Custom, Excise & Service Tax Tribunal
Jai International vs Commissioner Of Customs (General), ... on 18 April, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Application No. C/St-2173/10 and Appeal No. C/882/10 (Arising out of Order-in-Original No. CAO/94/2010/CAC/CC(G)/SLM dated 01.11.2010 passed by Commissioner of Customs (General), Mumbai.) For approval and signature: Honble Mr.P.G. Chacko, Member (Judicial) Honble Mr. Sahab Singh, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Jai International Appellant (Represented by: Mr. Z.B. Nagarkar, Consultant) Vs Commissioner of Customs (General), Mumbai Respondent (Represented by: Mr. K. Lal, SDR) CORAM:
Honble Mr.P.G. Chacko, Member (Judicial) Honble Mr. Sahab Singh, Member (Technical) Date of Hearing : 18.04.2011 Date of Decision: 18.04.2011 ORDER NO..
Per: P.G. Chacko
1. The stay application filed by the appellant (Customs House Agent) seeks stay of operation of the Commissioners order whereby their CHA Licence was revoked under Regulation 22 (7) of the Customs House Agents Licensing Regulations, 2004 (CHALR for short) and security deposit was ordered to be forfeited. As we are taking up the appeal itself for final hearing and disposal, the stay application is dismissed at the outset.
2. It appears from the records that the CHA Licence was suspended under Regulation 20 (2) of the CHALR on 20.3.2009 and the suspension was eventually revoked on 12.5.2009. Subsequently, after completing the procedure laid down under Regulation 22, the learned Commissioner of Customs (General) passed the impugned order on 1.11.2010. Thus, as on today, the CHA has not been able to carry on their business within the jurisdiction of the Commissioner for a period of over 7 months.
3. Five charges were framed against the CHA and the Inquiry Officer found all of them to have been proved. The first charge, which was framed with reference to Regulation No. 12, was that the appellant sublet the licence to one Mr Rakesh Mehta of M/s D.J. International by permitting them to use it for a monetary consideration. This charge was framed on the basis of statements given by Shri Ashok Kumar Ram Jaiswar, Partner of M/s Jain International (appellant) and Mr. Rakesh Mehta under Section 108 of the Customs Act. Mr. Jaiswar, in his statement, stated inter alia that he had signed 7 Bills of Entry pertaining to the relevant import consignments of M/s Satyam Overseas, that he had not verified the authorization letter of M/s Satyam Overseas, that his employee Mr. Rakesh Mehta was running independent business of clearing import consignments in the name and style of M/s D.J. International by making use of his (appellants) CHA licence, that he had not paid any salary to Mr. Rakesh Mehta and that he had received commission from Mr. Rakesh Mehta in respect of the job done by him independently in the name of M/s D.J. International. Mr. Rakesh Mehta, in his statement, admitted that he was proprietor of M/s D.J. International and had dealt with the above seven import consignments on the strength of the CHA licence of M/s Jai International, that he had filed the seven Bills of Entry for M/s Satyam Overseas on the basis of documents supplied by Mr. Vishnu Mangturam Harlalka of Surat, that Mr. Harlalka had paid him the Customs duty amount in cash for the above consignments, that he had paid the duty by pay order drawn from the current-account of M/s D.J. International, that the goods were delivered to Mr. Harlalka after Customs clearance at Nhava Sheva, that he had not obtained authorization from Satyam Overseas to file the Bills of Entry and that Mr. Harlalka was not the proprietor of M/s Satyam Overseas.
4. On the basis of the above statements, which corroborated each other, it was alleged that the appellant permitted Mr. Rakesh Mehta of M/s D.J. International to use their CHA licence for a consideration thereby violating Regulation 12 of the CHALR. This charge was found to be proved as per Inquiry Report, which was accepted by the Commissioner. The learned consultant for the appellant submits that the aforesaid statements were not voluntary as they were coercively recorded by the investigating agency (DRI). The learned SDR has contested this claim of the appellant by submitting that the statements were never retracted.
5. On our part, we have not found any of the statements having been retracted. Therefore, the statements given under Section 108 of the Customs Act assume full evidentiary value. Mutual corroboration of the statements of Mr. Jaiswar (partner of the CHA firm) and Mr. Rakesh Mehta (proprietor of M/s D.J. International) is quite clear with regard to the handling of the seven import consignments of M/s Satyam Overseas. Though, in both the statements, Mr. Rakesh Mehta was described as an employee of the CHA firm, the fact that Mr. Rakesh Mehta handled the seven import consignments independently and that the Customs duty for the said consignments was collected by him from Mr. Harlalka of M/s Satyam Overseas and paid to the Customs authorities by pay order drawn from the current-account of M/s D.J. International stood conceded by both Mr. Jaiswar and Mr. Rakesh Mehta. Mr. Jaiswar further admitted that the bill for the clearance work was raised in the name of M/s D.J. International and that his CHA firm received only a commission from Mr. Rakesh Mehta. It would, thus, appear that the CHA licence was allowed to be used by M/s D.J. International (Prop. Mehta) for a consideration which was received in cash from Mr. Rakesh Mehta. Such a case is covered by Regulation 12 of the CHALR, which prohibits sale or other kind of transfer of CHA Licence. To permit the licence to be used by another firm for a consideration amounts to transfer of the licence at least for the specific business for which it has been permitted to be used. Therefore, we hold that the appellant committed breach of Regulation 12 of the CHALR.
6. The learned consultant for the appellant has submitted that all the seven import details were duly recorded in their job register and, therefore, it is not open to the Commissioner to hold that the said imports were handled independently by Mr. Rakesh Mehta. We have not found it possible to accept this claim, at this stage, inasmuch as the job register referred to by the learned consultant was not produced before the Commissioner. The learned consultant has also claimed support from the decision in Krishan Kumar Sharma vs Commissioner of Customs, New Delhi 2000 (122) ELT 581 (Tribunal). In the cited case, the entire job of clearing the consignment was found to have been handled by the CHA but bills were raised by an intermediary firm on the importer. The Tribunal held that the mere fact that the bills were raised by an intermediary firm and not by the CHA on the importer was not enough to prove that the CHA licence was sublet or transferred to the intermediary firm. The cited case is factually distinguishable. In that case, it was found that the actual clearance of the imported consignment was handled by the CHA. The Commissioner revoked their licence on the limited ground that the bills for the CHAs job were not raised by the CHA but by an intermediary firm. In the instant case, on the other hand, both partner of the CHA-firm and Mr. Rakesh Mehta of M/s D.J. International, in their respective statements, clearly admitted that the seven import consignments were handled by M/s D.J. International by making use of the CHA licence of M/s Jai International (appellant). It was also admitted that the licence was allowed by the appellant to be used by Mr. Rakesh Mehta of M/s D.J. International for clearance of the said consignments for a commission paid to the appellant as consideration for such permission. On these facts, the case law cited by the learned consultant is inapplicable.
7. The next charge against the appellant is that the appellant did not have the authorization of M/s Satyam Overseas for clearing the seven consignments. The Inquiry Officer found this charge also to have been proved and his report was accepted by the Commissioner. The above charge has reference to Regulation 13 (a) of the CHALR. The learned consultant for the appellant submits that there was a contributory default on the part of the Customs officer concerned also. It is submitted that, when the Bills of Entry were filed, the officer should have checked whether the CHA had proper authorization from the importer. It is further submitted that the punishment of revocation of licence is disproportionate to the omission found against the appellant. In this connection, support is claimed from Commissioner of Customs (General) Vs S.S. Clearing and Forwarding Agency Pvt Ltd 2011 (263) 353 (Bom), wherein the Honble High Court found that the CHA did not have authorization of their client but it was also found that the Customs officer did not check whether there was any such authorization. The contributory default was, thus, found in that case and, on that basis, the punishment of revocation of licence was held to be disproportionate to the omission of the CHA. The Honble High Court, however, maintained the Commissioners order forfeiting the security deposit of Rs 25,000/-. The learned SDR refers to the question of law framed by the Honble High Court in the cited case and submits that what has been referred to by the learned consultant has to be treated only as obiter dicta. It is submitted that the partner of the CHA firm admitted, in his statement, that he had not verified the authorization letter from M/s Satyam Overseas and that Mr. Rakesh Mehta, in his statement, clearly admitted that he had not obtained any authorization from M/s Satyam Overseas to file the Bills of Entry. In view of this clear admission, according to the learned SDR, the appellant should be held to have violated Regulation 13 (a), which required the CHA to obtain written authorization from his client and to produce the same whenever required by the Assistant Commissioner of Customs or Deputy Commissioner of Customs. The learned SDR has also relied on Commissioner of Central Excise, Madras vs Systems & Components Pvt Ltd 2004 (165) ELT 136 (SC), wherein the apex court observed thus it is a basic and settled law that what is admitted need not be proved.
8. After considering the submissions, we have not found any valid point in the submissions made by the learned consultant for the appellant. Regulation 13 (a) requires written authorization to be obtained by CHA from his client. Such authorization is required to be produced before the proper officer of Customs as and when required. Production of authorization as required by the proper officer of Customs would imply that the authorization must be in writing. In the present case, it is not in dispute that no such authorization was obtained by the appellant from M/s Satyam Overseas. The appellant even did not know the proprietor of M/s Satyam Overseas. On these facts, it has to be held that Regulation 13 (a) was violated by the appellant. The case law cited by the learned consultant is not of any substantial aid to the appellant. The Honble High Courts decision says that there was a contributory default on the part of the Customs Officer in that case. The Honble High Court has not exonerated the CHA on this ground from its liability arising under Regulation 13 (a). The contributory default was apparently considered as a mitigating factor in the context of determining the extent of punishment to be meted out to the CHA. Accordingly, their Lordships sustained forfeiture of the security deposit while setting aside revocation of the licence. In the present case also, the appellant can legitimately claim benefit to a reasonable extent from the Honble High Courts judgment.
9. The learned Commissioner of Customs also accepted the Inquiry Officers recommendation for punishing the appellant for breach of Regulation 13 (d) and Regulation 13 (n). Under Regulation 13 (d), a CHA has obligation to advise his client to comply with the provisions of the Act and, in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or the Assistant Commissioner of Customs. Under Regulation 13 (n), a CHA has obligation to ensure that he discharges his duty with utmost speed and efficiency and without avoidable delay. In the present case, we have already found that the seven import consignments were handled not by the appellant but by Mr. Rakesh Mehta of M/s D.J. International. Hence the question of the appellant advising their client to comply with the provisions of the Act or ensuring due discharge of duties as CHA with utmost speed etc did not arise. This eventuality resulted from the appellants own conduct inasmuch as the appellant allowed the CHA licence to be used by another entity (M/s D.J. International) for a consideration paid by the latter.
10. Yet another charge against the CHA arose under Regulation 19 (8) which required the CHA to exercise supervision over their employees in the transaction of business as agents. Under this provision, the CHA was to be held responsible for all acts and omissions of their employees in regard to their employment. In the present case, the appellant has made an endeavour to show that Mr. Rakesh Mehta had handled the seven import consignments as their own employee and G-card holder. The learned consultant has submitted that Mr. Rakesh Mehta was removed from employment only on 6.2.09. It is submitted that whatever was done by Mr. Rakesh Mehta in relation to the subject consignments should be held to have been done for and on behalf of the appellant. We are unable to buy this argument inasmuch as it is an admitted fact that Mr. Rakesh Mehta handled the consignments as proprietor of M/s D.J. International and not as employee of the appellant-CHA. It is also an admitted fact that Mr. Rakesh Mehta was using the CHA licence of the appellant for the said purpose by paying a commission to the appellant. The above argument of the learned consultant is, therefore, not acceptable. As Mr. Rakesh Mehta was handling the consignments independently, there was no occasion for the appellant to exercise supervision or control over him. Here again, this predicament of the appellant resulted from subletting of the CHA licence by the appellant to M/s D.J. International.
11. In the result, we have got to sustain the Commissioners decision in principle. That the CHA (appellant) allowed the licence to be used by another firm viz., M/s D.J. International, in breach of Regulation 12 of the CHALR stands established. Equally established is the charge that the appellant allowed the subject consignments to be handled without written authorization of the importer M/s Satyam Overseas. The conduct of the appellant also led to contravention of Regulations 13 (d), 13 (n) and 19 (8) of the CHALR. Therefore, revocation of the licence and forfeiture of the security deposit cannot be faulted in principle. The question which now arises for consideration is whether any mitigating circumstances exist in favour of the appellant. The learned consultant has prayed for setting aside the revocation of the licence in keeping with the view taken by the Honble High Court in S.S. Clearing and Forwarding Agency (supra). In the cited case, what was set aside by the Honble High Court was the Commissioners order cancelling the CHA licence on just one count viz., handling of an import consignment without authorization of the importer. The present appellant has been found to be punishable on more than one count and, therefore, the appellant cannot claim the benefit of the Honble High Courts decision. However, the appellant can claim support from the measure of punishment determined by the Honble High Court. The learned SDR has canvassed a period of three years, in view of K.M. Ganatra & Co vs Commissioner of Customs (General) Mumbai 2007 (219) ELT 316 (Tri-Mumbai), for keeping the appellants licence under revocation. We have perused the Tribunals order in K.M. Ganatras case and have found that this Tribunal, on the facts of that case, considered that revocation for a period of three years from the date of suspension of licence (i.e. 1.3.2004) would be sufficient alongwith forfeiture of security deposit. In the instant case, we have already indicated that the CHA licence has been out of operation for a period of a little over seven months. The appellant has submitted that they have already suffered a lot over the said period on account of suspension/revocation of this licence. It has also been submitted that their employees have also gone without livelihood over the period. Without the subject licence, the appellant cannot carry on the business in any other jurisdiction. After giving due consideration to these circumstances coupled with the gravity of offence found against the appellant, we hold the view that the appellant is not entitled to instant restoration of the licence and has to go without it for a further period of one year from the date of receipt of a certified copy of this order. The forfeiture of security deposit shall stand upheld. In the result, upon expiry of the said period of one year, the appellant will be entitled to get the CHA licence restored to them against fresh security deposit. The impugned order will stand modified to this effect.
12. The appeal is disposed of in the above terms.
(Dictated in Court.) (Sahab Singh) Member (Technical) (P.G. Chacko) Member (Judicial) rk 12