Customs, Excise and Gold Tribunal - Bangalore
Express Kargo Forwarders Pvt. Ltd. vs Commr. Of Cus., Bangalore on 15 March, 2002
Equivalent citations: 2002(143)ELT128(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. Appellants are a Licenced Customs House Agents (hereinafter referred to as CHA) at Bangalore. They are issued a notice as enquiries made revealed that the CHA had filed certain Bills of Entry on which cash number mentioned RT-6 duty payments challan were forged and the goods cleared based on such forgery were filed by the employees of the CHA. Enquiries revealed forgery was done by certain employees of the CHA and they had not paid any Customs Duty, since all signature were forged. The goods were delivered after such clearances to M/s. Mahavir Industrial Supplier, the importer. This modus operand* was found to be conducted on 11 other such import consignments, which were located. The admission of the employee and result of the enquiry also extend to revelation of forging of export document declaration and signature also.
2. Since it appeared that consequent to the forgery committed, Shri Masood Pasha, Clerk and Shri S. Gilbert, Manager of the CHA, cleared imported goods from Bangalore Air Cargo Complex without examination, assessment and payment of duty and that these two employees of the CHA had connived with the exporter to mis-declare export goods as 'Mulberry Raw Silk' with intention to fulfill export obligation under DEEC Scheme, a show cause notice was issued to the two employees asking them to show - cause why penalty should not be imposed on them under Sections 112(a) and 114(iii) of the Customs Act, 1962. This notice was also issued to the importers asking why the goods should not be confiscated as they were cleared on such forged BEs and they should not be penalised under Section 112(a), why goods cleared on BEs of M/s. Mahavir Industrial Suppliers and seized from the buyer should not be confiscated. The exporter M/s. Surekha Silk goods, mis-declared on export, not be confiscated and penalty not be imposed on them under Section 114(iii). The CHA was asked why an amount of Rs. 3,61,023 which is liable to be demanded from various importers as duty not be adjusted against the Rs. 4 lakhs deposited by them during the enquiry and penalty be imposed on them under Sections 112(a) and 114(iii) of the Customs Act, 1962.
3. The present appeal is by the CHA, before us, is against the order of the Commissioner who after determining and demanding duties from various importers (i.e. the differential of duty amounts in accounts, as levied and as actually deposited by the forgers) and ordering confiscation of the export goods, and penalties on other notices ordered :-
(i) A penalty of Rs. 1,00,000/- on the CHA under Section 112(a)(ii) and Rs. 50,000/- under Section 114{iii) of the Customs Act, 1962.
(ii) A sum of Rs. 231/351/- appropriated from the deposit of Rs. 4 lakhs made by CHA against the differential duty demand made on the individual importers and ordered the appropriation of the balance Rs. 1,68,649/- towards the penalty imposed under Sections 112 and 114 of the Customs Act, 1962.
4. We have heard both sides and considered the matter and find .
(a) There is no contest before us as regards the findings on forgery and the misappropriation of duty amounts as recovered from the importers by the Manager and the Clerk of the CHA. The Commissioner has recorded in Para 54, that there is no evidence of the importer's involvement in the frauds committed by Shri Masood Pasha, Clerk of CHA and the led him to exonerate them from Penal liability and confiscation of the imported goods. However, in Para 55 of his Order, he has recorded that as regards the request of the importers for refunds of amounts paid to Masood Pasha, as duty by such importers, he is unable to intervene since it was a transaction between the importers and the agent. The department had nothing to do with it. It was for the importers and CHA to sort that out among themselves. We find no difficulty with this finding. However, the Commissioner has further held in this Para 55. 'Further the amount paid by EKF is adjustable towards the duty and other liabilities that may arise and hence no refund can be sanctioned to the importers'. EKF is the CHA herein. The learned Advocate for the CHA pointed out that duty under the Customs Act, 1962 could only be recovered and demanded from the importers. Provisions of Section 146(3) of the 'Customs Act, 1962 as regards the liability of the Agent CHA herein, will arise only if the same could not be recovered from the owner/importer of goods and after the Assistant Commissioner comes to such a finding that the amount could not be so recovered from such principals. In this case, we find no such efforts made. Since no such efforts made towards duty due on importers under the provisions of Customs Act, 1962, we cannot hold the appropriation order to be valid. It is premature, is required to be set aside with consequential relief to the appellants herein, CHA.
(b) As regards the imposition of the penalty, the Commissioner in Para 54 has based it on the following grounds to attract VICARIOUS LIABILITY.
(i) No proper supervision/monitoring was exercised by CHA on transactions by their representatives (SIC-employees) with Customers.
(ii) No verification effected, signatures made in a casual manner, resulting in mis-declarations of value and incorrect applications of foreign exchange rates documents not verified.
(iii) Blind faith shown on their employees, no audit conducted by CHA.
(iv) Rs. 4 lakhs deposited immediately on fraud coming to light is liable for adjustment.
(v) There is no reason to believe that CHA had not gained from such frauds, since it is a case of negligence of duty.
We find the Commissioner, in this Para, on considering the case law cited before him has found "have gone through all these cases most of which is related to cancellation of CHA licences or imposition of penalties. I find that most of the cases are not similar to the facts and circumstances of instant case." Thereafter he does not follow the case laws.
We find that the Commissioner has over looked the fact that the CHA as a Limited Company and being so, has to conduct their business through their employees. The Company operates only through its Branch Office at Bangalore. That the frauds came to light only through and nflcr extensive enquiries and investigations which revealed that the Manager of CHA and the Clerk both at Bangalore office, were guilty of ii criminal conspiracy ID defraud not only the clients, the Sink-Exchequer and also the CHA company. The fraud unearthed, spills over a periods from 24-3-98 to 26-6-98 as the Bill of Entry dated 2-2-98 was NIL, Bill of Entry. The audits of the Company, would have been normally done at the end of the year when they could have surfaced. Therefore the conclusions of a pre-concert on Part of CHA due to non-feasance or negligence, as arrived at by the Commissioner, do not impress us. The employer is not liable vicariously for the criminal acts of its employees, if the acts performed are not within the scope of the employment. No material has been brought on record that there was a pre-concert or knowledge on part of the main persons in-charge of the Private Limited Company, Head Quartered at Bombay about the criminal intent and conduct of the Manager and the Clerk at Bangalore Branch. We cannot, therefore find any reason of a visit of penalty under the Customs Act on CHA company. When we find no liability on penalty under Customs Act, Section 112 or 114, and the appropriation as ordered is also not approved, consequent benefits should flow to the CHA,
(c) During the hearing, the Advocate has produced letter No. C. No. VIII/13/01/96, dated 13-12-2001, which is conveying the Bangalore Commissioners pleasure of Renewal of the CHA licence for 5 years with effect from 13-11-2001 to 12-11-2006 operative at Bangalore. This reinforces our view that there is no case to call for a penalty on the CHA under Section 112(a) or 114(iii) as arrived at by the same Commissioner, since conduct of a CHA is a vital input for continuation/renewal of its licence operative in the Customs Post and nothing amiss in that aspect have led to this renewal.
5. In view of our findings, the order against the CHA is set aside and appeal allowed with consequential benefit.