Custom, Excise & Service Tax Tribunal
P.P. Associates vs Commissioner Of Customs (General) ... on 3 March, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. C/88303/14 (Arising out of Order-in-Original No. 09/201415 dated 23.04.2014 passed by the Commissioner of Customs (General) Mumbai.) For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) Hon'ble Shri P.S. Pruthi, Member (Technical) =====================================================
1. Whether Press Reporters may be allowed to see : No
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 : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
=====================================================
P.P. Associates
Appellant
Vs.
Commissioner of Customs (general) Mumbai
Respondent
Appearance:
Shri Anil Balani, Advocate
for Appellant
Shri M.S. Reddy, Dy. Commissioner (A.R.)
for Respondent
CORAM:
SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
SHRI P.S. PRUTHI, MEMBER (TECHNICAL)
Date of Hearing: 03.03.2015
Date of Decision: .03.2015
ORDER NO.
Per: Anil Choudhary:
The appellant CHA is in appeal against Order-in-Original No. 09/201415 dated 23.04.2014 passed by the Commissioner of Customs (General) Mumbai, by which the interim suspension was ordered to be continue being order dated 03/05.03.2014.
2. The facts in brief are that the appellant P.P. Associates is a Customs broker under licence number 11/1996 and is a partnership firm. An information was received by the DRI which revealed that one M/s Riddhi Siddhi Collection and M/s Aisha Electronics, importers of the rechargeable torches, emergency LED light, the rechargeable LED lamps etc. are indulging in rampant under valuation of the goods imported by them with the intention of evading payment of applicable Customs duty. Intelligence indicated that the RSP of the goods was suppressed to evade CVD. The aforementioned importers, when importing the goods reportedly from Hong Kong but the same are originated from China. According to Revenue one M/s K.S. Group (H.K.) Ltd. the company had been created by one Mr. Sunil Jain and his brothers Mr. Manoj Meghraj Jain and Mr. Mitesh Kumar Meghraj Jain; defacto owners. Preliminary enquiry revealed that the subject goods are subjected to Levy of additional duty of Customs based on the RSP, as per Notification No. 49/2008 Central Excise (NT) 24/12/2008. It was found that the goods were being sold through webportals, like EBay and other retailers. Market survey of these goods revealed that the importers are only declaring 20 to 25% of the actual retail sale price. The proprietor of Riddhi Siddhi Collection Mr. Sunil Jain in his statement recorded, has admitted that he undervalued the goods by about 25% of the assessable value arrived at by the Customs for calculation of Customs duty. He has further admitted that there was a difference between the RSP declared by them to the Customs and the price of the same product as per the cash memo/website. It was further admitted that the RSP declared in the bill of entry is approximately 2.5 times of the value arrived at after loading by the Customs. Further the proprietor of Aisha Electronics, Mr. Faisal Javeri, in his statement recorded under section 108, has admitted that he does not know the procedure for import and export of goods and does not know anything about import documents or different types of Customs duties. At the same time he added that he undervalued the goods by about 25% of the assessable value then shown in the bill of entry for payment of Customs duty. He also admitted that RSP in the bill of entry is approximately 2.5 times of the value after loading by the Customs. The further statement of Mr. Faiyaz Merchant, brother of Partner of the CHA, was also recorded on 29.11.2013, wherein, he inter alia stated that he had been working with the Customs broker since last 16 years where he is now a partner. Appellant firm also operates and is located in the same premises. As the custom broker, licenses of M/s Ismail Mohammed & Sons was suspended for the alleged IEC violation by an importer in the year 2008, so he started doing clearance works through his brothers CHA firm i.e. the appellant. He had introduced Mr. Sunil to the appellants firm. The import work for M/s Riddhi Siddhi Collection was started in April, 2010 and subsequently Sunil used to come for filing documents for both these parties, and importers also introduced M/s Aisha Electronics and its proprietor Mr. Faisal Javeri. Both the parties M/s Riddhi Siddhi Collection and M/s Aisha Electronics stop the clearance from Mumbai port since March, 2012.
3. Pursuant to the same report from the DRI, the licence of the present firm was suspended by ex-parte interim order dated 5/3/2014 and subsequently show cause notice was issued alleging, therein, that the appellant have violated the provisions of Regulation 10 of CBLR, 2013 which provides that every licence granted or renewed under these Regulations shall be deemed to have been granted/renewed in favour of the licensee and no license shall be sold or otherwise transferred. That the allegation is of subletting. Further, the allegation is violation of Regulation 11(b) of CBLR, 2013 which states that the Customs Broker will transact business in the Customs station either personally or through approved employees i.e. employee duly approved by the Department. From the statements of Faiyaz Merchant, it appears that he has handled the clearance works for the aforementioned importers on behalf of the appellant. It is further alleged that the appellant in violation of Regulation 11(d) have failed to advise its 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 Asst. Commissioner of Customs, as the case may be. Further it is alleged that as per Regulation 11(e), wherein, the appellant is required to exercise due diligence to ascertain the correctness of an information which he imparts to a client, with reference to any work related for clearance of cargo. Appellant has abetted in gross suppression of transaction value of imported goods. Further allegation is violation of Regulation 11(g), wherein, the appellant is required to promptly pay over to the Government, when due, sums received for payment of any duty, tax or other chares or obligations all promptly account for the same to its client for the funds received on his behalf. The said Faiyaz Merchant has admitted in his statement that N form for non-payment of octroi charges, if the goods are to be taken out of Mumbai city limits were collected by them and given to the said importers. It was further admitted by the said Faiyaz; that the goods never left the city limits, as the transportation charges he was collecting, was from docks till Sewri or Crawford market. Therefore it appears that the appellant have by its act of omission and commission defrauded the Governments revenue by evading in payment of octroi charges which were due to be paid to Govt. Authorities. Further allegation was violation of Regulation 11(m), in that the Customs broker is required to discharge his duties with the utmost speed and efficiency and without any delay. Whereas it appears that the appellant broker was actively involved in clearance of under valued goods. The said resulted in evasion of duty. Further it is alleged the appellant violate Regulation 11(n), wherein, a custom broker is required to verify antecedent, correctness of Import Export Code (IEC), to identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, date or information. Wherein, in this case it appeared that the appellant broker was not in direct contact with the IEC holder and it was the unauthorised person namely Faiyaz merchant who was looking after the clearance works with respect to the said two importers.
4. Pursuant to opportunity of hearing the appellant's licence was ordered to be remain suspended under Regulation 19 sub regulation (1) of CBLR, 2013 pending inquiry proceedings under Regulation 20 of CBLR.
5. Being aggrieved the appellant is in appeal against the impugned order. The Counsel for the appellant, argues that section 19 (1) of CBLR, 2013 empowered the Commissioner to suspend by way of interim measure when the immediate steps are required to prevent broker in the evasion of revenue and further violations by the appellant. It is admitted fact that no further imports were made after March 2012 by the appellants firm. For the alleged violations if any, which had occurred before March, 2012, suspension as an interim measure in March 2014, almost after 2 years is bad in law and facts. It is further contended that the statement of CHA were recorded in November 13, in the course of enquiry which started sometime in July, 2013 and show cause notice in the Customs case under section 124 of the act was issued in December, 2013 for alleged undervaluation and evasion of duty. It is further urged that the inquiry notice was issued only in May, 2014 which is more than 2 years after the alleged events and/or misgivings on the part of the appellant. As such no sufficient reason is recorded by the Commissioner for suspending the appellant by way of an interim measure, pending inquiry and final disposal of the show cause notice issued, after the impugned order, in May 2014. It is further urged that the appellant CHA firm have suffered suspension for almost 12 months. The appellant and its employees livelihood is in question, as such the impugned order is fit to be set aside and the appellant be allowed to function as a custom broker/CHA pending final adjudication of the inquiry proceedings. It is further stated that there have been hardly any progress in the inquiry proceedings since issue of the Inquiry notice in May, 2014.
6. Learned A.R. Mr. M.S. Reddy, Dy. Commissioner appearing for the Revenue, relies on the impugned orders.
7. Having considered the rival contentions, I find that there is no allegation made out against the appellant CHA firm of the active involvement in the alleged undervaluation by the said importers. Further no documents appeared to have been executed and handled by the said Faiyaz Merchant, on behalf of the appellant firm. It is further admitted fact that the suspension have been made by way of interim measure for alleged misgivings and/or action or inaction on the part of the appellant for imports prior to March, 2012, almost after 2 years and as such interim suspension, pending inquiry is bad and not called for. The appellant have also drawn our attention to the ruling of the Honble Bombay High Court in the case of Commissioner of Customs Vs, National Shipping Agency - 2008 (226) ELT 46 (Bom.), wherein, the Honble Court have noted that the power to suspend as an interim measure, is to be used in those cases, where it is required that the CHA licence be immediately suspended. Under the fact that the alleged violation was of the year 2005 September and the order of suspension was issued in October, 2006, itself indicates that there is no emergency which required that the licence be suspended.
8. It is therefore ordered that the interim suspension of the appellant CHA firm vide the impugned order is set aside. The Commissioner of Customs is directed to complete the inquiry proceedings expeditiously preferably within a period of 12 months from receipt of a copy of this order. The appellant CHA firm is entitled to carry on its business as CHA with immediate effect.
9. That the appeal is allowed in the aforementioned terms. A copy of this order be given Dasti to the parties.
2013(Pronounced in Court on 03.2015)
(P.S. Pruthi)
(Anil Choudhary)
Member (Technical)
Member (Judicial)
Sp
8