Full Judgment
2. The brief facts of the case are that M/s Continental Cargo Service is a partnership concern and Shri Bhupinder Singh is one of the partner. M/s Continental Cargo Service is a Customs House Agency and is holding a CHA agency for Customs clearance work. The appellants M/s.
Continental Cargo Service filed shipping Bill No. 15650 to 15653 dated 9.8.98 on M/s Cinex Overseas for glass beads. After clearance of the said consignment from ICD, Tughlakabad, on its way to Mumbai, the said consignment was intercepted by the Customs Authorities. On re-examination of the consignment, it was found that the goods were not of a primary quality and actually consisted of junk and waste material.
3. A show cause notice dated 1.12.98 was issued to Shri Bhupinder Singh partner of M/s Continental Cargo Service and to the exporter for confiscation of the goods and for imposition of penalty. A separate show cause notice dated 21.4.99 was issued to the appellants Continental Cargo Service for cancellation of CHA licence. In the show cause notice issued on 1.12.98, the adjudicating authority confiscated the goods and imposed a personal penalty of Rs. 25 lakhs on Shri Bhupinder Singh under Section 114 of the Customs Act. In respect of the second show cause notice dated 21.4.99, the adjudicating authority cancelled the CHA licence and appropriated the security amount of Rs. 50,000.
4. In the present appeals, the appellants M/s Continental Cargo Service and Shri Bhupinder Singh is only challenging the cancellation of CHA licence and the penalty imposed under Section 114 of Customs Act.
5. The learned Senior Counsel appearing on behalf of the appellants submitted that in the show cause notice dated 1.12.98, the provisions of Rule 14 were invoked against Shri Bhupinder Singh as partner of M/s.
Continental Cargo Service for helping the exporter by not verifying his bonafide and for helping the exporter for attempting to export grossly over-invoiced goods. The contention of the appellant is that the appellant before filing the shipping bill, made enquiries from the exporter regarding the goods to be exported. The exporter had produced a shipping bill for similar goods exported from Mumbai and the copy of the bill was also produced by the appellants before the adjudicating authority to show his bona fides. The appellants before filing shipping bill saw the samples produced by the exporter. These facts were admitted by the Revenue in the Adjudication order. As the appellant has taken all the precaution before filing the shipping bill, therefore, he cannot be held liable for penal action.
6. The learned Senior Counsel also submitted that when CHA licence was cancelled, an Enquiry officer was appointed and the Enquiry officer vide his report held in favour of the appellant. During the proceedings before the lower authorities, the appellant produced the exporter before the customs authorities at the time of re-examination of goods.
The office and residential address of the exporter as given by the appellant, were found to be correct. In these circumstances, the submissions of the appellant is that the cancellation of CHA licence and imposition of penalty is not sustainable.
7. The SDR appearing on behalf of the Revenue submitted that the appellant had filed shipping bill declaring the goods as glass beads and declared the value on higher side to get more higher DBP credit. He has taken the proper precaution before filing the shipping bill. He has also not brought to the notice of customs authorities regarding the value of goods exported.
8. Heard both the sides. In this case, the penalty was imposed on the appellant Shri Bhupinder Singh and while imposing the penalty, the Commissioner of Customs held as under: "I also observe that the CHA also had seen the samples of export consignments. The CHA has argued that they were not expert in Gemology and, therefore, could not ascertain the value. But it cannot be disputed and/or denied that the condition of the goods was not proper as per the observation of the jewellery expert. Thus, the CHA aided and abetted the impugned fraud in not observing his duties as warranted of a CHA in terms of Customs House Agent Licensing Regulation, 1984 whereby a contractual obligation was cast on him to conscientiously follow the rules and deter his clients from the impugned fraud.
9. In the case where the CHA licence was cancelled, the adjudicating authority while disagreeing with the report of the enquiry officer, held as under: (1) It is established that the CHA failed to comply with the provisions of Regulation 14(d) of the CHALR' 84 as they did not take due care in ascertaining the quality and quantity of goods and for not advising their client properly in this regard. The CHA has also failed to inform the Department of the sub-standard goods being attempted to be exported.
(2) The CHA has failed to ensure all documents prepared and presented by him were in accordance with the orders relating thereto in terms of Regulation 14(L) as he had prepared and filed the Shipping Bills without verifying the contents of Goods attempted to be exported.
(3) In view of (1) and (2) above M/s Continental Cargo Service have committed a grave misconduct which could have incurred a great loss to the exchequer had the sub-standard goods not been detected by the Mumbai Customs which prevented the loss. I therefore, revoke the licence and appropriate the security amount of Rs. 50,000 (Fifty thousand only).
In the show cause notice, the provisions of Rule 14(b) and (d) Customs House Regulation Rule were invoked. The Regulation 14(d) provides that a Customs House agent shall transact licence either personally or in a manner duly approved by the Customs authority and Regulation 14(d) provides that Customs House Agent shall advice and in case of non-compliance, shall bring the matter to the notice of the Customs House.
10. The appellant is admitting the fact that the shipping bills were filed by M/s Continental Cargo Service. As per the provisions of Regulation 14 of the Customs House Agent Licensing Regulation, an enquiry officer was appointed to enquire into the allegations against the CHA. The Enquiry officer gave a detailed report in favour of the CHA. The Enquiry officer specifically noticed the fact that the allegation on CHA that he failed to produce the exporter before the Customs authority cannot be held since Shri Bhupinder Singh had produced the exporter at the time of re-examination of the goods. Shri Ashok Kumar, Prop. of M/s. Cinex Overseas (Exporter) was present at the time of re-examination of the goods and his residential and office address given by Shri Bhuplnder Singh was also found correct. The Enquiry officer further found that there is no fault with CHA since he acted in a good faith and discharged the duty cast upon him under Regulation 14 of Customs House Agent Regulation. He took abundant caution by enquiring whether a similar consignment had been cleared early, Exporter produced a similar consignment exported from Mumbai. A copy of the shipping bill was produced by the CHA. The Enquiry officer finally concluded that in view of the facts and circumstances of the case, the CHA acted in a good faith and discharged the duty cast upon him under Customs House Agent Regulation.
11. In view of these facts that CHA made enquiries from the exporter regarding similar exports and also produced the shipping bill in respect of the similar goods and also produced the exporter before the Customs authorities at the time of re-examination of the goods, it cannot be said that the CHA did not take due care in ascertaining in respect the quality of goods and committed a grave misconduct which made him liable for penal action and cancellation of licence. Hence, the impugned orders are not sustainable in respect of cancellation of CHA licence and in respect of imposition of penalty on the appellant Shri Bhupinder Singh. The appeals are allowed.