Custom, Excise & Service Tax Tribunal
M/S Sharp Logistics Pvt. Ltd vs Commissioner Of Customs (General) on 25 June, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. I
APPLICATION NO. C/S/1373/12
IN APPEAL NO. C/528/12 Mum
Arising out of Order-in-Original No. 15/2012 dated 18.6.2012 passed by the Commissioner of Customs (General), Mumbai.
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Honble Shri Sahab Singh, 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 :
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 Sharp Logistics Pvt. Ltd.
:
Appellant
Versus
Commissioner of Customs (General)
Mumbai
Respondent
Appearance Shri Sanjay Agarwal, Advocate for appellant Shri A.K. Prabhakar, Supdt. (A.R.) For Respondent CORAM:
Shri Ashok Jindal, Member (Judicial) Shri Sahab Singh, Member (Technical) Date of Hearing : 25.06.2012 Date of Decision :2012 ORDER NO.
Per Ashok Jindal The appellant namely M/s. Sharp Logistics Pvt Ltd., (a CHA), has filed this appeal against the impugned order wherein their CHA licence No. 11/247 has been continued to be under suspension pending enquiry under Regulation 22 of CHALR, 2004.
2. Today the stay application is listed before us. After hearing the stay application for some time, we find that the appeal itself has to be disposed of because if we allow stay, the same will be amounting to allowing the appeal. Therefore, we have taken both, the stay application and the appeal, together for disposal with the consent of both the sides.
3. The facts in brief are that the Central Intelligence Unit, JNCH, Nhava Sheva (CIU in short) has investigated a case of attempted filing of a time barred refund claim by M/s General Motors amounting to Rs.5.15 crore and further informed that Shri Haresh B. Shah, Director of the appellant Company has violated the provisions of Section 13 of the CHALR, 2004, by facilitating filing of time barred claim and by not bringing to the notice of the Customs authorities about the attempt of M/s General Motors in filing the time barred refund claim. The Revenue was of the view that if the appellant had acted with due diligence, the attempted filing of time barred refund claim would not have taken place. As the investigation has started, M/s. General Motors withdrew the refund claim which was allowed to withdraw on 09.12.2010. The investigation conducted revealed that a time barred application for refund was filed by M/s General Motors and Shri Shreyas Randive, the then Senior Divisional Manager of M/s General Motors , stated in his statement that he had prepared and signed the application for refund and handed it over to their CHA M/s Sharp Logistics in June, 2010. Shri Haresh B. Shah, Director of the appellant firm denied that he ever received or filed such an application. Shri Ashish Sheth, Managing Director of the appellant firm, whose statement recorded on 01.06.2011, stated that the subject refund claim has not been filed by their office situated in Mumbai but was not sure whether the same was filed by their Baroda office. An investigation was conducted and Shri Haresh B. Shah later-on admitted that the said refund claim was filed on instruction from Shri Shreyas Randive who has telephonically instructed to send such mail to show it to his higher authorities; that he was under pressure from Shri Shreyas Randive as he was giving him business. Shri Shreyas Randive has also stated that he had instructed Shri Haresh B. Shah to file a refund claim in September, 2010 to which Shri Haresh B. Shah denied the same and claimed that he had not attended office till November 2010. From the said act, it appeared that Shri Haresh B. Shah has not filed the said refund claim but he was privy to the said act which is evident from the fact that he had sent an e-mail to Shri Shreyas Randive, General Manager of M/s General Motors wherein he had intimated Shri Shreyas Randive about the filing of refund which he later admitted at the insistence of Shri Shreyas Randive. From the above act of Shri Haresh B. Shah, it is evident that the appellant has violated the provisions of Regulation 13 of the CHALR 2004 for facilitating filing of time barred claim and by not brining to the notice of the Customs, the attempt of M/s General Motors in filing the time barred refund claim. If he had acted with due diligence, the said time barred refund claim could not have filed. Therefore, it was alleged that the appellant has violated the Regulation 13(d) and 13(e) of the CHALR, 2004. In view of this the appellants licence was suspended on 23.05.2012. After the suspension of licence of the CHA, post decisional hearing took place and the suspension of licence was ordered to be continued pending enquiry under Regulation 22 of CHALR, 2004 on 18.6.2012. Aggrieved by the impugned order the appellants are in appeal.
4. Shri Sanjay Agarwal, learned Advocate appeared for the appellant and submitted that in this case the investigation started in the month of December, 2010 and the statement of the appellant was recorded in June, 2011 and in the order dated 18.06.2012 it has been recorded that the investigation report from the CIU, JNCH, Nhava Sheva along with relied upon documents were received in April, 2012 and their licence has been suspended on 23.05.2012 which is in gross violation of Regulation 20(2) of CHALR, 2004. He submitted that as per the Regulation 20(2), if the Commissioner of Customs feels that immediate action is necessary then within fifteen days from the date of receipt of the report from investigating authority, can suspend the licence of a CHA where an enquiry against such agent is pending or contemplated. He further submitted that in this case, admittedly the prescribed time limit under Regulation 20(2) of CHALR, 2004 has not been followed.
4.1 He further submitted that on 08.04.2010 a Circular No. 9/2010-Cus was issued for dealing with the Regulation 20(2) and Regulation 22 of the CHALR, 2004. In para 7.2 of the said Circular it is prescribed that the investigating authority shall furnish its report to the Commissioner of Customs who had issued the CHA licence within thirty days of the detection of an offence. The Licensing authority shall take immediate suspension action within fifteen days of the receipt of the report of the investigating authority. Thereafter, a post-decisional hearing shall be granted to the party within fifteen days from the date of suspension. In this case no time limit has been followed.
4.2 He further drew our attention to the impugned order wherein it has been recorded that Shri Haresh B. Shah was a Director of the appellant Company. In fact, Shri Haresh B. Shah is neither Director of the Company nor an employee of the appellant Company but he is only a consultant in their Baroda office. This fact is evident from the CHA licence itself that Shri Haresh B. Shah has resigned from the appellant firm as Director/employee long back in 2007 and this fact has not been appreciated by the adjudicating authority and a case has been made out against the appellant on the basis of the statement of Shri Haresh B. Shah. The working of Shri Haresh B. Shah is no way having any relevance with the appellant as neither he was an employee nor a Director of the appellant firm at that time. Therefore, cognizance of the offence taken by the respondent on the basis of the statement of Shri Haresh B. Shah is without appreciating the fact that he is no where related to the appellant. Therefore, immediate suspension of their licence is not required.
4.3 In support of his contention, he relied on the following judgments:-
1. Om Freight Forwarders Pvt Ltd. vs. Commissioner of Customs(General), Mumbai 2011-TIOL-73-CESTAT-MUM.
2. Sunil Bhatia vs. Commissioner of Customs, New Delhi 2011 (268) ELT 97.
3. Kamal Sehgall vs. Commissioner of Customs 2011 (274) ELT 193 (Tri. Del.)
4. Commissioner of Customs (General) vs Burieigh International 2008 (226) ELT 49 (Bom.)
5. Commissioner of Customs (General) vs National Shipping Agency 2008 (226) ELT 46 (Bom.) 4.4 He further contended that the case relied on by the Revenue are not relevant to the present provisions of Regulation 20(2) of CHALR, 2004 as the same has been amended with effect from 08.04.2010 and the decision relied upon by the respondents in the case of Ami Clearing & Forwarding Pvt. Ltd. vs. Commissioner of Customs (General) Mumbai 2009 (233) ELT 92 (Tri- Mum), Orient Clearing and Forwarding Agency vs. Union of India 2001 (136) ELT 3 (Cal.) and AR Marines Pvt. Ltd. vs. Commissioner of Customs (General) Mumbai 2008 (227) ELT 584 (Tri-Mem) dealw with for the provisions prior to 08.04.2010. In view of these submissions he prays that the impugned order be set aside.
5. On the other hand, the learned A.R. reiterated the impugned order but fairly admitted that it is recorded in the impugned order that the investigation report was received in the office of the respondent in April 2012 and the licence of the appellant was suspended on 23.05.2012 i.e. after 23 days of the receipt of the investigation report and submitted that the delay of eight days is condonable in the facts and circumstances of the case. Therefore the impugned order is to be upheld.
6. Heard both sides and considered their submissions.
7. We find that in this case M/s General Motors has filed a refund claim on 06.12.2010 which was withdrawn by them on 09.12.2010 when investigation took place. From the said facts it is clear that the investigation has started somewhere in December, 2010 when the refund claim was withdrawn. The refund claim was arose on the basis of that in February, 2010/March, 2010 one Korean firm had by oversight mentioned the invoice amount as US $ instead of Koren Won (KRW) due to which the two shipments cleared on the higher invoice value (showing the wrong currency) that in June, 2010, they realized the mistake and brought it to the notice of the higher ups and handed it over the refund claim in the first week of June, 2010 to the appellant at their office. In September, 2010, when M/s General Motors India Pvt. Ltd. pointed out the mistake of extra duty payment and wrong invoicing and contacted the appellant to process the refund claim if it was not filed earlier and it was also intimated to them that the refund claim has already been filed in June 2010 and the same was e-mailed in November, 2010.
7.1 From the perusal of the impugned order it is coming out that Shri Harish B Shah has not filed the refund claim but he was privy to the said act as he has e-mailed to Shri Shreyas Randive for filing the refund claim but it is also cleared from the records that Shri Harish B Shah has resigned from the appellant firm as Director in 2007 thereafter he was neither a Director nor an employee of the appellant firm but he is only a Consultant in their Baroda office. Therefore, the violation of Regulation 13 of CHALR, 2004 as alleged on the basis of the statement of Shri Harish B Shah who was neither Director nor an employee of the appellant firm during the relevant time prima facie is acceptable.
7.2 Further, the contention raised by the appellant that the action of suspension of their licence under Regulation 20(2) is not warranted at all. For better appreciation of the facts we reproduced the Regulation 20(2) of CHALR, 2004 as under:-
(1) (2) Notwithstanding anything contained in sub-regulation (1), the Commissioner of Customs may, in appropriate cases where immediate action is necessary (within fifteen days from the date of receipt of a report from investigating authority, suspend the licence) of a Customs House Agent where an enquiry against such agent is pending or contemplated.
7.2 We further find that the Circular 9/2010 dated 08.04.2010 also deals with the situation and the same is reproduced as under:-
7.2 In cases where immediate suspension action against a CHA is required to be taken by a Commissioner of Customs under Regulation 20(2), there is no need for following the procedure prescribed under Regulation 22 since such an action is taken immediately and only in justified cases depending upon the seriousness or gravity of offence. However, it has been decided by the Board that a post-decisional hearing should be given in all such cases so that errors apparent, if any, can be corrected an opportunity for personal hearing is given to the aggrieved party. Further, Board has also prescribed certain tie limits in cases warranting immediate suspension under Regulation 20(2). Accordingly, the investigating authority shall furnish its report to the Commissioner of Customs who had issued the CHA licence (Licensing authority) within thirty days of the detection of an offence. The Licensing authority shall take necessary immediate suspension action within fifteen days of the receipt of the report of the investigating authority. A post-decisional hearing shall be granted to the party within fifteen days from the date of his suspension. The Commissioner of Customs concerned shall issue an Adjudication Order, where it is possible to do so, within fifteen days from the date of personal hearing so granted by him.
7.3 From the above provisions, it is clear from the mandate of the legislature, the Regulation 20(2) has prescribed time limit. With effect from 08.04.2010, it is also clarified that if the Commissioner of Customs feels in appropriate cases where immediate action is necessary against the CHA, same should be done within fifteen days from the date of the receipt of the report from the investigating authority to suspend the licence and it is further clarified by the Circular that for immediate suspension on Regulation 20(2), certain guidelines to be followed and as per those guidelines the investigating authority has to furnish its report to the Commissioner of Customs (Licensing authority) within thirty days of the detection of an offence. Thereafter, the Licensing authority shall take necessary immediate suspension action within fifteen days of the receipt of the report of investigating authority. In this case, we find that the investigation was started somewhere started in December, 2010. As per the impugned order, the investigation report has been received by the Licensing authority somewhere in April, 2010. From the above, it is clear that the investigating authority has not submitted their report within thirty days of the detection of the offence. Further, we find that the suspension of licence was done on 23.05.2012 whereas it is an admitted fact investigation report has been received somewhere in April, 2012. If we consider that the investigation report has been received on 30.04.2012, then also the suspension is beyond the time period prescribed under 20(2) of CHALR, 2004 7.4 In the case of Om Freight Forwards Pvt. Ltd. (supra) this Tribunal has dealt with the situation and in para 8 of the said judgment, this Tribunal has observed as under:-
8. The period prescribed under Regulation 20(2) is 15 days from the date of receipt of a report from investigating authority. The Boards Circular has clarified that the investigating authority is liable to make a report to the Commissioner (Licensing authority) within 30 days. The purport of the new provisions is that the licensing authority should, if he deems it fit to suspend the CHA licence, do so within 15 days from the date on which he receives information about the offence of the CHA. In the instant case, the respondent Commissioner had received on 9.8.2010 the order passed by the Commissioner of Customs (Export) in adjudication of a show-cause notice earlier issued to the exporters and the CHA. Information about the offence of the CHA was received by the respondent-Commissioner on 09.08.2010. The period of 15 days should be counted from this date, it is not in dispute that the impugned order was passed by the Commissioner suspending the CHA licence only on 25.10.2010. The action taken by the Commissioner cannot be reckoned in a light vein as proposed by the SDR. The Commissioner is not above the law. He has to obey it. In the present case, the Commissioners order was passed far beyond the period prescribed by the legislative authority.
7.5 The issue again dealt with by this Tribunal in the case of Sunil Bhatia (supra) wherein the report of the investigating authority was submitted on 24.10.2010 and the suspension order issued on 15.12.2010 and this Tribunal has observed that there has been a considerable delay in issue of the suspension order when adjudged against the time frames prescribed by the Board and thereafter the suspension was revoked.
7.6 Again this issue came before this Tribunal in the case of Kamal Sehgal (supra) and there also this Tribunal hold as under:-
8. We note from the arguments on both sides that the alleged offence against the appellant is not about any action he has done in his capacity as a Customs House Agent. It is about not notifying the department about his knowledge that Shri Lokesh Kumar had intention to smuggle goods. The evidence against the appellant is not based on documents. It is based on statement of the co-accused and the statement of the appellant about his awareness about intentions of another person. So this matter needs to be tested in a regular adjudication proceeding. In the meanwhile his license has been suspended. Such suspension is normally done to ensure that he does not misuse his position as CHA, having access to Customs area to destroy evidence if any, and also to be on guard about his actual involvement that may be unearthed during investigation. Now that a show cause notice has been issued, the said reasons no longer exist. We also take note of the delay in complying with time frame prescribed by CBEC in Circular No. 9/2010 dated 8.4.2010. The decision of the Madras (sic) A.P. High Court in the case of HB Cargo Services ((supra) was in the context of a revocation order. The impugned order is a suspension order passed before appreciating the full evidence and considerable time has lapsed after the suspension order. We note that there is no procedure prescribed for periodic review of suspension order which is confirmed after post decisional hearing. Considering all these aspects, we consider it proper to set aside the impugned order suspending the licence of the appellant.
7.7 The Honble High Court of Bombay also dealt with the issue in the case of National Shipping Agency (supra). Although it is for the period prior to 08.04.2010, the Honble High Court also observed as under:-
2. The power of suspension is pursuant to the powers conferred under Regulation 20(2) of the CHALR, 2004. As we have noted in the earlier judgements, this is an emergent power to be used in those cases where it is required that the CHA licence be immediately suspended. The very fact that alleged violation is of the year 2005, as the import had taken place in September, 2005 and order of suspension was issued on 30.10.2006 itself would indicate that there is no emergency which required that the licence be suspended. The tribunal has noted that it is always open to the appellants herein to take steps even after the order of the Tribunal dated 11.5.2007. It appears that no show-cause notice has been issued to the respondents herein, till date. 7.8 Same view was taken by Burieigh International (supra) as reproduced under:-
2. In the instant, case the tribunal by its impugned order has held that the order of suspension was passed seven months after the alleged misuse came to the notice of the appellant. Regulation 20(2) no doubt confers power to suspend pending enquiry. The said sub-regulation however, requires that it can be done in an appropriate case and after following procedure under Regulation 20(2). 7.9 We have also examined the case law relied on by the learned A.R. in the case of Ami Clearing & Forwarding Pvt. Ltd. (supra) and AR Marine Pvt Ltd. (supra). All these cases are dealt with the situation prior to 08.04.2010.
7.10 Therefore, as explained by this Tribunal in the case of Om Freight Forwarders Pvt. Ltd. (supra), we are also not impressed with the proposition made by the learned A.R. that Regulation 20(2) as it stood prior to its amendment should be applied to this case, considering the fact that the violation by the CHA had occurred way back in 2010.
7.11 On examination of the above case laws, it is the position in this case that the investigation took place somewhere in December, 2010 i.e. after the amendment in Regulation 20(2) of CHALR, 2004 and the investigation report was received by the Commissioner (as admitted) in April, 2012 and the licence has been suspended on 23.05.2012 are barred by time limit prescribed for taking immediate necessary action as proposed by Regulation 20(2) of CHALR, 2004. Admittedly CHALR, 2004, have not provided any provision for condonation of this delay. Therefore, the belated action taken by the respondent cannot be condoned. The respondent is not above the law. He has follow the provisions of law as laid down in the statute and within time frame work.
8. In view of these observations, we set aside the impugned order and revoked the suspension of the CHA licence No. 11/247 of the appellant M/s Sharp Logistics Pvt. Ltd. with immediate effect.
9. Order is to be issued immediately.
(Pronounced in Court on .) (Sahab Singh) Member (Technical) (Ashok Jindal) Member (Judicial) nsk 15