Custom, Excise & Service Tax Tribunal
M/S. S.A. Dalal & Co vs Commissioner Of Customs (G), Mumbai-I on 14 July, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. C/87319/13 (Arising out of Order-in-Original No. 59/CAO/CC/(G)/PKA/2013-14 passed by the Commissioner of Customs (General) Mumbai-I) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) Honble Shri Raju, 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 : No
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?
=======================================================
M/s. S.A. Dalal & Co.
:
Appellant
VS
Commissioner of Customs (G), Mumbai-I
:
Respondent
Appearance
Shri N.D. George, Advocate for Appellant
Shri Kamal Puggal, Asstt. Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri Raju, Member (Technical)
Date of hearing : 14/07/2016
Date of pronouncement : 15/11/2016
ORDER NO.
Per : Ramesh Nair
This appeal is arising out of the Order-in-Original No. 59/CAO/CC/(G)/PKA/2013-14 dated 16.04.2014, passed by the Commissioner of Customs (General), New Customs House, Mumbai, whereby the Ld. Commissioner ordered for revocation of CHA licence of the Appellant and also ordered forfeiture of entire amount of security deposit. As per the findings of the Commissioner the reasoning given for the revocation of Cha Licence is that the Appellant has sublet the licence against consideration to various companies such as M/s. Vaishnovi Clearing and Forwarding Agency, M/s. Shree Swami Samarth Logistics & Shree Vighnahar International. For this reason the enq1uiry proceedings were conducted against the CHA and issued a chargesheet of probable violation of Regulation 12, 13(a), 13(d). 13(e). 13(n), 13(o), 19(8) of CHALR, 2004. However, in the enquiry officers report all the charges were held to be disproved or not proved except the charge of subletting in violation of Regulation 12 of CHALR 2004. The Ld. Commissioner in his findings held that the CHA is guilty for violation of regulations of sub-regulations (a), (d), (e), (n), (o) of Regulation 13 sub-Regulation 8 of Regulation 19 besides the crucial regulation 12 of CHALR 2004. Being aggrieved by the OIO the appellant filed this appeal.
2. Shri N.D. George, Ld. Advocate appearing on behalf of the appellant has submitted that the disagreement memo has only taken into account the views of the Presenting Officers whereas the defence put up by the appellant was totally ignored, the enquiry officer after detailed enquiry come to the conclusion that out of 7 charges leveled against the appellant, only one was proved whereas, 3 charges were disproved. There was no sufficient reason to reject the conclusion of the enquiry officer. He submits the entire basis of initiation of proceeding and conclusion by revoking the CHA License is the charge of subletting the license. He submits that outsourcing the services of other persons does not constitute the subletting of the licence, even the outsourcing of the work is against the monetary consideration. In the present case three is no charge against the appellant that they have sublet the licence legally under an agreement. All the customs work and documentation have been done in the name of appellant only. Therefore, for all the purpose the appellant only has acted as CHA and no one else. The job of Custom House Agent was being carried out by the employee of the CHA, who is G-Pass holder and also holding power of attorney. In these facts it cannot be said that the licence was sublet. The various obligations cast on the CHA are to prevent from any commission of fraud by the importer/exporter. In the present case there is no intent of any fraudulent activity as regard import and export of goods. Therefore, it cannot be said that the appellant has violated the Regulations 12, 13(a), 13(d). 13(e). 13(n), 13(o), 19(8) of CHALR, 2004. He further submits that in the identical mouds operandi i.e. outsourcing of other person for carrying out the Custom clearance work but on behalf of licenced CHA does not amount to subletting of licence, as has been held in various following judgments:
(i) Krishan Kumar Sharma Vs. Commissioner of Customs, New Delhi 2000 (122) E.L.T.518 (Tribunal)
(ii) K.S. Sawant & Co. Vs. Commissioner of Customs (General), Mumbai 2012 (284) E.L.T. 363(Tri.-Mumbai)
(iii) Crown Shipping Agency Vs. Commissioner of Customs, Mumbai 2004 (178) E.L.T. 885 (Tri.-Mumbai)
3. On the other hand, Shri Kamal Puggal Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both the sides. We find that the Ld. Commissioner revoked the CHA licence of the appellant mainly on the charges that they have sublet the licence and consequently violated the various Regulations of CHALR, 2004. As regard the charges of subletting the licence the entire Customs clearance work was done by the employee of the appellant in the banner of the appellant M/s. S.A. Dalal & Co. The appellant have outsourced the work of various other persons such as M/s. Vaishnovi Clearing and Forwarding Agency, M/s. Shree Swami Samarth Logistics & Shree Vighnahar International, for which monetary consideration was received by the appellant. Despite this undisputed fact this fact is also undisputed that the CHA Licence of appellant was not sublet to nay other person under legal agreement, for the reason that even though there is some understanding of sharing of work, the fact remains that the documentation of import export were being done in the name of appellant in the capacity of CHA. In our view if the licence is sublet against the lease charges than during the lease period the lessee becomes the owner of the licence and all the documentation will be filed in the name of lessee, accordingly during the lease period the lessor will cease to be a Custom House Agent. As per the regulation this arrangement is not permissible as the licence is not transferable. Therefore merely because the CHA acted through various other persons but he presented himself as a CHA under his CHA licence, than no question can be raised that the licence was sublet. In our considered view the arrangement of working adopted by CHA will not amount to subletting of licence. This issue has been considered in the various judgements which are referred below:
(i) In the case of Krishan Kumar Sharma (supra) held that-
6. We have heard the rival submissions. The? first issue is whether the Customs clearance work was handled by M/s. Track, the evidence on record is two bills issued by M/s. Track. Bills have been issued by M/s. Track indicating the Agency and Service also. Agency and Service can be collected only by a Customs House Agent. The Departments case was that since M/s. Track has collected Agency and Service charges in their bill, they have acted as Customs House Agent without authority and illegally and since they were working for M/s. K.K. Sharma, therefore, the case of sublet is proved as against this the appellant states that the work was brought by M/s. Track from the importer but as M/s. Track were not a Customs House Agent Licence holder, therefore, they entrusted the work of Customs clearance to M/s. K.K. Sharma. It was submitted that M/s. K.K. Sharma prepared the Bills of Entry and signed the documents as CHA and issued their bill to M/s. Track. Looking to the above facts, we find that there is nothing on record to prove that Customs clearance work was handled by M/s. Track. Bill of Entry and other documents requiring Customs House Agents signature was signed by M/s. K.K. Sharma or his authorised representative. Second minor objection is that Shri V.N. Choudhry had signed the Annexure 2 to the Bill of Entry. Further, it has been submitted that Shri V.N. Choudhry was holding G Card from the Customs under which he could operate in the Customs area and if he had signed the Annexure 2 to Bill of Entry that signature was legally made and in no way indicated that Shri V.N. Choudhry was working for any other person other than M/s. K.K. Sharma. Having considered the above facts, we hold that no case for subletting the Customs House Agent clearance work to M/s. Track has been proved by the Customs Authorities. In the circumstances the revocation of licence and forfeiture of security is not sustainable in law in the present case. In the circumstances, the impugned order is set aside and the appeal is allowed.
(ii) In the case of K.S. Sawant & Co. (supra) held that-
5.1?From the records, it is clear that the business in respect of the client M/s. Advanced Micronics Devices Ltd., was brought in by Shri Sunil Chitnis, who claims himself to be a sub-agent of the appellant CHA. The statements of Shri Badrinath and Shri Sunil Chitnis amply proves this fact. The question is, merely because the appellant procured the business through an intermediary who is not his employee, can it be said that he has sub-let or transferred the business to intermediary. The Tribunal in the case of Commissioner of Customs v. Chhaganlal Mohanlal & Co. Ltd. [2006 (203) E.L.T. 435 (Tri. - Mum.)], held that if the Customs clearance has been done through intermediary and business was got through intermediary, the same is not barred by the provisions of CHALR, 2004 and it cannot be stated that the appellant has sub-let or transferred his licence. In the case of Krishan Kumar Sharma v. Commissioner of Customs, New Delhi reported in 2000 (122) E.L.T. 581 (Tri.), this Tribunal held that the mere fact of bills raised on the intermediary cannot be held against the CHA firm to prove that the CHA licence was sub-let or transferred. Therefore, in the light of the judgments cited above, the charge of violation of Regulation 12 is not established. As regards the violation of Regulation 13(a), the adjudicating authority himself has observed that the I have no doubt to say that the CHA might have obtained the authorisation but it is surely not from the importer. Therefore, the authorisation submitted is not a valid one. This finding is based on a presumption. Obtaining an authorisation from the importer does not mean that the same should be obtained directly; so long as the concerned import documents were signed by the importer, it amounts to authorisation by the importer and, therefore, it cannot be said that there has been a violation of Regulation 13(a). As regards the last charge, i.e. the appellant did not transact the business through his employee but through Shri Sunil Chitnis thereby violating the provisions of Regulation 13(b), there is some merit in the argument. Both Shri Sunil Chitnis and Shri Ashish Patekar, authorised signatory of the appellant CHA, has admitted that it was Shri Sunil Chitnis, who undertook the clearance work on behalf of the CHA. Mere signing of the documents does not prove that the clearances were undertaken by the appellant CHA and, therefore, there is some merit in the argument that Regulation 13(b) has been violated by employing Shri Sunil Chitnis for doing the clearance work of M/s. Advanced Micronics Devices Ltd. The question now is whether revocation of licence is warranted for such a violation. In our view, the punishment should be commensurate with the gravity of the offence. Revocation is an extreme step and a harsh punishment, which is not warranted for violation of Regulation 13(b). Accordingly, we are of the view that forfeiture of security tendered by the appellant CHA is sufficient punishment and revocation is not warranted. Accordingly, we set aside the order of the revocation and direct the Commissioner of Customs (General) to restore the CHA licence subject to the forfeiture of entire security amount tendered by the CHA.
(iii) In the case of Crown Shipping Agency (supra) held that-
The enquiry officer has found the charges in an Article 1 herein above and the other four charges were found and held to be not proved, after detailed enquiry.
3. (a) If the article of charges and grounds as are not proved, are considered, it is established that the CHA has complied with the onerous responsibility of effective supervision on his employees, all the documents have been prepared and presented with due care and in accordance with the Act and the Procedures. There was nothing extraordinary which was to have been brought to the notice of the Assistant Commissioner. This also indicates that Proper authorization was obtained from the clients. Therefore, it can be concluded that the Transaction effected were within the four corners of the CHAS liabilities and responsibility as far as the consignment of M/s Velco and M/s R.S. Exports were concerned. The Commissioner, in accepting these findings of the Enquiry Officer, has accepted the above position.
(b) When all documentation are made/handled as prescribed and procedures have been found to be correctly followed, by the CHA after obtaining authorizations from the clients, merely because they are alleged to obtain a deposit of Rs. 30,000/- from one Shri Gaonker will not be cause or case to bring them under the charge to have sold or and transferred the CHA licence. Surely a Transfer of CHA licence will not go hand in hand with subsequent obligations to be performed under the licence by the appellant. Transfer however temporary is therefore not inferred. The Article of Charge II that he was not knowing the Exporter M/s Velco Overseas and documents were given to him by Mr. Gaonkar and in his having obtained a deposit of Rs. 30,000/- from such unknown exporter, which are not proved in any case, would indicate business prudence and not sale or transfer of the licence as is being arrived at. The subsequent charges, of which the CHA is absolved prove that he handled the consignment, documentation, in the manner prescribed. The obtaining of a deposit of Rs. 30,000/- from a first time unknown client should not and cannot be considered as sale or transfer of his CHA licence in any manner.
(c) As regards the statement of Singh Brothers and payments and business obtained through their firm i.e. M/s Adarsh Clearing and Forwarding, it is found that, Ramesh Singh in cross examination, before the Enquiry Officer had denied that he was using the licence as alleged. There is no legal bar of clients of a CHA, being procured by other firms and or in soliciting business through other unlicensed firms. That could not be a misconduct under CHALR to establish Transfer of Sale of Licence. Since as per the findings of the Enquiry Officer accepted by the Commissioner all subsequent act and role of CHA has been performed by Shri Qureshi and his employees. Practice of soliciting clients is established and finds approval as seen from the past orders of Collector/Commissioner of Central Bombay who have repeatedly upheld and found in the past. Orders passed by earlier Collectors on this same subject were not considered by the ld. Commissioner or have been not differentiated. Orders passed contrary to the settled position, upheld by Tribunal vide order in case of P.P. Dutta [2001 (136) E.L.T. 1042 (T)] and Krishan Kumar Sharma [2000 (122) E.L.T. 581] would exhibit judicial indiscipline and not a judicious order. Such orders cannot be upheld to arrive at conclusion that the CHA herein had sold and transferred the licence. When otherwise the CHA for the same clients is found to have not conducted any violation.
? 4. When no violation of sale or Transfer is being found the order cancellation arrived at after following the finding of Enquiry Officer are to be set aside and the licence restored. Appeal allowed. Ordered Accordingly.
From the above judgments it can be seen that in the identical mouds operandi of the present case, it was held that this sort of arrangement is not subletting of licence. As regard the Commissioners finding with regard to violation of other regulations, we find that, the genesis of entire case is the charge of subletting of the licence. We hold that in the present case there is no case of subletting & CHA Licence therefore violation of all other regulations being consequential would not sustain. Moreover, all the charges except the violation of Regulation 12 of the Regulations were either disproved or not proved by the enquiry officer. On careful reading of the repot of enquiry officer we are in agreement for holding the various regulations as disproved or not proved. As per our above discussion, we are of the considered view that the departments case of revocation of licence is not sustainable. We therefore, set aide the impugned order and allow the appeal.
(Pronounced in court on 15/11/2016) (Raju) Member (Technical) (Ramesh Nair) Member (Judicial) SM.
11Appeal No. C/87319/13