Bombay High Court
The Commissioner Of Customs (General vs S.S.Clearing And Forwarding Agency ... on 6 October, 2010
Author: V.C. Daga
Bench: V.C.Daga, R.M.Savant
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bgp
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CUSTOMS APPEAL NO.7 OF 2006
The Commissioner of Customs (General) ..Petitioner
Vs.
S.S.Clearing and Forwarding Agency Pvt. Ltd. ..Respondent
Mr.Pradeep S. Jetly for petitioner.
Mr.S.N.Kantawala i/b. Mr.Yogesh Rohira for respondent.
CORAM :- V.C.DAGA &
R.M.SAVANT,JJ.
DATE :- OCTOBER 6, 2010
JUDGMENT (PER : V.C. DAGA,J.)
1. This appeal is directed against the order dated 23rd August, 2005 passed by the Customs, Excise & Service Tax Appellate Tribunal, Mumbai ("Tribunal" for short) raising following reframed substantial question of law:
Whether non joining of the respondent as a co-noticee in the show cause notice under the Customs Act,1962 vitiates disciplinary proceedings initiated under CHALR, 1984 made under Section 146(2) of the Act.
FACTUAL BACKGROUND:
2. The factual background giving rise to the aforesaid question of law is as under:
A Bill of Entry dated 12th February, 2001 was filed by the importer M/s.S.B.Impex ("the importer" for short)declaring the same as Sodium Bicarbonate, where the respondent acted as the Customs House Agent ("CHA" for short). The goods were examined. The clearance was allowed. Subsequent to this clearance, during the search of the importer's godown, 921 bags were seized in a warehouse located outside the town, by the Customs Officer on the allegations that the goods imported were not which were actually shown in the Bill of Entry by the importer.::: Downloaded on - 09/06/2013 16:30:41 :::
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3. The show cause notice dated 27th March, 2002 was issued by the Commissioner consequent to the enquiries made. The said show cause notice did not make any allegations against the CHA nor the CHA was made party.
4. Somewhere in the month of January, 2004, the CHA was served with a Show Cause Notice under the Customs House Agent Licensing Regulations, 1984 ("CHALR 1984" for short) and a regular enquiry and proceedings were commenced, wherein the articles of charge were framed, enquiry was held and concluded on 10th March,2004. Replies were made to the Commissioner of Customs along with the documents on which reliance was placed including various decisions in support of the defence. However, the Commissioner, not satisfied with the defence, proceeded to order cancellation of the CHA licence and ordered forfeiture of security deposit of Rs.25,000/-.
5. Aggrieved by the aforesaid order of the Commissioner, the CHA filed an appeal before the Tribunal contending that the CHA employed about 20 persons and have been functioning as a CHA for the last many years without any blemish. They, not only acted as CHA for importing the cargo through Custom House in Mumbai but also Nhava Sheva Custom house. The subject consignment of Sodium Bicarbonate were importing as far back as in the month of February, 2001. No action leading to suspension of the licence was taken. The appellants (CHA) were allowed to operate smoothly and during the said period of investigation nothing adverse was found against the CHA as regard the clearance of five containers of Sodium Bicarbonate. As such no show cause notice was issued to the CHA under the provisions of the Customs Act,1962 for that mis-declared import. No allegations of any collusion between the shed staff and the CHA were made at any time. It was urged in the appeal that the CHALR,1984 lays down that the agency gets over on complete delivery of the goods, after payment and requisite duty. Thus, clearance of the goods from the Customs were complete in toto and that the importer was a new client as such the CHA as such there was no occasion to ::: Downloaded on - 09/06/2013 16:30:41 ::: :3: 7.06-cuapp suspect the bona fides of the importer. It is further submitted that merely because the authorisation was not obtained that by itself could not be a ground for severe punishment leading to cancellation of licence permanently. It was also urged that the respondents were not issued show cause notice under Section 124 of the Act for penalty under Section 112 ibid mis-declaration of the goods seized in the warehouse ascribed to have been cleared with assistance of the appellants. It is thus urged that absence of notice or action against CHA under the provisions of the Act would indicate that they were totally innocent for the alleged import and that the impugned action was initiated after a lapse of four years from the date of import. It is thus urged that no action could, therefore, be initiated against the CHA. It is further submitted that an Intelligence Unit of the Customs House had investigated the alleged clearance of Titanium Dioxide said to have been declared as "Sodium Bicarbonate" and that they themselves had given no objection certificate for revival of the licence to the CHA Company from time to time, if this be so no case of cancellation of the CHA licence and or forfeiture order of security was warranted.
6. The aforesaid submissions made found favour with the Tribunal, with the result, the Tribunal was pleased to set aside the order of cancellation of the licence and forfeiture of security amount which were ordered by the Commissioner. In the result, order of the Commissioner was set aside and the appeal was allowed.
7. Being aggrieved by the aforesaid order, the Revenue has invoked the appellate jurisdiction of this Court.
SUBMISSIONS:
8. Mr.Jately, learned Counsel appearing for the Revenue urged that in order to initiate the enquiry proceeding under the provisions of the CHALR 1984 against the CHA it is not necessary to initiate action against him under ::: Downloaded on - 09/06/2013 16:30:41 ::: :4: 7.06-cuapp the provisions of the Act. He further contends that enquiry proceeding under CHALR 1984 is independent and distinct from the proceedings under the provisions of the Act. He further submits that the Tribunal was not justified in holding that the charges against the respondent CHA in enquiry proceeding vitiated for want of action under the provisions of the Customs Act. He, thus, submits that the order setting aside the revocation of licence and forfeiture of security deposit is liable to be quashed and set aside.
9. Mr.Jetly further urged that the Tribunal has grossly erred in holding that since show cause notice under Section 124 was not issued against the respondents for levying penalty under Section 112 of the Act though subject goods were cleared with the assistance of the appellant would indicate that they were totally innocent about the alleged import of "Sodium Bicarbonate".
He further submits that there is no limitation provided under the CHALR 1984 for initiating enquiry against the CHA and that merely because the licence of the CHA was not suspended with immediate effect that by itself can not vitiate the disciplinary proceeding against CHA. He, thus, submits that the impugned order is bad and illegal and the question of law raised herein needs to be answered in favour of the Revenue.
PER CONTRA:
10. Mr.Kantawala, learned Counsel appearing on behalf of the respondent submits that the examination of the imported goods is the duty of the Customs Officers, and the CHA does not play any role in such examination. He contends that the CHA accompanies the Officer only as agent of the importer.
The obligation of the CHA are contained in Regulation 13 of the CHA licence Regulation 2004, the perusal of which would demonstrate that there is no obligation on the part of the CHA for carrying out examination of the imported goods or to help the officers examining such goods. He, thus, submits that the impugned action against the CHA was unwarranted and that the Tribunal was justified in setting aside the order of the Commissioner.
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11. Mr.Kantawala further submits that the proceedings were initiated by the Custom Officers under the provisions of the Act against the importer and on the same allegations, the actions is taken against the CHA respondent herein.
He, thus, submits that the allegations against the importer and the CHA being common, it was obligatory on the party of the Department to make the CHA, a co-noticee and that the CHA ought to have been tried along with importer.
Once the CHA is left out from the proceeding under the Act, then by way of disciplinary action, the same object cannot be achieved. He, submits that what cannot be done directly, cannot be allowed to be done indirectly.
12. Mr.Kantawala further submits that looking to the CHA's reputation and unblemish record and failure on the part of the Officers of the Customs Department to implead him as a co-noticee along with importer for the action taken under the Act, the present respondent CHA cannot now be made suffer. He, further, submits that looking to the past good conduct of the CHA, punishment of cancellation of licence and forfeiture of security deposit was disproportionate to the alleged mis conduct, wherein the only charge against the respondent was that he did not obtain authorisation certificate. He further submits that it was the duty of the Customs Officers to first check the authorisation of the CHA. No such precaution was taken by the Customs Officers as such the CHA cannot be made responsible for dereliction of their duty.
13. Mr.Kantawala also pressed into service the Division Bench judgments of this Court in the case of Union of India Vs. M/s.East & West Shipping Agency passed in Customs Appeal No.78 of 2008 decided on 9 March, 2010 th to which one of us (V.C.Daga,J.) is party, wherein it was held that once the CHA is exonerated by the Adjudicating Authority and/or by the Settlement Commission, then on the same charge no disciplinary proceeding under CHALR 1984 can be initiated. He tried to borrow support from the said judgment to contend that the absence of joining respondent as a co-noticee ::: Downloaded on - 09/06/2013 16:30:41 ::: :6: 7.06-cuapp under the said Act constitutes waiver on the part of the Customs to take action against the CHA. If that be so, no action under CHALR 1984 could have been initiated against the respondent herein. Mr. Kantawala, thus, tried to support the impugned order passed by the Tribunal.
CONSIDERATION:
14. Having heard the rival parties, the substantive issue which falls for consideration along with allied issue is whether the impugned order passed by the Tribunal needs interference at the hands of this Court.
15. In order to answer the question raised, one has to turn to the genesis of CHALR 1984. The said CHALR 1984 is made in exercise of powers conferred by sub section (2) of Section 144 of the Act by the Central Board of Excise and Customs to carry out the provisions of Section 146(1), in particular, to deal with the situation provided in sub clause (a) to (f) of sub Section (2) of Section 146. One of such situations is to provide for the suspension or revocation of the license and to provide appeal against the order of suspension or revocation of license and provide limitation for such appeals. Sub Section (1) of Section 146 mandates that no person shall carry on business as an agent relating to the entry or departure of a conveyance or the import or export of goods at any customs station unless such person holds a licence granted in this behalf in accordance with the regulations. The Regulations, known as CHALR, 1984 is framed in exercise of powers conferred under Section 146(2) of the Act. It is, thus, clear that Section 146 of the Act read with the regulations framed therein is a Code by itself. Reading of CHALR 1984 would unequivocally demonstrates that it creates certain obligations on the CHA and provides for the modality for discharge of obligations created. It also provides, how to deal with the licence holder (CHA) in the event of mis- conduct or dereliction of duty or breach of the terms of the license. Under these circumstances, the action under Section 146 read with Regulations ::: Downloaded on - 09/06/2013 16:30:41 ::: :7: 7.06-cuapp framed thereunder are independent of the other actions contemplated under the Act.
16. It is no doubt true that in certain circumstances, if the particular act or omission is jointly committed by the CHA along with the importer or exporter then it could give rise to a Joint action against both, which has to be dealt with in accordance with the provisions of the Act, such action may, ultimately, culminate either in discharge or in confiscation of the goods and/or imposition of fine and/penalty in such an action CHA could also be visited with the fine and penalty including an action for suspension or cancellation of license. But such an action under the provisions of the Act is not always necessary if the misconduct of the CHA can be dealt with independently under the provisions of the Regulations without invoking provisions of the Act. In this view of the matter, the question sought to be canvassed by the Revenue that non joinder of the respondent (CHA) in show cause notice under the provisions of the Act cannot result in vitiating the disciplinary action against the CHA deserves acceptance.
17. Having said so, if one turns to the facts of this case, merely because the CHA was not joined as a co-noticee cannot be a ground to hold that the enquiry proceeding initiated against the CHA were vitiated. The Tribunal has committed an error on this count in recording finding against the Revenue. The question of law framed is thus required to be answered in favour of the Revenue and against the Respondent.
18. Apart from above, the Tribunal has also went on to observe that it was obligatory on the part of the Customs Officer to examine the goods properly before clearance and that there was a dereliction of duty on their part. Once the goods are examined and allowed to be cleared, the CHA could not have prohibited clearance of the goods. As a fact, Tribunal found that the CHA could not be blamed and that it was not at fault. This view of the Tribunal ::: Downloaded on - 09/06/2013 16:30:41 ::: :8: 7.06-cuapp cannot be faulted.
19. One more aspect needs consideration regarding absence of authorisation in favour of the CHA. It is true that the CHA should not have acted without authorisation on behalf of its Client. At the same time, it was also duty of the Customs Officer to check the authorisation in favour of the CHA before allowing him to act as CHA for the importer. Thus, there is a contributory default on the part of the both. Under these circumstances, the CHA alone cannot be blamed and punished. The punishment of cancellation of licence is disproportionate to the act of omission committed by the CHA. In the circumstances, the action taken against the CHA canceling his license is set aside maintaining the order to the extent it forfeits the security deposit in the sum of Rs.25,000/-. In the result, the appeal is partly allowed with no order as to costs.
(R.M.SAVANT,J.) (V.C.DAGA,J.)
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