Customs, Excise and Gold Tribunal - Mumbai
Airol Cargo Services Pvt. Ltd. vs Cc on 7 July, 1999
Equivalent citations: 2000CENCUS857
ORDER Gowri Shankar, Member (T)
1. The application for early hearing is listed today. Advocate for the applicant stated that he did not wish to press for early hearing but instead prays that the application for stay of the impugned order may be taken up. With the consent of the departmental representative, stay application is listed and heard.
2. The application is for stay of operation of the order of the Commissioner suspending, under Regulation 21(2) of the Custom House Agents Regulations, 1984, the Customs House Agent's licence issued to the applicant.
3. Advocate for the applicant explains that the applicant has been engaged by M/s. Sidh Seva Exports for clearance through the Sahar International Airport of consignments of garments imported by it. Garments were manufactured in Italy and consigned to Mumbai by M/s. A1 Jamaheer Trading, Dubai. In the course of investigation into undervaluation of the garments, the applicant's office was searched and various files seized. In one of these files, an invoice of the Italian supplier was found for one of the consignments of garments under clearance, which showed a value for the good substantially higher than the invoices of the Al Jamaheer which had been submitted for their clearance by Custom House Agent along with bill of entry. It is on this basis that the suspension has t been ordered.
4. It is first contended that there is substantial delay in issuing the order as a result of which recourse could not be had to the provisions of Regulation 21(2). The search of the applicant's office which resulted in the seizure of documents was on 29.4.1998. His statement was recorded on 4.6.1998: The order of suspension was however passed only on 1.12.1998 and issued on the next day.
5. It is contended that this passage of time rules out the application of sub Regulation 2 of Regulation 21. This requirement, it is argued, is only available in cases where urgent action is required to be resorted to stop a custom house agent from function pending an enquiry and issue of charges. During the 8 months between the search of the office and the suspension of the licence applicant continued to work as Custom House Agent without any detriment to the revenue. It is not shown as to why, in that situation, the department could not take a little more time, of suspension was warranted by resorting to the provisions of regulation.
6.It is next contended that the department had already cleared 5 consignments of the same importer, in which invoices filed by Dubai importer were accepted and cleared. If the department itself could accept these invoices as proper, it would not be fair to expect the custom house agent to expect a higher degree of caution or supervision. It is further contended that the six statements which were recorded of the importer's representative did not resort at any point to the involvement of the applicant. At no time was the importer questioned regarding the applicant's involvement. The significant failure in investigation, goes in the applicant's favour.
7. Applicability of the invoice itself to the documents under clearance is questioned. The invoice is addressed by the Italian firm to Seva Enterprises whereas the importer in the present case is Sidh Seva Exports.
8. It is further argued that the provisions of Regulation 21(2) do not provide for dispensing with the notice of hearing. The unreported decision of this Tribunal in Varma and Sons v. CC in appeal C/797/98 is cited in support. The Judgment of the Supreme Court Maneka Gandhi v. Union of India is cited in support of the proposition that the principle of natural justice must apply to the order passed under the Regulation 20.
9. The departmental representative contends that some time taken to pass the order of suspension does not vitiate the order. Time was required to investigate the matter so that there was a reasonable basis for passing the order of suspension. He contends that Seva Enterprises and Sidh Seva Exports are related firm, there being common partners. The quantity of the goods imported, and other documents and the time of importation all tally. He contends that Bharat Parikh the proprietor of the applicant had in his statement accepted categorically that the importer told him and that the invoice which was in his possession showed the real value of the goods and that he had not attached it to the bill of entry on the instructions of the importer. This statement had not been retracted and no reason is shown as to why this should not be accepted. In the light of the clear culpability of the applicant in the underinvoicing, the suspension was called for.
10. He contends that the Tribunal decision in Varma Enterprises v. CC is directly in conflict with that of the earlier decision of the Tribunal in JAC Enterprises v. CC and therefore requires reconsideration.
11. The apparent discrepancy in the name of the importer in Mumbai and the ultimate consignee in the Italian invoice is not at this stage of great significance. The two appellants are to be related firm and have the same address. The partner in both firms are Sidhardh Shah and his family - father, mother and wife. Both import garment. The details of the goods imported tally and they closely correspond with the Italian invoice and the Dubai invoice. So is the statement that A1 Jamaheer Trading Co. issued invoices was owned by his friend Mehra and that it was brought in to the picture in order to avoid direct import from Italy so as to undervalue the goods. No reason has been shown as to why it is not relevant or admissible evidence. A weak attempt to argue that the statement of Bharat Shah in which he clearly and categorically admits the applicability of the invoice to the consignment and it not producing to the Customs department at the instance of the proprietor was obtained by unlawful means is not sought to be substantiated; in reply to a specific question, it was admitted that statement was not retracted at any time. At this stage, therefore the statement has to be acted upon and clearly implicates the applicant for not bringing into the notice of the department as is required to do under the regulations the correct position with regard to the value of the goods.
12. We are also not persuaded at this stage that an order of suspension under Regulation 21(2) cannot be issued on without issue of notice or following the delayed procedure for suspending or otherwise proceeding against a Custom House Agent. Sub-regulation (2) of Regulation 21 provides that notwithstanding these provisions the Collector of Customs in cases where he considers necessary may suspend the licence. It appears to us prima facie that it can only mean that in such cases suspension of the licence can be resorted to without giving any opportunity of hearing or issue of notice.
13. Nor can we agree that principle of natural justice invariably require that the principle of natural justice must be followed. It is to be noted that the decision in Maneka Gandhi v. Union of India the case cited by the applicant, the Supreme Court did not find as being contrary to the principle of natural justice, the cancellation of the passport to the petitioner before it on the ground of urgency. It only directed that in such cases a post decisional hearing may be given.
14. The ratio of the decision in Varma Enterprises v. CC is diametrically contrary to the earlier decision in JAC Enterprises. At this stage, there are two decisions before us each taking a different view. The Judgment of the Calcutta High Court in China and Co. v. CC 1987 (28) ELT 223 : 1987 (13) ECR 364 (Cal) also did not say that even in case under Regulation 21(2) that hearing a noticee is a pre-requisite. It only emphasises that such suspension under that rule must be ordered only in cases where, but for the suspension, grave consequence would follow.
15. We have to note that this is a case where it appears, at least at this stage, that the Custom Hose Agent, despite being aware that the invoice which was enclosed with the bill of entry which he presented to the Custom House did not represent the true value not only presented it at the behest of the importer but chose not to disclose to the Custom House the fact that the true invoice for the goods showing a higher value was in his possession. We of course emphasise that these are our prima facie views and each aspect of the matter will have to be decided after hearing the arguments in detail. The Custom House Agent is a critical link between the officers of the Customs and the community of importers, exporters and passengers. In the daily functioning of the Custom House Agent considerable trust is placed upon the agent with regard to the correctness and genuineness of documents which he presents and pursues in the course of clearance of goods for import or export at various categories of officers. The officers would normally accept the genuineness of the documents furnished by the agent and would not question such genuineness or correctness. To do so would be to strike at the root of one of the primary requirements of Customs clearance that it should be speedy. Absence of such a trust would cause irreparable harm to the exporter or importer, not only directly but by contributing to delay in the departure of vessels or aircraft carrying the imported or export goods. The significance is attached to the role played by the Custom House Agent is considerable and cannot be underplayed. It is incorporated in Regulation 14. He is obliged to advise his client to comply with the provisions of the Act and to report non-compliance to the Assistant Commissioner and to ensure that documents prepared or presented by him are strictly in accordance with the orders relating to them. Against this background the failure by the Custom House Agent prima facie by the applicant to inform the Assistant Commissioner of the existence of the real invoice of the goods and suppressed it is an act of considerable significance.
16. In these circumstances, the time taken by the department to investigate the matter before suspension of the order is not as such to justify revocation of suspension on the ground that it was not immediate enough. Having regard to these aspects, we do not find it possible to stay the operation of the order and dismiss its application.
16.1. We would however impress upon the Commissioner that delay in proceeding in the matter of final decision should be avoided, on account of the hardships that it causes to the Custom House Agent whose licence has been suspended not only on account of the loss of business that he currently undergoes and the loss of income to his employees suffered from but also for the reason that he may, because of his inability to function during the pendency of proceedings lose his clients who would have during the intervening period gone to some other agents in the events that the licence is restored to him at the end of the proceedings. Since the department has already taken time to investigate the matter, finalisation of proceedings should not take much time. It is therefore hoped and expected that proceedings will be completed within the next three months. In the event that this does not happen, the applicant is at liberty to seek hearing of his appeal out of turn.