Customs, Excise and Gold Tribunal - Mumbai
Eagle Transport Services vs Commissioner Of Customs on 23 September, 1997
Equivalent citations: 1997(96)ELT469(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. The appellant, was a Custom House Agent (referred to as 'agent' for short); notice was issued to it containing 3 articles of charge. These were that it had sublet the licence to M/s. Amol Shipping Agency by falsely stating that the Manager and four other employees of Amol Shipping Agency were its own employees obtained Customs Passes for them, and that it handed over shipping bills, signed but not containing any other particulars to Amol Shipping Agency and thus aided and abetted it in an attempted misuse of the DEEC Scheme by misdeclaring description of goods in 3 shipping bills in connivance with the exporter. After issue of the notice to the appellant under the regulation provision is cancellation of licence as Assistant Collector was appointed as Enquiry Officer. The Enquiry Officer in his report has held all three charges have been proved. The Commissioner after considering the report of the Enquiry Officer and hearing the appellant's advocate has passed the orders cancelling the licence. Hence this appeal.
2. The Advocate for the appellant contends there had been no contravention of Regulation [13] as first article of charge. The contention is that Regulation 13 does not refer to any licence being sublet, it only says the licence cannot be sold or transferred and in this present case there has been no transfer. It is further contended that Regulation 14(b) which was invoked with regard to the issue of Customs Passes does not mention the issue of any passes. It is also contended that the appellant's supervising the activities of Amol Shipping Agency does not arise. The advocate for the appellant argued that the appellants had themselves requested permission to take the goods covered by the 3 shipping bills referred to in the articles of charge and back to him that is established its bona fides. The appellant was not in any manner concerned with or aware of the attempted illegal export. The exporter or any one else concerned had not at any point implicated the appellant or attributed any knowledge of it.
3. The departmental representative adopts the reasoning of the Commissioner. He contends that the articles of charge against the appellant had been proved after independent enquiry. They are of serious nature and such activities, if unchecked would lead to commission of large scale fraud. He emphasised that the role of the Custom House Agent requires integrity and clean dealings and in the demonstrated absence of these, the appellant was not a fit person to be present for importation and exportation before the Customs.
4. The essence of the charges is that the appellant permitted Amol Shipping Agency, and its employees to work as Custom House Agent, by permitting its employees to operate under cover of the licence issued to it and by obtaining for its employees Custom Passes by misrepresenting them as employees of the appellant. Regulation 13 provides that every licence granted or renewed under the Regulation shall be deemed to have been granted and renewed in favour of the licensee and no licence shall be sold or otherwise transferred. In the proceedings of enquiry conducted before the Assistant Commissioner, it was contended for the licensee that has not transferred-the licence but only carried out the work relating to Custom House brought to it by M/s. Amol Shipping Agency, and charged by agency for this work, which charges on the basis of those fixed by the Customs. The same plea has now been urged before us.
5. This article of charge should be examined in conjunction with the second article of charge that the appellant arranged to get Custom Passes for the Manager and 4 other employees of Amol Shipping Agency. Mahendra Shrimankar, proprietor of the appellant had in his statement admitted that he obtained Customs Passes for two employees of the Amol Shipping, Sampat Kokate and Balue V. Andhale and deck passes for other employees Dyanesh-war M. Waiting and Vasant B. Pokharkar. Now it is not in dispute that in the applications for the issue of passes these persons were represented as being the employees of the appellant. The other persons concerned have also confirmed that passes were obtained. A feeble argument was raised that obtaining passes for another person was not illegal and that such act in any event would [not] contravene any of the provisions of Regulation 14. Sub-regulation [(b)] prescribes that Custom House Agent shall transact business in the Customs House Station personally or through employees duly approved by the A.C. designated by the Commissioner. Since these four persons were not employees of appellant provisions of Sub-regulations [(b)] have been contravened.
7. What could be the motive for the appellant for obtaining passes for four persons who were not its employees but employees of Amol Shipping? The answer has been provided by Shrimankar in his own statement, that was to allow Amol Shipping Agency to make use of the facilities which the appellants licence made available access to the Custom House and its employees and to the premises and officials of the Mumbai Port Trust and of representing various exporters and importers before Shrimankar in his statement has said that in consideration of Amol Shipping depositing Rs. 30,000/- with him and paying Rs. 5,000/- monthly he used to give shipping bill forms blank, except for his signature to Amol Shipping Agency. I would follow from this that any person was in possession of such documents could fill in any particulars correct or incorrect about a particular consignment. This is in fact what happened with regard to the 3 shipping bills in question, in which the consignmerits were misdeclared as polyester filament yarn. Shrimankar went a step further. He obtained Customs Passes for four employees of Amol Shipping by saying that they were his employees. The result of this that through these persons Amol Shipping could represent clients in the Customs and Port Trust. A Custom House Agent has a significant role to play in the clearance of goods through Customs and Port Trust. Such clearance involves application of either specialised laws and detailed procedures often conduct complexed. It is not possible for every layman to have the requisite knowledge and the time to personally undertake such clearances. It is for this reason that Custom House Agents have been licensed. The Regulations of 1984 provide for stringent conditions to be fulfilled before a person is appointed as licensee. The applicant must be financially sound. He must have experience of clearance through Customs. Before he is granted permanent licence he has to qualify an examination in which his knowledge of relevant procedures is vested. Regulation 14 places various obligations on a Custom House Agent. The object of these to ensure that the Custom House Agent acts honestly and efficiently in the conduct of his business. It is not difficult to foresee the consequences that would aim the Custom House Agent does not co-act in such a manner. The Custom House Agent makes various representations before the Custom House on behalf of the importer and exporter relating to the nature of the goods conditions under which they were imported their value etc. The statements that he makes and the information that he provide are crucial for assessing the goods to duty and deciding whether the import is prohibited or not. The Custom House Agent thus can the status of a professionally qualified person akin to an advocate, Chartered Accountant or number of other professions which requires a minimum standards of knowledge for minimum standards of conduct. If the Custom House Agent acts negligently or dishonestly, the Custom House can be defrauded money due to the Government, and in good faith permit import or export of prohibited goods. The damage done to innocent importers by misleading their documents for such purposes by Custom House Agent would be enormous. In the present case, but for the action by the Customs, goods misdeclared as polyester yarn would have been exported and resultant benefits for importation not available in law would have been made available.
8. It is clear from the record that the appellant had given more than 100 blank shipping bills form sent to Amol Shipping Agency. We do not know to what extent any or one or more the shipping bills had been misused. In this context the contention that there was no legal transfer of the licence is simplistic. Shrimankar made available to Amol Shipping has the goodwill of the appellant firm such reputation as it had adopted as his own employees of Amol Shipping. In other words, the activities of the appellant firm were controlled day today, not by Shrimankar but by employees of Amol Shipping Agency. We do not see how this does not amount to transfer of the licence in all but name. Hence, we must hold that the first and second articles of charge have been rightly held as proved.
9. The third article of charge that the appellant failed to supervise the activities of Amol Shipping does not arise. It is in fact contrary to the first article. We, therefore, find for the appellant with regard to the third article.
10. Leniency was pleaded on the ground that the appellant was old and that he was compelled to do what he did in order to satisfy the requirement prescribed by the Commissioner of conducting the minimum volume of business. Reliance was also placed on the Tribunal's decision in Johar Enterprises v. Collector of Customs - 1996 (84) E.L.T. 226 to say that leniency should be exercised. The fact that Shrimankar could not run up enough business legally to satisfy the requirement of minimum quantum of business to be conducted does not in any way justify the action of the appellant in handing over completely its work and functions to M/s. Amol Shipping without giving a thought to the interests of the department. This was not an isolated case of one shipping bill being handed over; nor was it a case where the licence was cancelled because of a fault of a employee as was the position in the case cited by the appellant. There was in that case no allegation that the Director of the agency was involved, or even knew about the fabrication of an examination report which an employee did, and thereafter absconded. In the present case the proprietor has knowingly passed on a large number of documents which can be misused over a period of time. We have to agree with the Commissioner's finding that such a person is unfit to carry on the business of Custom House Agent.
11. We, therefore, decline to interfere. Appeal dismissed.