Custom, Excise & Service Tax Tribunal
Parekh Cargo Logistics Pvt. Ltd vs Pune on 20 June, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/87460/2015
[Arising out of Order-in-Original F. No. III/Cus/13-37/TC/94/ Part File/2072 dated 24/09/2015 passed by the Commissioner of Customs, Pune.]
For approval and signature:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri C J Mathew, 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?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
No
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Parekh Cargo Logistics Pvt. Ltd.
Appellant
versus
Commissioner of Customs
Pune
Respondent
Appearance:
Shri J.S. Sanghvi, Consultant for the appellant Shri Chatru Singh, Asstt. Commissioner (AR) for the respondent CORAM:
Honble Shri Ramesh Nair, Member (Judicial) Honble Shri C J Mathew, Member (Technical) Date of hearing: 20/06/2016 Date of decision: 20/06/2016 ORDER NO: ____________________________ Per: C J Mathew:
This appeal has been filed by M/s Parekh Cargo Logistics Pvt Ltd, holder of licence no. PN/R/20 issued under regulation 9(1) of the erstwhile Customs House Licencing Regulations, 2004 by Commissioner of Customs, Pune, seeking the quashing of order of revocation of licence dated 24th September 2015. Appeal has been filed under section129A of Customs Act, 1962 read with the said Regulations.
2. The licence, extended for use at Ahmedabad, was utilised to file shipping bills dated 7th September 2010 on behalf of M/s Balaji Enterprises for export of muriate of potash under the guise of sodium chloride. During investigations, the shipment of two other consignments in August 2010 also came to light. The shipper had been effecting shipments between May and July 2010 and had been referred to the appellant by M/s SJ International, an agent whose licence had been suspended by Commissioner of Customs, Nagpur in June 2010. Licence of appellant was suspended on 14th October 2010. The appellant was also proceeded against vide notice dated 1st June 2012 under section 117 of Customs Act, 1962 for imposition of penalty in connection with the export consignments. The appellant moved this Tribunal for revoking of the suspension order and, on directions of the Tribunal for early completion of hearing of representation by Commissioner of Customs, that authority issued order dated 20th December 2012 for continuation of suspension.
3. In accordance with regulation 22 of the said Regulations, inquiry was ordered on 4th January 2013 to report upon five articles of charge relating to:
a) failure to obtain prior authorization of exporter;
b) failure to advise the exporter to comply with the provisions of Customs Act, 1962 and did not being the non-compliance to the attention of the proper officer;
c) failure to exercise diligence in ascertaining the correctness of information imparted to client with reference to cargo clearance;
d) failure to discharge duties with efficiency and without unavoidable delay; and
e) failure to verify antecedents, correctness of Import Export Code, identity and address of the client.
4. Based on the report of the Inquiry Officer dated 20th October 2013 in which all the charges were held to have been substantiated, and which was challenged by the appellant vide representation dated 16th November 2013, a personal hearing was granted on 19th December 2013. In the meanwhile, the adjudicating Additional Commissioner vide order-in-original dated 20th December 2012 had imposed a penalty upon Shri Prabodh Babulal Shah, managing Director of the appellant-company, in the proceedings initiated under Customs Act, 1962 which was brought to the notice of the respondent in this appeal after prolonged correspondence. In view of this development, a further hearing was scheduled for 22nd/23rd June 2015 and, in response to which the appellant opted to file a written representation drawing attention to the inordinate delay in finalizing the issue, non-compliance with circular no. 9/2010 dated 8th April 2010 of Central Board of Excise & Customs prescribing issue of order within 15 days of hearing and adherence to time-frame of nine months for completion of proceedings, to the non-conformity with various judicial decisions setting aside revocations on the ground of delays and that the penalty imposed on the Managing Director had been set aside in appeal. Notwithstanding these submissions, the Commissioner of Commissioner issued the impugned order holding that:
39. In view of aforesaid discussion and also on the basis of findings of the Inquiry Officer, I have to hold that the CHA got actively involved in the fraudulent export of MOP under the guise of Sodium Chloride. It is a fact that the CHA is an important link between the exporter and the Customs and without the active involvement of the CHA the subject export fraud could not have taken place. As such, I have to hold that the export of MOP under the guise of Sodium Chloride has wider implications on the economy and the CHA could not live up to the responsibilities/obligations cast upon him under the CHALR 2004. I therefore agree with the Inquiry Officers report that the CHA has failed to fulfil the obligations of Regulation No.13(a), 13(d), 13(e), 13(n) and 13(o) of the CHALR 2004.
40. As regards the contention of the CHA that the department has not followed the procedures prescribed for suspension of their licence, it is on record that the final decision in this matter had to be taken on the basis of outcome of the Inquiry and adjudication proceedings at Ahmedabad Customs. It is also on record that the department had initiated the adjudication proceedings for finally deciding the issue immediately on receipt of the Inquiry report and the OIO of Ahmedabad, Customs. Though, there is a delay in taking the final decision, it is pertinent to mention here that the seriousness of the issue which involves huge economic loss to the Government required an indepth investigation to unearth the economic fraud committed by the fraudsters. Hence, I have to hold that the delay is justified and the CHA cannot take shelter of delay for absolving themselves of the fraud committed by them. In this regard, I rely on the Honble Tribunals decision in the case of S.C. Ghosh & Co. (I) Pvt. Ltd. Vs CC (Admn & Airport) Kolkata xxxxxxxxx
41. The CHA had also contended that the Commissioner (Appeals) had set aside the penalty imposed on them by the ADC, Ahmedabad and hence the allegations leveled against them should be dropped. On perusal of the said Order of Commissioner (A), it has to be noted that the learned Commissioner held that the penalty imposed on Shri Prabodh Babulal Shah under Section 117 of the Customs Act, 1962 was not justifiable and thus set aside the impugned order to the extent it imposed penalty on him. However a fine reading of the order also indicates that the same had been ruled on the basis that once the goods were held liable to confiscation under section 113(d) &(l) of the Customs Act, 1962, then any person found liable to any act of such commission or omission or abetment in rendering the goods to such confiscation is liable to penalty under section 114 ibid and not under section 117 of the Act. However, the Commissioner (A) has not absolved the appellant from any action which could be taken under proceedings under CHALR 2004. The Commissioner (A) has specifically mentioned in the order that setting aside the penalty would not absolve the CHA from any action which might be taken under different proceedings under the CHALR, 2004. Thus, it is clear that the action taken against the CHA under the provisions of CHALR, 2004 is legally valid and maintainable. In this context, I rely on the Honble Tribunals decision, supra xxxxxxx In view of the above discussion, I have to hold that the CHA cannot take shelter under the order of the Commissioner (A) for absolving himself from any action under CHALR, 2004.
42. The CHA has also taken a plea for restoration of their licence on the ground that suspension of licence may deprive their staff of their livelihood. Considering the grievous nature of the offence which has large ramifications, I have to hold that the CHA has compromised with the economy and security of the nation by way of indulging in the mis-declared export so the above plea of the CHA cannot be accepted.
43. The intrinsic faith that the department keeps in the institution of CHA has been mis-utilised for monitory gains in this case and as such I am inclined to hold that the operation of the CHA licence be revoked.
5. Learned Consultant relied upon the decision of the Tribunal in KS Sawant & Co v. Commissioner of Customs (General), Mumbai [2012 (284) ELT 363 (Tri-Mumbai)]. Learned Authorised Representative, per contra, relied upon the decision of the Tribunal in Nikhil Shipping Agency v. Commissioner of Customs (General), Mumbai [2012 (283) ELT 513 (Tri-Mumbai)], which was finalized by reference to Third Member, holding that absolute and final revocation of licence is a consequence of establishing that charges leveled against a customs house agent are correct and that delay is not a mitigating circumstance.
6. Undoubtedly, in re Nikhil Shipping Agency, the Tribunal did emphasize the importance of authorization and that lapse of several years between the impugned incident and commencement of inquiry is not inordinate but a marked difference in the present matter is that penal proceedings initiated against the appellant did not ultimately sustain. There is no record of any examination of cargo having been ordered and in which the appellant was complicit in concealing the true nature of the offending cargo. Though the impugned order points out the quashing of penalty was on technical grounds, we also take note of the fact that the appellant was proceeded against independent of the exporter in a separate proceedings much after the one for confiscation. It appears to have all the hallmarks of an afterthought.
7. On the contrary, in re KS Sawant & Co, it was observed that:
5.1?.. The question is, merely because the appellant procured the business through an intermediary who is not his employee, can it be said that he has sub-let or transferred the business to intermediary. The Tribunal in the case of Commissioner of Customs v. Chhaganlal Mohanlal & Co. Ltd. [2006 (203) E.L.T. 435 (Tri. - Mum.)], held that if the Customs clearance has been done through intermediary and business was got through intermediary, the same is not barred by the provisions of CHALR, 2004 and it cannot be stated that the appellant has sub-let or transferred his licence. In the case of Krishan Kumar Sharma v. Commissioner of Customs, New Delhi reported in 2000 (122) E.L.T. 581 (Tri.), this Tribunal held that the mere fact of bills raised on the intermediary cannot be held against the CHA firm to prove that the CHA licence was sub-let or transferred. Therefore, in the light of the judgments cited above, the charge of violation of Regulation 12 is not established. .. Obtaining an authorisation from the importer does not mean that the same should be obtained directly; so long as the concerned import documents were signed by the importer, it amounts to authorisation by the importer and, therefore, it cannot be said that there has been a violation of Regulation 13(a). As regards the last charge, i.e. the appellant did not transact the business through his employee but through Shri Sunil Chitnis thereby violating the provisions of Regulation 13(b), there is some merit in the argument. Both Shri Sunil Chitnis and Shri Ashish Patekar, authorised signatory of the appellant CHA, has admitted that it was Shri Sunil Chitnis, who undertook the clearance work on behalf of the CHA. Mere signing of the documents does not prove that the clearances were undertaken by the appellant CHA and, therefore, there is some merit in the argument that Regulation 13(b) has been violated by employing Shri Sunil Chitnis for doing the clearance work of M/s. Advanced Micronics Devices Ltd. The question now is whether revocation of licence is warranted for such a violation. Further, holding that the punishment should be commensurate with the gravity of the offense, the Tribunal restricted the penalty of forfeiture of security deposit to suffice for the failures.
8. We note that both the cited decisions have delved into the merits of the respective submissions to render a finding. Though, in re Nikhil Shipping Agency, the Tribunal did examine the effect of alleged delays in finalizing the revocation proceedings and observed that such delays would not mitigate the gravity of the offence which was deserving of the penalty imposed, we note that non-adherence with circular no. 9/2010 dated 8th April 2010 of Central Board of Excise & Customs was not an aspect considered while doing so. The purpose, content and consequences of the referred circular cannot admit of any conclusion other than the need for a strict adherence to the time-lines. Customs house agents or customs brokers (as they are now designated) are an integral part of customs operations; they are expected to be a professional class of intermediaries for ensuring smooth flow of goods across borders. Being an important constituent of the logistics industry, a number of persons derive livelihood therefrom. Consequently, any detriment to their earning potential must be determined with utmost care and caution, following all the canons of natural justice and without undue delay. Hence, the time-lines prescribed may be deviated from for acceptable reasons and in unavoidable circumstances.
9. We find that the alleged contraventions on the part of the appellant stem from three episodes of filing of shipping bills for export of muriate of potash without valid sanction. The charges pertaining to authorization and verification are not much different. The presumption by the Commissioner of Customs is that these being requirements which, if diligently undertaken, would have unveiled the malign intent of the exporter, failure to do so enabled perpetration of the offence. Such an inference is also apparent in the conclusion that had proper advise been rendered and compliance insisted upon and had the correct information been furnished to exporter by the appellant, the offence could have been prevented. Such presumption and inferences are no substitute for evidence of active participation in an offence. We also do not find any imputation to establish that the appellant had displayed lack of efficiency and promptness; it would appear that the Commissioner of Customs has not appreciated the context in which this charge was even liable to be framed and has improperly resorted to this allegation.
10. An agent is in business and can hardly be blamed for executing jobs for clients on certain reasonable references. It is alleged that this business came through a suspended customs house agent and, considering their palpable mutual interest in each other, expecting the appellant to carry out fool-proof verification and ascertainment is not a reasonable one. That the exporter was not a new entrant into the field is admitted in the record of proceedings. The scam of exporting muriate of potash had apparently been going on for some time and it is hardly within the competence of an agent to unearth it or carry on a crusade against it; more so, when seasoned officers of customs were unable to do so. We see from the records that only three consignments were handled by the appellant and, that too, only in relation to filing of documents of factory sealed containers. No evidence is forthcoming to establish that the appellant, in its capacity as an agent, was privy to the contents of the container.
11. We are, therefore, inclined to follow the ratio of the decision of this Tribunal in re K S Sawant & Co that:
5.1? In our view, the punishment should be commensurate with the gravity of the offence. Revocation is an extreme step and a harsh punishment, which is not warranted for violation of Regulation 13(b). Accordingly, we are of the view that forfeiture of security tendered by the appellant CHA is sufficient punishment and revocation is not warranted. Accordingly, we set aside the order of the revocation and direct the Commissioner of Customs (General) to restore the CHA licence subject to the forfeiture of entire security amount tendered by the CHA.
12. For the above reasons, we believe that the ends of justice will be met by forfeiture of the security deposit. We set aside the revocation of licence of the appellant and allow the appeal to that extent.
(Pronounced in Court) (Ramesh Nair) Member (Judicial) (C J Mathew) Member (Technical) */as 14 12