Custom, Excise & Service Tax Tribunal
M/S Millenium Express Cargo Pvt. Ltd vs Cc, New Delhi on 3 February, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 6.1.2016
Date of Pronouncement : 3.2.2016
No. C/Stay/51677/2015 & C/52655/2015-CU(DB)
(Arising out of Order-in-Original No. 59/NK/Commr(G)/Policy/2015 dated 22.4.2015 passed by the Commissioner of Customs, New Delhi)
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s Millenium Express Cargo Pvt. Ltd. Appellant
Vs.
CC, New Delhi Respondent
Appearance Shri Ashish Batra, Advocate - for the appellant Shri Amresh Jain, DR for the respondent CORAM: Honble Mr. Justice G. Raghuram, President Honble Mr. R.K. Singh, Member (Technical) Final Order No. 50156/2016 Per R.K. Singh:
Appeal is filed against order dated 22.4.2015 in terms of which CHA license of the appellant was revoked and security deposit of Rs.50,000/- forfeited.
2. The facts of the case are as under :
Intelligence was received that two containers bearing Nos. OOLU 8433339 and TGHU 9546915 contained cigarettes whereas the goods declared were induction cookers. Examination of container No. TGHU 9546915 resulted in recovery of 48 lakhs sticks of cigarettes which were concealed amongst 420 cartons of induction cookers. Container No. OOLU 8433339 was already cleared under Bill of Entry No.7756887 dated 24.8.2012 which was filed by the appellant and in that container as against declaration of 460 cartons, containing 1824 pieces of induction cookers and four cartons of spare part samples, 610 cartons of cigarettes were also found. The said container weighed an additional 7.280 tonnes over and above the declared weight of 5051 kgs. On further enquiry M/s Nikhaar Associates in the name of which the bill of entry was filed was found to be non-existent at the address given. Investigations also revealed that the appellant had not conducted due diligence required of a custom broker. Accordingly, the impugned order was passed for violation of Regulations 13 (e) and 13 (o) of CHA Licensing Regulation, 2004.
3. The appellant has contended that :
(i) The time limits prescribed in the Regulation 22 of CHALR, 2004 have been violated and therefore the proceedings are not sustainable as has been held in the case of A.M. Ahamed & Co. Vs. CC 2014 (309) ELT 433 (Mad.).
(ii) It has not contravened the provisions of Regulation 13(e) as it did not impart any wrong information to client and also Regulation 13(o) of the CHALR, 2004 as it had obtained from the importer IE code issued by DGFT, attested copy of PAN, copy of bank statement and his authorisation letter for the subject import. It had not filed any bill of Entry for Container No. TGHU 9546915 .
(iii) It was not aware of the mis-declaration.
The appellant cited the judgements of Delhi High Court in the case of M/s Ashiana Cargo Services Vs. CC CUS.AA.24/2012, C.M. APPL. 19694/2012, Falcon Air Cargo & Travel P. Ltd. Vs. CC, New Delhi 2001 (141) ELT 284 and Trans Shipping Service Vs. CC 2004 (163) ELT 484 in support of its contentions.
4. The ld. DR, on the other hand, contended that the appellant had not fulfilled the KYC norms and had not conducted proper address verification and therefore was clearly guilty of violation of the Regulation 13(o). It also did not exercise due diligence to ascertain the correctness of information imparted to the importer (who did not exist) thereby leading to violation of Regulation 13(e) ibid. Thus there was serious misconduct on the part of the appellant and therefore the action as per the impugned order was not disproportionate. He also pleaded that the issue of time bar is no longer germane to the case as the impugned order was passed in pursuance of Delhi High Courts direction vide order dated 25.2.2015.
5. We have considered the contentions of both sides. It is an admitted fact that the appellant had dealt with the importer M/s Nikhaar Associates. It is also a fact that the importer was found to be non-existent. CHA Regulation 13(e) state that a CHA shall exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage. In the present case, there was no question of the appellant being in a position to impart any information to the client as the same was found non-existent. Also the weight of the container for which it filed bill of entry was in excess by 7.280 tonnes over the declared weight (5.051 tonnes) which should have come to the appellants notice had due diligence been exercised. Thus the allegation of violation of Regulation 13(e) is sustainable. Further Regulation 13(o) ibid states as under :
A Custom House Agent shall verify antecedent, correctness of Importer Exporter Code (IEC) Number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. CBEC vide Custom Circular No. 9/2008 dated 8.2.2010 in order to avoid any ambiguity inter alia laid down the following requirements of verification and documents for the individual category to which the importer belonged being a proprietorship concern as claimed.
S. No. Form of organisation Features to be verified Documents to be obtained
1.
Individual
(i) Legal name and any other names used
(ii) Present and Permanent address, in full, complete and correct
(i) Passport
(ii) PAN card
(iii) Voters identity card
(iv) Driving licence
(v) Bank account statement
(vi) Ration card Note: Any two of the documents listed above, which provides client/customer information to the satisfaction of the CHA will suffice.
Thus the appellant was required to inter alia verify present and permanent address in full, complete and correct which the appellant did not do. Merely because the appellant obtained documents as per column 4 of the above table does not tantamount to fulfilment of requirement of column 3 relating to features to be verified because if that was so, then there was no need to have column 3. As seen from Regulation 13 (o) quoted above, the Custom House Agent is obligated to inter alia verify antecedent, correctness of Importer Exporter Code, identity of the importer and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. The appellant has not even claimed that it had ever verified the existence of the importer at the given address. Obviously, the appellant failed to fulfil the requirement of Regulation 13(o) ibid.
6. The appellant is right in contending that the time line prescribed in Regulation 22 ibid have been violated in the present case. However, it is pertinent to note that the appellant had approached the Honble Delhi High Court which vide its order dated 25.2.2015 observed as under :
This court is conscious of the fact that inquiry proceedings under Regulation 22 have got prolonged to an extent. The respondents are directed to complete the enquiry proceeding after giving two opportunities to the appellant in accordance with the provisions of Regulations and other provisions of law and pass final order at the earliest preferably within 3 months from today. The appellant had not taken this point of time bar before the High Court and therefore by the doctrine of constructive res judicata is prevented from raising this point in respect of the current proceedings which are in compliance of the direction of the Honble High Court.
7. The documents filed by CHA are treated with a certain degree of trust by the Customs and such trust was completely violated in the present case. Filing of bill of entry filed in the name of a non-existent importer is a grave offence on the part of CHA and it becomes graver when it turns out that CHA did not make minimum efforts to verify the genuineness of the importer and its address. Such acts of omission and commission on the part of CHA can potentially have even more serious financial /security consequences and therefore such a CHA hardly deserves any leniency. We find that in the case of CC (General) Vs. Worldwide Cargo Movers 2010 (253) ELT 190 (Bom.), the Bombay High Court apart from upholding the principle of liability of the CHA for the act of its employees went on to observe as under :
27.?We have noted what the Tribunal has observed in the impugned order. In our view, the finding given by the Enquiring Officer and thereafter the order passed by the appellant in original are fully justified on the facts of the case. The authorities relied upon by Mr. Kantawala undoubtedly are mostly of the Tribunal. Even the judgment of the Calcutta High Court speaks about the suspension of licence not to be continued indefinitely. Here, we are concerned with revocation which has been resorted to after a due enquiry. We are conscious that the punishment has to be commensurate with the misconduct and that by revocation the respondent and its employees are going to suffer. At the same time, we cannot forget that though it is the right of a citizen to carry on his business or profession, it is subject to reasonable restrictions and conditions. In the present case, those conditions were already stipulated. In the case of Arvind Bhagat (supra), the order of Madras High Court has been left undisturbed by the Apex Court. It was a case where the CHA had failed to discharge his obligation to exercise proper supervision. In the case of Sri Kamakshi Agency (supra), the CHA was held responsible for the fraudulent activities of a third party whom it had delegated its functions. That was also left undisturbed by the Supreme Court. The present case is some what similar to one of Sri Kamakshi Agency, if not worse. Here, the CHA has brazenly defended his Regulation 8 employee who gave a fake name of his brother as an importer for undervaluing the imported car. Thus, the employee of the CHA was party to the Firm. The CHA has not disowned him and has, in fact, defended him in the reply filed by him before the appellant. That being so, he is clearly responsible vicariously. (emphasis added).
28.?In our view, the Tribunal has committed a grave error in interfering with the decision of a domestic authority. In a departmental proceeding one has to see whether the principles of natural justice are followed and the findings are justified from material on record. Once both these aspects are satisfied if an outsider Tribunal interferes, its findings and order will be improper and perverse which is what has happened in the present case. Similarly when one comes to the disciplinary measures, one must not lose sight of the fact that the appellant-Commissioner of Customs is responsible for happenings in the Customs area and for the discipline to be maintained over there. If he takes a decision necessary for that purpose, the Tribunal is not expected to interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or his employees. The decision is best to be left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or mala fide. That is not the case here. (emphasis added).
The ratios contained in the above reproduced paras (especially in para 28 thereof) is squarely applicable to the present case.
Andhra Pradesh High Court in the case of H.B. Cargo Services (supra) in para 16 has also held as under :
While great emphasis is placed by Shri C. Kodandaram, Learned Senior Counsel appearing on behalf of the respondent, on the previous unblemished record of the CHA, it must be borne in mind that a single act of corruption is sufficient to award the maximum penalty which under the CHALR, is of revocation of the license (State of Punjab V. Ex-Constable Ram Singh (1992) A-SCC-54. (emphasis added) The appellant has cited the judgement of M/s Ashiana Cargo Services (supra). We find that in that case the proportionality doctrine was invoked and the High Court in the facts and circumstances of that case, held that revocation of licence of the CHA was violative of the proportionality doctrine. In the case of Falcon Air Cargo & Travel P. Ltd. (supra) cited by the appellant the same doctrine was invoked by High Court to hold that in the specific facts and circumstances of that case punishment awarded was disproportionate. In the present case, as analysed earlier, doctrine of proportionality is in no way violated in our view given the facts and circumstances and the gravity of the offence and the ratios of judgements of Bombay High Court in the case of Worldwide Cargo Movers (supra) and Andhra Pradesh High Court in the case of H.B. Cargo Services (supra) are squarely applicable and clearly supportive of our view.
8. In the light of the foregoing, the impugned order does not suffer from any such infirmities as to warrant appellate intervention. The appeal is therefore dismissed. Stay application also stands disposed of.
(Pronounced in Court on 3.2.2016) (Justice G. Raghuram) President (R.K. Singh) Member (Technical) RM 1