Custom, Excise & Service Tax Tribunal
Leo Cargo Services Pvt Ltd vs New Delhi on 1 October, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - IV
Customs Appeal No. 50691 of 2019
[Arising out of Order-in-Original No. 05/MK/Policy/2019 dated 04.02.2019 passed
by the Commissioner of Customs (Airport & General), New Delhi]
M/s. Leo Cargo Services Pvt. Ltd. ...Appellant
Vs.
Commissioner of Customs, New Delhi ...Respondent
APPEARANCE:
Shri Akhil Krishan Maggu, Advocate for the Appellant Shri Rakesh Kumar, Authorised Representative for the Respondent Coram: HON'BLE MR. C. L. MAHAR, MEMBER (TECHNICAL) HON'BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL) FINAL ORDER No. 51292/2019 DATE OF HEARING : 22 May, 2019 PRONOUNCED ON : 01.10.2019 RACHNA GUPTA The appellant, M/s. Leo Cargo Services Pvt. Ltd. is holding CB Licence and Shri Sanjeev Maggu is its Director. Department got an information about Shri Ramesh Wadhera and Shri Sanjeev Maggu both residents of Sushant Lok, Phase - I, Gurugram, Haryana to have been engaged in evasion of Customs duty by way of diverting the goods stored in Custom Bonded Warehouses into domestic market. For the purpose, they were forging/ fabricating the documents to show the re-export of warehoused goods and following fictitious firms and IECs No. were used by both of them:
(i) M/s. Accturists Overseas (OPC) Pvt. Ltd. (IEC - 0517503581)
(ii) M/s. Sparx Exports (IEC - 0516517803)
(iii) M/s. Shree Shyam Enterprises (IEC - 0516966839)
(iv) M/s. Horrens Exim (IEC - 0516516299) 2 Customs Appeal No. 50691 of 2019 It was also noticed that though Shri Sanjeev Maggu himself was a Customs Broker but was utilising the services of other Customs Brokers namely M/s. D.S. Cargo Agency and M/s. R.P. Cargo Handling Services as the front Brokers for his clandestine operations. The input categorically stated that said Shri Ramesh Wadhera was the financer and Shri Sanjeev Maggu was the master mind behind the said activity of diverting the warehoused goods from public bonded warehouses M/s. Rider India & M/s. Prime Time Exports into the domestic markets without payment of Customs duty and creating forged/fabricated documents evidencing the re-
export of warehoused goods.
Based on the said information, searches were conducted by the DRI officers on 14.07.2017 in the residential premises of both the above named people and also in their various official premises as well as in the premises of associated importing firms and the cargo agencies. Statements of all concerned were also recorded. It is thereafter that the show cause notice No. 16729 dated 10.08.2013 was served upon the appellants proposing that the appellant has contravened Regulations 10 (d) (g) and (q) of CBLR, 2013. The revocation of CB Licence, forfeiture of the amount of security (Rs. 75,000/-), submitted at the time of issue of the licence, was proposed alongwith the imposition of penalty. The said show cause notice for the sake of preparing the offence report was considered by Dy. Commissioner of Customs, Air Cargo and Import (NCH), Delhi who submitted the enquiry report No. VIII/12 dated 06.12.2018 holding that Custom Broker/ the appellant has failed to fulfil his obligations as cast upon him in terms of the Regulations of 3 Customs Appeal No. 50691 of 2019 CBLR, 2018 read with CBLR, 2013. It is against the said enquiry report that the appellant preferred an Appeal before Commissioner of Customs, Airport and General who vide its Order No. 05 dated 04.02.2019 had confirmed the findings of the enquiry report and thus revoked the CB Licence of the appellant ordering forfeiture of the entire amount of security deposit of Rs.75,000/-. Penalty of Rs.50,000/- was also imposed upon the appellant. Aggrieved of the said Order, the appellant is before this Tribunal.
2. We have heard Shri A.K. Maggu, learned advocate on behalf of the appellant and Shri Rakesh Kumar, learned Authorised Representative on behalf of the Department.
3. It is submitted that the grounds of defence of the appellant have not been considered by the adjudicating authorities below. It is impressed upon that the findings about violation of Regulations of CBLR 2018/2013 on the part of the appellant are liable to be set aside on the ground of limitation alone as the enquiry report was submitted after expiry of 90 days of the issuance of show cause notice and the same was not submitted as per the provisions carried out under Regulations 20(5) of CBLR, 2013. However, the said ground has not been considered by Commissioner. Thus, the Order is liable to be set aside on this score only.
With respect to merits, it is submitted that there is no evidence on record except mere statements of various people without any corroboration thereto. Those statement makers were never allowed to be cross-examined by the respondent. Hence, on merits also, the Order under challenge is liable to be set aside. 4
Customs Appeal No. 50691 of 2019 Learned Counsel has relied upon the decision of the Hon'ble Supreme Court in the case of Harish Charan Kurmi Vs. State of Bihar reported in 1964 (6) SCR 623 and also on the decision of CESTAT, Mumbai reported in 2017 (357) E.L.T. 1017. The decision of CESTAT, Delhi in the case of Ambika Enterprises Vs. Commissioner of Customs, New Delhi reported in 2016 (343) E.L.T. 1022 (Tri.-Del.) has also been cited, praying for Appeal to be allowed.
4. Per contra, it is submitted on behalf of the Department that after receiving the information from Additional Directorate, DRI Headquarters, vide letter dated 10.05.2018, that a meticulous investigation in the form of conducting searches at various premises, in the form of recording of the statements of various people who were found the IEC Holders of the fictitious Companies as allegedly created by Shri Ramesh Wadhera and Shri Sanjeev Maggu, the Director of the appellant Company was called. It is impressed upon that the Director of the appellant was the master mind of diverting the warehoused goods to the domestic market. The statements being given to the Customs officers under Section 108 of the Customs Act are well admissible into evidence. Thus, there is sufficient evidence on record as a proof for the alleged illegal act on the part of the appellant. Hence, there is no infirmity in the Order under challenge.
It is impressed upon that the impugned show cause notice cannot even be held to be barred by time as alleged. It is impressed upon that the time limit under Regulation 20(5) of CBLR, 2013 is mere directory and not mandatory in nature. Learned AR 5 Customs Appeal No. 50691 of 2019 has relied upon decision of Hon'ble Apex Court in the case of Commissioner of Customs Vs. Candid Enterprises reported in 2001 (130) E.L.T. 404 (S.C.) to emphasise that even if there is delay on the part of the public authorities the same is condonable when the element of fraud is involved. Learned AR has also impressed upon Section 17 of the Limitation Act, 1963. Appeal is accordingly prayed to be dismissed.
5. After hearing both the parties and perusing the entire record of the Appeal we are of the opinion as follows:
5.1 The appellant has objected the impugned order for no findings of Adjudicating Authority below on the limitation issue i.e. the proceedings against appellant are liable to be vitiated as the offence report was not submitted within 90 days of issuance of show cause notice. We observe that Commissioner in the Order under challenge has considered the plea of limitation in view of the observation that Mr. Sanjeev Maggu was deliberately buying time to disable the Directorate to unearth the modus operandi and to recover the Customs duty. Hence, the allegation that there is no finding on the issue of limitation are not sustainable. However, since the findings have been challenged on both grounds, merits as well as limitation, before touching the merits, we prefer to first adjudicate the legal issue of limitation.
For the purpose, Regulation 18-22 of CBLR 2013 are relevant as those talk about revocation of licence/ imposition of penalty (Regulation 18), Suspension of license (Regulation 19), Procedure for revoking licence/ imposition of penalty (Regulation 20) Sub- 6
Customs Appeal No. 50691 of 2019 clause 5 of Regulation 20 [20(5)] talks about the time period the violation whereof is the grievance of the appellant. It reads as follows:
"At the conclusion of the inquiry, the Dy. Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall prepare a report of the inquiry and after recording his findings thereon submit the report within a period of ninety days from the date of issue of a notice under sub-regulation(1)."
6. Apparently, show cause notice was issued on 10.08.2013 and the offence report was got prepared on 06.12.2013. Thus, the issue involved at this stage is:
6.1 Whether the time frame prescribed in Regulation 20(5) is mandatory or directory i.e., whether the time therein be so strictly construed so as to result in declaring initiation of action itself invalid, if that is not adhered to.
7. CBLR Regulations aim at securing interest of the customs house agent and also of the revenue. The urgency and expediency of the action permits the authority to step in immediately or with promptitude. A balancing of interests is achieved by ensuring prompt action and avoiding undue delay in taking it to its logical conclusion. Though word used in Regulation 20(5) is "shall" but in view of above observed aim of CBLR, we are of the opinion that the question as framed above would depend on the intention of the legislature and not necessarily merely by looking at the language in which it is clothed with. We opine that it is mandatory for the Court to look into the nature of the statute and the consequences which would follow from construing it in one way or the other, the ambit of the other provisions, the necessity of compliance of the provisions in question. Above all, whether the object of the enactment is 7 Customs Appeal No. 50691 of 2019 defeated by holding it to be directory and whether the object would be achieved by construing it to be mandatory has to be considered.
We draw our support from a decision of Hon'ble Apex Court in the case of Govindlal Chhaganlal Vs. Agriculture Produce Market Committee reported in AIR 1976 SC 263, where Hon'ble Supreme Court has approvingly quoted the following passage from Crawford on statutory construction.
"The question as to whether the statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which it is clothed. The meaning and the intention of the legislature must govern and this is to be ascertained not only from the phraseology of the provision, but by considering its nature, design and the consequences of which would follows from construing it one way or other."
The Hon'ble Apex Court further observed:
"thus the governing factor is the manner and intent of the legislature which should be gathered not merely from the words used by legislature but from a variety of other circumstances in consideration. The circumstances that the legislature has used a language of compulsive force is always of great relevance in the absence of anything contrary in the context indicating that a permissive interpretation is permissible, the statue ought to be construed as peremptory. One of the fundamental rules of interpretation is that if the words of the statue are themselves precise and unambiguous, nothing more is necessary than to expound those words in their natural and ordinary sense, the words themselves in such case best declare the intention of the legislature"
8. For the object of time limit in Regulation 20 of CBLR, 2019/2018 we opine that said time limit is evolved so that the inquiry and proceedings are not delayed indefinitely as it hampers the brokerages of the customs broker. At the same time, the time limit should not be so strictly adhered to, even in cases of serious lapse on the part of the customs broker and where the inquiry involves certain complicated facts. Hon'ble Apex Court in T.V. Usman Vs. Food Inspector, Tellicherry reported in 1994 (1) S.C. 260 held that if the performance of a public duty is required to be discharged within a specific time which also confers a right on a 8 Customs Appeal No. 50691 of 2019 person, the provision as to time limit will still have to be held as directory unless it is shown that a person on whom the right is conferred is prejudiced because of non performance of the duty within a specific time. Thus, cannot be permissible that the customs house agent is entitled to take benefit of his own wrong, on the ground that the process is not completed within the stipulated period. In such circumstances, if the provision is construed in such a rigid form and no flexibility is allowed, though it results into declaration of the entire action of the revenue as illegal, it would not ensure justice rather shall defeat it? Merely because the inquiry was not completed within a stipulated period, the customs broker may not be allowed to walk free, as his suspension cannot be continued beyond the period prescribed in the Regulation and his licences need not be restored. The Hon'ble Apex Court in the case of Delhi Air take Services Pvt. Ltd. and another Vs. State of West Bengal and another reported in 2011(a) SCC page 354 has clarified the above position by quoting an example of criminal law. It observed:
"where a statute imposes a public duty and proceeds to lay down the manner and time frame within which the duty shall be performed. The injustice or inconvenience resulting from a rigid adherence to the statutory prescriptions may not be relevant factor in holding such prescription to be only directory. For e.g., when dealing with provision relating to criminal law, legislative purpose is to be borne in mind for its proper interpretation. It is said that the purpose of criminal law is to permit everyone to go about the daily lives without fear of harm to person or property and it is in the interest of everyone that serious crime be effectively investigated and prosecuted. There must be fairness to all sides. In a criminal case, the Court is required to consider the triangulation of interests taking into consideration the position of the accused, the victim and his or her family or the public."
9. The circumstance for grant of license to Customs Broker is that the customs house agent has a direct access to the port, the revenue intended that there should be a regime of discipline 9 Customs Appeal No. 50691 of 2019 governing such customs house agent and only a person who is qualified and in know-how of the business relating to the customs clearance would be entitled to be conferred with a licence to act as a customs house agent.
In order to continue the regime of discipline, the Commissioner of Customs is empowered to revoke a licence of the customs house agent and order forfeiture of his security if the customs house agent fails to comply with any of the conditions of the bond executed by him and he fails to comply with the provisions of the Regulation or indulge into an act which would amount to "misconduct".
Thus, we reaffirm that the purpose of prescription of the time limit by the CBLR Regulation, 2013 is to cast a duty on the Revenue Authorities to act within the time frame so that there remains no discretion to the revenue to continue the said action of suspension of licence for an indefinite period depriving and adversely affecting the interest of the licensee and simultaneously the purpose is that the licensee should not be permitted to take an advantage of some delay at the instance of the Revenue, which is beyond its control since the revenue administration needs to be granted certain concessions which may be on account of administrative exigencies, and the department working at different levels through different persons.
10. The principles of fairness and equity demands a balancing situation that when there is deviation from the time schedule prescribed in the Regulation, on part of Revenue, the Revenue 10 Customs Appeal No. 50691 of 2019 need to enumerate the reasons and attribute them to an officer dealing with it and also should account for every stage at which the delay occurs. Every endeavour should be made to adhere to the time schedule. In exceptional circumstances also, which are beyond the control of the revenue if the time schedule is not adhered to, an accountability be fastened on the Revenue, to cite reasons why the time schedule was not adhered to, and then if the explanation offered is reasonable and is not reflecting the casual attitude on behalf of the Revenue rather there is apparent malafide on part of the CB, in that case the time line has to be considered directory only. Thus, the non compliance thereof cannot be the ground to vitiate the show cause notice. We draw our support from the decision in the case of Union of India Vs. R.S. Saini reported in 1999 (2) SCC 151 wherein Supreme Court held that the office memorandum fixing the time limit for completion of disciplinary proceedings is only a mid-line, non compliance of such office memorandum will not invalidate the punishment. The customs house agent, who is in a position of the delinquent and facing an inquiry is somehow similar to an inquiry in disciplinary proceedings on one hand and the revenue in the capacity of the administration on the other hand. CESTAT West Zonal Bench Mumbai also in Unison Clearing Pvt. Ltd. Vs. Commissioner of Customs (Tribunal Mumbai) held that if the time limits are construed as mandatory and the matter is put to an end, the purpose of Regulation would be defeated and so would be defeated the intention of legislature behind framing such a regulation. On the other hand, if there is no consequence stated in the regulation for non-adherence of time period for 11 Customs Appeal No. 50691 of 2019 conducting the inquiry, the time line cannot be proved to be fatal to the outcome of the inquiry. Based on these observations the Tribunal had held that the Regulation is directory in nature.
11. Hon'ble Apex Court in Topline Shoes Ltd. Vs. Corporation Bank reported in 2002 (6) SCC 33 held as follows:
The provision contained in a statue which is procedural in nature using the word "shall" be held to be mandatory, if it did not cause any prejudice else not. The emphasis, therefore, should not be upon the language employed in the provision, but the Court will have to examine whether the provision is intended to specify certain procedure or whether it confers certain rights in the individual and casts a corresponding duty on the officer concerned. The Court will have to examine as to what is the effect of such a provision and whether its non compliance would invalidate or render the proceedings void ab initio or it would result into imposition of lesser penalty or in issuance of directions to protect the individual against the action of the State. The language of the statue, the intention of the legislature would determine the impact of non compliance in facts and circumstance of a given case, before the Court construes a provision to be directory or mandatory.
In view of above discussed case law, we are of the opinion that the judgments on which reliance had been placed by the appellant taking a view that the revocation of a CHA license is bad in law since the time limit for completion of inquiry in terms of Regulation 20(5)/22(5) of CBLR, 2013/2018 has not been adhered to, are not applicable to the facts of the present case as 12 Customs Appeal No. 50691 of 2019 most of these cases have dealt with the extraordinary delay caused at the instance of the revenue in conducting inquiry against the custom house agent, depriving them of their means of livelihood and it was observed that the purpose of prescribed time limit was to safeguard the interest of the custom broker and smooth import and export of goods. Whereas, present is the case of alleged fraud on part of the appellant. Adjudicating Authority has clearly observed the delaying strategy of the appellant's Director. Section 17 of Limitation Act while talking about effect of fraud or mistake lays that the fraud vitiates the limitation prescribed. Thus, those are not applicable to the present case.
12. In the light of the entire above discussion, when facts of this case are looked into, we observe that after the show cause notice was served upon the appellant tried to delay investigation by not joining the investigation. It is also observed that vide his letter dated 30.10.2017, Shri Sanjeev Maggu had stated that no firm in the name of M/s. Leo Cargo Services ever existed at the address on which the hearing notices were served. Thus, the malafide intentions to not to enable the DRI officials to unearth the modus operandi of committing the alleged illegal act were very much apparent on the record. These reasons are sufficient to hold that the inquiry officer could not maintain the time line of 90 days for submitting the report. Accordingly, we are of opinion that the customs house agent cannot be permitted to take benefit of his own wrong, on the ground that the process is not completed within the stipulated period. In such circumstances, if the provision is construed in such a rigid form and no flexibility is allowed, though it 13 Customs Appeal No. 50691 of 2019 results into declaration of the entire action of the revenue as illegal, it would not ensure justice rather shall defeat it? Thus, we answer the question framed, as above, as follows:
In view of the above noticed intention of CB to not to enable the Department to adhere to the impugned time limit despite that the illegal act of diverting the warehoused goods to domestic market was alleged against the said CB, the time line of Regulation 20(5) CBLR, 2013 is mere directory in nature and the non compliance thereof shall not vitiate the action taken against the defaulting CB.
13. Now coming to the merits of the case based on the documents/ loose papers as got recovered during the search of the residence of Shri Sanjeev Maggu and that of office premises of M/s. Riders India, M/s. Prime Time Exports, the public bonded warehouses, as were also got searched. The statements of Shri Sanjay Gaholt, warehouse keeper of M/s. Prime Time, statement of various others from the CHA Companies and the other companies/firms which were informed to be used by the appellants for committing the alleged act were recorded. All of them in corroboration have deposed that Shri Sanjeev Maggu despite himself being a Custom Broker but concealed his identity while dealing with the various companies and projecting himself as the owner of the fictitious companies to get the goods transferred from the customs warehouses to the domestic markets and that he only was providing all the documents relevant for the transfer of the goods without even submitting any re-warehousing certificates. The statement of the officers of Department were also recorded to the fact that during their visit to M/s. Rider India, Shri Sanjeev Maggu 14 Customs Appeal No. 50691 of 2019 was found present. There has been admissions on record as is apparent from the statement of Raja Bhanskar alias Raja Bansal, proprietor of IEC Holder of M/s. Shree Shyam Enterprises that it was on Shri Sanjeev Maggu's instruction that he signed in a fake name as a witness for triple duty bond of a different firm M/s. Sparks Exports. Similarly, Shri Suresh Aggarwal, Chartered Accountant admitted that on the instruction of Shri Sanjeev Maggu and Shri Ramesh Wadhera that he got opened few firms based on the forged documents in the names of petty employees just for the purpose of evasion of Customs duty. There are many such admissions apparent on record. The statements recorded under Section 108 of the Customs Act are the statements given to the Customs officers who are not the police officers. Hence, the immunity against admissibility of these statements into evidence is not available to these statements. There is no apparent retraction by any of the witnesses for these statements nor there is any other document apparently on record produced by the appellant which may even prima facie rebut the said oral evidence and the said admissions on record. Thus, we are of the opinion that the adjudicating authorities have committed no error while denying the opportunity to cross- examine these witnesses and in holding the appellant to have hatched the alleged conspiracy for clandestine removal of warehoused goods from public bonded warehouses to domestic market without payment of customs duty by floating fictitious importer firms. The Director of the appellant had committed forgery of documents for the purpose. Therefore, legal ground of the objection thereof is not sustainable due to the noticed mis- representation and fraud/ forgery. Hon'ble High Court of Punjab & 15 Customs Appeal No. 50691 of 2019 Haryana in the case of Shiv Shakti Steel Tube Vs. Comm. Reported as 2008(221)E.L.T. 166 has held that equity and compassion cannot be allowed to bend the arms of law in a case where the individual requires a status by practising fraud.
14. In view of above discussion, we are of opinion that there is no infirmity in the Order under challenge confirming the violation of the Regulation 10 (d) (g) and (q) of CBLR 2018/ Regulation 11 (d) (g) and (o) of CBLR, 2013 on part of the appellant. The cancellation of appellants licence with the forfeiture of the security deposit and the imposition of penalty upon the appellant is therefore, held to be sustainable. Appeal accordingly stands dismissed.
[Order pronounced in the open Court on 01.10.2019] (C. L. MAHAR) (RACHNA GUPTA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) DJ