Customs, Excise and Gold Tribunal - Mumbai
Worldwide Cargo Movers vs Commissioner Of Customs (General) on 4 April, 2006
ORDER S.S. Sekhon, Member (T)
1.1. The appellant is a CHA Licensee under the provisions of the Custom House Agents Licensing Regulations, 1984 (CHALR for short). The said licence has been ordered to be revoked/cancelled vide impugned order dated 17.1.2006 and the security furnished by the licensee at the time of issue of the license has been ordered to be forfeited. Hence this appeal.
1.2 The appellant, pursuant to the licence issued, was handling the export/import consignment of several clients at Mumbai, Nhava Sheva ports.
1.3 The department find serious violations of the provisions of the Customs Act, 1962 allegedly against the licensee and an employee of the CHA namely Shri Rehman Iqbal Shaikh as follows:
(i) import fraud case of undervaluation, mis-declaration and contravention of EXIM Policy, in import of one New Volkswagen Touareg Car imported vide B/E No. 252983 dated 11/05/05 at Air Cargo Complex, Sahar resulting in a personal penalty of Rs. 50,000/- (Rupees Fifty Thousand only) on Shri Rehman Iqbal Shaikh, vide Order-in-Original CAO No. CC-17(SP)/2005 ADJ ACC dated 18/07/2005 for his involvement in the said import fraud, the importer Shri Ahmed Imran Shaikh in the said case was real younger brother of Shri Rehman I. Shaikh who did not advise the Importer about the compliance of the provisions of Customs Act, 1962, Import Licensing Note and other Rules and Regulations and he did not bring to the notice of the department such non-compliance of the provisions by the Importer. He also was involved in the import fraud in connivance with the actual Importer and made effort to siphon off import duty by mis-declaring the value of the imported car.
(ii) In another case of outright smuggling of a new Mercedes Car detected at Jawaharlal Nehru Port (Nhava Sheva), Shri Rehman I. Shaikh was involved and was arrested by SUB, JNCH. In this case, one Mercedes Benz car of assessable value Rs. 36.15 lakhs was smuggled into India by clandestinely removing from CFS-GDL, Nhava Sheva and by replacing the same with a cheap, old and used car, without filing Bill of Entry, without producing the documents required as per the provisions of Import Policy, and the same was removed from the customs area without permission of proper officer and thereby evading duty of customs. Shri Rehman I. Shaikhplayed a major role in theft of the said car and at the behest of other persons, he devised and executed a strategy for removing the said Mercedes vehicle clandestinely by substituting an old and used car in place thereof. He made arrangements to bring the container to the ground level and broke and opened the seal and took out the Mercedes car and parked an old Toyota Corolla inside the container and thereafter took away the new Mercedes car from CFS-GDL. He admitted his offence in his statement and the same was corroborated with statements of other persons. A Show Cause Notice dated 10/11/2005 was issued in this behalf wherein the said Shri Rehman I. Shaikh is one of the noticees.
1.4 The case herein against the CHA Licensee is, that the CHA failed to take immediate action against this employee and also to bring the matter to the notice of the department, who had issued the licence, as also that the licensee had no control in supervision on his employee Shri Rehman Iqbal Shaikh and they failed to ensure proper conduct of the said employee while he was under their employment calling for violation of provisions of Regulations 19 (8), 13 (n) and 20 (i)(c) of CHALR 2004 and the said licence was suspended on 2.11.2005. A writ petition was filed in the Hon'ble Bombay High Court against the suspension Order which was dismissed and enquiry proceedings were initiated. An SLP was preferred against the said Order of the Hon'ble High Court before the Hon'ble Supreme Court, however, in the meantime the Licence itself was revoked.
1.5 Notice was issued to the Appellant on 23/11/2005 framing the following six charges -
(i) Article of Charge - I - regarding violation of Regulation 13(d) of CHALR, 2004 which stipulate that the CHA shall advise his client to comply with the provisions of the Act and in case of non-compliance shall bring to the notice of the DC or AC of Customs.
(ii) Article of Charge - II - regarding violation of Regulation of CHALR, 2004 which stipulates that the 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.
(iii) Article of Charge-III - regarding violation of Regulation 13(1) of CHALR-2004, which stipulates that the CHA shall ensure that all documents, such as bills of entry and shipping bills delivered in the Customs Station by him show the name of the importer or exporter, as the case may be, and the name of the Customs House Agent, prominently at the top of such documents;
(iv) Article of Charge - IV - regarding violation of Regulation 19(8) of CHALR-2004, which stipulates that the CHA shall exercise such supervision as may be necessary to ensure the proper conduct of any such employees in the transaction of business as agents and be held responsible for all acts or omissions of his employees in regard to their employment.
(v) Article of Charge - V - regarding violation of Regulation 13(n) of CHALR-2004, which stipulates that the CHA has to ensure that he discharges his duties as Customs House Agent with utmost speed and efficiency and without avoidable delay.
(vi) Article of Charge - VI - regarding violation of Regulation 20(1) (c) of CHALR-2004, which stipulates that any misconduct on his (CHA) part, whether within the jurisdiction of the said Commissioner of Customs or any where else which in the opinion of the Commissioner renders him unfit to transact any business in the Customs Station.
1.6 On 26/12/2005, the Inquiry Officer and the Presenting Officer for the Department gave a report of the above mentioned six charges. The report showed that all the six charges leveled against the Appellant in the Notice dated 23.11.05 were proved. A copy of the Inquiry Report was supplied to the Appellant vide letter dated 30.12.05 for comments and the appellants submitted a reply to this enquiry report stating that (i) as regards the allegations with regard to violations and misbehaviour in respect of the two cases, referred to in the Notice were attributed to their Regulation 8 authorised employee Shri Rehman Iqbal Shaikh, for which the company could not be held directly responsible; (ii) the company has dismissed the said employee, Shri Rehman Iqbal Shaikh from their service on receipt of the Suspension Order of the licence from the Department.
1.7 After grant of personal hearing which had been attended by the partner of the licensee firm who submitted that it came to know about the unauthorized activity of Shri Rehman I. Shaikh only on receiving the adjudication order dated 18.7.2005 from the Air Cargo Complex in respect of the case concerning the unauthorized import of Volkswagaon under Bill of Entry No. 252983 dated 11.4.2005 and as regards the second case of outright smuggling of Mercdes car which happened at Jawaharlal Nehru Custom House in May 2005, he came to know about the allegations only when the said employee was arrested. The said employee was thereafter dismissed from the service and the license as well as Custom pass were surrendered to the department. None of the partners were directly or indirectly involved to the two incidents of violation of the Customs violations attributed to the employee Shri Rehman I. Shaikh.
2.1 Heard both sides and it is found that:
(a) The question of vicarious liability of the appellant firm for the alleged conduct of its employee are the crux of the issues involved in this case. The appellant firm have not been issued any Show Cause Notice for the alleged complexity in clearance of the Volkswagaon car from the Air cargo Complex, Sahar, Mumbai, the appellant firm came to know about the same only after the adjudication order was received on 18.7.2005, and as regards clearance of the Mercedes car in May 2005, the same came to the knowledge of the appellant firm only when the employee was arrested. On the arrest of the employee, after consideration of the conduct, the said employee has been dismissed from the service. In this view of the facts on record the firm cannot be held to be liable for the said alleged acts of the employee.
(b) There is nothing on record to bring out any other flaw in the conduct of the firm business as a CHA licensee firm. They were not even made a notice in the two proceedings initiated under the Customs Act after due enquiry. The Enquiry Officer's report under CHALR finds the firm to be liable for these two acts of violation under the Customs Act, 1962 are in direct contradiction to the findings arrived at by the Investigator, who investigated the case of Customs violation and Smuggling of the cars and did not find any material to consider the appellant firm to be liable in any way under any provisions of the Customs Act for a penalty or prosecution etc, which a person is liable to have having aided, abetted or concerned, even himself with certain goods which he knew or had reason to believe were liable to confiscation. In this view of the matter, when the firm is not even made liable to a penalty on account of the firm having been concerned in any case with cars liable to confiscation, such CHA firm cannot be held to be liable for a punishment of cancellation/revocation of the licence granted to them. It is apparent that they are not in conscious knowledge of the two violations, said to have been committed by Shri Rehman I. Shaikh. There is no material which could be shown to us from the statements of Shri Rehman I. Shaikh to even remotely suggest that the partners of the said firm or the firm in any way was privy to or in concert to these activities of Rehman. The activities are not the duties to be performed by Shri Rehman I. Shaikh in the course of his employment. Shri Rehman I. Shaikh is responsible for his individual acts of criminal and quasi criminal nature, no vicarious liability for such acts could be fastened on the employer when the acts are not done with preconcert, knowledge or connivance of the employer and or in the course of the employment of the firm.
(c) Shri Rehman I. Shaikh, was only an employee though a qualified employee under Rule 8, he was employed to perform certain functions which he is required to perform under the law and the duties prescribed by the firm have been found to be a violation. The violations, if any, are all beyond the call of the normal duties of this employee. He is not a licence holder as observed in para 13 and 38 of the impugned order. He is an employee who has passed the qualifying test conducted by the Custom House for and such an employment, as envisaged under the Regulations. The firm was required to appoint such a person. There is no material on record to show that the firm has appointed this person with any preconcert or knowledge of the employee to be engaging himself subsequent to such an appointment in the said activities. The reliance of the adjudicator on the proceedings initiated against Shri Rehman I. Shaikh, in his individual capacity, can therefore be no reason for a violation or infringement of the regulations by the CHA firm to call for revocation of their licence.
(d) In this view of the matter, the revocation of the licence which would deprive the CHA licensee and other employees of their livelihood is a punishment which is not commensurate with the nature of the offence if any.
(e) The Ld Commissioner has failed to consider that in the case of import of Volkswagaon car, there is no averment in the report received from the Commissioner of Customs, Sahar that the importer shown on the Bill of Entry, filed, in that case or the alleged financier/actual importer Shri Sumesh Menon or Shri Rehman Shaikh were acting in preconcert or with the knowledge or an anticipated profit gain of the appellant firm, resulting from any violation or misdeclaration. It is on record and accepted that the firm was not even aware about the importers, in that case viz Shri Ahmed Imran Shaikh, was brother of Shri Rehman I. Shaikh; since a Bill of Entry was filed in the routine course in the matter of import, which was to be examined and thereafter assessed by the Proper Officers of Customs arid only after sudh scrutiny the goods could be released, there was no reason for the firm to even suspect any connivance of Shri Rehman in the alleged improper, impermissible import of the said car. This particular Bill of Entry filed on behalf of CHA firm cannot be a case for cancellation of the CHA licence of the firm.
(f) The second case of removal of Mercedes car from JNPT, Port, Nhava Sheva even without filing a Bill of Entry is an act for which the CHA firm cannot be held even remotely liable, since it is an admitted position that no Bill of Entry has been filed in this case. No agency of any kind has been created for clearance of the said car and there is no material on record to find that the appellant firm had any prior knowledge and or benefit from the said attempt to drive away the Mercedes car from JNPT Port Premises without even filing a Bill of Entry and or discharge of duties on the said car.
(g) As regards the findings arrived at by the Ld Commissioner of alleged failure to comply with he provisions of CHALR, it is found as follows:
(i) that violation of Regulation 13(d) is alleged on the basis that the Bill of entry was filed in the name and address of a fake importer with whom Regulation 8 Employee of the Appellant colluded for unauthorized importation and furnished a bogus Import Invoice to the Customs. The Appellant cannot be held liable to investigate regarding authenticity of addresses of each Importer, and the pre-importation arrangements of individuals, with any other person, when the name of the individual appears as Importer on the shipment documents.
(ii) The Appellant cannot be held liable for any undervaluation and cannot be expected to verify the authenticity of the value appearing on invoices submitted to the Customs for verification with the actual goods imported under the cover of such invoice. Regulation 13(e) therefore, cannot be said to be violated by the Appellant.
(iii) Shri Ahmed Imran held himself as Importer and submitted documents showing him as Importer of the car. The IGM also showed him as the Importer and accordingly, Bill of entry No. 252983 dated 11/04/2005 was allowed to be filed. Therefore, violation of Regulation 13(1) cannot be alleged.
(iv) The misdeeds and illegalities committed by Shri Rehman I. Shaikh cannot be said to have been done in regard to his employment. Therefore, violation of Regulation 19(8) cannot be hold as sustainable.
(v) The Ld. Commissioner held that Shri Rehman Shaikh was actively involved in the violation and the Appellant failed to take any action against him to prevent such violation. After being aware of the violations, the Appellant failed to take any prompt action against Shri Rehman Shaikh and that therefore, it was held that Regulation 13(n) was violated. The said Regulation requires that the duties of the CHA shall be discharge with utmost speed and efficiency without avoidable delay. The Appellant was under obligation to inform about any illegality to the department immediately upon receiving such information. However, in the instant case, only after the alleged violations were detected by the Customs authorities, the Appellant came to know about the same. Any action against the employee by the Appellant is neither prescribed under Customs Act, 1962 nor under CHALR. 2004. Therefore, any delay in the same cannot be held as a reason to hold that Regulation 13(n) was violated.
3.1 The CHA licence was the only means of earning livelihood by the Appellant and its other employees. The livelihood of the Appellant and its other employees is in total jeopardy. They having already been subjected to severe punishment and hardship on account of the same. In view of the settled position of law in the case of Nanda Internation v. Commissioner of Customs, Channai 2004 (176) ELT 524, which settles the position of law that CHA licence once cancelled, may be revived on considerations such as prejudice to the livelihood of the CHA and its employees, hardship already suffered, period for which the licence was inoperative. This revocation is required to be set aside and the licence restored on fresh security and obtaining a competent Rule 8 employee's service.
3.2 In view of the foregoing, the appeal is to be allowed.
3.3 Ordered accordingly.
(Pronounced in Court on 4.4.2006)