Gujarat High Court
M/S. Kandla Clearing Agency Pvt. Ltd vs Commissioner Of Customs Kandla on 9 July, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/337/2007 ORDER DATED: 09/07/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 337 of 2007
With
R/TAX APPEAL NO. 338 of 2007
With
R/TAX APPEAL NO. 339 of 2007
With
R/TAX APPEAL NO. 340 of 2007
With
R/TAX APPEAL NO. 341 of 2007
================================================================
M/S. KANDLA CLEARING AGENCY PVT. LTD. & ANR.
Versus
COMMISSIONER OF CUSTOMS KANDLA
================================================================
Appearance:
MR PARESH M DAVE(260) for the Appellant(s) No. 1,2
MR UTKARSH R SHARMA(6157) for the Opponent(s) No. 1
================================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 09/07/2025
COMMON ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Parth Rachchh for learned advocate Mr.Paresh M. Dave for the appellants and learned advocate Mr.Utkarsh R. Sharma for the respondent.
2. These Tax Appeals are filed under Section 130 of the Customs Act, 1962 (for short 'the Page 1 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Act') proposing the questions of law arising out of the Common Judgment and Order dated 17.09.2003 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short 'the CESTAT') in Appeal No.C/89 to 98/2002/NB-C so far as confirmation of the penalty imposed upon the appellants are concerned.
3. This Court by order dated 07.02.2008 admitted the Appeals in terms of the following questions :
"1. Whether a show cause notice issued under Section 28 of the Customs Act, 1962 by the Additional Director, DRI [and not by a Customs Officer] was valid in law?
Page 2 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined
2. Whether an application for rectification of mistake filed by the appellant could have been decided by a Bench of the Tribunal not comprising of the Members who passed the orders on the appeals originally?
3. Whether the penalties imposed on the appellants are correct and justified in the facts in the case"
4. Thereafter, by order dated 20.11.2024, question No.1, having been settled by the decision of the Hon'ble Apex Court in case of Commissioner of Customs Versus Canon India Private Limited reported in 2024 SCC Online SC 3188, learned advocate Mr.Parth Rachchh for the appellants prayed for time to argue the matter qua question Nos.2 and 3 only. Page 3 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined
5. Learned advocate Mr.Parth Rachchh for the appellants, at the outset, submitted that question No.2 admitted by this Court pertains to whether the application for rectification of mistakes filed by the appellant could have been decided by a Bench of Tribunal not comprising of the Members who passed the orders in Appeals originally has become academic in view of the fact that the Members who have decided the Appeals as well as the application for rectification of mistakes are not available due to afflux of time. We therefore, decline to answer the question No.2 having become academic by afflux of time.
6. With regard to question No.3, as to whether the penalties imposed upon the appellants are Page 4 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined correct and justified in the facts of the case is concerned, learned advocate Mr.Parth Rachchh invited the attention of the Court to the findings of the Tribunal in the impugned Judgment and Order to submit that so far as the appellants are concerned, they were only the agents who have acted at the instructions given to them for filing the Bill of Entries along with the relevant documents including the advance licenses and therefore, no penalty could have been levied upon the appellants under Sections 112(a) and 112(b) of the Act respectively.
7.1. The appellant No.1-M/s.Kandla Clearing Agency Private Limited is a Custom House Agent (CHA) and appellant No.2-Shri Shantilal Jain Page 5 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined was Director of the appellant No.1. 7.2. It is the case of the appellant that during the years 1995-96, the business activities of the appellant No.1-Company were looked after by one Director of the Company- Shri Pankaj Joshi residing at Kandla whereas, the appellant No.2-Shri Shantilal Jain was residing at Mumbai doing his own business activities.
7.3. During the normal course of business, the appellant No.1-Company was approached by one Shri Raju Mohta for clearance of goods imported under an Advance License under the DEEC Scheme and handed over relevant documents to file Bill of Entries for clearance of the Page 6 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined imported consignments of Polypropylene in name of various parties. Shri Pankaj Joshi who subsequently expired filed Bill of Entries as per the instructions given by Shri Raju Mohta as CHA. However, the appellant No.2 could not produce any of the documents before the respondents except some of the documents which were provided along with the show-cause notice from the Office of the respondents. 7.4. Thereafter, the Mumbai Zonal Unit of Directorate of Revenue Intelligence (DRI) conducted inquires in the affairs of the group of Companies based at Calcutta known as 'More Group of Companies' which were managed by one Shri Ashwani Kumar More and during the course of inquiry, it was found by the DRI that the Page 7 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined goods were not imported by the entities which were named in the Bill of Entries and the Advance Licenses produced for import of the goods (in question) were issued for import of a different product with value of the different amount and such Licenses were never sold nor transferred to anybody by the original licensee. It was therefore prima- facie concluded that the Advance Licenses, against which the consignment of plastic materials (in question) were cleared under exemption, was fake or forged or tampered Advance Licenses and the clearance of the goods without payment of duty was illegal clearance.
7.5. Thereafter, considering the replies filed Page 8 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined by the appellants along with other co- noticees, the Commissioner of Customs passed five Orders-in-Original and determined the demand of the Customs Duty which was not paid due to production of Advance Licenses which have found to be not genuine and also confiscated the imported goods (in question). The Commissioner also imposed the penalties upon the importers and separate penalties upon the appellant-Company as well as the Director- Shri Shantilal Jain under Section 112(a) and 112(b) of the Act respectively. 7.6. The appellants therefore filed Appeals challenging the Orders-in-Original dated 28.09.2001/30.10.2001 before the CESTAT. The CESTAT by the impugned Judgment and Order Page 9 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined dated 17.09.2003, after considering the submissions made by both the sides and appreciating the evidence on record, reduced the penalty imposed upon the appellants to 50%. It is also the case of the appellants that upon receiving the order, the appellants felt that the various important issues of facts and law were not considered by the CESTAT while deciding the Appeals. The appellants therefore filed an application for rectification of mistakes before the CESTAT. The application was fixed before the CESTAT for hearing on several dates but the same Bench that passed the final order on the Appeals was not constituted on those dates for hearing and the application was adjourned from Page 10 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined time to time and ultimately, the application was fixed for hearing on 24.09.2004, when also the same Bench that had decided the Appeals was not constituted. The appellants pointed out such facts before the CESTAT, however, the CESTAT insisted on submissions on merits and the order dated 24.09.2004 was passed by the CESTAT rejecting the application for rectification of mistakes. The appellants have therefore raised the question No.2 on the ground that the CESTAT, who had decided the application for rectification of mistake, was not consisting of the same Members who passed the Orders-in-Appeals. It is also the case of the appellants that other parties involved, i.e. importers of the More Group preferred Page 11 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Appeals before the East Zonal Bench of the Appellate Tribunal at Calcutta and West Zonal Bench at Mumbai including other various CHA firms and such Appeals were allowed by the Appellate Tribunal on the ground of violation of principles of natural justice by remanding the matter to the respondent-Commissioner for de-novo adjudication. Such orders are also placed on record of these Appeals. 7.7. Learned advocate Mr.Parth Rachchh for the appellants, however, could not produce on record any subsequent development after the remand of the case by the other Benches of the Tribunal in case of the other similarly situated importers and CHA.
Page 12 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined 7.8. The appellants thereafter preferred five Writ Petitions before this Court challenging the order of the Tribunal which was disposed of by the order dated 11.01.2007 permitting the appellants to withdraw the petitions with liberty to file Tax Appeals so that the limitations may not come in the way of the appellants to prefer the Tax Appeals. 7.9. It would therefore be germane to refer to the findings of the Commissioner of Customs in the Orders-in-Original No.KDL/COMMR/39/2001 dated 30.10.2001 so far as the role of the appellants in the entire alleged illegal import of the goods is concerned, which read as under :
Page 13 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined "29. As for the merits of the case, I find that goods were imported by M/s.More Overseas and Bill of Entry No.7693 dated 18.09.95 has been filed in the name of M/s.J.C.S. Exports for clearance of 240 MTs of Polypropylene Grade H4500 against DEEC Advance License No.0332931 dated 20/03/95. The goods were cleared against the said DEEC Advance License in which the duty foregone was Rs.50,28,097/-. On the basis of intelligence and during the course of investigation, it has been found beyond any doubt that DEEC Advance License No.0332931 dated 20.03.95 produced for clearance in Bill of Entry No.7693 dated 19/09/95 was forged/fake license. The statement of Shri Rajendra Desai dated 20.07.2000 representing M/s.Industrial Valves who were the genuine license holder of License No.0332931 brings this out. In Page 14 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined his statement he stated that the said license was for the import of Brass Scrap for a value of Rs.1,56,000/- and their company had not made any import, against the said license and that the said license was not sold to anyone. On being shown Bill of Entry No.7693 dated 18/09/95 he stated that they had no dealing either with M/S. J.C.S. Exports or with M/s.Kandla Clearing Agency and that as per Bill of Entry, date of Advance License and items imported were different from the date of Advance License No.0332931 issued to them. On comparison it was found that two licenses with the same number had different particulars for the product for import and the date of issue.
30. Enquiries caused with regard to the importer (High Seas Buyer), namely, M/s.J.C.S. Exports, 219-B/220, Shah & Page 15 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Nahar Industrial Estate, A1, 2nd floor, S.J. Marg, Lower Parel, Mumbai revealed that the said firm is in existence.
Shri Kulangara Thomas Kunjumon, representative of the said firm in his statement dated 20.07.2000 stated that their company had registered office at 219-B/220, Shah & Nahar Industrial Estate, A1, 2nd floor, S. J. Marg, Lower Parel, Mumbai-400 013 but they had shifted their office to Solaris-II, Powai, Mumbai in 1994 and they have never imported Polypropylene Grade H4500 under Bill of Entry No.7693 dated 18.09.95 and they had never been issued Advance License No.0332931 dated 20.03.95 from DGFT nor they got the said license from market; that they had no business dealing with M/s. More Overseas or M/s.Kandla Clearing Agency any time in past. They had not entered into a High Sea sale contract with Page 16 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined M/s.More Overseas any time and they had never imported Polypropylene.
31. The above facts establish beyond any doubt that the Advance License No. 0332931 dated 20.03.95 produced for clearance of 240 MTs of Polypropylene was never issued by the Jt.DGFT and therefore is a fake/forged license created with an intent to defraud the government exchequer to the tune of Rs.50,28,097/- 240 MTs of Polypropylene valued at Rs.67,04,129/- cleared against the said fake/forged Advance License, therefore, is liable for confiscation under section 111(d)/(o)/(m) of the Customs Act, 1962 as the same have been cleared without payment of appropriate duty apart from any other policy restrictions for import of polypropylene at the relevant time. Duty amount of Rs.50,28,097/- Page 17 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined along with interest thereon as applicable is recoverable under section 28 of the Customs Act, 1962.
32. Further, investigators carried out by the DRI revealed that originally 240 MTs of polypropylene was consigned to M/s. More Overseas under Bills of Lading No.BBK-9505050 to 9505061, Invoice Nos.SL-4175C/95 & SL-4175D/95 both dated 01.06.95. The said goods were shown to be sold on High Seas Sale basis to M/s.J.C.S. Exports and subsequently M/s.J.C.S. Exports filed Bills of Entry No.7693 dated 18/09/95 for clarence of the goods.
33. Enquiries conducted with the Chief Manager, Syndicate Bank, Foreign Exchange Branch, Culcutta revealed the remittance was made by M/s.More Overseas for the said goods and Page 18 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined forwarded copies of Invoices No.SL 4175C/95 for 120 MTs of PP and SL- 4175D/95 for 136 MTs of PP both dated 1/6/95 along with copies of 12 Bills of Lading Nos.BBK-9505050 to 9505061 all dated 30/05/95. This enquiry reveals that the said offending goods originally pertain to M/s.More Overseas and the fact that M/s.More Overseas and particularly Shri Ashwani Kumar More could not establish the genuineness of the subject impart before the investigating authorities. Further it reveals that M/s.J.C.S.Exports is a fake/front company created by M/s.More Overseas for facilitating the use of forged/fake DEEC Advance Licence. This fact is substantially corroborated by the statement of Shri Rajendra Kumar Mohta dated 20.11.99 who was working for Shri Mohan Kumar More father of Ashwani Kumar More and their company. Page 19 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Не stated that he came to know that his employers were directly or indirectly involved in preparation and use of forged/bogus import licenses and therefore he left at the end of November, 1997. He further confirmed that after clearance from the customs, the said goods were delivered to either Shri Ashwani Kumar More or any other party as directed by Shri Ashwani Kumar More. This fact has also been stated by Shri Shantilal Jain of M/s.Kandla Clearing Agency in his statements dated 04.07.2000 & 03.08.2000 wherein he also confirmed that his agency namely M/s.Kandla Clearing Agency had cleared the goods on behalf of More Group of companies for which they got instructions from Shri Ashwani Kumar More and Shri Raju Mohta. The payment for clearance of these goods for the job undertaken by M/s.Kandla Clearing Page 20 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Agency was also made by More Group of companies managed by Shri Ashwani Kumar More for all consignments even though on relevant Bills of Entry No.7693 dated 18.09.95 importer was shown to be M/s.J.C.S. Exports. He also further confirmed that the consignments after customs clearance were delivered to a nominated transporter by More Group of companies.
34. From the above facts, it is amply clear that (i) the remittance for the goods is made by M/s.More Group managed by Shri Ashwani Kumar More. (ii) All payments for clearance of goods, documentation etc., the job undertaken by the clearing agency M/s.Kandla Clearing Agency are made by More Group/Ashwani Kumar More (iii) After clearance of the goods consignments were delivered to the transporter Page 21 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined nominated by More Group/Ashwani Kumar More even though the Bills of Entry are related documents for clearance have been filed in the name of M/s.J.C.S. Exports, the said firm M/s.J.C.S. Exports did not come into picture at any stage i.e. for payment, remittance abroad, custom clearance, charges to the CHA and delivery of the goods. Under these circumstances, it is established beyond any doubt that M/s. More Overseas managed by Shri Ashwani Kumar More have deliberately with a clear intention to evade the payment of duty and committing fraud on exchequer have meticulously executed a modus operandi putting up a fake firm for clearance of goods. It is confirmed during investigation that there exists a firm named M/s.J.C.S.Exports, but they have denied any connection with M/s.Kandla Clearing Agency, CHA or Page 22 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined M/s.More Overseas, Shri Ashwani Kumar More, Shri Raju Mohta or Shri Pankaj Joshi and they did not know the said persons/firms and never imported or cleared the subject consignments. During the course of proceedings Shri Rajendra Kumar Mohta vide his letter dated 15.12.2000 and also during personal hearing on 10.04.2001, Shri D. R. Mudgal, advocate for Shri Rajendra Kumar Mohta argued that Shri Rajendra Kumar Mohta was not instrumental in having the goods cleared, preparation and presentation of bogus advance license and he was simply being implicated in the case for imposition of penalty upon him on the basis of related statement of Shri Ashwani Kumar More. The plea of innocence does not hold any water as he himself in his statement admitted that at the relevant time he had been working for More Group Page 23 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined and was stationed at Kandla for the purpose thereby, he was in knowledge of each and every documents and papers being filed with the customs and the manner in which the same were being filed. Shri Shantilal Jain in his statement has also confirmed that Shri Rajendra Kumar Mohta was organizing the documents and clearance in association with M/s.Kandla Clearing Agency during the relevant time. Not only that Shri Rajendra Kumar Mohta himself has also confirmed that the goods after clarence were being delivered to Shri Ashwani Kumar More of M/s.More Overseas or as on directions through nominated transporter. Involvement of M/s.More Overseas, Shri Ashwani Kumar More and Shri Rajendra Kumar Mohta in the above shot i.e. clearance of 240 MTs of polypropylene on a forged/bogus license thereby with an intent to evade the Page 24 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined duty amounting to Rs.50,28,097/- is established and, therefore, M/s.More Overseas, Shri Ashwani Kumar More and Shri Rajendra Kumar More are liable for penalty under section 112 of the Customs Act, 1962.
35. As far the role of M/s.Kandla Clearing Agency, CHA for and on behalf of M/s.More Overseas/J.C.S. Exports Ltd. and director Shri Shantial Jain is concerned, I find that during the course of proceedings and in the personal hearing conducted on 10.04.2001 they pleaded ignorance on the ground that they did not deal with the importer nor with any person, namely a high seas buyer (M/s.J. C. S. Exports) and on whose behalf the Bill of Entry was filed. Their argument that they were engaged by More Group of companies and paid for by M/s.More Page 25 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Overseas. They, however, confirmed that they being CHA conducted clearance activities in the name of M/s.J.C.S. Exports, which they pretend now not to know, and not engaged by them. Shri Shantilal Jain's plead that Shri Pankaj Joshi was the sole in-charge handling the said work who had died by then is also not tenable as the Director of the company he is responsible for the activities undertaken by his firm and his ignorance of he same is only a pretext to escape his liability. Further, I find that Shri Shantilal Jain in his statements dated 04.07.2000 and 03.08.2000 had admitted that they had undertaken documentation and clearance of the goods on behalf of More Overseas/J.C.S. Exports and their authorized signatory was Shri Pankaj Joshi who later had died. He admitted that for the job undertaken by them Page 26 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined they received the payments from More Group/Ashwani Kumar More and Shri Rajendra Kumar Mohta. He further confirmed that after customs clearance the goods were actually delivered to a transporter nominated by M/s.More Overseas/Aswani Kumar More and in most of the consignments M/s.Shri Krishna Roadways, Gandhidham were transporters. It transpires that M/s.Kanda Clearing Agency/Shri Shantilal Jain as a director of the company was in the knowledge that M/s.J.C.S. Exports is a fake/front firm for the reasons that the agency was engaged and paid for by More Overseas/Ashwani Kumar More, documents were being filed by this very CHA in the name of third party namely, M/s.J.C.S Exports and after customs clearance this very CHA was delivering the goods to More Group/Ashwani Kumar More or their nominated transporter. Page 27 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Nowhere in his statements Shri Shantilal Jain has contested that M/s.J.C.S. Exports engaged his agency for customs clearance. The facts and circumstances would make one believe beyond reasonable doubt that Shri Shantilal Jain/M/s.Kandla Clearing Agency were not only in the knowledge of the entire exercise of cheating and defrauding the exchequer but they have actively connived in the evasion and fraud because the agency was not engaged by M/s.J.C.S. Exports for clearance of goods on their behalf but were engaged by More Group for clearance of the goods on behalf of M/s.J.C.S. Exports. I have also adjudicated a few cases of similar modus operandi of the same More Group in which the customs clearing against was M/s.Kandla Clearing Agency under the directorship of Shri Shantilal Page 28 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Jain. It is one instant of evasion and it cannot be a co-incidence that M/s.Kandla Clearing Agency/Shri Shandial Jain were the customs clearing agency in all these cases.
36. As regards the role of M/s.J.C.S. Exports, I find that during the course of investigation by DRI the said firm was found to be in existence. I also find that the investigation authority is also convinced and satisfied with the denial submissions of M/s.J.C.S.Exports at para 12(ii) in the charging portion of the show-cause notice reads- "The goods were originally imported in the name of M/s. More Overseas and were shown as sold to M/s.J.C.S. Exports, 219-B/220, Shah & Nahar Industrial Estate, Al, 2nd Floor, S.J.Marg, Lower Parel, Mumbai on High Sea Sale basis. CHA M/s.Kandla Clearing Page 29 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Agency filed Bill of Entry in the name of M/s.J.C.S. Exports, 219-B/220, Shah & Nahar Industrial Estate, Al, 2nd floor, S. J. Marg, Lower Parel, Bombay. However, the said firm denied having transacted the said import clearance. Further, the said firm claimed that M/s.Kandla Clearing Agency, or M/s. More Overseas, Shri Ashwani Kumar More, Shri Raju Mohta and Shri Pankaj Joshi were not known to their company. During the course of proceedings also in their reply dated 30/11/2000 and hearing dated 09/08/2001 the said firm denied to have imported the subject consignment and contested that they have neither imported the consignments covered under under the subject notice nor entered into any high seas sale contract with M/s. More Overseas of More Group of company. Thus, I find that there is no evidence on record Page 30 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined against M/s.J.C.S. Exports of their involvement in the case except for their statement dated 20.07.2000 which is also in their favour only and the Show Cause Notice at Para 12(ii) and 12(xi) has also treated the same as to be true and correct. I do not find any reason to impose any fine/penalty against this noticee M/s.J.C.S. Exports.
7.10. The CESTAT in view of the above findings which are similar in all the Appeals, arrived at the following findings of fact:
"6. Heard both sides. We have also considered various pleas enumerated above and also those advanced during the hearing. The Commissioner in his impugned orders has elaborately explained that the Custom clearance Page 31 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined document was prepared in the name of non-existent company or by using a name of the existing who denied to be connected with the imports in question, allegedly based on the instructions from the representative of More Group of Companies. As a responsible Customs House Agent it was the duty of a CHA not to accept the document without being sure about the antecedents of the importer, as the CHA is aware that penal provisions in the Customs Act can be directed against him, in case import goods become liable for confiscation. Custom House Agent licence regulations nowhere permitted a Custom House Agent to transact business on behalf of a fictitious or non-existent firm. It is claimed that the business was provided by More Group of Companies and yet the import document was prepared in the name of a different company which was Page 32 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined non-existent or which was not concerned with import. While it is true that the Customs Officers at the port could not detect any irregularity either in the documents submitted or in the concerned advance licence. Nevertheless CHA obviously had full knowledge of the importing firm being non-existent and fictitious or not concerned with the import in question. Yet he undertook to file the documents in the name of such firm for seeking clearance of the import consignments. It is not, as if, the CHA did not know the actual companies of More Group of Companies, considering their longstanding business association. As a responsible Customs House Agent they are aware that in case any Customs violation is noticed subsequent to import, it is the importer who has to face the consequences. Therefore, filing a Page 33 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined document knowingly on behalf of a non- existent or using a wrong name of the client displays an active role of the CHA in shielding the real importers from any penal or legal consequences. The CHA could not claim that though the documents were received from More Group, importers named in the documents were real importers. It is obvious that, he has represented to the Customs House, posing as the agent of a non- existing importer or by using a wrong name, of the importer and completed the import formalities on behalf of such non-existent firm. This facilitated the actual importer (smuggler) to operate behind the scene to evade the penal and the duty liabilities. The inference drawn by the Commissioner that M/s Kandla Clearing Agency/Sh.Shantilal Jain as Director of the company was having the knowledge that import firms Page 34 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined are fictitious or pseudonomous is, therefore, sustainable. It is also stated in the said order that despite filing the document in the name of different importing firm, the goods were delivered to More Group of Companies/Ashwani Kumar or their nominated transporter. Therefore, the Commissioner's finding that Shri Shantilal Jain/M/s. Kandla Clearing Agency were not only in the knowledge of the entire exercise of cheating and de-frauding the exchequer but they have actively connived in the evasion and fraud because the agency was engaged by More Group of Firms on whose behalf the custom clearance documents were filed, without anywhere mentioning the name of the real importer i.e. More Group of Companies in these documents. The entire modus operandi could be detected only through detailed investigation, Page 35 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined and the fact that this fraud could not be detected by the officers who accepted the licences and permitted clearances cannot be a ground to claim that the CHA had acted in an honest and a bona fide manner.
7. The Ld. counsel in his defence is stating that it is not unusual to file documents in the name of different firm whose name is figuring on the advance licence. While it may be possible that since the advance licenses are transferable, name of the importer on the import document, may be different from the name of the licence holder. As long as the licence is transferred in the name of the importer this difference does not affect the validity of imports. In the instant case, the import documents were filed in the name of fictitious firms or using a Page 36 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined pseudoname and the CHA had full knowledge of this fact for the reason that the entire transaction of import and post import transport was handled by More Group of Companies who took the delivery of goods. The payment for custom clearance was received from More Group and the delivery was also made to More Group/Ashwani Kr. or their nominated transporter. The CHA cannot seek the benefit of doubt in this situation by claiming that they were not aware of any illegal activities of import by More Group of Companies by using fictitious names of importers.
8. It is claimed that Customs official themselves were not aware of any fraud or tampering with the advance licence and the CHA was, therefore, not in a position to know the existence of such a fraud. In case, if the conduct of the Page 37 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined CHA was to be honest (i) he could not have accepted or prepared document in the name of unknown fictitious importer
(ii) he could have make a declaration before the Customs authorities that though the document is presented in the name of a importer, the said importer does not exist. In terms of CHA regulation a CHA is allowed to transact business handled "on behalf of a client". If the "client" is non-
existent. it is obvious that the CHA is not an agent of a client. In that case the entire responsibility of any commission or omission connected with the document must be borne by him for the reasons that for all purposes the CHA becomes a person who has filed the import document and thereby he becomes the importer, because there is no client. Either he produces the client on whose behalf a document is filed or Page 38 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined he faces the consequences arising therefrom.
9. The challenge to penalty has been made on the ground that the CHA had no knowledge of any fraud in the licence. As long as it comes on record that the advance licence was non-existent and was not issued from the office of the concerned licencing authorities, duty free clearance of the goods becomes unauthorised, ab initio, and such goods become liable for confiscation. The penalty imposed was only on the ground that the goods were liable for confiscation. Therefore, the penalty is correctly imposable under Section 112(a) as ordered by the Commissioner.
10. It is argued by the Ld. counsel that it has not been established that the licences in question were fake. Page 39 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined This argument has no force. Once the licensing authority disclaims to have issued a licence in question, fraudulent nature of the licence is established and nothing remains to be proved.
11 Accordingly, there is no merit in the appeals and the same deserve to be rejected.
12. It has been pleaded that the penalties imposed are excessive. In this connection, we note that the main perpetrator of the fraud are the person behind More Group of Companies, and the CHA firm was used by them to execute their scheme. No doubt the role of the CHA is that of an active participant, the fact nevertheless remains that it is secondary role. On these considerations we feel that some reduction in penalty imposed by the Page 40 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Commissioner is called for.
13.1. Accordingly, we uphold 50% of the penalty imposed by the Commissioner on each of the appellants in the individual appeals and the balance 50% penalty is set aside."
8.1. Learned advocate Mr.Parth Rachchh for the appellants submitted that the Commissioner of Customs as well as the Tribunal have not given any finding of involvement of the appellants for facilitating the use of the forged/fake Advance Licenses. It was submitted that the appellants have discharged their duties as CHA upon the instruction of Mr.Raju Mohta of More Group of Companies for payment of the charges for the import of the goods. It was therefore Page 41 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined submitted that the Commissioner of Customs as well as the Tribunal could not have held the appellants responsible and liable for the penalty under Sections 112(a) and 112(b) of the Act respectively either for abetment or for involvement in any manner for the confiscation of the goods under Section 111 of the Act.
8.2. It was therefore submitted that in absence of a decision as to whether the Advance Licenses (in question) were bogus or fake or tempered with and in absence of any decision as to who is involved in creation of such Licenses, the respondent-Authorities could not have held anyone guilty under the Page 42 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined provisions of the Customs Act. 8.3. It was submitted that the appellants have filed the Bill of Entries in the name of the importer different from the names figuring in the Advance Licenses as usual practice because the name on the document is suggested by the client and even though the appellants may be aware that it was Mr.Raju Mohta or More Group of Companies, who has given the advance licenses to the appellants for filing the Bill of Entries in the name of different importing Companies, no motive can be imputed upon the appellants nor any knowledge can be attributed even remotely. It was therefore submitted that the impugned orders passed are based on the assumption and presumption in absence of any Page 43 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined evidence in support thereof.
8.4. It was submitted that considering the role of the appellants to file the Bill of Entries as CHA on the basis of the information and documents including the Advance Licenses submitted by Mr.Raju Mohta on behalf of More Group of Companies, the appellant-Company cannot be held responsible on the assumption that it had information or knowledge about the tempering or forgery of the Advance Licenses in the year 1995 and such licenses were filed before the Customs Authority with the Bill of Entries as CHA and such licenses were considered as genuine by the Customs Authority and accordingly, the goods were permitted to be imported. It was submitted that the Page 44 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined appellants have conducted the business in normal and routine course and there is no evidence on record to remotely connect the appellants for alleged forgery or tempering with licenses. It was therefore submitted that the Tribunal could not have sustained the penalty to the extent of 50% of the penalty levied in Orders-in-Original. 8.5. It was submitted that the respondent has failed to establish that the appellants had done or omitted to do any act as they could have rendered the goods liable to confiscation under Section 111(d)/(o)/(m) of the Act as there is no allegation against the appellants for any forgery or tempering with the Advance Licenses and only on the basis of the Page 45 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined assumption and presumption of the Adjudicating Authority, which is confirmed by the Tribunal without any evidence on record, the penalty has been imposed upon the appellants. 8.6. It was submitted that late Mr.Pankaj Joshi was the sole in-charge of handling the work as Director of the appellant No.1-Company and in his absence, the appellant No.2 could not have been subjected to the penalty under Section 112(b) of the Act. The appellant No.2 has categorically stated in his statement that Mr.Pankaj Joshi was aware about the transactions of import of the goods (in question) and therefore, no ingredients of Section 112(b) can be said to be attracted for levy of penalty upon the appellant No.2. Page 46 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined 8.7. It was further pointed out that the CESTAT in the impugned order has not at all dealt with the levy of penalty upon the appellant No.2 under Section 112(b) of the Act in paragraph No.9 or paragraph No.10 of the impugned order as in view of the evidence on record to the effect that neither Shri Ashwani Kumar More nor Shri Raju Mohta has stated that Shri Shantilal Jain was a person with whom they were dealing or they had given any instructions or documents for clearance of the goods against the Advance License (in question). It was submitted that since all the activities were handled by late Shri Pankaj Joshi and in absence of any evidence, the penalty imposed upon Shri Shantilal Jain, is Page 47 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined illegal.
8.8. It was submitted that the payments of the CHA charges were received by the appellant No.1-Company and not by the individual, Shri Shantilal Jain and merely filing the Bill of Entries on behalf of the non-existent firm, cannot be a reason for which the penalty can be imposed upon the Director of the Company and Shri Pankaj Joshi, who was also a Director of M/s.Kandla Clearing Agency and was looking after the entire affairs, is not available due to his sad demise.
8.9. It was therefore submitted that the impugned order is contrary to the evidence on record and therefore, the findings arrived at Page 48 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined by the Tribunal to confirm the penalty upon the appellants to the extent of 50% is required to be quashed and set aside by answering the question No.3 in favour of the appellants and against the Revenue. 8.10. In support of his submissions, reliance was placed on the decision of the Tribunal in similar facts in case of Vaz Forwarding Ltd. V/s. Commissioner of Customs dated 27.07.2009 reported in 2009 (7) TMI 1272-CESTAT, Ahmedabad which was in favour of the appellants-CHA of the said case wherein, in similar facts, the Tribunal came to the conclusion that there is no direct evidence on record to show that the CHA were aware of the facts of the Advance License being bogus and Page 49 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined forged and therefore, they cannot be subjected to the penalty. It was submitted that the decision was challenged before this Court and this Court by Judgment and Order dated 22.12.2010 in case of Commissioner of Customs Versus Vaz Forwarding Limited reported in 2011 (266) E.L.T 39 (Gujarat) has dismissed the Appeal filed by the Revenue observing as under:
"3. The facts of the case stated briefly are that vide order dated 27th February, 2009, the Commissioner of Customs, Kandla imposed penalty of Rs. 2 lakhs on the respondent, a Customs House Agent under Section 112(a) of the Act. Being aggrieved, the respondent preferred appeal before the Tribunal who set aside the penalty.
Page 50 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined
4. Ms.Amee Yajnik, learned Senior Standing Counsel appearing on behalf of the appellant has assailed the impugned order by placing reliance upon the reasoning adopted by the adjudicating authority.
5. As can be seen from the impugned order of the Tribunal, the Tribunal after appreciating the evidence on record has recorded the following findings :-
"4. As is seen from the above, there is no direct evidence on record to show that the said appellants were aware of the fact of the advance licences being bogus and forged. There may be some contravention as regards following procedure envisaged in the Customs House Licensing Rules, but there is virtually no evidence to Page 51 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined show any knowledge on the part of the appellant about the forged advance licences. Even the officers cleared the goods against said licences and it is only subsequently on investigation that these licences were found to be forged and bogus.
Under these circumstances, find no
justifiable reason to impose the
penalties imposed upon the
appellants. The same are,
accordingly, set aside and appeals
allowed with consequential relief to them."
6. Thus, it is apparent that the Tribunal after appreciating the evidence on record has found that there was no direct evidence on record to indicate that the respondent was aware of the fact that the advance licences were bogus and forged. The Tribunal has Page 52 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined also found as a matter of fact that though there was some contravention on the part of the assessee in following the procedure envisaged under the Customs House Licensing Rules, there was no evidence on record to show any knowledge on the part of the respondent that the advance licences in question were forged. It is in the light of the aforesaid findings recorded by the Tribunal that the Tribunal has held that there was no justifiable reason to impose the penalties on the respondent."
8.11. It was therefore submitted that the facts of the case of the appellants are similar to that of before this Court in case of Vaz Forwarding Limited (Supra) and therefore, no penalty could have been levied Page 53 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined upon the appellants.
9.1. Per contra, learned advocate Mr.Utkarsh Sharma for the respondent submitted that the Commissioner of Customs and Tribunal have given concurrent findings of fact so far as involvement of the appellants are concerned in filing the Bill of Entry in name of a non- existent firm.
9.2. It was submitted that the name of the importers mentioned in the Bill of Entries filed by the appellants have been lately denied by such importers in the investigation carried out by the DRI and therefore, the Commissioner of Customs and Tribunal have rightly come to the conclusion that the Page 54 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined appellants are having the information and knowledge of import of the goods by More Group of Companies on the basis of the forged Advance Licenses.
9.3. It was also submitted that the Licensing Authorities have disclaimed to have issued the Licenses (in question) and the fraudulent nature of the licenses used for import of the goods by the appellants is established and therefore, the CESTAT has rightly come to the conclusion that the penalty is leviable upon the appellants who have abetted an import of goods which are liable for confiscation under Section 111 of the Customs Act. 9.4. It was further submitted that the Page 55 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined appellant No.2-Mr.Shantilal Jain in his statement recorded under Section 108 of the Customs Act had admitted about the transactions being carried out by the More Group of Companies at the behest of Mr.Raju Mohta and Director-Mr.Pankaj Joshi, who later had died. It was submitted that Mr.Shantilal Jain admitted that for the job undertaken by the appellant-Company, payments were received from More Group of Companies, Mr.Ashwani Kumar More and Mr.Raju Mohta and after Customs clearance, the goods were delivered to the transporter nominated by M/s.More Overseas and Mr.Ashwani Kumar More and most of the consignments were handed over to M/s.Krishna Roadways, Gandhidham.
Page 56 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined 9.5. It was therefore submitted that the Adjudicating Authority as well as the Tribunal were justified in holding that Mr.Shantilal Jain-being Director of the Company was in knowledge of the transactions carried out by the appellant No.1-CHA Company and therefore, he is rightly held to be liable for penalty under Section 112(b) of the Act.
10. Considering the submissions made by the learned advocates for both the sides and on perusal of the Judgment and Order passed by the Tribunal, it appears that the Tribunal has upheld the findings of fact arrived at by the Commissioner of Customs to the effect that the appellant No.1-CHA Company and Late Mr.Pankaj Page 57 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined Joshi, who was Director of the Company were aware about the illegal activities of More Group of Companies of importing the goods (in question) in fictitious names of firms which were never imported and clearing such goods by producing fake/forged Advance Licenses without payment of Customs duty.
11. The Custom House Agents Licensing Regulations, 1984 (for short 'the Regulations') provides for the regulations relating to giving license to the Customs House Agents and Rule 14 of the Regulations, stipulates the obligations of the Custom House Agents. As per clause (a) of Rule 14 of the Rules, it is mandatory for the Custom House Agent to obtain an authorisation from each of Page 58 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined the Companies, firms and individuals by whom he is for the time being employed as Custom House Agent and produce such authorisation whenever required by an Assistant Commissioner of Customs. Hence, appellants were required to be authorised by the importer, whose name is mentioned in the bill of entry filed by the appellant No.1-Company as CHA. The Tribunal has therefore, rightly concluded that it was duty of the appellant-CHA Company not to accept the documents without being sure about the attendees of importers. The Tribunal has thus arrived at findings of fact that the Regulations nowhere permitted the CHA to transact business on behalf of fictitious or non-existent firm.
Page 59 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined
12. The Commissioner of Customs and Tribunal have also arrived at a finding that the Appellants have full knowledge of importing firms being non-existent, fictitious or not concerned with the import (in question) and yet the Bill of Entries were filed in the name of such firms for seeking clearance of the imported consignments.
13. Regarding the use of the fake/forged Advance Licenses are concerned, the Commissioner of Customs in Order-in-Original has held that the evidence on record that the appellants were part of the modus operandi of clearing of the imported goods on production the forged/fake Advance licenses to evade the Page 60 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined payment of the customs duty. The Tribunal has also come to the conclusion that the Licensing Authority has denied the issuance of the Advance Licenses which have been used for clearance of the goods by the appellant No.1- Company as CHA and as such, the fraudulent nature of the license is established but for the CHA, such licenses could not have been used for the import of the consignments.
14. The contention of the appellants that they were not having any knowledge or active participation in procurement of the Advance Licenses which were found to be non-genuine, the Commissioner of Customs and the Tribunal have rightly come to the conclusion that the Page 61 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined appellant No.1-CHA has abetted the More Group of Companies to utilise such licenses for clearance of the imported consignments and therefore, as per provisions of Section 112 of the Act, they were subjected to the penalty. The Tribunal after considering the role of the appellants has reduced the penalty to 50% by setting aside the remaining penalty imposed in the Order-in-Original.
15. With regard to the contention raised on behalf of the appellants that in similar cases, the Tribunal and this Court has held the CHA not liable for penalty in case of Vaz Forwarding Ltd. (Supra) is concerned, on perusal of the orders passed by the Tribunal Page 62 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined as well as by this Court, the distinguishing feature is that in the facts of the said case, the Tribunal has come to a finding of fact that there was no direct evidence on record to show that the CHA was aware about the fact of the Advance Licenses being bogus and forged whereas, in the facts of the present case, the Commissioner of Customs as well as Tribunal have come to the finding of fact to the effect that the usage of such licenses by the CHA would clearly shows their involvement in abetting the import of the goods without payment of the duty and thereby, the plea of the appellants was rejected considering the nature of transactions entered into by the appellants in name of a fictitious importer. Page 63 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined
16. It is also pertinent to note that the appellants have filed the Bill of Entries in name of the importer who never authorised the appellants as CHA and only at the instance of Mr.Raju Mohta of More Group of Companies, the appellants have acted as CHA for filing various Bills of Entries in all these appeals in name of the importers who had not imported any of the goods.
17. Moreover, it is also found as a matter of fact that the imported goods were cleared using the fake and forged Advance Licenses produced by the appellants for such clearance and thereafter, the goods were transported at the instance of the More Group of Companies to Page 64 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined the transporter. Thus, the involvement of the appellant No.1-Company-as CHA is direct in illegal import of the goods which were confiscated under Section 111 of the Customs Act.
18. In view of the concurrent findings of fact arrived at by the Adjudicating Authority, and the CESTAT with regard to the import of the goods by the More Group of Companies through appellants working as a CHA by using the fictitious names as importers and by producing fake and forged Advance Licenses for not paying the customs duty, it appears that the same are established on the basis of the evidence and the statements of the appellant Page 65 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined No.2 along with the authorised persons of Shri Ashwani Kumar More of More Group of Companies and Raju Mohta recorded during the course of investigation Under Section 108 of the Customs Act. It is also revealed from the impugned orders that Raju Mohta on coming to know about the illegal activities carried out by the More Group of Companies had left the service in the year 1997. Thus, it is established on the basis of the evidence that the appellant No.1 had abetted the importation of the goods which have been confiscated under Section 111 of the Act. Moreover, the appellants have also failed to point out any order of confiscation of the goods which has been altered by any higher authority.
Page 66 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025
NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined
19. In such circumstances, we do not find any merit in the arguments on behalf of the appellant No.1 for setting aside the 50% penalty sustained by the CESTAT, however, so far as the penalty imposed upon the appellant No.2-Shantilal Jain, who was a Director of the Appellant No.1-Company is concerned, the Tribunal has not recorded any finding for invocation of Section 112(d) of the Act for levy of the penalty, more particularly, when it is not disputed by the respondent and no material has been brought on record that except late Mr.Pankaj Joshi that there was anybody else who had any knowledge of the transactions of the More Group of Companies. It is also not in dispute that the respondent Page 67 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined has not brought any corroborative evidence of involvement of the Appellant No.2-Shantilal Jain in any manner for his connection in carrying, removing, depositing, harboring, teaching, concealing, selling or purchasing or any other manner of dealing with the goods which involves or has a reason to believe that the goods are liable to confiscation under Section 111 of the Customs Act. Therefore, the penalty levied upon appellant No.2-Shantilal Jain to the extent of 50% retained by the Tribunal is without any basis and is accordingly, quashed and set aside.
20. The appeals are accordingly partly allowed by answering the question No.3 partly in Page 68 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025 NEUTRAL CITATION C/TAXAP/337/2007 ORDER DATED: 09/07/2025 undefined affirmative in favour of the Revenue and against the appellant No.1 as as penalty of 50% confirmed by the CESTAT on appellant no.1 is upheld and partly in negative, in favour of the appellant No.2 and against the Revenue and as penalty of 50% confirmed by the CESTAT on appellant no.2 is ordered to be deleted.
21. The Appeals are accordingly, disposed of.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) PALAK Page 69 of 69 Uploaded by PALAK BRAHMBHATT(HC01391) on Fri Aug 08 2025 Downloaded on : Fri Aug 08 21:30:01 IST 2025