Custom, Excise & Service Tax Tribunal
Krishna Brothers vs Commissioner Of Customs Cochin on 15 September, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: C/21685/2015-DB [Arising out of Order-in-Original No. COC-CUSTM-000-COM-03-15-16 dated 21/04/2015 passed by the Commissioner of Customs, Cochin] For approval and signature: HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 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 Krishna Brothers 38/339 H, Under South Overbridge, Sahodaran Ayyappan Road, Cochin 682 016 Kerala Appellant(s) Versus Commissioner of Customs Cochin Custom House Cochin 682 009 Kerala Respondent(s)
Appearance:
Shri Reghunatha Karnavar, Consultant Nandanam, 29/2726, Poonithura P.O. Petta, Ernakulam, Kerala 682 038 For the Appellant Shri N. Jagdish, AR For the Respondent Date of Hearing: 19/05/2016 Date of Decision: 15/09/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 20774/ 2016 Per: S.S GARG 1.1. The present appeal is directed against the impugned Order-in-Original dated 21.04.2015 passed by the Commissioner of Customs vide which the appellants license as Custom Broker was revoked and whole of the security deposit was forfeited. Briefly the facts of the present case are that the appellant is a holder of Custom Broker license which is valid up to 14.07.2024. Shri P. Ganapathy is a F card holder and authorized signatory of the appellant-firm. Shri O. Kassim has been an employee of the appellant and a G card holder.
1.2. Special intelligence and investigation branch of the Custom House Cochin booked a case involving evasion of customs duty by misdeclaration and undervaluation of imported goods and submission of fabricated documents by M/s. Riya Electronics, Malappuram and certain other importers. Preliminary investigation revealed that the Bills of Entry under investigation were filed by the appellant firm while the clearance of goods imported/under import were handled by one Shri N.S. Mahesh, who did not have any proper authority or Customs ID Card in the name of the appellant firm. Investigation conducted indicated that Shri N.S. Mahesh with the connivance of the importers and the overseas suppliers had fabricated the import documents which resulted in the evasion of Customs Duty.
1.3. During the course of investigation statements of Shri P. Ganapathy Iyer and Shri O. Kassim of the appellant firm and Shri N.S. Mahesh were recorded under Section 108 of the Customs Act 1962.
1.4. The Customs Broker license issued to the appellant was suspended by the Commissioner of Customs vide order F. No. S34/02/2013 I&B.Cus dated 18.07.2014 under the provisions of the regulation no. 19(1) of the CBLR 2013. Again the suspension was ordered to be continued vide order COC-CusTM-000-COM-026-14-15 dated 10.09.2014 after obtaining submissions from the appellant.
1.5. Show cause notice No. F. No. S9/30/1964 I&B Cus dated 13.10.2014 was issued to the appellant under CBLR 2013 by the Commissioner of Customs answerable to the Deputy Commissioner of Customs who has been appointed as the Inquiry officer in terms of the CBLR 2013 as to why -
(a) the Customs Brokers license No. 20 of M/s. Krishna Brothers should not be revoked under Regulation 18 of CBLR 2013 and the security deposit should not be forfeited in full or in part under Regulation 18 of CBLR 2013 or
(b) Impose penalty not exceeding Rs. 50,000/- under Regulation 18 of CBLR 2013 1.6. A statement of defense was filed by the CB on 21.11.2014 against the allegations contained in show-cause notice. Thereafter a detailed enquiry was conducted by Deputy Commissioner and he submitted his enquiry report on 09.01.2015. Thereafter a rejoinder to the enquiry report was submitted by the appellant vide submission dated 05.03.2015 before CC, Cochin denying charges against the appellant. The learned Commissioner, Customs after considering the enquiry report, written submissions of the appellant filed on 05.03.2015 and after affording appropriate opportunity of hearing to the appellant and analyzing the facts and material brought on record, came to the hold that CB had intentionally violated the provisions of Regulations 11(a), (b), (K) and (n) of CBLR 2013 and consequently imposed the maximum penalty by revoking the license and forfeiting the security. Aggrieved by the said order appellant is before us.
2. The learned counsel for the appellant submitted that the copy of enquiry report was not given to them as a result the appellant could not file the defence properly and it has prejudiced the appellant. This submission has no force because the appellant has furnished the explanation/clarification to the evidence in the enquiry report and the same is on record of this appeal. The learned counsel further submitted that the learned Commissioner without considering the totality of the evidences and circumstances wrongly concurred with the findings of the enquiry officer regarding the allegations contained in para 11 of the show-cause notice that the appellant had violated Regulation 11(a) of the CBLR 2013 inasmuch as the appellant failed to obtain authorization from the importer before undertaking to perform customs related work for them. He also submitted that these authorizations were produced which has been acknowledged by the enquiry officer in para 28 of the enquiry report but the enquiry officer did not consider the same. He also submitted that the enquiry officer had also considered the case records of SIIB the copies of which were not supplied to the appellant. Further regarding the allegations that the appellant had engaged this service of a person who was not an employee of the firm and who was not authorized by the customs to work for them and that one Mahesh gained entry in the port area and operated there solely because of the entry pass applied by M/s Krishna Brothers was denied as baseless and unsustainable by the appellant. To controvert this allegation the learned Commissioner on the basis of enquiry report has observed that from the record, it is proved that CB themselves had applied to M/s. Cochin Port Trust on 01.01.2013 for renewal of Bio Metric Wharf Entry Pass of Shri N.S. Mahesh and in the said application Shri Ganapathy Iyer, Managing Partner of CB had certified that N.S. Mahesh was their regular employee and they are fully responsible for ensuring good conduct of their employees and this was done in respect of the fact that Mahesh was already in possession of a valid G card in the name of another Customs Broker M/s. P.T. Varghese which fact was already known to CB.
3. On the other hand the learned AR submitted that the impugned order has been passed after complying with the principles of natural justice.
4. In this case detailed enquiry was conducted by the Deputy Commissioner. The statements of Shri P. Ganapathy, O Kassim and N.S. Mahesh were recorded during the investigation under Section 108 of the Customs Act 1962. The learned AR took us through the statements of these persons and he also referred to the enquiry report of the Deputy Commissioner where the Deputy Commissioner after a detailed enquiry has come to the conclusion that the CB has violated regulations 11(a)(d)(k) and (n) of CBLR 2013. In the enquiry report it is also observed that even though the deliberate fraud was attributed by Shri N.s. Mahesh but Mahesh got his accessibility in the custom area with the help of license issued to this CB. Detailed study of the case file reveals that this CB forwarded entry pass for Shri N.S. Mahesh. It is the responsibility of the CB to question the importer or exporter regarding the legal provisions and procedures. Also it is their duty to invite attention of the Department if they come across any fraud or duty evasion, any import or export related activity in stead of certifying as a trustful intermediate between department and trade, but facilitate the fraud as well as to safeguard Governments revenue. The CB in this case had violated rules and regulations stipulated in CBLR 2013. From the above, it appears that the nature of offence committed by CB deserves penalty and revocation of the license under Regulation 18 (b) and (c) of CBLR 2013. Further the learned Commissioner in the impugned order has discussed the material contradictions in the statements of CB Ganapathy, Kassim and Mahesh and finally has come to the conclusion in para 16 which is reproduced herein below:
16. From the above it emerges that CB had contravened provisions of Regulation 11(a), (b), (k) and (n) of CBLR 2013. Quantum of penalty in cases such as these are decided based on nature and gravity of the offence and the involvement of top management in the commission of the offence. In the instant case, it is seen that CB allowed Sri Mahesh, who was neither an authorized employee nor a person authorized to transact business with customs on behalf of CB, to take over and discharge all the duties and responsibilities vested on them, for a consideration of Rs. 500/- per document. Sri Mahesh used to bring business to CB in the form of imports, and got the documents filed using the office of CB, who in turn did not exercise due diligence or scrutiny while endorsing all the documents and filing the same before Customs. CB also facilitated Sri Mahesh to obtain an entry to the wharf area by certifying him as their employee, despite being aware that Sri Mahesh possessed a G-card for working under another Customs Broker. Thus CB had abdicated the various obligations that was cast on him under CBLR 2013 and even the authorization of various importers authorizing CB were actually obtained and provided to him by Sri Mahesh. This is not a case of an act of individual employee getting the CB into trouble; this is a case where the top management of CB, on their own volition, decided to give away all the responsibilities, powers and obligations, which was required to be performed by CB, to a person not employed by them, for a consideration. Hence the case of M/s. Ark Logistics cited by CB would not apply in this case. As this is a procedure under CBLR 2013, the culpability/liability of CB in the evasion of customs duty is not the subject matter to be considered in the present proceedings. The CB has, vide their actions involving surrendering all duties, responsibilities and obligations cast on them by the statute, to a private individual and helping him in the conduct of his business by providing false employment certificate, rendered themselves liable for action under provisions of Regulation 18 of CBLR 2013. The nature and gravity of the offence committed by CB and the involvement and complacence of the top management in the alleged acts leaves me with no option but to impose on them the maximum penalty stipulated therein. 4.1. Further we find that the case law relied upon by the appellant does not apply to the facts of this case. The case law mentioned below and relied upon by the AR would apply in the instant case.
(i) CC Vs. K.M. Ganatra & Co. 2016-TIOL-13-SC-CUS
(ii) Sri Durga Shipping Agencies Vs. CC, Trichy 2013-TIOL-1562-CESTAT-MAD
(iii) Jai International Vs. CC, Mumbai 2011-TIOL-943-CESTAT-MUM
(iv) CCE, Hyderabad-II Vs. H B Cargo Services, Hyderabad 2011-TIOL-198-HC-AP-CUS 4.2. In the case of Sri Durga Shipping Agencies, the Tribunal relied upon Worldwide Cargo Movers reported in 2006-TIOL-424-HC-MUM-CUS and H.B. Cargo Services reported in 2011-TIOL-198-HC-AP-CUS and upheld the revocation of CB license for violation of the regulations of CHALR 2004. It is pertinent to mention para 28 and 29 in the case of Worldwide Cargo Movers where Honble Bombay High Court has observed as under:
"28. In our view, the Tribunal has committed a grave error in interfering with the decision of a domestic authority. In a departmental proceeding one has to see whether the principles of natural justice are followed and the findings are justified from material on record. Once both these aspects are satisfied if an outsider Tribunal interferes, its findings and order will be improper and perverse which is what has happened in the present case. Similarly when one comes to the disciplinary measures, one must not lose sight of the fact that the appellant-Commissioner of Customs is responsible for happenings in the Customs area and for the discipline to be maintained over there. If he takes a decision necessary for that purpose, the Tribunal is not expected to interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or his employees. The decision is best to be left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or mala fide. That is not the case here.
29. In the circumstances, we allow Customs Appeal No. 37 of 2006 filed by the appellant-Commissioner of Customs since the CESTAT was not justified in setting aside the revocation of the CHA licence in the facts and circumstances of the case and on the material on record. The order of the CESTAT setting aside the order of the appellant-Commissioner of Customs was clearly perverse in law. Appeal No. 37 of 2006 is, therefore, allowed. The order dated 4-4-2006 passed by the CESTAT is set aside and the order dated 17-1-2006 passed by the appellant-Commissioner of Customs is restored."
4.3. Further in the case of CC Vs. K.M. Ganatra & Co. reported in 2016-TIOL-13-SC-CUS wherein Honble Supreme Court of India in para 15 has observed as under:
15. In this regard, Ms. Mohana, learned senior counsel for the appellant, has placed reliance on the decision in Noble Agency v. Commissioner of Customs, Mumbai 2002 (142) E.L.T. 84 (Tri. - Mumbai) wherein a Division Bench of the CEGAT, West Zonal Bench, Mumbai has observed:-
The CHA occupies a very important position in the Custom House. The Customs procedures are complicated. The importers have to deal with a multiplicity of agencies viz. carriers, custodians like BPT as well as the Customs. The importer would find it impossible to clear his goods through these agencies without wasting valuable energy and time. The CHA is supposed to safeguard the interests of both the importers and the Customs. A lot of trust is kept in CHA by the importers/exporters as well as by the Government Agencies. To ensure appropriate discharge of such trust, the relevant regulations are framed. Regulation 14 of the CHA Licensing Regulations lists out obligations of the CHA. Any contravention of such obligations even without intent would be sufficient to invite upon the CHA the punishment listed in the Regulations. We approve the aforesaid observations of the CEGAT, West Zonal Bench, Mumbai and unhesitatingly hold that this misconduct has to be seriously viewed.
5. In view of the above discussion and the clear findings of violation of Regulations of CBLR, we do not find any reason to interfere with the order of the Commissioner, Customs. Accordingly the appeal filed by the appellant is rejected.
(Order pronounced in open court on 15.09.2016) (ASHOK K. ARYA) TECHNICAL MEMBER (S.S GARG) JUDICIAL MEMBER iss