Judgment:
1. This application was filed by the Custom House Agents viz. M/s Falcon Air Cargo & Travels (P) Ltd. claiming that certain questions of law arose out of Final Order No. A/500-502/99-NB(DB) dated 28.05.1999 passed by this Bench in the captioned appeals (including the CHA's appeal) and prying that such questions be referred to the jurisdictional High Court under Section 130 of the Customs Act. The questions as formulated by the applicants are as under:- "1. Whether penalty under Section 114 of the Customs Act, 1962, can be imposed on the applicant in the absence of any penalty proceedings against the exporter M/s Ski Air Exports (P) Ltd. to whom no show cause notice was issued even though in the main body of the show cause notice, M/s Ski Air Exports (P) Ltd have been required to show cause to the Commissioner of Customs (ICDs), ICD, Tughlakabad, New Delhi, as to why the impugned goods should not be imposed on them for attempting to export goods illegally under Section 114 of the Customs Act, 1962.
2. Whether the goods, which were allegedly attempted to be exported illegally, can be confiscated under Section 113(1) of the Customs Act, 1962, in the absence of a show cause notice to the exporter and owner of the goods M/s Ski Air Exports (P) Ltd. (Which is a separate legal entity) even though the show cause notice was issued to Shri Kirti B.Saluja, Director of the exporting company.
3. Whether penalty under Section 114 of the Customs Act, 1962, can be imposed on the applicant whether for a violation of the Custom House Agent Regulations, 1984 (the Commissioner in the impugned order has held that the applicant intentionally over looked the statutory obligations case on them under the CHA Regulations).
4. Whether in the absence of any evidence or allegation in the show cause notice the applicant can be held guilty of contumacious conduct or deliberate violation of the provisions of law and whether in the absence of any such allegation in the show cause notice, penalty under Section 114 of the Customs Act, 1962, can be imposed on the applicants, contrary to the decision of the Hon'ble Supreme Court in the case reported at 1996 (88) ELT 12 (SC) Pratibha Processors Vs UOI." 2. The Commissioner's order impugned in the appeals was passed in adjudication of the show-cause notice [SCN] issued to the following persons:- 1. Shri Kirti B. Saluja, Director of M/s Ski Air Exports Pvt. Ltd., C-122, IInd Floor, Hari Nagar Clock Tower, New Delhi-64.
2. M/s Falcon Air Cargo & Travels Pvt. Ltd., 55-A, Siddharth Chambers, Hauz Khas, New Delhi.
3. Shri Vinod Kumar Chopra S/o Shri C.L. Chopra, II-O-33, Lajpat Nagar, New Delhi.
4. Shri Navneet Arora R/o R-202. IInd Floor, Greater Kailash-I, New Delhi.
3. The proposal in the SCN to confiscate the goods and impose penalties on the exporting company [Ski Air Exports (P) Ltd] and its director [Kirti B. Saluja] was based on the main allegation that they had misdeclared and over invoiced the export goods with intent to claim excess drawback of duty against the exportation. The exporter's CHA [present applicants] and others were sought to be penalised for their alleged abetment of the commissions of the exporters. The Commissioners who adjudicated the SCN confiscated the goods under Section 113 (i) of the Customs Act (with option for redemption thereof under Section 125) and imposed penalties on all the notices under Section 114 of the Act.
This Tribunal, by the Final Order ibid, upheld the confiscation as also the penalties imposed on Shri Kirti B. Saluja and the CHA. The present application is by the CHA seeking reference, to High Court of the four questions mentioned in para (1) above.
4. Heard both sides. The Counsel for the applicants submitted that no penalty under Section 114 of the Act was imposed on the exporting company. The penalty imposed on its director was not a penalty on the company, which was a separate legal entity. Therefore, according to Counsel, the question arose as to whether any penalty proceedings against the exporting company. The Counsel further submitted that the show-cause notice was issued not to the exporting company but to its director only. In the absence of SCN to the owner of the goods, the question arose as to whether the goods could be confiscated. Counsel, further, raised the question whether any violation of the Customs House Agents Licensing Regulations [in short, the Regulations] attracted the penalty provisions of Section 114 of the Act. yet another question raised by him was as to whether any penalty under Section 114 could be imposed on the applicants for contumacious conduct or deliberate violation of law, in the absence of allegations to that effect in the SCN. The Departmental Representative, on the other hand, submitted that none of the questions raised by ld. Advocate had arisen out of the Tribunal's Order.
5.1 We have considered the submissions. The first two questions raised in the present application appear to be based on the premise that the SCN had not been issued to the exporting company viz. Ski Air Exports (P) Ltd. We observe that the SCN, which expressly called upon the said company, among others, to show cause against confiscation of the goods and imposition of penalty, cannot be held to be one "not issued" to the company by mere reason of the fact that it was despatched to the company's director Shri Kirti B. Saluja. Under Section 153(a) of the Customs Act, any notice issued under the Act shall be served by tendering the notice or sending it by registered post to the person to whom it is intended or to his agent. The director being an agent of the company, the service on Shri Kirti B. Saluja of the SCN intended for his company was goods service in the eye of law. The very premise on which the above questions were raised is wrong. We further note that the confiscation of the goods was under Clause (i) and not under clause (1) of Section 113. The second question framed by the applicants is found to be based on Clause (1). For these reasons neither of the first two questions can be considered to have arisen out of the Final Order in the appeals.
5.2 The 3rd question raised in the application is whether penalty could be imposed on the CHA under Section 114 for violation of the Regulations. The provisions of Section 114 would attract a person whose commission or omission in relating to any export goods would render such goods liable to confiscation under Section 113 as also a person who abets such commission/omission of the person first above referred to. The applicability of Section 114 would, therefore, depend on whether the goods are liable to confiscation under Section 113. In the instant case, it was found, on physical examination of the goods, that the goods were at variance with the description given in the Shipping Bills filed by the CHA. That finding of fact was not challenged before the Tribunal in the appeals. Further, it was found by the Tribunal that the goods were overvalued in the export document. Therefore, the goods which were entered for exportation under claim for drawback and did not correspond in material particulars with the entries in the export documents were rightly found to be liable to confiscation under clause (i) of Section 113. The export documents were prepared and filed by the CHA. Under Regulation No. 14 of the Regulations, the CHA had an obligation to advise the exporter to comply with the provisions of the Act and notify and non-compliance to the Assistant Commissioner. It was also their obligation to ensure that the export documents prepared by them or on their behalf were strictly in accordance with the orders/instructions of the export. In the instant case, the Tribunal found no evidence on record to show that the applicants had discharged the obligations. The Tribunal therefore upheld the Commissioner's finding that the CHA had actively connived with the exporter in fraudulently claiming drawback, for which the latter was not eligible.
The case on hand thus demonstrate that a CHA's deliberate omissions/commissions in breach of obligations under the Regulations, in active connivance with the omissions/commissions of their client, say, an exporter in relation to export goods, can amount to 'abetment' for purposes of Section 114 of the Act. It would follow that a CHA could be visited with penalty under Section 114 for such violation of the Regulations as might, as in the present case, be found to constitute abetment of any commission or omission of an exporter rendering the export goods liable to confiscation under Section 113.
The provisions of law being clear on the point, we do not find any question of law as suggested by the applicants.
5.3 On the last question raised by the applicants, we find that such a question also does not arise in this case. The allegation in the SCN against the CHA was that they abetted, and connived with, the exporter's acts for claiming excess drawback. The Commissioner sustained the allegation and imposed penalty on the CHA under Section 114. The Tribunal upheld the decision of the Commissioner. The question whether the SCN had attributed contumacious conduct to the CHA or had alleged that they had deliberately violated law was not material so far as the above decision was concerned. Therefore, the last question raised with reference to contumacious conduct and violation of law is not a question of law arising from the Tribunal's decision.
6. The application have not been able to establish that any of the suggested question merits reference under Section 130 of the Act. The application is rejected.