Kerala High Court
Krishna Brothers vs Commissioner Of Customs on 15 September, 2016
Author: Antony Dominic
Bench: Antony Dominic
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE ANTONY DOMINIC
&
THE HONOURABLE MR. JUSTICE K.P.JYOTHINDRANATH
FRIDAY,THE 23RD DAY OF JUNE 2017/2ND ASHADHA, 1939
Cus.Appeal.No. 4 of 2017 ()
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AGAINST THE ORDER/JUDGMENT IN ORDER 20774/2016 of CUSTOMS,EXCISE&SERVICE
TAX APPELLATE TRIBUNAL,SOUTHB ZONAL BENCH, BANGALORE DATED 15-09-2016
APPELLANT(S)/APPELLANT:
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KRISHNA BROTHERS
38/339 H, UNDER SOUTH OVERBRIDGE,
SAHODARAN AYYAPPAN ROAD,
COCHIN-682016
REPRESENTED BY ITS MANAGING PARTNER SHRI.P.GANAPATHY IYER
BY ADV. SRI.K.N.SASIDHARAN NAIR
RESPONDENT(S)/RESPONDENT:
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COMMISSIONER OF CUSTOMS
CUSTOM HOUSE, WELLINGDON ISLAND,
COCHIN-682 009
BY ADVS. SRI.RAMAVARMA REGHUNATHAN THAMBURAN, SC
SRI. SREELAL N. WARRIER, SC.
THIS CUSTOMS APPEAL HAVING BEEN FINALLY HEARD ON 23-06-2017, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Cus.Appeal.No. 4 of 2017 ()
APPELLANT's ANNEXURES
ANNEXURE A-1 TRUE COPY OF THE RENEWED LICENCE NO.20 DATED 4.6.2016
ISSUED TO THE APPELLANT BY THE COMMISSIONER OF CUSTOMS, COCHIN
ANNEXURE A-2 TRUE COPY OF LETTER NO.C-1/16/99 CUS.DATED 18.2.99 ISSUED
TO THE APPELLANT BY THE COMMISSIONER OF CUSTOMS, COCHIN
ANNEXURE A-3 TRUE COPY OF THE ORDER OF SUSPENSION OF LICENCE
BEARING NO.S34/02/2013 I & B CUS DATED 18.7.2014 ISSUED BY THE COMMISSIONER
OF CUSTOMS, COCHIN
ANNEXURE A-4 TRUE COPY OF THE ORDER OF CONTINUATION OF SUSPENSION
OF LICENCE BEARING NO.S9/30/1964 I&B CUS.PTI DATED 10.9.2014 OF THE
COMMISSIONER OF CUSTOMS, COCHIN
ANNEXURE A-5 TRUE COPY OF THE SHOW CAUSE NOTICE NO.S9/30/1964 I&B CUS
DATED 13.10.2014 ISSUED BY THE COMMISSIONER OF CUSTOMS, COCHIN
ANNEXURE A-6 TRUE COPY OF THE STATEMENT OF SHRI.M.S. MAHESH DATED
25.6.2014
ANNEXURE A-7 TRUE COPY OF THE STATEMENT OF SHRI.P. GANAPATHI IYER
DATED 26.6.2014
ANNEXURE A-8 TRUE COPY OF THE STATEMENT OF SHRI.O.KASSIM KUNJU
DATED 27.6.2014
ANNEXURE A-9 TRUE COPY OF THE WRITTEN STATEMENT OF DEFENCE DATED
21.11.2014 FILED BEFORE THE ENQUIRY OFFICER
ANNEXURE A-10 TRUE COPY OF THE ENQUIRY REPORT DATED 9.1.2015
ANNEXURE A-11 TRUE COPY OF THE REJOINDER TO THE ENQUIRY REPORT
DATED 5.3.2015
ANNEXURE A-12 TRUE COPY OF ORDER NO.COC-CUSTOM-000-COM-03-15-16
DATED 21.4.2015 PASSED BY THE COMMISSIONER OF CUSTOMS, COCHIN
ANNEXURE A-13 TRUE COPY OF FINAL ORDER NO.20774/2016 DATED 15.9.2016 OF
THE HON'BLE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, SOUTH
ZONAL BENCH, BANGALORE
RESPONDENT'S ANNEXURES:
NIL
//True copy//
P.A. TO JUDGE
SHG/
ANTONY DOMINIC & K.P.JYOTHINDRANATH, JJ.
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Cus. Appeal No.04 of 2017
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Dated this the 23th day of June, 2017
JUDGMENT
Antony Dominic, J.
This appeal is filed against the order passed by the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Bangalore in C/21685/2015-DB, whereby the appeal filed by the appellant against Annexure A-12 order passed by the respondent revoking his licence as a customs broker, issued under the Customs Brokers Licensing Regulations, 2013 (hereinafter referred to as the 'Regulations' for short) was upheld.
2. We heard the learned counsel appearing for the appellant and the learned Standing Counsel appearing for the respondent.
3. Briefly stated the facts of the case are that the appellant is a customs broker whose licence was renewed as per Annexure A1 for the period till 14.7.2024. By Annexure A3 proceedings of the Commissioner, his licence was suspended under Regulation 19(1) of the Regulations. This Cus. Appeal No.04 of 2017 2 was on the prima facie finding that the appellant had violated the provisions of the Regulations. They were granted a personal hearing on 10.9.2014 and Annexure A4 order was issued by the Commissioner of Customs to continue the suspension of licence issued to the appellant, pending adjudication into the allegations.
4. Subsequently they were issued Annexure A5 show cause notice in which the misconducts alleged were the following:
"11) From the statements and facts available on records, it appears that M/s. Krishna Brothers, Customs Broker, has contravened the provisions of Regulation 11 (a), (b), (k) & (n) of CBLR, 2013 in as much as:
i) CB did not obtain authorization from importer before undertaking to perform Customs related work for them;
ii) CB engaged the services of a person who was not his employees and who was not authorized by Customs to work for him to transact business at a Customs Station on his behalf;
iii) CB did not maintain records relating to Customs work such as Bill of Entry, other correspondences including financial transaction in an orderly and itemized manner;
iv) CB did not verify the antecedents of importer or about their identity and functioning using independent documents, data or information,
12) In view of the above, it appears that M/s. Krishna Brothers had failed to comply within the provisions of Regulation 11(a), (b), (k) & (n) of CBLR, 2013 and have Cus. Appeal No.04 of 2017 3 Regulation 18 (b) & (c) bid."
5. To the show cause notice, the appellant submitted Annexure A9 reply where the appellant denied all the allegations against them. Subsequently an enquiry officer was appointed and an enquiry was conducted with notice to the appellant. Finally, Annexure A10 report was submitted, with the following findings:
"38. It appears from the above that the Customs Broker, M/s. Krishna Brothers have violated Regulations 11(a), (d), (k) and (n) of the CBLR, 2013. Even though the whole fraud was perpetrated by Shri.N.S.Mahesh, Shri. Mahesh got his accessibility in Customs area with the help of licence issued to this CB. Detailed study of case file reveals that this CB forwarded port entry pass for Shri.N.S.Mahesh. It is the responsibility of the CB to enlighten the importers or exporters regarding legal provisions and procedures. Also, it is their duty to invite the attention of the department, if they come across any fraud or duty evasion, in import or export related activities. Instead of serving as a trustful intermediate between department and trade, to facilitate the trade as well to safeguard Government revenue, CB in this case had violated rules and regulations stipulated by CBLR, 2013 as discussed above. From the above, it appears that the nature of offence committed by CB is deserve for penalty and Cus. Appeal No.04 of 2017 4 revocation of licence under Regulation 18(b) and (c) of he CBLR, 2013. Even though I, ascertained violation of rules and regulations of CBLR, 2013 by this CB, detailed study of case file reveals following inputs.
1) Detailed study of case filed reveals that there seems to be no undue benefit or money flow to this CB as customs of this fraud.
2) Even though it is the carelessness and irresponsibility of the CB, on the other side betrayal of this CB by Shri.N.S. Mahesh cannot be ruled out.
3) I cannot rule out the possibilities that this CB might have associated with Shri. N.S.Mahesh, for the purpose of getting more customers rather than to perpetuate any fraud by colliding with him."
6. The appellant submitted Annexure A11 objections against the findings in the enquiry report. Considering all the materials before him the respondent passed final order as per Annexure A12 whereby the appellant's licence was ordered to be revoked and the security deposit was forfeited, under Regulation 18 of the Regulations. The order of the Commissioner was challenged before the Tribunal and the Tribunal dismissed the appeal as per Annexure A13 order. It is in these circumstances this appeal is filed under Section 130 of the Customs Act, 1962.
7. Although several contentions were raised, to our Cus. Appeal No.04 of 2017 5 mind the main contentions that require to be dealt with are that the enquiry was conducted in violation of principles of natural justice and that in the enquiry statements recorded under Section 108 of the Customs Act were relied on without complying with Section 138 B thereof. Insofar as the contention regarding non-compliance of the principles of natural justice, complained of by the appellant, is concerned, according to the appellant, although several material documents were relied on by the Enquiry Officer, apart from Annexures A6, A7 and A8 statements recorded under Section 108 of the Customs Act, not only that documents relied on were not supplied to the appellant, even the contents thereof were not disclosed to them. It is stated that the failure of the authority to supply the documents that were relied on against the appellant and non-disclosure of the contents thereof, is a clear case of violation of the principles of natural justice entitling the appellant for relief in this appeal. Second contention that is raised is with reference to the reliance placed on Annexures A6, A7 and A8 statements recorded under Section 108 of Cus. Appeal No.04 of 2017 6 the Customs Act. According to the appellant, without complying with the provisions of Section 138 (B) (2) of the Customs Act, these statements could not have been relied on.
8. We have considered the submissions made before us. Insofar as the first contention of the learned counsel regarding the non-compliance of the principles of natural justice is concerned, it cannot be disputed that the principles of natural justice are applicable to the proceedings under the Customs Act as well and if such principles are not complied with, that will vitiate the proceedings. Law is settled that in an enquiry when documents are relied on against a person either copies of the documents should be furnished to the person against whom it is sought to be relied on or at least the contents thereof should be disclosed to him. Insofar as this case is concerned, from Annexure A5 show cause notice itself it is evident that reliance is placed on Annexures A6, A7 and A8 and copies of these documents were furnished to the delinquent. However Annexure A10 Inquiry report reveals Cus. Appeal No.04 of 2017 7 that several other documents were also relied on by the Enquiry Officer to arrive at his conclusions of guilt against the appellant. None of these documents, including the offence report, were furnished to the appellant. Even the contents of these documents were also not disclosed to them. In otherwords, these documents were relied on against the appellant behind their back and thus in violation of principles of natural justice.
9. Insofar as the second contention raised by the learned counsel with reference to Annexures A6, A7 and A8 is concerned admittedly these are statements recorded under Section 108 of the Customs Act. In terms of Section 138 B (2) of the Customs Act such statements could not have been used in any proceedings under the Act without the person who made the statement being examined as a witness, so long as the maker of the statement is available. Insofar as this case is concerned even the department has no case that the makers of the statements, who are very much available, were examined. If that be so, these statements could not have been relied on. Cus. Appeal No.04 of 2017 8
10. These two findings against the department should vitiate the enquiry and the findings of the Enquiry Officer based on which punishment of revocation of licence was imposed on the appellant. Although the counsel for the appellant argued that in the light of the aforesaid conclusions, the appellant should be absolved of all the charges, having regard to the fact that if an enquiry is held in violation of the principles of natural justice that would not absolve the delinquent of the charges, but would only require the disciplinary authority or such other authority to proceed afresh in compliance of the principles of natural justice and other rules. If that be so, our aforesaid conclusions should lead only to a remand of the proceedings back to the Enquiry Officer with liberty to proceed afresh against the appellant.
11. In such circumstances, this appeal is disposed remitting the matter to the respondent Commissioner who shall appoint an Enquiry Officer who shall conduct a fresh enquiry into the charges against the appellant as contained in Annexure A5 show cause notice. The enquiry shall be Cus. Appeal No.04 of 2017 9 conducted with notice to the appellant and the appellant will be afforded an opportunity to peruse all documents that are to be relied on against them. In the event the appellant requests for copy of any particular document that is relied on against them, that would also be issued.
12. The enquiry shall be completed as expeditiously as possible, at any rate, within a period of three months from the date of receipt of a copy of this judgment.
13. In the meanwhile, the status quo as on today will be maintained.
The impugned proceedings will stand set aside and the appeal is disposed of as above. No costs.
SD/-
ANTONY DOMINIC JUDGE SD/-
K.P.JYOTHINDRANATH JUDGE //True copy// P.A. TO JUDGE shg/