, he was in regular touch with Sri Sanjoy Singh, but met him;
(vi) Sri Amreek Singh, claimed to be brother of Sri Sanjoy Singh used to visit his office to deliver documents etc.;
(vii) he used to get remunerations in cash and issue bills to M/s. Global Marine Agency on spot;
(viii) he did not obtain KYC of Sri Sanjoy Singh & M/s. Global Marine agency prior to 01.12.2012, though the export started from May, 2012;
(ix) he neither verified correctness of the PAN of Sri Sanjoy Singh nor met him in person.
That in view of the above there is clear violation of Regulation 13 (a), 13 (b), 13 (d) & 13 (o) of the CHALR 2004 and the appellant never checked from the exporter of goods in Nepal whether Shri Amreek Singh or Shri Sanjoy Singh were their Freight Forwarders. Learned A.R., therefore, strongly defended the order passed by the Adjudicating authority.
4. Heard both sides and perused the case record. The issue involved in these proceedings is whether appellant has violated the provisions of Regulations 13 (a), 13 (b), 13 (d) & 13 (o) of the CHALR 2004 inviting revocation of their CHA License. Relevant provisions contained in Regulation 13 of the CHALR 2004 are reproduced below:
Regulation 13. Obligations of Customs House Agent- A Customs House Agent shall-
(a) obtain an authorization from each of the companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorization whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs;
(b) transact business in the Customs Station either personally or through an employee duly approved by the Deputy Commissioner of Customs or Assistant Commissioner of Customs;
(c) advise his client to comply with the provisions of the Act and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs;
(o) verify antecedent, correctness of importer Exporter Code (IEC) Number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents , data or information. 4.1 It is observed from letter dated 28/5/2012 written by M/s. OSIA Enterprises, Birdnagar-I to Commissioner of Customs, Kolkata that confirmation of Authority was given in favour of M/s. Shuvam Enterprises, Kolkata for the job of Export Challan passing based on CTD and other Customs related procedures at Kolkata. If the work assigned to the appellant was only restricted to facilitating export at Docks, Kolkata then there was no need for the appellant to depute his representative to supervise stuffing of containers in Nepal. It is also accepted by Shri Chandan Chatterjee, partner of the appellant that he was in regular touch with Shri Sanjoy Singh. No effort was made by the appellant to check up with the exporter or the freight forwarder whether Shri Sanjoy Singh is their assigned representatives for carrying out the transit of their containers from LCS Jogbani to Dock Kolkata. Regulation 13 (o) of CHALR 2004 clearly provides that CHA, interalia, should verify the identity of his client and functions of his client at the declared address. Shri Amreek Singh and Shri Sanjoy Singh conducted business with the CHA as an agent of M/s. Osia Enterprises and freight forwarder and thus fell into the footsteps of the exporter. No independent efforts were made by the CHA to verify whether the persons dealing with him on behalf of the exporter/freight forwarders are genuine. No confirmation over phone/Mobile was made by the appellant when documents were handed over to the CHA. It is also observed that Shri Dilip Kumar Sharma, Jetty Sircar of the appellant was deputed to attend to the examination of the container when DRI was carrying out the investigation. Para 2 of the statement dated 29/11/2012 of Shri Dilip Kr. Sharma where he stated as follows:
In response to a specific query of DRI officer I want to say that I am looking after the export clearance work of goods loaded in container No. IICU-5005028 and IICU-5006024 under CTD No. 356/LC-6/5/12 dt. 23.11.12 and E.F. No. 124 dated-26/11/12. Both containers had entered in NS Dock Kolkata today on 29/11/2012. This work was allotted to me by the owner of my CHA firm Shri Chandan Chatterjee. Container No. IICU-5006024 was laden on vehicle No. NL-02K-9752 while container No. IICU-5005028 was laden on vehicle No. NL-05D-9568. Both loaded vehicle were parked at a place after entry in dock where DRI Officers came and asked me to show export documents. I have submitted following documents voluntarily to the DRI Officers:
(i) CTD No. 356/LC-6/5/12 dt. 23.11.12 in triplicate,
(ii) Commercial invoice No. OSIA/06/12-13 dt. 23.11.2012
(iii) Packing list dated 23.11.2012
(iv) Certificate of origin 131846 dt. 25.11.2012
(v) Proforma Invoice dt. 16.11.2012
(vi) Kolkata Port Trust documents, Export Clearance dt. 27.11.2012
(vii) Copy of Export Carting order dated 26.11.2012
(viii) Container Bill-CTB 12121830 dt. 27.11.2012.
4.2 Regulation 13 (b) of the CHALR 2004 clearly spell out that transacting of business in Customs station should be either personally or through an employee duly approved by DC/AC Customs. Getting the examination done or production of CTD & related documents is also a transaction of business which started from the time the appellant authorized Shri Dilip Kr. Sharma to look after the work. No approval of the concerned DC/AC Customs for Jetty Sarkar has been brought on record. No authorization was obtained also from Shri Amreek Singh /Shri Sanjoy Singh or M/s. Osia Enterprises that Shri Amreek Singh will be dealing with the Customs for processing of CTD which starts the moment containers left LCS Jogbani till they entered Docks Kolkata. Adjudicating authority has thus correctly held that appellant was found wanting in his duties so far as Regulations 13 (a), 13 (b) & 13 (o) of CHALR 2004 are concerned.
5. Appellant has relied upon the case law of Ashiana Cargo Services Vs. C.C. (I & G) (supra) where Delhi High Court has made following observations in para 10 to 12:-
10.Beginning with the facts, there is virtually no? dispute. There is a concurrent finding of fact by the Commissioner and the CESTAT that the appellant did not have knowledge that the illegal exports were effected using the G cards given to V.K.s employees. There was no active or passive facilitation by the appellant in that sense. Undoubtedly, the provision of the G cards to non-employees itself violated the CHA Regulations. This is an admitted fact, but it is not the Revenues argument (nor is it the reasoning adopted by the Commissioner or the CESTAT) that this violation in itself is sufficiently grave so as to justify the extreme measure of revocation. Not any and every infraction of the CHA Regulations, either under Regulation 13 (Obligations of CHA) or elsewhere, leads to the revocation of license; rather, in line with a proportionality analysis, only grave and serious violations justify revocation. In other cases, suspension for an adequate period of time (resulting in loss of business and income) suffices, both as a punishment for the infraction and as a deterrent to future violations. For the punishment to be proportional to the violation, revocation of the license under Rule 20(1) can only be justified in the presence of aggravating factors that allow the infraction to be labeled grave. It would be inadvisable, even if possible, to provide an exhaustive list of such aggravating factors, but a review of case law throws some light on this aspect. In cases where revocation of license has been upheld (i.e. the cases relied upon by the Revenue), there has been an element of active facilitation of the infraction, i.e. a finding of mens rea, or a gross and flagrant violation of the CHA Regulations. In Sri Kamakshi Agency (supra), the licensee stopped working the license, but rather, for remuneration, permitted his Power of Attorney to work the license, thus in effect transferring the license for money. As the CESTAT noted, 9..[a]pplicant instead of discharging his functions as a Custom House Agent in accordance with the Regulations, in flagrant violation of those Regulations went to the extent of encashing the facilities made available to him as a CHA by selling it for a price. Moreover, the Power of Attorney was - as a matter of fact - actively involved in the fraudulent act in connivance with the importers and others and that as per the Power of Attorney Bond executed by Sri K. Natarajan, all acts, deeds and things done by Sri D. Sukumaran were to be construed as if they were done by himself. Therefore virtually all the fraudulent activities carried out by the Power of Attorney of Thiru Natarajan were to be treated as having been carried out by Thiru K. Natarajan himself, i.e. the licensee. In OTA Kandla, too, mens rea (i.e. knowledge) of the licensee was established. By a statement of the petitioner under Section 108, Customs Act, followed by the inquiry, it was clear that the licensee was aware that the consignment contained gypseous alabaster, a prohibited substance, but nonetheless, participated in its release from the Kandla Port. In Santon Shipping (supra), the adjudicating authority came to the conclusion that the fraud in this case has been committed in so many consignments over a long period of time and the same could not have happened without the connivance of the CHA. The revocation of the license was again informed by the fact of connivance (i.e. mens rea as to the infraction) of the CHA. In Eagle Transport (supra), the CHA transferred the license altogether. As the CESTAT noted, the activities of the appellant firm were controlled day to day, not by Shrimankar but by employees of Amol Shipping Agency. We do not see how this does not amount to transfer of the licence in all but name. Hence, we must hold that the first and second articles of charge have been rightly held as proved. Moreover, more than 100 blank shipping bill forms were sent to a third-party. Following these aggravating factors, the penalty of revocation was justified by the CESTAT. Similarly, in H.B. Cargo (supra), relied upon by the majority of the CESTAT, the case did not concern any ordinary infraction of the CHA Regulations, but an act of corruption, where blank shipping bills were issued by the partner and authorized representative of the CHA for a consideration of ` 150 per shipping bill.
11.Viewing these cases, in the background of the? proportionality doctrine, it becomes clear that the presence of an aggravating factor is important to justify the penalty of revocation. While matters of discipline lie with the Commissioner, whose best judgment should not second-guessed, any administrative order must demonstrate an ordering of priorities, or an appreciation of the aggravating (or mitigating) circumstances. In this case, the Commissioner and the CESTAT (majority) hold that there is no finding nor any allegation to the effect that the appellant was aware of the misuse if the said G cards, but do not give adequate, if any weight, to this crucial factor. There is no finding of any mala fide on the part of the appellant, such that the trust operating between a CHA and the Customs Authorities (as a matter of law, and of fact) can be said to have been violated, or be irretrievably lost for the future operation of the license. In effect, thus, the proportionality doctrine has escaped the analysis.
12.Learned Senior Standing Counsel for the Customs has? stressed that the infraction in this case is not a routine matter, but rather, illegal smuggling of narcotics by the G card users. However, given the factual finding that the CHA was not aware of the misuse of the G cards (and thus, also unaware of the contents being smuggled), no additional blame can be heaped upon the CHA on that count alone. Rather, the only proved infraction on record is of the issuance of G cards to non-employees, as opposed to the active facilitation of any infraction, or any other violation of the CHA Regulations, whether gross or otherwise. Neither have any such allegations been raised as to the past conduct of the appellant, from the time the license was granted in January, 1996. Equally, it is important to note that the appellant has - as of today - been unable to work the license for 8 years, and thus been penalized in this manner. This is not to say that the trust operating between the Customs Authorities and the CHA is to be taken lightly, or that violations of the CHA Regulations should not be dealt with sternly. A penalty must be imposed. At the same time, the penalty must - as in any ordered system - be proportional to the violation. Just as the law abhors impunity for infractions, it cautions against a disproportionate penalty. Neither extreme is to be encouraged. In this case, in view of the absence of any mens rea, the violation concerns the provision of G cards to two individuals and that alone. A penalty of revocation of license for this contravention of the CHA Regulations unjustly restricts the appellants ability to engage in the business of the CHA for his entire lifetime. As importantly, it skews the proportionality doctrine, substantially lowering the bar for revocation as a permissible penalty, especially given the dire civil consequences that follow. On the other hand, the minority Opinion of the CESTAT, delivered by the Judicial Member, correctly appreciates the balance of relevant factors, i.e. knowledge/mens rea, gravity of the infraction, the stringency of the penalty of revocation, the fact that the appellant has already been unable to work his license for a period of 6 years (now 8 years), and accordingly sets aside the order of the Commissioner dated 24-1-2005. 5.1 In the above case CHA was out of business for 8 years but Honble Court while deciding clearly observed that trust between the CHA and the Customs authorities has to be viewed seriously. It was also held that punishment has to be proportionate to the nature and extent of violation. Based on the existing facts in the present appeal before us we hold that appellant was found wanting in discharging his obligations under Regulation 13 (a), (b) & (o) of the CHALR 2004 and accordingly orders passed by the Adjudicating authority under Regulation 20 (1) of CHALR 2004 are upheld.
6. However, looking to the fact that appellant had no knowledge of the contraband nature of the goods substituted in the containers and in view of the ratio of the relied upon case law, punishment for a life time cannot be imposed upon the appellant. We are of the considered opinion that revocation ordered by the Adjudicating authority should be for a limited period. As there is no irregularity committed by the appellant from the date of offence detected by DRI, the revocation ordered by the Adjudicating authority is made effective upto 31/3/2016 and with effect from 1/4/2016 CHA License of the appellant and forfeiture of Security deposit will be restored.
(Pronounced in the Court on 9/12/2015) Sd/- 9/12/15 Sd/-9/12/15 (D.M. MISRA) JUDICIAL MEMBER (H.K. THAKUR) TECHNICAL MEMBER k.b/-
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