Per: P.G. Chacko, Member (J),
The appellant-company was holding CHA licence No.11/560 issued to them under the provisions of the Customs House Agents Regulations, 1984. This licence was suspended by the Commissioner of Customs as per orders dated 19.3.2008 under Regulation No.20(2) of the Customs House Licensing Regulations, 2004 on certain grounds. The suspension orders were challenged by the CHA in appeals No. C/313 and 314/08 before this Tribunal and, by interim orders dated 13.5.2008, this Tribunal directed the department to complete the inquiry proceedings against the CHA within three months (The said appeals were dismissed in due course vide order No. A/539 and 540/08 dated 01/10/2008). Accordingly, the Commissioner issued show-cause notices to the appellant under Regulation 22(1) of the CHALR 2004. One of these notices was issued on 9.6.2008 and the other on 10.6.2008. Six charges were raised against the CHA in each of these notices. An Assistant Commissioner of Customs was appointed as the Inquiry Officer. The CHA filed written statements of defence. The Inquiry Officer submitted his report upon completion of the proceedings. After considering this report and other materials available on record, the Commissioner of Customs, by two separate orders, one issued on 25.8.2008 and the other on 22.8.2008, revoked the CHA licence under Regulation 22(7) of the CHALR 2004. The present appeals have been filed under Section 129A of the Customs Act read with Regulation 22(8) of the CHALR 2004.
2. The suspension of the CHA licence and its subsequent revocation by the Commissioner of Customs are traceable to the customs clearance work pertaining to two shipping bills dated 18.7.2007 filed in the name of M/s. Darshan International, Surat and six shipping bills dated 19.7.2007 filed in the name of M/s. Kumar Enterprises, New Delhi. All these shipping bills were filed for export of goods declared to be ladies garment accessories under claim for drawback of duty. The goods covered by the two shipping bills dated 18.7.2007 had a declared FOB value of Rs.43,73,458/- and, in respect of the same, drawback of duty of Rs.5,02,948/- was claimed at the rate of 11.5% of the FOB value. The goods covered by the six shipping bills dated 19.7.2007 had a declared FOB value of Rs.2,04,85,872/- and, in respect of the same, drawback of duty of Rs.23,55,876/- was claimed at the same rate. One of the impugned orders relates to the customs clearance work pertaining to the two shipping bills filed in the name of M/s. Darshan International, Surat and the second order relates to the customs clearance work pertaining to the six shipping bills filed in the name of M/s. Kumar Enterprises, New Delhi. In both the cases, the learned Commissioner found that the CHA had committed breach of Regulations 12, 13(a), 13(b), 13(d) and 13(e) of the CHALR 2004 and accordingly the learned Commissioner ordered revocation of the licence.
3. Five charges were framed against the appellant. According to the first charge, the appellant violated Regulation 12 of the CHALR, 2004 by allowing one Shri Vikas Doshi to use the CHA licence for clearance of the subject consignments. According to the second charge, the appellant violated Regulation 13(a) by filing the export documents without authorization from the exporters, namely, M/s. Darshan International, Surat, and M/s. Kumar Enterprises. The third charge is that, appellant Regulation 13(b) of the CHALR, 2004 by allowing Shri Vikas Doshi, who was not an employee of the CHA-Company, to handle the export consignments unauthorisedly. According to the fourth charge, the appellant violated Regulation 13(d) by not bringing to the notice of the Department the fact that the exporters had not complied with the provisions of the Duty Drawback Rules. The fifth charge is that the appellant committed breach of Regulation 13(e) by not advising the exporters against filing manipulated documents mis-declared the value of the goods with intention to claim higher drawback. The enquiry officer found all these charges to have been proved and the Commissioner upheld these findings and awarded the punishment of revocation of CHA licence to the appellant.
4. We have examined the records and heard both sides. The following are the admitted facts: Shri Vikas Doshi was actively involved in the customs clearance of the export goods. He had received the export documents of M/s. Darshan International from one Shri Ashok Vange and those of M/s. Kumar Enterprises from one Shri Tejas Desai. At the time of receiving the documents from the said persons, Shri Vikas Doshi was not given any copy of IEC (Import Export Code) nor did he ask them as to who was the IEC holder. Shri Vikas Doshi did not obtain any authority letter from the two exporters. He was present during the examination of the goods after the same was intercepted by officers of the Directorate of Revenue Intelligence. In his statement dated 04/09/2007, recorded under Section 108 of the Customs Act, he stated that the goods were over valued by five to six times the actual value. He also stated that he had received payment at the rate of Rs. 4.50 per piece of the goods in respect of both the exporters. Out of this amount of Rs. 4.50 per piece, 50 paise was towards his agency charges and the balance of Rs. 4/- was towards other expenses incurred during clearance of the goods. Thus Shri Vikas Doshi had received cash of Rs. 19,000/- from M/s. Darshan International and Rs. 36,000/- from Kumar Enterprises. Shri Vikas Doshi was not an employee of the CHA-Company. He had entered into a contract with the appellant for procuring jobs of clearance of import / export consignments for the latter. The consignments of M/s. Darshan International and M/s. Kumar Enterprises were canvassed for the appellant in terms of this contract. All the above shipping bills were signed by one Shri Krishna Nikharge, an employee of the appellant, holding a 'G' Card issued by the department. Shri Nikharge had also attended to the customs clearance work but the sole Authorised Signatory for the appellant-company was Shri P.S. Parmesh, Managing Director of the company. Shri Vikas Doshi was also personally present for the customs clearance. He himself had held a CHA licence in the name of M/s. Interport Logistics Pvt. Ltd., which was earlier known as M/s. Virat Industries. That licence was suspended by the Commissioner of Customs but the suspension order was revoked in September, 2005. This licence was not used for the clearance work in question. Shri Vikas Doshi used to be billed by the appellant @ Rs. 1,000/- per shipment. In turn, he used to bill the exporters.
5. Learned counsel for the appellant produced a copy of letter dated 21/05/2007 of the appellant addressed to Mr. Vikas Doshi, Virat Shipping, Nashik. This letter, signed by Shri P.S. Parmesh, Managing Director of the appellant-company, reads as follows:
"Further to the talks the undersigned had with you on 20th May, 2007, we are happy to extend our services to various clients of yours on the following conditions as mutually agreed by us.
1) All documents pertaining to each shipment should be handed over to us duly signed and stamped by the exporter, well in advance.
2) We will try our utmost to process the shipping documents if we receive the documents before 2 PM. Otherwise, the documents will be processed only on the next working day.
3) As agreed, we will charge you all inclusive Agency Fees of Rs. 1,000/- per Shipping Bill or Rs. 2,500/- per 20' Container.
4) Service Tax as applicable will be charged.
5) Expenses for Carting of cargo and all Sundry expenses will be to your account.
6) Please do not dispatch the cargo before handing over the shipment documents to us. We are not responsible for any delay in unloading the cargo at the nominated site if the cargo arrives first since processing and passing of Shipping bills through Customs takes at least half a day and unloading of cargo is subject to availability of space.
We are enclosing herewith few copies of our Shipping Instructions and request you to kindly get filled up the necessary columns by your respective exporters duly stamped and signed by them and return the same along with the export documents.
Please sign the duplicate copy of this letter and mail to us for our records."
It was argued that the shipping bills in this case were filed in terms of the above contract of service and that nothing illegal was done by the appellant. However, any agency fee was not recovered from Shri Vikas Doshi in respect of the subject shipping bills. The counsel submitted that the shipping bills and other export documents (signed by the exporters) supplied by Shri Vikas Doshi were duly filed by the appellant through their employee Shri Nikharge, 'G' Card holder and therefore, the relevant regulations were substantially complied with. The learned counsel, in his endeavour to rebut the findings of the Commissioner, referred to the record of oral evidence taken by the Enquiry Officer. He also relied on certain decisions of this Tribunal including P.P Dutta vs. Commissioner 2001 (136) ELT 1042 (Tri.-Del); Landing and Shipping Agency vs. Commissioner 2003 (158) ELT 78 (Tri.- Kol.); Crown Shipping Agency. vs. Commissioner 2004 (178) ELT 885 (Tri.-Mum); Krishan Kumar Sharma vs. Commissioner 2000 (122) ELT 581 (Tri.) and Global Linkerz United Agency. vs. Commissioner 2009 (238) ELT 76 (Tri.-Del). According to the learned counsel, in the light of the cited case law, the revocation of CHA licence in this case cannot be sustained. It was also pointed out that the appellant-company and their employees have already suffered enough without any means of livelihood for one year and 9 months on account of revocation of the licence and, therefore, for the ends of justice, the licence should be restored to the appellant. In this connection, the learned counsel claimed support from Nanda International vs. Commissioner 2004 (176) ELT 524 (Tri.-Chennai).
6. The learned SDR submitted that there was enough evidence in this case to justify the revocation of the CHA licence. He referred to the obligations of a CHA under the CHALR, 2004 and submitted that the appellant committed breach of many of these obligations and, therefore, any punishment less than revocation of the licence could have been awarded in this case. He quoted from para 9 of the Hon'ble High Court's judgment in Shri Kamakshi Agency vs. Commissioner 2001 (129) ELT 29 (Mad.). The learned SDR also relied on a few other decisions including the following:
i) Order No. A/164/CSTB/WZB/MUM/2009 C-II dated 16/07/2009 in appeal No. C/1119/08 [M/s. Baraskar Brothers vs. Commissioner of Customs (Gen.), Mumbai]
ii) Order No. A/169/CSTB/WZB/MUM/2009 C-II dated 20/07/2009 in appeal No. C/1147/08 [M/s. Daroowalla Brothers and Co. vs. Commissioner of Customs (Gen.), Mumbai]
iii) Jasjeet Singh Marwaha vs. Union of India and Others 2009-TIOL-87-HC-DEL-CUS
iv) Judgment dated 29/11/2006 of the Bombay High Court in Customs Appeal No. 37 of 2006 (Commissioner of Customs vs. Worldwide Cargo Movers)
7. The first charge against the appellant is that they committed breach of Regulation 12 of the CHALR, 2004. Regulation 12 prohibits sale or transfer of CHA licence. According to the lower authority, the charge was proved against the appellant. We do not find valid reason to sustain this finding of the Commissioner. There is no evidence of the CHA licence having been sold or otherwise transferred by the appellant to Shri Vikas Doshi. A sale has to be established with proof of a valuable consideration having been received by the seller from the buyer. There is no such proof in this case. It is on record that the shipping bills were all signed by an employee of CHA. The CHA licence number was used by the employee of the CHA and not by anybody else in this case. Therefore, the licence cannot be said to have been transferred by the CHA to Shri Vikas Doshi. We note that, in the cases of P.P. Dutta (supra) and Crown Shipping Agency (supra) cited by the counsel, it was held in comparable circumstances that sale/transfer of CHA licence had not been established. In the result, we hold that the first charge against the appellant has not been proved.
8. The remaining charges are based on some of the provisions of Regulation 13, which are reproduced below:
"Obligations of Customs 13. House Agent. - A Customs House Agent shall -
(a) obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs;
(b) transact business in the Customs Station either personally or through an employee duly approved by the Deputy Commissioner of Customs or Assistant Commissioner of Customs;
(c) --------------
(d) advise his client to comply with the provisions of the Act and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs;
(e) exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage;"
Regulation 13(a) requires an authorisation to be taken by the CHA from his client (exporter/importer). Learned counsel argued that, where the export documents were signed by the exporter his authorisation should be deemed to have been obtained by the CHA filing the shipping bills. This argument flies in the face of the language of Regulation 13(a) which also requires the CHA to produce the authorisation whenever required by the Deputy/Assistant Commissioner of Customs. Any authorisation which is not in writing cannot be so produced. In the present case, it is not in dispute that the appellant did not have any authorisation in writing from any of the exporters. In P.P. Dutta's case, it was held that the fact that the importer / exporter had signed the Bill of Entry / Shipping Bill which was filed by the CHA should be taken to be substantive compliance by the CHA with the requirement of obtaining authorisation under Regulation 14(a) of the CHALR, 1984. It was held to the same effect in the case of Maruti Transports vs. Commissioner 2004 (177) ELT 1051 (Tri.-Chennai) cited by the counsel. In any of those cases, the CHA had not pleaded ignorance of the identity of the exporter/importer, nor did the latter plead that he did not authorise the CHA. On the other hand, in the instant case, the Managing Director of the CHA-Company himself admitted under Section 108 of the Customs Act that he did not have any authorisation from the exporters. He also submitted that he would check-up with Shri Vikas Doshi to find out whether the latter had obtained such authorisation. The oral evidence given by Shri Vikas Doshi under Section 108 of the Customs Act also did not show that the appellant had any authorisation in writing from the exporters. It appears from the "contract of service" (vide para 5 of this order) as also from the oral evidence of Shri P.S. Parmesh and Shri Vikas Doshi that Shri Vikas Doshi stood as an intermediary between the exporters and the CHA and that the CHA was directly accountable to Shri Vikas Doshi in respect of export consignments canvassed by the latter. The CHA did not even know who those exporters were. They did not render CHA service to the exporters or bill them. They billed Shri Vikas Doshi who, it appears, billed the exporters or their agents. On these facts, the case law cited by the learned counsel is of no avail. The charge of breach of Regulation 13(a) stands proved.
9. The third charge relates to Regulation 13(b) which requires a CHA to transact business in the Customs Station either personally or through an employee duly approved by the Deputy / Assistant Commissioner of Customs. In the instant case Shri Vikas Doshi in his statement stated under Section 108 of the Customs Act that he had done the entire customs clearance work in this case. He also claimed that he was authorised by the appellant to witness the re-examination of the goods after its interception by the DRI. In fact, he was present at the time of re-examination. That Shri Vikas Doshi was enabled to handle the customs clearance work is also evident from the statement of Shri P.S. Parmesh. The fact is further proved by the "contract of service" entered into between the appellant and Shri Vikas Doshi. All this would establish that the appellant willingly allowed the export consignments to be cleared by Shri Vikas Doshi who was not an employee of theirs nor approved by the Deputy / Assistant Commissioner of Customs. Again the authorised signatory of the appellant-Company was Shri P.S. Parmesh, Managing Director. Though Shri Nikharge who signed the shipping bills was an employee of the company and 'G' Card holder, he was not the authorised signatory duly approved by the proper officer of customs. It would thus appear that the appellant did not transact business either personally or through an employee duly approved by the proper officer of customs. The charge of violation of Regulation 13(b) stands proved.
10. The fourth charge relates to Regulation 13(d) which requires a CHA to advice his client to comply with the provisions of the Customs Act and in case of non-compliance, to bring the matter to the notice of the Deputy/Assistant Commissioner of Customs. The appellant did not even know who the exporters were. They were transacting business with Shri Vikas Doshi who canvassed the work for them and undertook the customs clearance in terms of the "contract of service". The appellant had no interface with the exporters at all. They did not even enquire about the holder of the IEC code supplied by Shri Vikas Doshi. Thus, evidently, there was no scope of the appellant giving any advice to the exporters to comply with the provisions of the Customs Act or bringing non-compliance to the notice of the department. This situation arose from the way the appellant chose to deal with the export consignments. Therefore, we agree with the learned Commissioner insofar as the charge of violation of Regulation 13(d) by the appellant is concerned.
11. The last charge against the appellant relates to Regulation 13(e) which requires a CHA to exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage. It is on record that the export consignments were canvassed by Shri Vikas Doshi for customs clearance under the CHA licence held by the appellant. He supplied the export documents to the appellant. He undertook the customs clearance work. The limited contribution of the appellant was that their employee Shri Nikharge signed the shipping bills. The rest of the work was done by Shri Vikas Doshi, which is a fact borne on record. Shri Vikas Doshi admitted that the goods were overvalued five to six times the actual value. According to the department, the CHA had an obligation to impart correct information to the exporters regarding all particulars including the value of the goods. According to the appellant, it was not the function of the CHA to ensure correctness of the declared value or other particulars of the goods given in the shipping bills. In this context, the Hon'ble High Court's ruling in Jasjeet Singh Marwaha's case is significant. One of the questions of law considered by the Hon'ble High Court was whether a CHA could be penalised for mis-declaration under the CHALR, 2004. The Hon'ble High Court held thus: "...... We are of the view that since a CHA acts on behalf of a importer, it is not only his obligation to ensure that the entries made in the Bill of Entry are correct but also that a true and correct declaration of value and description of the goods is made and in the event of any infraction such as misdeclaration, he can be penalised under Regulation 20 of CHALR, 2004 if it results in a misconduct which is of the nature which renders him unfit transact the business of a CHA at the Customs Station". In the present case, as the appellant did not know the identity of the exporters and permitted their licence to be used for clearance of the export consignments of such exporters under a "contract of service", to which such exporters had no privy, there was no scope for the appellant advising the exporters regarding the particulars to be declared in the shipping bills so as to ensure the correctness of such particulars including the value of the goods. As per the Hon'ble High Court's ruling, the CHA had an obligation to ensure the correctness of the declared particulars in the shipping bills, particularly where the shipping bills were filed under claim for drawback of duty. It was so held by this Tribunal in the case of Baraskar Brothers (supra). Evidently, the appellant committed breach of Regulation 13(e).
12. Before parting with this case, we think, we should refer to the following observations of the Hon'ble High Court of Madras in Sri Kamakshi Agency case:
"The very purpose of granting a licence to a person to act as Custom House Agent is for transacting any business relating to the entry or departure of conveyance or the import or export of goods at any customs station. For that purpose, under Regulation 9 necessary examination is conducted to test the capability of the person in the matter of preparation of various documents, determination of value procedures for assessment and payment of duty, the extent to which he is conversant with the provisions of certain enactments etc. Therefore the grant of licence to act as a Custom House Agent has got a definite purpose and intent. On a reading of the Regulations relating to the grant of licence to act as Custom House Agent, it is seen that while Custom House Agent should be in a position to act as agent for the transaction of any business relating to the entry or departure of conveyance or the import or export of goods at any customs station, he should also ensure that he does not act as an Agent for carrying on certain illegal activities of any of the persons who avail his services as Custom House Agent. In such circumstances, the person playing the role of Custom House Agent has got greater responsibility. The very prescription that one should be conversant with the various procedures including the offences under the Customs Act to act as a Custom House Agent would show that while acting as Custom House Agent, he should not be a cause for violation of those provisions. A CHA cannot be permitted to misuse his position as a CHA by taking advantage of his access to the Department. The grant of licence to a person to act as Custom House Agent is to some extent to assist the Department with the various procedures such as scrutinising the various documents to be presented in the course of transaction of business for entry and exit of conveyance or the import or export of the goods. In such circumstances, great confidence is reposed in a Custom House Agent. Any misuse of such position by the Custom House Agent will have far reaching consequences in the transaction of business by the Custom House officials".
Certain observations of the Hon'ble High Court of Bombay in Worldwide Cargo Movers case are also apposite to this context and the same read thus:
"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 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 its employees. The decision is best to be left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or mala fide."
13. In our opinion, the above observations of the High Court's have a strong bearing on the degree of punishment to be awarded to a CHA who is found to have violated the Regulations and to have committed breach of the trust reposed in him by the licensing authority. We have already found that the appellant committed breach of Regulation 13(a), (b), (d) and (e) of the CHALR, 2004. In our view, the revocation of licence coupled with the forfeiture of security deposit is a befitting punishment for this serious offence. In the result, the impugned order is sustained and this appeal is dismissed.