Custom, Excise & Service Tax Tribunal
S.K. Shipping vs Commissioner Of Customs (Gen) on 3 December, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.C/87336/13 (Arising out of Order-in-original No.30/2013/CAC/CC(G)/PKA-CHA (ADMN) dated 28/02/2013 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? ========================================
S.K. Shipping Appellant
Vs.
Commissioner of Customs (Gen), Respondent
Mumbai
Appearance:
Shri.Prasad Paranjape, 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 arises from Order-in-original No.30/2013/CAC/CC(G)/PKA-CHA (ADMN) dated 28/02/2013 passed by Commissioner of Customs (General),Mumbai. Vide the impugned order, the CHA license No.11/865 issued to M/s. S.K Shipping Agency has been revoked and also the entire amount of security deposit made by the CHA has been forfeited. Aggrieved of the same, the appellant is before us.
2. The appellant, M/s. S.K Shipping Agency is a Customs House Agent (CHA) with license No.11/865 and it is a proprietary concern of Shri. Karamshi J Nakhua. A case of fraudulent exports of various types of fabrics by certain exporters were investigated by the Directorate of Revenue Intelligence (DRI) wherein it was found that the exporters had grossly overvalued the export goods to avail higher DEPB benefits and such exporters had obtained IEC codes in the names of acquaintances and such exporters were fake/bogus. The exporters in connivance with one Shri Viren Gala and Shri Rajesh Khichda undertook fraudulent exports and these two persons had run a partnership firm in the name of M/s. R.P Clearing Agency. Subsequently they parted ways and Shri Rajesh Khichda was undertaking the activities. Investigations conducted revealed that the appellant CHA for monetary gain allowed the use of its CHA license to Shri Rajesh Khichda. In his statement recorded under Section 108 of the Customs Act, Shri Rajesh Khichda, inter alia, admitted that he was doing the CHA work by clearing export consignments from Nhava Sheva port and he utilized the CHA license of M/s. SK Shipping Agency as its owner Shri Karamshi J Nakhua was known to him. He had attended to the Customs Clearance work of M/s. Anjan Textiles, M/s.Vinayak Impex, M/s.Sahil International, M/s. Krishna Overseas and M/s.RM Enterprises by using the CHA license of SK Shipping Agency. None of the exporters were known to him and the export work was given to him by one Shri Mansukh Kataria. Shri Kataria paid him an amount equivalent to 0.4% of the FOB value to see that the goods were cleared/exported without any problems. Shri Rajesh Khichda utilized the services of some of the employees of the SK Shipping. Shri Rajesh Khichda, further stated that he had paid an amount of Rs.2,500/- for a 20 ft. container and Rs.5,000/- for 40 ft. container to Shri Nakhua, Proprietor of the CHA firm. Shri Nakhua in his statement also admitted that Shri Rajesh Khichda had come up with a proposal that he would bring exporters and the documentation was done by SK Shipping Agency. He also admitted that he did not know any of the exporters personally. On receipt of documents from Shri Rajesh Khichda, the CHA filed shipping bills online. Shri Nakhua further admitted that he did not have any authorization from the exporters to undertake the transactions. On completion of the investigation, a charge sheet was issued to the CHA alleging,- (i) contravention of Regulation 12 of CHALR 2004 for having allowed/sub-let to Shri Rajesh Khichda the use the CHA license for monetary consideration, (ii) contravention of Regulation 13 (a) for not obtaining authorization from exporters for undertaking the transactions; (iii) contravention of Regulation 13 (b) for using Shri Rajesh Khichda, who was not its employee, to undertake customs clearance work; (iv) contravention of Regulation 13 (d) in not advising the clients to comply with the provisions of the Customs Act; (v) contravention of Regulation 13 (i) in attempting to influence the conduct of a Customs Officer, Shri Samal, Superintendent of Customs, by offering bribes to facilitate the clearance of export containers; and (vi) contravention of Regulation 13 (n) in not discharging the duties as a CHA with utmost speed and efficiency. The inquiry officer held that the charges of sub-letting the CHA licence (contravention of Regulation 12), contravention of regulation 13(b) of employing persons other than its own employees, contravention of Regulation 13 (d) of not advising the client and contravention of Regulation 13 (i) of attempting to influence of the conduct of the Customs Officer were not proved. He further held that the charges of not obtaining authorisation to undertake the transactions and of not discharging the duty with utmost speed and efficienccy were proved. The licensing authority, namely, the Commissioner of Customs issued a disagreement memo with the inquiry officers report in respect of charges held to have been not proved by giving the reasons therefor and after taking into account, the submissions made by the CHA and also affording a personal hearing came to the conclusion that all the charges imputed against the CHA were proved and accordingly, he revoked the CHA license. Hence, the appeal before us.
3. The learned Counsel for the appellant CHA submits that this matter had come up for consideration of this Tribunal earlier and vide order No.A/81/12/CSTB/C-I dated 20/01/2012, the suspension was revoked inasmuch as the inquiry was not conducted within the time limit stipulated and the licensing authority was directed to complete the inquiry within a period of 90 days from the date of the order. In spite of such specific directions, the adjudicating authority has not conducted the inquiry in time and has passed the order only after a lapse of almost one year from the time limit fixed by this Tribunal.
3.1 The learned Counsel further submits that against six charges imputed against the CHA, the inquiry officer has held that four charges have not been proved and only the charge of not obtaining authorization letters from the exporters and the charge of non-discharge of duty as a CHA with speed and efficiency are proved. It is his submission that these contraventions are technical in nature and therefore, they do not merit the severe punishment of revocation of license. It is his further contention that the appellant had obtained authorization letters from the exporters subsequently and the signatures of the exporters have also been verified by the bank officials with whom the exporters had maintained accounts. Therefore, even the charge of not obtaining authorization letters from exporters thereby contravening the provisions of Regulation 13 (a) is also not proved. He also relies on the decisions of this Tribunal in the case of Manilal Patel Clearing & Forwarding Pvt. Ltd., Vs. CC (Gen), Mumbai 2013 (294) ELT 472 (Tri-Mumbai) and Baraskar Brothers Vs. CC (General), Mumbai 2013 (294) ELT 415 (Tri-Mumbai) in support of his contentions and submits that a lenient view be taken in the matter. If at all any punishment is called for, the same be restricted to forfeiture of security deposit as the CHA has been out of business since 2009 and that itself would be should be a sufficient punishment for the contraventions made. Accordingly, he pleads for setting aside the order of revocation of CHA licence.
4. The learned Deputy Commissioner (AR) appearing for the Revenue on the other hand reiterates the findings of the adjudicating authority. He submits that the licensing authority had taken immediate action to comply with the directions of this Tribunal and had directed the inquiry officer to complete the proceedings expeditiously. However, the Inquiry Officer had to be replaced on account of transfers and other administrative reasons. Further the presenting officer (P.O.) was hospitalized and had to be replaced and a new presenting officer had to be reappointed in May 2012. Thereafter the inquiry proceedings were completed and the inquiry officers report submitted in November 2012. It was because of change of inquiry officers four times and the presenting officer twice, the inquiry got delayed and these administrative exigencies were beyond the control of the licensing authority. Therefore, the delay caused was not at all intentional and the same be condoned.
4.1 The learned Deputy Commissioner further submits that in his statement recorded under Section 108, the appellant CHA had clearly admitted that he had failed to verify the credentials of the exporters, whose jobs he had handled. He has also admitted that he did not have any control over the jobs handled by Shri Rajesh Khichda who was allowed to work using their CHA license for the export jobs of various exporters. It is also an admitted position that the appellant had allowed the CHA license to be used for a monetary consideration of Rs.2,500/- for a 20 ft. container and Rs.5,000/- for a 40 ft. container. Shri Rajesh Khichda has further clearly admitted that he also did not know any of the exporters and he had undertaken the export clearance work relating to M/s. Anjan Textiles, M/s.Vinayak Impex, M/s.Sahil International, M/s.Krishna Overseas and M/s.RM Enterprises using the CHA licence of the appellant. He had obtained the export documents from one Shri Kataria, who gave him the documents for the above mentioned exporters. He has also admitted to having paid various amounts to the Customs officials to expedite the clearances of the cargo. The learned DR also emphasizes that none of these statements have been retracted and therefore, all the charges against the CHA imputed in the charge sheet stood proved. Accordingly, he pleads for upholding the impugned order.
5. We have carefully considered the submissions made by both the sides.
5.1 From the statements of Shri Rajesh Khichda and Shri Nakhua, proprietor of the CHA firm, it is clear that the CHA had allowed Shri Rajesh Khichda to use his CHA license for export clearance of fabrics by five exporters. Neither the CHA nor Shri Rajesh Khichda knew any of the above exporters. The export documents were given by one Shri Kataria and based on these documents, the CHA facilitated online filing of the shipping bills. Though the service of the employees were used for filing of the documents, other activities relating to the export transactions were undertaken by Shri Rajesh Khichda. It is also on record that the CHA never incurred any expenditure on carting and other charges on behalf of the exporters and the expenses relating to the clearance work was taken care of by Shri Rajesh Khichda. This also shows that it was that it was Shri Rajesh Khichda, who was undertaking the clearances work on behalf of the exporters by using the CHA license of the appellant. The CHA was paid consideration @ Rs.2,500/- for a 20 ft. container and Rs.5,000/- for a 40 ft. container. The above statements (which have not been retracted) clearly show that the CHA allowed Shri Rajesh Khichda to use its license for undertaking export clearance work. As per the provisions of the Customs Act, the CHA functions as the agent of the exporter or the importer and as such agent, if any contravention is committed by the importer/exporter, the agent is also liable for penal action as provided under Section 147 of the Customs Act, 1962. In these circumstances, we agree with the Commissioner that the CHA license has been sub-let for monetary consideration by the appellant herein. As regards the contravention of Regulation 13 (a) of not obtaining authorization letters, both Shri Rajesh Khichda as well as the CHA in their statements have admitted that they had never met the exporters. The documents for the transaction were given by Shri Kataria and the CHA had also not met Kataria. The so-called authorization letters subsequently produced by the CHA were not made available at the time of investigation and therefore, the subsequent submission of such letters is only an attempt to escape the consequences of law. Therefore, we have no hesitation to conclude that the CHA did not have appropriate authorization for undertaking the transactions at the relevant time. As regards the contravention of Regulation 13 (b), it is a fact on record that except for online filing of the check list for the shipping bill, rest of the activities such as carting, examination, etc. was attended to by Shri Rajesh Khichda and not by any of the employees of the CHA. Therefore, the contravention of Regulation 13 (b) is also established. With regard to the charge of not advising the clients for complying with the Customs laws, inasmuch as the CHA did know the exporters and had never met them, he could not have advised his clients at all and hence, this charge also stands proved. It is on record that Shri Rajesh Khichda paid bribes to the Customs officers/authorities to expedite and facilitate the transactions as admitted by him in his statement. Therefore, the contravention of regulation 13 (i) also stands proved. As regards the last charge of contravention of Regulation 13 (n), in the absence of knowing the clients, the CHA could not have undertaken any activity with speed and efficiency. In fact, the CHA completely abdicated his responsibility and left everything to be done by Shri Rajesh Khichda. Therefore, in our considered view the various charges imputed against the CHA stand clearly established. It is on record that none of the above statements have been retracted. The 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 many 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 a 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)] has held that - It is a basic and settled law that what is admitted need not be proved. It is also well understood that confessional statements recorded in a proceeding under the Customs Act can be relied upon in a proceeding under the CHALR also as held by the honble Delhi High Court in Jasjeet Singh Marwaha case [2009-TIOL-87-HC-DEL-CUS] wherein it was held 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 findings of the Licensing authority that the contravention of all the charges imputed against the appellant stand proved cannot be faulted.
5.2 As regards the reliance placed by the appellant on the Manilal Patel Clearing & Forwarding Pvt. Ltd., & Baraskar Brothers case, the facts were completely different. In the Manilal Patel case, the contraventions alleged did not include sub-letting of license and the only charge against the CHA was of not obtaining authorization; that is not the case before us. Similarly, in the case of Baraskar Brothers, the charge was that the CHA did not verify the genuineness of the exporters. Further in that case, it was noticed that the CHA had verified the genuineness of the IEC code from the DGFT website and therefore, it was held that the CHA had discharged the obligation. In the present case, we notice that there are a number of serious allegations against the CHA and therefore, the ratio of the above decisions will not apply.
5.3 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. Similarly in a matter pertaining to HB Cargo Services [2011 (268) ELT 448 (A.P.)], wherein also the license was sub-let and no authorisations were obtained from the exporters, the honble AP High Court upheld the punishment of revocation of CHA licence by holding that in a Customs area, it is the Commissioner who is responsible for the happenings, discipline to be maintained and he is best placed to understand the importance of CHA and if he takes a decision for that purpose, CESTAT should not interfere on the basis of its own notions of difficulties likely to be faced by the CHA or its employees and should not be swayed by considerations of mis-placed sympathy. The honble Bombay High Court in the Commissioner of Customs vs. Worldwide Cargo Movers [2010 (253) ELT 190 (Bom)], while dealing with a case relating to smuggling of cars, 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) 5.4 In our considered view, the ratio of the above decisions apply to the facts of the present case. Therefore, the revocation of the CHA licence along with forfeiture of security deposit, as ordered by the Licensing authority, is beyond any legal challenge. Thus, we do not find any merit in the appeal and accordingly, 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
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