Custom, Excise & Service Tax Tribunal
M/S Shree Simmandhar Shipping Services vs Commissioner Of Customs (General), ... on 5 January, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. III Application No. C/EH/97893/14 in Appeal No. C/89842/14 (Arising out of Order-in-Original No. 55/2014-15 dated 21.10.2014 passed by the Commissioner of Customs (General), Mumbai). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) Honble Shri P.S. Pruthi, 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? ====================================================== M/s Shree Simmandhar Shipping Services Appellant Vs. Commissioner of Customs (General), Mumbai Respondent Appearance: Shri Atul Nanda, Sr. Advocate with Shri H.K. Sudhakara, Advocate for Appellant Shri A.K. Singh, Addl. Commissioner (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) SHRI P.S. PRUTHI, MEMBER (TECHNICAL) Date of Hearing: 05.01.2015 Date of Decision: 05.01.2015 ORDER NO. Per: Anil Choudhary
The appellant, M/s Shree Simmandhar Shipping Services is a regular Custom Broker/CHA, granted Licence No. 11/1024, by Mumbai Customs under regulation 10(1) of the Custom Broker Licensing Regulation (now Regulation 7(1) of the Custom Broker Licensing Regulation, 2013) with validity upto 31.12.2016. An appeal has been preferred against Order-in-Original dated 21.10.2014 by which the licence suspended earlier vide Order dated 1.10.2014 under Regulation 20(2) of CHALR read with Regulation 19 of CBLR, 2013 was suspended and the suspension was confirmed vide the impugned order. Being aggrieved the appellant have prayed for revocation of the interim suspension pending final adjudication of the show-cause notice dated 5.9.2014, which is pending adjudication.
2. The brief facts are that the appellant broker was engaged by the importers namely M/s FSL and M/s Global Exim to clear the consignment of Cocoa powder imported against transferred DFIA, issued against the export of Biscuits under Sr. No. E5 of SION. The appellant performed the duties of the CHA/CB in clearing 9 consignments of the Cocoa powder imported by M/s FSL Ltd. during the period prior to October, 2010 and in respect of Global Exim cleared 14 consignment of Cocoa powder during the period June 11 to June 12. The importers claimed duty free benefit on the basis of final order No. !553/2009 dated 29.12.2009 of this Tribunal in the matter of Khushalchand & Co. Vs. Commissioner of Customs, Mangalore, which was reconfirmed in the subsequent order vide final order No. 1547/2010 dated 19.11.2010, which is reported at 2011 (265) ELT 109 (Tri-Bang). The Revenue pursuant to some enquiries made with the Licensing Authority (granting DFIA) felt that duty free benefit was obtained by the said importer on the basis of mis-representation and/or suppression of facts. In Khushalchand case, this Tribunal had held that the term flour and powder are synonymous. Thus, Cocoa powder qualified to be flour. The Tribunal took notice of the fact that the original version of DFIA, which was subject matter of the dispute before it, mentioned the ITCHS code 11010000 or 19019090. In the amendment sheet issued to the said DFIA, subsequently by the Jt. DGFT, Mumbai, did not contain any ITCHS code. However, taking into account the fact that the importer had produced the amendment sheet issued by the licensing authority, wherein the reference to ITCHS were deleted, the matter was remanded and referred to the Commissioner for the reason that the Commissioner had not seen the amendment sheet. The Commissioner, however, pursuant to remand, had once again held that Cocoa powder is not covered by DFIA, vide order dated 16.7.2010, observing that the assessee had only given department copies of the documents to the Revenue, and the Revenue had written to the Jt. DFGT, Mumbai to confirm the authenticity of the licence. Since no reply was received from the O/o DGFT, reminders were also sent. The DGFT finally vide two separate letters have attested and confirmed the authenticity of the DFIA, the DFIA pre-import list and amendment sheets. However, claim was again rejected on the ground that Cocoa powder was not flour. In the second round, this Tribunal vide Final Order dated 19.11.2010 held that in its earlier order it was categorically held that Cocoa powder is covered under the description of imported items flour. The relevant paras 14, 15 and 17 of the Final order of this Tribunal dated 19.11.2010 are quoted herein for ready reference: -
14.?We have carefully considered the submissions made by both the parties. It is clear that this Tribunal had already settled the issue of whether Cocoa Powder is covered under the description of input item Flour permitted under the DFIA issued against export of Biscuit in order No. 1553/09. Therefore, the action of Commissioner going beyond the scope of remand order is highly deplorable and is not permitted under law. The Commissioner has been specifically directed to look into the limited aspect of examining the amendment sheets of DFIA wherein it was observed that No ITC (HS) Numbers were mentioned. It may also be noted that it is not proper for the Commissioner of Customs, Mangalore, to rely upon his predecessors order, which had already been set aside by the CESTAT. On specific query from the Bench, it was informed that the Tribunals order dated 29-12-2009 is not challenged before higher juridical fora.
15.?Having examined that the original amendment sheets of DFIAs thereto had been duly attested and authenticated by the Jt. DGFT, Mumbai and confirming the same, the commissioner has once again dealt with the whole issue very extensively which is clearly beyond the scope of the remand back order.
16.?It is well settled in law that classification/clarification on Import Policy issued by Office of the Director General of Foreign Trade are binding on Customs as far as ITC Policy is concerned even if such clarifications are signed by Joint Director General of Foreign Trade, as affirmed by the Hon. Supreme court in the case of Commissioner of Customs v. Cine Land - 2000 (120) E.L.T. A67 by not granting stay on CEGAT Order reported in 1999 (114) E.L.T. 653 (Tribunal).
17.?The Ld. Advocate has correctly stated that amendment sheets do have precedence over the previous document, which is exactly for the purpose for it is being issued. Therefore, the observation of Commissioner in going beyond the scope of the license is clearly unwarranted. Thus, the claim by the said importers of duty free benefit against import of item, Atta, Maida, Flour/Cocoa powder was in accordance with the policy of the Government and legal in view of the ruling of this Tribunal.
3. The appellant urges that there is no mis-declaration nor any wrong advice to the importers, on the part of the appellant-CHA. The appellant draws attention of the Bench, to the copy of Bill of Entry at page 270, 271 and 275 of appeal file, wherein the item to be imported is categorically mentioned as natural Cocoa powder P/1011, with net weight 25Kg, bagged with general description and so far the entitlement of duty free import is concerned, vide disputed DFIA, the said fact is also brought to the notice of assessing authority, and the concerned Assistant Commissioner has recorded his comments as follows: -
Flour is meant for any powdery substance and that the two terms powder and flour may be considered synonymous, as per CESTAT observation in S.Khusalchands case.
Thus, from the facts and circumstances, it is evident that there is not failure on part of the CHA, either in making true disclosure or in advising the said importer. Further no case of mis-declaration and suppression is made out, as is evident from the documents on record. It is further stated that the imports were completed during the month of June, 12 and the show-cause notice have been issued only on 5.9.2014 which is after two years and is beyond the limitation of 12 months.
3.1 It is further stated that there is no further appeal by the Revenue against the order of this Tribunal in Khushachands case (supra). There is no error in relying on the said ruling, which have been, after examination accepted by the concerned Addl. Commissioner of Customs. It is further urged that suspension can be done only after following the procedure prescribed in the Regulation 19 of CBLR, 2013 which provides that the Commissioner of Customs may, in appropriate case, where immediate action is necessary, suspend the licence of a Customs Broker wherein enquiry against such agent is pending or contemplated. Thus, the condition precedents have been laid down i.e. immediate action, as necessary, for reasons to be recorded. Thus, this condition also existed in the earlier regulation, CHALR, 1984 wherein regulation 20(1) provided for suspension/revocation on certain grounds of mis-conduct and or non-compliance of the provisions etc. and sub-Rule (2) empowers the Commissioner for immediate action/suspension in appropriate case. In the present case, there is a long gap as pointed out by the Counsel, i.e. more than two years and as stated, the condition precedent is not available, for suspending the appellant, pending the final adjudication of the show-cause notice.
3.2 Further, he urges that once the show-cause notice is issued, which show the completion of investigation, and as such instead of adjudicating the show-cause notice, suspending the licence, vide separate order, as an interim measure is bad and uncalled for. It is further pointed out that post the statement of CHA/CB recorded on 18.9.2013 and as such all the facts were before the customs authorities. As such suspension by way of interim measure, after more than 12 months is bad and against the provisions of law. It is further stated that the concerned appellant CHA employees about 300 persons and their livelihood is being affected since the date of suspension, being 1.10.2014 and as such the same is fit to be revoked and the impugned order be set aside.
3.4 Further, the appellant relies upon the ruling of the Hon'ble Bombay High Court in the case of Babaji Shivram Clearing & Carriers Pvt. Ltd. Vs. UOI 2011 (269) ELT 222 (Bom), wherein the Hon'ble High Court took notice of the provisions of suspension and in view of the facts in that case, the Customs authorities in middle of January, 11 were aware of the fact that the documents submitted by the person were fabricated, however, the impugned order had been passed belatedly on 28.3.2011 and accordingly, the Hon'ble High Court found it fit and proper to revoke the suspension of licence and permit the customs authorities to take appropriate action as deemed fit after completion of investigation in the proceedings. The appellant also draws attention to the Circular No. 9/2010-Cus dated 8.4.2010 wherein in para 7.2, it is pointed that where immediate suspension action against CHA is required to be taken by the Commissioner of Customs, there is no need for following the procedure prescribed in the regulation, since the action is taken immediately and only in justified case depending upon the seriousness and gravity of the situation. However, it was decided by the Board that post decisional hearing be given in all cases so that error apparent, if any, can be corrected and opportunity of personal hearing can be given to the aggrieved parties. Further, Board have also prescribed certain time limits in case warranting immediate suspension in the regulation. Accordingly, the investigating authority shall furnish these reports to the Commissioner of Customs, who has issued the CHA licence within 30 days of an offence. The licensing authority shall take steps for immediate suspension within 15 days of receipt of the report and thereafter provide the post decisional hearing within 15 days from the date of suspension. Evidently, in the facts of the present case, the suspension itself by way of an interim order being made after more than 12 months of the alleged judgment is bad and also against the guidelines of the Board, is fit to be set aside.
3.5 It is further pointed out by the learned Counsel that the learned Commissioner himself admitted that the issue is interpretational in nature as per observation in para 21 of the impugned order and in such matters of disputed interpretation, there can be no mis-giving and/or negligence attributable to the appellant CHA. It is further urged by the learned Counsel that vide the impugned order (interim order), the learned Commissioner have erred in pre-judging the matter as the Commissioner has observed - I have no hesitation in holding that CHA/CB is guilty of violating regulation 11 of CHALR of erstwhile Regulation , 2004. Accordingly, the learned Counsel prays to set aside the order of suspension.
4. The learned AR relies on the impugned order and further relies upon the order of the Hon'ble Bombay High Court in the case of Commissioner of Customs (General) Vs. Worldwide Cargo Movers 2010 (253) ELT 190 (Bom), wherein the Hon'ble High Court have said that in administrative matter like licencing etc., the Tribunal should not interfere with revocation and limit its power to judicial review, one has to see whether the principles of natural justice are followed and the findings are justified from material on record. In case, this aspect is satisfied, the Tribunal should restrain from interfering on the grounds of difficulties likely to be faced by the CHA and their employees.
5. We have considered the submissions of both sides. We find that the issue arose from the absence of the ITC (HS) Code number relating to Cocoa powder in the amendment sheets issued by DGFT against the original DFIA Licences. The CESTAT in its first order dt. 29.12.2009 examined the issue technically and came to the conclusion that the word flour mentioned in the amendment sheet would cover Cocoa Powder under the licence. This order of CESTAT was never challenged. CESTAT, in this order, remanded the case for examining the amendment sheets. After re-adjudication, when the case again came up in appeal, CESTAT observed that the re-examining of the issue on merits was beyond the scope of the remand order and decided the appeal in the appellants favour. It is contented by the Ld. Counsel that as the first CESTAT order was not challenged on merits, its ruling holds till today. Therefore, there was no reason for the department to challenge the imports of Cocoa Powder made by the appellant against DFIA Licenses read with amendment sheets issued by DGFT only contain the word flour and did not specify the tariff item number of any of the goods mentioned in the License.. The contentions have force. We also note that the DGFT Authorities at Mumbai, where most of the imports took place, did not confirm to the Customs that Cocoa powder cannot be imported under the amendment sheets.
5.1 We have discussed the details of the case as above only because, in our view, it would be very relevant in examining the role of CHA, which is the subject matter in the present case. We have seen that all the Bill of Entry under which imports of Cocoa Powder were made were assessed finally by the Assistant Collector (A C) with the following remark:
As per A/c group VIIA order in file No. S/16-MISC-1034/09 GR.VII and report from Institute of Chemical Technology dt. 24.12.09 issued by Dr. U.s. Annapure, Matunga, Mumbai. Flour may be considered Synonymous as per CESTAT observation in the case of M/s. Khushalchand & Co. Vs. CC, Mangalore in Appeal No. C/595/2009 dt. 10.12.09 there is force in the contention of the appellant that the imported item Cocoa Powder is flour.
By 10023708 on 15/10/2012 at 02.53.P.M. It is quite obvious from the remarks of the Assessing Officer (AC)that the assessment was done in full consciousness of the facts of the case. We fail to see how even the extended period can be invoked under the Customs Act for demanding duty. We also fail to understand how suppression of facts or mala fide intention can be alleged on the part of the importer and, more importantly, the CHA, when all the facts were clearly before the Customs authorities. The case under the Customs Act is not before us. But the case before us which is against the CHA, is not supported by facts. As discussed above, the contents of the DFIA and the contents of the amendment sheets were in the notice of the department when the Bills of Entry were filed and finally assessed in December 2012, whereas the show cause notice was issued in September 2014.
4.2. The learned AR drew our attention to the show cause notice dt. 5.9.2014 issued by Commissioner under the Customs Act, to the importer and the CHA. He drew our attention to para 7.1 wherein it is stated that M/s. Kushalchand & Co. had mis-presented before the CESTAT stating that the subsequent amendment sheets issued by the Licensing Authorities permit import of input items without any restriction of CTH classification. We do not appreciate this statement as it amounts to stating that CESTAT did not appreciate all the facts. We find that CESTAT passed the order in full knowledge of all the facts. We do not find mis-representation by the CHA of any facts whatsoever. The CHAs role is to present all the documents before the assessing authority who in this case passed the assessment order in complete knowledge of the facts as well as the CESTAT order in the case of M/s. Kushalchand & Co. (supra). Therefore no action is warranted against the CHA.
6. Having considered the rival contention, we find that in the case of Worldwide Cargo Movers (supra), it was a case of revocation and not suspension and further it was a case of mis-declaration and fraud by the CHA and its employees, which are not the facts obtaining in the present case. As such, we find that this ruling is not applicable in this appeal. We further hold that there is a complete absence of conditions precedent for exercise of powers by the Commissioner for suspending the licence of the appellant, as an interim measure. We further hold that the impugned order is in conflict with the direction of the CBE&C issued vide Circular dated 8.4.2010. We further find that in the facts of this case, the ruling of the Hon'ble Bombay High Court in the case of Babaji Shivram Clearing & Carriers (supra) is squarely applicable. Thus, we set aside the impugned order dated 21.10.2014, releasing the interim suspensions of the appellants CHA licence w.e.f. 1.10.2014. We further direct the concerned Commissioner to allow the appellant to function as a CHA/CB with immediate effect, pending final adjudication of the show-cause notice dated 5.9.2014. Thus, the appeal stands allowed with consequential benefit.
7. The order may be given Dasti
6. (Pronounced in Court) (P.S. Pruthi) (Anil Choudhary) Member (Technical) Member (Judicial) Sinha 10