Custom, Excise & Service Tax Tribunal
P.B. Nair C&F Pvt. Ltd vs Commissioner Of Customs (General) on 3 December, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.C/87827/13 (Arising out of Order-in-Original No.67/2013/CAC/CC(G)/PKA-CHA (Admn) dated 10/05/2013 passed by Commissioner of Customs (General), Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) 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? ========================================
P.B. Nair C&F Pvt. Ltd., Appellant
Vs.
Commissioner of Customs (General), Respondent
Mumbai
Appearance:
Shri.J.C.Patel, & M.L.Grover, Advocate for appellant
Shri.S.Nathan, Dy. Comm. (AR), for respondent
CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of Hearing : 03/12/2014
Date of Decision : /12/2014
ORDER NO
Per: P.R.Chandrasekharan
1. The appeal is directed against Order-in-original No. 67/2013/CAC/CC(G)/PKA-CHA (admn) dated 10-5-2013 passed by the Commissioner of Customs (General), New Custom House, Mumbai. Vide the impugned order, the ld. Adjudicating authority has revoked the CHA licence No. 11/830 of M/s P.B. Nair Clearing and Forwarding Pvt. Ltd., Mumbai and ordered forfeiture of the security deposit made by the CHA. Aggrieved of the same, the appellant CHA is before us.
2. The facts relevant to the case are briefly as follows. The Mumbai Zonal unit of the DRI investigated a case of undervaluation in the import of laminate sheets by Sri. Manish Thakkar and Sri. Naresh Gala in the names of M/s Kirmi Expo and M/s J.M. Traders and it was found that the CHA who undertook the customs clearance transactions was the appellant P.B. Nair C&F Pvt. Ltd. Sri. Sopan Dhamale, Manager and Sri. C.H. Menon, Director of the CHA firm, in their statements recorded under section 108 of the Customs Act, 1962 admitted that they had allowed Sri. Euregen Ashley to use their CHA licence independently for monetary consideration and that in respect of parties of the said Sri. Ashley, the role of the CHA firm was limited to the point of filing online check lists of the bills of entry. It was further admitted by them that Sri. Asley had his separate establishment and had provided CHA services to his clients using the CHA licence of the appellant. It was also admitted that the CHA firm had employed sub-agents, Sri. Euregen Ashley of Able & Co. for undertaking import transactions and Mr.Martin Joseph of M/s Akanksha Shipping for undertaking export transactions. For using the CHA licence, Sri. Ashley gave Rs.2500/- per 20 feet container, Rs.3000/- for a 40 feet container and Rs.2500/- for LCL consignments. During the years 2008-09 and 2009-10, out of the total 89 import consignments handled by the CHA firm, 74 consignments were handled by Sri. Ashley. In respect of the transactions pertaining to M/s Kirmi Expo and J.M.Traders, these transactions were undertaken by Sri. Ashley and the CHA filed the bills of entry without meeting the importers and without verifying the classification and other particulars declared in the bills of entry. S/Sri. Manish Thakkar and Narendra Gala in their statements recorded under section 108 of the said Customs Act also admitted to mis-using the IEC codes of five import firms for import of laminate sheets and they had interacted only with Mr. Ashley and none else and the CHA licence of the appellant firm were used for clearance of the import cargo. The investigation conducted revealed that the appellant CHA had allowed Mr. Ashley of Able & Co. and Mr. Martin Joseph of M/s Akanksha Shipping to use its licence independently for monetary consideration.
2.1 Based on the above, a charge sheet was issued to the appellant CHA imputing the following charges and alleging contravention of,-
(1) Regulation 12 of CHALR, 2004, for sub-letting its CHA licence for monetary consideration;
(2) Regulation 13(a) for undertaking customs clearance transactions without obtaining proper authorizations from the clients;
(3) Regulation 13(d) for not advising the clients for complying with the provisions of the Customs Act;
(4) Regulation 13(n) for not discharging the duties entrusted to a CHA with utmost speed and efficiency;
(5) Regulation 13(k) for non-maintenance of proper records for the transactions undertaken; and (6) Regulation 19(8) for not exercising proper supervision over the conduct of its employees.
2.2 The charges were enquired into by the Inquiry Officer appointed for this purpose who after taking into the Presenting Officers submissions, cross examination of prosecution and defence witnesses and the submissions made on behalf of the defendant CHA, came to the conclusion that all the charges except contravention of Regulation 13(a) were proved and contravention of regulation 13(a) is only partially proved. Thereafter, the appellant CHA was heard by the Licensing Authority who, vide the impugned order revoked the CHA licence and also forfeited the security deposit made by the CHA. Hence the appeal before us.
3. The ld. Counsel for the appellant urged the following in the oral submissions made before this Tribunal on 3-12-2014 :-
(a) Against the action initiated under the Customs Act in respect of undervaluation of laminated sheets, the importers M/s J.M. Traders and M/sKirmi Expo had approached the Settlement Commission admitting to undervaluation and by paying the differential duty of Rs.3,34,153/- and Rs.3,66,241/- along with interest thereon and the Settlement Commission had settled the matter and granted immunity from prosecution on payment of a penalty of Rs.10000/- each by the importing firms. The appellant CHA and Mr. Eurgene Ashley had also approached the Settlement Commission against the penalties imposed on them and the Settlement Commission had granted immunity to the appellant from payment of penalty and prosecution under the Customs Act by observing that there was no substantive evidence to establish their involvement in mis-declaration of value and evasion of duty. In a similar matter pertaining to A.M. Ahamed & Co. wherein also CHA licence was revoked, the parties therein had approached the Settlement Commission which had upon confirmation of differential duty liability, interest and nominal fine and penalty had granted immunity. Under the CHALR proceedings, the licence of the appellant was revoked which was challenged before the Honble High Court of Madras by way of a writ petition No. 30884 of 2013 and the Single Judge who heard the matter vide order dated 19-8-2014 had set aside the revocation on the ground that the same throws the petitioner out of business and deprives them of their very livelihood and it would be unfair to impose the extreme penalty upon the petitioner by revocation of CHA licence. The ld. Counsel submits that the ratio of the said decision applies squarely to the facts of the present case and therefore, the revocation of CHA licence should be set aside.
(b) During the inquiry proceedings conducted under the CHALR, both Sri. P.B. Nair, Director and Sri. Sopan Dhamle had stated that they had given the statements before the DRI under section 108 of the Customs Act under duress and pressure and they contradict the statement made that they had sub-let the CHA licence to Mr. Eugene Ashley. They have also stated that they had the requisite authority letters from their clients for undertaking the transactions. Sri. Ashley who was examined by the defence has also confirmed that he had been merely forwarding the customs clearance work to the appellant CHA and he did not have any customs pass to undertake the clearance work. These statements before the inquiry officer are very relevant while drawing conclusions against the CHA in respect of the various contraventions.
(c) Reliance is placed on the decision of this Tribunal in the case of K.S.Sawant & Co. [2012 (284) ELT 363] wherein it was held that procurement of business through an intermediary who is not an employee of the CHA does not amount to sub-letting or transfer of business. In the said decision it has been further held that signing of import documents by the importer amounts to authorisation and the punishment imposed should be commensurate with the gravity of the offence committed. The ratio of the said decision applies to the facts of the present case and extreme punishment of revocation is not warranted in th facts of the present case.
4. The ld. Dy. Commissioner (AR) appearing for the Revenue, while re-iterating the findings of the Inquiry Officer and the adjudicating authority submits that in their order dated 9-2-2011, the Settlement Commission had specifically mentioned in para 11 (sub-para titled Prosecution) that Revenue is at liberty to continue the proceedings under the CHA Licensing Regulations 2004 against the CHA M/s P.B. Nair C & F Pvt. Ltd. as per law which clearly show that CHALR proceeding is a separate and independent proceeding and therefore, the conclusions drawn in the proceedings under the Customs Act, has no relevance to the proceedings under the CHALR, 2004. He further submits that both Sri. Sopan Dhamle, Manager and Sri. C.H.Menon, Director of the appellant CHA firm had confessed to allowing the CHA licence to be used by Sri. Eugene Ashley independently and for monetary consideration. These statements given before the DRI under section 108 of the Customs Act have not been retracted at all and has evidentiary value in the CHALR proceedings. He also relies on the decision of the honble Bombay High Court in the case of Worldwide Cargo Movers [2010 (253) ELT 190 (Bom.)] wherein, it was inter alia held that in departmental proceedings, it should only be seen that principles of natural justice has been followed and the findings are justified from the material on record. Once these aspects are satisfied, it an outsider Tribunal interferes, its findings and order will be improper and perverse. In the said decision it was further held that the Commissioner of Customs is responsible for the happenings in Customs area and to maintain discipline thereat. The Tribunal is not expected to interfere on the basis of its own notions of mis-placed sympathy. The ld. DR submits that in the present case, there is no allegation that the inquiry proceedings conducted any principles of natural justice has been violated and any prejudice was caused to the appellant. Accordingly, he pleads for upholding the impugned order in the light of the law laid down by the honble Bombay High Court in the case cited supra.
5. We have carefully considered the rival submissions. Our findings and conclusions are discussed in the ensuing paragraphs.
5.1 Our first observation is that there is no allegation made by the appellant as urged before us that proper procedure of inquiry was not followed or there has been any violation of the principles of natural justice either by the Inquiry Officer or by the adjudicating authority. The only contention is that the evidence adduced by the appellant has not been properly appreciated and the punishment of revocation for the contravention of the CHALR, if any, is grossly disproportionate to the offence committed.
5.2 The first charge against the CHA is sub-letting of its CHA licence to Mr. Eugene Ashely. This is based on the statements of Mr. Sopan Dhamle, Manager and Sri. C.H. Menon, Director of the CHA firm. In his statement recorded under section 108 on 23-10-2009, Sri. Dhamle had admitted that in respect of the transactions of M/s J.M.Traders and M/s Kirmi Expo, the clients in these cases were brought by Sri. Ashley working under the name and style of M/s Able & Co.. and that all the CHA import formalities in these cases were handled by Sri. Ashley and their CHA firm had allowed Sri. Ashley to act as defacto CHA in the case for monetary benefit. Sri. C.H.Menon, in his statement dated 19-11-2009 had, inter alia, admitted to the following,-
(i) Sri. Eugene Ashley handled majority of their sea imports; Sri. Ashley was not their employee;
(ii) Sri. Ashley himself was the owner of customs clearance firm by the name of M/s Able & Co. who sought their own clients, handled their imports using the CHA licence of M/s P.B.Nair C & F Pvt. Ltd. and raised his own bills to the clients;
(iii) that as per the understanding between him and Mr. Ashley, the latter gave photocopies of import invoices, packing list and bill of lading to his employee Mr. Dhamle on the basis of which Sri. Dhamle filed the checklist bill of entry using their on-line facility;
(iv) thereafter all the activities under the said bill of entry was done by Mr. Ashley; that the same included presenting the goods for examination to the Customs and delivery of out of charge goods to the importer;
(v) sometimes Mr. Ashley filed check-list bills of entry at the CMC window at the Custom House using the CHA annexure duly signed by him ( C.H.Menon); Sri. Ashley handled all import formalities;
(vi) Sri. Ashley had provided authorisation letters, however they did not insist for it in all the cases;
(vii) that neither nor any of his employees interacted with the importer/parties handled by Mr. Ashley;
(viii) that for offering this facility Sri. Ashley gave him Rs.2500/- per 20 feet container, Rs.3000/- for a 40 feet container and Rs.2500/- for LCL cargo.
(ix) Sri Menon also admitted to mis-classification of imported laminated sheets by J.M. Traders and Kirmi Expo and added that for all the acts of omission and commission by Shri. Ashley under his CHA licence, the CHA firm was fully responsible.
5.3 It is on record that none of the above statements have been retracted. It is a settled position in law that statements recorded under section 108 of the Customs Act is a valid piece of evidence as held by the honble Apex Court in the case of Romesh Chandra Mehta vs. State of West Bengal [ 1970 AIR 940 SC ] and a lot of other decisions. Further in K.I. Pavunny Vs. Asst. Collector of Central Excise [1997 (90) ELT 241 (SC)], the honble apex court held that In a criminal trial punishable under the provisions of the IPC, it is now well settled legal position that confession can form the sole basis for conviction. If it is retracted, it must first be tested whether confession is voluntary and truthful inculpating the accused in the commission of the crime. Confession is one of the species of admission dealt with under Sections 24 to 30 of the Evidence Act and Section 164 of the Code.. The honble Madras High Court in the case of Govindasamy Raghupathy [ 1998 (98) ELT 50 (Mad)] and the honble apex court in the case of Systems & Components [2004 (165) ELT 136 (SC)] have held that - It is a basic and settled law that what is admitted need not be proved. It is also a settled position in law that confessional statements recorded in a proceedings under the Customs Act can be relied upon in a proceeding under the CHALR as held by the honble Delhi High Court in Jasjeet Singh Marwaha case [2009-TIOL-87-HC-DEL-CUS] wherein it was concluded that the CHA's licence can be suspended based on the confession made under Section 108 of the Act provided it is voluntary and the statement is truthful and is not the result of any inducement, threat or promise as mentioned in Section 24 of the Indian Evidence Act, 1872. In the light of the above decisions, the ratio of which apply to the facts of the present case, the findings of the Inquiry Officer as well as the Licensing authority that the charges of contravention of- (a) Regulation 12 of sub-letting the CHA licence; (b) Regulation 13(a) of not having proper authorizations for undertaking the transactions from the importers; and (c) Regulation 13(d) of not advising the client to comply with the provisions of the Customs Act stand clearly cannot be faulted. It is obvious that if the CHA did not know or meet the importer/exporter, he could not have rendered any advice to his client. Therefore, we do not find any perversity or unreasonableness in the findings of the said authorities.
5.4 As regards the charge of contravention of Regulation 13 (n) of non-discharge of their obligations with utmost speed and efficiency, Sri C.H. Menon in his confessional statement has admitted to non-verification of the correctness of the classification declared in the bills of entry handled by Mr. Ashley. Later on it was found that M/s J.M. Traders and M/s Kirmi Expo had mis-declared the classification of laminated sheets imported by them and this position has been admitted by the importers themselves before the Settlement Commission. If that be so, the appellant CHA could not be said to have discharged his duties and obligations with any efficiency at all. It is thus evident that the appellant has been grossly negligent in the discharge of his statutory functions. As regards the charge of contravention of Regulation 13(k), it is an admitted fact on record that the charged CHA did not maintain any import or export register showing details of the consignments handled by them and the dockets maintained by them were incomplete and they did not have the authority letters in many cases and the CHA delivery challans for having delivered the goods to the importers after clearance by the Customs. With regard to contravention of Regulation 19 (8) of not exercising proper supervision over the conduct of the employees, it is an admitted position that Mr. Eugene Ashley and Mr. Martin Joseph had handled all the import and export transactions in respect of the clients brought by them and the CHA did not exercise any control over them with regard to compliance with the provisions of Customs Act. In such a situation, the contravention of Regulation 19 (8) stands and cannot be wished away.
5.5 It has been argued that in the inquiry proceedings conducted in April, 2011, Sri. Dhamale and Mr. Menon had deposed during their cross-examination that they had given statements admitting their involvement of the commissions and omissions before the DRI under duress and threat and therefore, these statements cannot be taken at face value. This argument is not valid for more than one reason. The proceedings under section 108 of the Customs Act is a judicial proceeding and if any retraction of the confession has to be made, the same should be made before the same authority who originally recorded the statement. In Zaki Ishrati vs. Commissioner of Customs & Central Excise, Kanpur [2013 (291) E.L.T. 161 (All.)], the honble Allahabad High Court has held that subsequent retraction cannot take away the effect of the statement, if the retraction is not addressed to the officer to whom the statement was given. In the present case, it is an admitted position that both Mr. Dhamle and Mr. Menon never retracted their statements given before the DRI in October and November, 2009. Only during the cross examination conducted during the inquiry proceedings, they have stated that their statements were obtained under duress and threat. Such belated retractions made in April, 2011, after about one and half years after the statements made cannot take away the evidentiary value of their original statements and we hold accordingly.
5.6 In H.B. Cargo Services [2011 (268) ELT 448 (AP)], the honble Andhra Pradesh High Court while dealing with revocation of a CHA licence held as follows:-
12. The CHALR enables both suspension and revocation of the license of a CHA for violation of any of the conditions specified therein. If any such ground exists, two courses are open to the Commissioner. One is to suspend the license and the other is to revoke it. Suspension would mean that the license would be inoperative for a particular period. An order of revocation would mean that the license is totally inoperative in future, it loses its currency irretrievably. Suspension/revocation, as the case may be, has to be directed looking to the gravity of the situation in the background of the facts. For minor infraction, or infractions which are not of a serious nature, an order of suspension may suffice. On the contrary, when revocation is directed it has to be only in cases where the infraction is of a serious nature warranting exemplary action on the part of the authorities for, otherwise, two types of actions would not have been provided for. Primarily it is for the Commissioner to decide as to which of the actions would be appropriate but, while choosing any one of the two modes, the Commissioner has to consider all relevant aspects, and draw a balance sheet of the gravity of the infraction and the mitigating circumstances. The difference in approach for consideration of cases warranting revocation or suspension has to be borne in mind while dealing with individual cases. The proportionality question is of great significance as action is under a fiscal statute, and may ultimately lead to a civil death. (Falcon Air Cargo and Travels (P) Ltd ).
13. It should be borne in mind that, in disciplinary matters, the Commissioner is responsible for the happenings in the Customs area, and for the discipline to be maintained thereat. If he takes a decision necessary for that purpose, the CESTAT would, ordinarily, not interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or their employees. The decision is best left to the disciplinary authority save in exceptional cases where the punishment imposed is shockingly disproportionate or is malafide. 5.7 A case of sub-letting of licence by CHA, obtaining customs pass for non-employees, removal of goods without obtaining authorisation from importers was considered by the honble High Court of Gujarat in OTA Kandla Pvt. Ltd. [2011 (269) ELT 467 (Guj)]. The honble high court upheld the contention of the Revenue that sub-letting amounted to transfer of CHA licence and refused to interfere with the punishment of revocation of CHA licence awarded by the Commissioner of Customs, the Licensing authority. The relevant portion from the said judgment is reproduced below:-
14. In view of the above principles laid down by the Hon'ble Supreme Court in various judgments it clearly transpires that the judicial review of administrative action or of proportionality of punishment is permissible only if the decision of the decision maker is found to be illegal, unreasonable, irrational or suffering from any procedural impropriety, and that the High Court in exercise of jurisdiction under Article 226 or 227 should not interfere with the legal orders of Administrative Authorities. So far as the facts of the present case are concerned, as stated hereinabove, respondent no.3 the CEGAT has upheld the order of respondent no.2, revoking the licence of the petitioner as CHA on the ground of petitioner having committed breach of statutory regulations and the misconduct by misusing its licence. In the opinion of this Court, once the decision of the respondent Authorities that the petitioner committed violation of statutory regulations and the misconduct is found to be within the legal parameters, all the legal consequences as a result of such violation and the breach have to follow. The case of the petitioner being the case of contravention of said regulations and misuse of licence as CHA, the respondent Authorities have rightly revoked the licence of the petitioner. The said decision having been arrived at by the respondents, after taking into consideration all relevant material and the said Regulations, and after following the due process of law, it could not be said that the said decision was illegal, unreasonable, perverse or irrational. Under the circumstances, it could also be not said that the punishment of revocation of licence was a harsh punishment or the punishment dehorns the doctrine of proportionality. The petitioner having failed to point out any perversity or unreasonableness on the part of respondent Authorities warranting judicial intervention, this Court does not find any merits in the present petition.
5.8 The honble Bombay High Court in the Commissioner of Customs vs. Worldwide Cargo Movers [2010 (253) ELT 190 (Bom)], while dealing with a case of revocation of CHA licence, held as follows:-
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 the 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 malafide. That is not the case here. (emphasis supplied) 5.9 In our considered view, the ratio of the above decisions apply to the facts of the present case and in the light of these decisions, we find no reason to interfere with the decision of the Adjudicating authority. As regards the decision of the honble Madras High Court in the case of A.M. Ahamed & Co., we find that the said decision is by a Single Judge and the said decision does not appear to have considered the decisions of the A.P., Bombay and Gujarat Hugh Courts by a Division Bench and the said decision of the single judge cannot be considered as a binding decision. Further, we are bound to follow the decision of the jurisdictional Bombay High Court in the Worldwide Cargo Movers case.
6. In the light of the factual and legal analysis made above, we do not find any merit in this appeal and accordingly, we dismiss the same.
(Operative part of the order pronounced in the court on /12/2014) (Ramesh Nair) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 16