Custom, Excise & Service Tax Tribunal
Sindhu Cargo Services Ltd vs The Commissioner Of Customs on 24 June, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - Court - I (Division Bench)
Date of Hearing & decision: 24.06.2013
Miscellaneous Application No. 26924/2013
Stay Application No. 26923/2013
in
Customs Appeal No. 26584/2013
(Arising out of Order-in-Original No. 09/2013 dated 22.05.2013 passed by the Commissioner of Customs, Bangalore)
For approval and signature:
Honble Mr. B.S.V. Murthy, Member (Technical)
Honble Dr. D.M. Misra, Member (Judicial)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities?
Yes
Sindhu Cargo Services Ltd. ..Appellant
Vs.
The Commissioner of Customs
Bangalore Respondent
Appearance Mr G. Shivadass, advocate for the appellant Mr A.K. Nigam, Additional Commissioner (AR) for the respondent Coram:
Honble Mr. B.S.V. Murthy, Member (Technical) Honble Dr. D.M. Misra, Member (Judicial) MISC. ORDER Nos. /2013 FINAL ORDER No. /2013 Order Per: B.S.V. Murthy In the impugned order the licence issued to the appellant CHA firm has been suspended in respect of their operations all over India except Karnataka. The appellants approached Honble High Court of Karnataka and Honble High Court of Karnataka vide their order dated 03.06.2013 directed the stay application filed by the appellants should be heard within 4 weeks from the date of order. This order was mentioned before us on 19.06.2013 and accordingly the stay application was fixed for hearing today.
2. The appellant had also filed an application for early hearing of stay application. Since as per the High Courts direction we have taken up the hearing of the stay application, early hearing application for stay becomes infructuous and accordingly is dismissed.
3. The issue in brief is that SCSL are alleged to have misutilized the license, indulged in clearance of overvalued exports, and being involved in serious malpractices by their branch manager in collusion with one Shri Selvanathan at their Coimbatore Branch Office. The alleged malpractices include creating export documents in the name of non-existent export companies, forgery of Bills of Lading, fabrication of BRCs and Bank Verification Certificates. The Branch Manager and other staff are stated to have been involved, actively, in such malpractices and had also received pecuniary benefits in return for their collusion/complicity. Their collusion with unscrupulous exporters is said to have resulted in a losss of Rs. 3.49 crores to the exchequer in the form of drawback issued to 14 exporters.
3.1. In the above backdrop, the license issued to SCSL was suspended on 10.10.2005 and 29.11.2005 in Coimbatore and Tuticorin Coommissionerates, respectively. However, as the final order in the matter could not be passed within the time stipulated by the Tribunal, the suspension was revoked subsequently. Later, the current show-cause notice has been issued, inter alia, proposing to revoke the license, in accordance with Rule 22 of CHALR, 2004.
3.2. The CHA has not refuted the allegations of malpractices by their Coimbatore Branch. Indeed, the SCSL Management, at an early stage of investigation into the overvalued exports by certain exporters under claim of drawback, claim to have made a compliant to the Commissioner of Customs & Central Excise, Coimbatore, that their Branch Manager had indulged in clearance of overvalued exports. They had also submitted, along with the complaint, a notarized statement of Shri Mohammed Aneez, the then Branch Manager of SCSL, Coimbatore. Thus, it is a fact admitted by SCSL that their Branch Manager and other staff knowingly indulged in serious malpractices.
3.3. The show-cause notice brings out that there were violations of Regulations 13(a), 13(d), 13(e) and 19(8) of CHALR, 2004. The Inquiry Officer in her report established these violations.
4. Proceedings initiated have culminated in the impugned order under challenge.
5. After considering the operative portion of the order we find that the licence of the appellant has been suspended for a period of 6 months from 1st June onwards from operating in all places other than Karnataka. We find that in this case the appellant has already undergone suspension of licence for 24 days and further when the matter is taken up finally if we reject the appeal, fresh suspension order will have to come ordered. Since the matter was heard for quite some time, we consider it appropriate that we dispose of the appeal finally. Accordingly the matter is taken up for final disposal. Both sides agree that the matter can be disposed of today.
6. The learned advocate submits on behalf of the appellants that right through the order, the Commissioner takes the view that there is no evidence to show the involvement of management of the firm. The collusion with exporters resulting on revenue loss in the form of export incentives took place because of the activities of one Shri Mohammed Aneez who was the Branch Manager of their Coimbatore Branch. The claim of the appellant is that whatever was done by Shri Mohammed Aneez was done in his individual capacity and management did not derive any benefit out of his activities and even in his statement there was no indication that whatever earnings received because of such activities he was sharing with the management. Further the learned counsel also submitted that the employment of Shri Mohammed Aneez was terminated after the incident took place in 2005. He takes us through paragraphs 25.2, 25.3, 27, 28 and 29.02 to submit that Commissioner himself has taken note of the fact that there were several mitigating factors and there was no case against management as such but what happened was because of the activities of a Branch Manager. He submits that under these circumstances, the penalty of 6 months suspension imposed on the appellant is very harsh and in any case the appellant has already suffered 24 days of suspension in respect of operations outside Karnataka and therefore the order may be set aside and the licence may be allowed to be operated outside Karnataka.
7. The learned AR on the other hand would submit that Commissioner has taken a very lenient view against the appellants. In fact the show-cause notice was issued for revocation. He submits that punishment is not for the management but for the CHA firm and therefore if the management is not involved also, punishment has to be upheld. He also submits that appellants have not shown any evidence as to whether they are exercising proper control thereafter. Just because there is no offence after 2005, it does not mean that whatever offence committed in 2005 should go scot free.
8. We have considered the submissions made by both the sides. As rightly submitted by the learned advocate, the Commissioner himself accepts that there is no evidence to show the involvement of the management of CHA firm and there are also no evidences for the CHA to benefit in any manner. We are unable to agree that the punishment has been given to CHA firm and therefore if the management was involved or not need not be considered. Further we also note that in para 28, the Commissioner himself observed that there are several mitigating facts and circumstances which should be taken note of, namely the suspension of CHA licence of Coimbatore jurisdiction for 6 months in 2005; suspension of CHA licence in Tuticorin jurisdiction for about 2 months; not allowing the CHA firm to operate in Pune from 16.06.2010 onwards in view of the current pending proceedings and the cooperation extended by the appellant in producing copies of fake BRCs of 4 exporters. We find that these observations are correct and we find that handed over copies of fake BRCs of 4 exporters which are necessary for the Revenue and there is no indication that these 4 fake BRCs were recovered in search operation. In such circumstance this shows good intension of the management. Under these circumstances what we find is that the Commissioners decision to revoke suspension only outside Karnataka is mainly because in his opinion, appellants did not exercise proper control over their branches. In paragraph 30.04 the Commissioner has observed that in all probability the CHA have failed to put in place appropriate monitoring systems and control mechanisms in respect of their Branch Offices. For coming to this conclusion, we are unable to find what is the basis in the order. There is no indication that appellants were put to notice to answer this issue. The appellants defence has been that the very fact that there are no offences after 2005 against the firm would show that they have been exercising proper control. The Commissioner is going on the basis of probability for coming to the conclusion that there is no proper control. We find difficult to accept this as a justifiable ground for imposing punishment. Under these circumstances we consider that the imposition of punishment of suspension for a period of 6 months from 1st June against the CHA firm from operating in all parts of India except Karnataka is harsh. Moreover there was suspension of operation for varying periods outside Karnataka and there is evidence to show that events in Coimbatore were not because of the Branch Manager alone. Further management took action against the Branch Manager and co-operated with investigation by Revenue. Therefore we feel these facts have to be taken into account.
9. Having regard to the facts and circumstances and submissions and the records, we consider that a punishment of one month suspension from operating the licence in other parts of Karnataka would meet the ends of justice. Accordingly we modify the order of the Commissioner (Appeals) and direct that suspension will run from 1st June to 30th June 2013. The registry will make efforts to issue this order before 30th June 2013 so that appellants get appropriate relief. Application for early hearing of stay application, stay application and appeal are disposed of in above terms.
(Pronounced and dictated in open Court)
(D.M. MISRA) (B.S.V. MURTHY)
MEMBER (JUDICIAL) MEMBER (TECHNICAL)
iss