| SooperKanoon Citation | sooperkanoon.com/28383 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai |
| Decided On | Jun-12-2002 |
| Judge | S T Gowri, P Chacko, J Balasundaram |
| Reported in | (2003)(159)ELT446Tri(Mum.)bai |
| Appellant | Ota Kandla P. Ltd. |
| Respondent | Commissioner of Cus. |
3. We are not able to accept the ground in the appeal that the order was passed by the Commissioner ex parte without giving the appellant opportunity of being heard, in that the Commissioner passed an order without granting hearing in spite of a request made in letter 21-12-99.
In this letter, while the applicant denied each of the charges in detail, it did not ask for any hearing. Regulation 23 of the Regulations which prescribed the procedure for suspending or revoking the licence contained in Sub-regulation (6) provisions for the agent to submit within a period of not more than 60 days from the receipt of the enquiry officer any representation he may wish to make against it.
Sub-regulation (7) provides that after considering the report and representation thereto the Commissioner shall pass orders as he may deem so. Neither Sub-regulation (6) nor Sub-regulation (7) made a hearing mandatory. We have already noted that the appellant did not specifically ask for a hearing, That being the case, we cannot find fault with the Commissioner on the ground that hearing had not been granted.
4. The contention that was taken before the Commissioner was that the appellant was not permitted to cross-examine the witnesses. Annexure 4 to the notice issued to the appellant proposed to revoke the licence indicated 11 witnesses on whose statements reliance was to be placed.
It is clear from the enquiry officer's report that not all these witnesses were examined by him or made available for cross-examination.
The enquiry officer's report and the daily sheet, which form part of the report, indicating, the details of the proceedings before him indicates that Parag Mehta, proprietor of Prabhat Kiran Marine, Sunil Kothari, an employee of this firm, in addition to Subhash Sethi, the Executive Director of the appellant were cross-examined. The enquiry officer records that "the advocate of the noticee stated that they did not want to cross-examine any other witnesses and he has nothing more to say in defence." This statement is stated to have been made at the hearing on 29-11-2000 before the Asstt. Commissioner. The daily sheet containing records of proceedings does contain such a statement attributed to Sharma, Advocate for the appellant and this is signed by this advocate. The word "examined" in the daily sheet obviously has to refer to cross-examination. In a situation where the Counsel for the appellant had himself stated that he did not wish to cross-examine any other witnesses we do not think it possible to hold that the enquiry officer's report was "flawed" because acting on that admission he did not examine these witnesses himself. The implication of the concession made by the Counsel for the appellant before the enquiry officer would be that he accepted as correct the statement that they made. It was entirely open to him to indicate a statutory right provided to cross-examine these persons and the fact that he chose not to cross-examine them he gave up the right and it was done by legal practitioner rules out any ignorance or lack of clarity. That being the case, we go on to the merits of the case.
5. The Commissioner has found that each of the charges against the appellant is established and thereafter revoked the licence. We shall consider each of the charges one by one.
6. The first charge alleges that the appellant transferred or sublet its licence. In that it allowed Prabhat Kiran Marine to clear a imported consignment of gypsum. It contended that the appellant after signing the bill of entry handed over to Parag Mehta, the proprietor of Prabhat Kiran Marine for further processing such as assessment, examination, etc., for which Prabhat Kiran Marine was to pay Rs. 1,500 per container to the appellant. The appellant had denied this claim. It said that Prabhat Kiran Marine had approached it on behalf of the importer R.P. Bhansal for clearance of the goods. It contended that Sunil Kothari had obtained blank gate passes from the office of the Custom House Agent without his consent for clearance of the goods and that Sunil Kothari and Parag Mehta are the real culprits. This was the same plea with regard to article 2, which alleged removal of this gypsum in question at an incorrect gate in the customs area contravened to instructions.
7. The appellant however has not explained how it happened that Parag Mehta and Sunil Kothari were able to obtain blank gate passes (i.e.
blank but signed) from the appellant's employee; the name of the employee is not given. Parag Mehta, at the hearing before the enquiry officer stated that he did not remember what happened as the matter was two years old, as thus Sunil Kothari. However, Subhash Sethi, the director in his statement on 28-1-98 has accepted that Sunil Kothari typed the bill of entry for the clearance of the goods, also accepted that Custom House Agent was to get Rs. 1,500 per container. The fact of blank signed gate passes from the appellant also has been established.
8. However, the contention before us was that the amount of Rs. 1,500 was not to be given so as to enable Prabhat Kiran Marine to utilise the appellant's licence for clearance but was a normal commercial payment.
It was explained by the Counsel for the appellant that Prabhat Kiran Marine was in the nature of only agent which acted as an intermediary between the importer-exporter and the Custom House Agent and this amount was given as a commission. We find this explanation difficult to accept. We do not see why when the Custom House Agent is given a job to perform, commission should be given. The Custom House Agent would charge sums as its fees for the work that it carried out and would not be ordinarily given any further payment. The fact that the other process of examination was pursued by employees of Prabhat Kiran Marine and not the appellant confirms this view. We therefore conclude that this charge has been established.
9. The second charge as we have noted, that the goods were removed from the west gate of the port and not the north gate, which was what was permitted, in fact merges in the earlier charge and is a representation of an aspect of it.
10. The third charge is that the appellant did not maintain its records properly. The basis for the charge is that gate pass numbers of the consignment were not being maintained and that separate dockets were not maintained for the consignment of gypsum and any other consignment.
While there is a general denial of this contention in the reply, there is no specific averment that is made. The basis for the charge is the statement of Sunil Sethi, the appellant's executive director.
Therefore, this charge must be considered to be established. Article 4 alleged that the appellant had obtained customs pass for Sunil Lalwani and Chandan Wazirani, who were not the employees, by presenting them to the department as its employees. Here again, the basis for the charge was the statement of Subhash Sethi in which he accepted that these persons were exclusively attending to the work of Maheshwari Handling Agency, and the statement of Lalwani and Wazirani confirming that they were with Maheshwari Handling Agency. So far this aspect of the charge is concerned, the reply again consisted of a denial without any basis and cannot be accepted. The charge in the remaining part of the article that the appellant admitted to get customs passes in favour of K.K. R.Pillai, R.G. Puri, Chandan Maheshwari and A.B. Agarwal has not been established. No evidence is cited to say that they were not on the pay roll of the appellant or any appellant's letters were issued for them.
We must conclude that this charge is partially established.
11. The charge five is that the importer did not contact the appellant directly but through various handling agents and most of the bills of entry are brought for clearance by Maheshwari or J.R. Kullar and Co.
While this charge is also denied, we do not see how this amounts to contravention of the Rules. It appears that there are handling agents in Kandla who act as intermediate agents between the importer and exporter. If the Custom House Agent obtained business through the handling agent, we do not see how the regulation would be contravened.
There are no regulation prohibiting this. However the regulation provides that Sub-regulation 14(a) that a Custom House Agent must obtain an authority from each of the company or individual from whom he is for the time being employed as Custom House Agent. The grounds rely upon the admission in the statement dated 20-3-98, he has not received any authorisation from R.P. Bansal and Co. Therefore, so far as this consignment is concerned, there is a failure to obtain the authorisation. At the same time, however, we must note that the allegation in the first article of the charge is that the appellant had permitted Prabhat Kiran Marine to utilise its licence for clearance of these goods. The omission on the part of the appellant with regard to the consignment therefore appears to us to be already be covered by the first charge.
12. We have thus necessarily to conclude that there was contravention by it of the regulation and it was liable to punishment for this contravention. The Commissioner has, on the facts before him, permanently revoked the licence that was issued to the appellant. None of the charges that we have found to be established is one that involves jeopardy to the revenue or finding on the part of the appellant to abet any evasion of duty or any other contravention of any prohibitions which render any goods liable to confiscation. As a matter of fact, the entire proceedings against the appellant with which we are concerned in this appeal appear to have arisen out of its attempt to clear a consignment of gypsum imported by it and R.P. Bansal & Co. and others. Show cause notice was issued to R.P. Bansal & Co. proposing confiscation of the gypsum on the ground that it could not be imported without a licence falling in the negative list of import in the Import Policy. Show cause notice dated 1-6-91 also proposed penalty on the appellant before us for having intentionally and knowingly removed a restricted item and for "having wilfully flouted the instruction of the department by clearing the restricted goods." After considering the reply that was filed, the Addl. Commissioner of Customs who adjudicated upon the case, has dropped the proceedings against the importer and the Custom House Agent. This being the case, the allegation contained in article 1 of the attempt to remove the gypsum from a gate other than the one prescribed by the officers become a procedural contravention.
The goods themselves were not liable to confiscation and there is no allegation that the import and clearance was not legal. The fault of the appellant trying to remove the goods through another gate is hence more procedural than technical. The other contravention relating to obtaining passes for persons who were not employees of the appellant, failure to maintain account have not been associated with any attempt to fraudulently deprive the Department of Revenue or to otherwise contravene any provisions of law.
13. In a situation of this kind, while the appellant is liable to punishment, we do not think that revocation for all time of the licence is called for. We note decision of the Tribunal in Damani Brothers v.CC,M.S. Mehta & Co. v. CC, 1994 (74) E.L.T. 304 and Johar Enterprises v. CC, 1996 (84) E.L.T. 226. In the first case, the Tribunal has held that failure by the appellant to inform the department of diversion of goods imported under an exemption in the DEEC scheme calls for punishment but not such as to permanently disable him and has limited the punishment to revocation for about a year from the date of the Commissioner's order. In the second case, the Tribunal has, while finding that the Custom House Agent was liable to penalty for permitting other person to transact proceedings on its licence, set aside the order of cancellation of the licence and substituting with revocation for four years from the date of the order of the Collector.
In the third case, the Tribunal had, on finding liability of the Custom House Agent to punishment reduced the revocation to suspension for two years.
14. The appellant's licence was suspended by order dated 16-1-98. It has thus not functioned as Custom House Agent from February, 1998 onwards i.e. almost four years as of date. We also note the claim of the appellant that it has been functioning in Mumbai, Kolkata, Haldia, Paradip, Kandla and New Delhi and has been functioning from 1956 onwards without any blemish on its record. Having regard to these facts, we are of the opinion that the suspension that the appellant had undergone is sufficient punishment.
15. We therefore, with a caution to the appellant to be careful in future, order its licence to be restored from the date of receipt of this order. Appeal accordingly disposed of.
16. On a reading of the order recorded for the Bench by my learned Brother, I am of the view that, on his very findings on the charges against the appellants, there should be an order of absolute revocation of their CHA licence.
17. The offences found against the appellants are of a serious nature.
The following offences have been specifically found against them :- (i) They sublet/transferred their licence to M/s. Prabhat Kiran Marine in violation of Regulation No. 13 of the Customs House Agents Licensing Regulations, 1984 (in short, the Regulations); (ii) They did not maintain statutory records thereby contravening Regulation No. 19 of the Regulations; (iii) They obtained Customs pass for persons who were not their employees, and presented them as their own employees before the Customs authorities, in violation of Regulations 14(b) and 20(6).
I fully concur with the above findings. Two other charges, found to have been established against the CHA, have been treated as covered by the first charge, and these are that the imported goods were removed through the West gate instead of the North gate of the port in contravention of Regulation No. 14(e) and that the appellants did not obtain the authorisation required under Regulation No. 14(a) from the importer in respect of the consignment. While agreeing with these findings of contraventions, I observe that the contraventions of Regulation No. 14 are distinct from, and independent of, those of Regulation No. 13 (first charge) and hence cannot be treated as part of the first charge. Those contraventions, having been established against the CHA, will have their own penal consequences.
18. Under Regulation No. 21, a CHA licence could be revoked on any of the following grounds :- (a) failure of the Custom House Agent to comply with any of the conditions of the bond executed by him under Regulation 11; (b) failure of the Custom House Agent to comply with any of the provisions of these regulations, whether within the jurisdiction of the said (Commissioner) or anywhere else; (c) any misconduct on his part whether within the jurisdiction of the said (Commissioner) or anywhere else which in the opinion of the (Commissioner) renders him unfit to transact any business in the Customs Station.
Ground (c) stands established against the appellants on the evidence on record. I do not think that the party deserves to be treated with such leniency as meted out to the CHAs in the cases of Damani Brothers, M.S.Mehta & Co. and Johar Enterprises cited in para (13). A close examination of the facts and evidence in those cases will reveal that the gravity of offence found against those CHAs was not as enormous as in the present appellants' case. On the other hand, in my view, the present appellants' case is similar in gravity of offence to the case of Eagle Transport Services v. C.C., Mumbai [1997 (96) E.L.T. 469 (T) = 1997 (23) RLT 450], in which this Tribunal affirmed the Commissioner's order of revocation of CHA licence. The example of Johar Enterprises (supra) was also considered in Eagle Transport Services.
19. In Eagle Transport Services (supra), the CHA had sublet/transferred their licence to another firm and obtained Customs passes for employees of that firm and presented them as their own employees. The jurisdictional Commissioner revoked the licence and this Tribunal's West Zonal Bench affirmed the revocation. The ratio of the Tribunal's decision is applicable, a fortiori, to the instant case.
20. For the reasons already noted, the order of the Commissioner is affirmed and the appeal is rejected.
In view of the difference of opinion between the two members, the matter may be placed before a third member for his opinion as to whether the licence of the appellant should be restored, or should be permanently revoked.
(P.G. Chacko) (Gowri Shankar) Member (Judicial) Member (Technical) 21. The following difference has been placed before me for resolution : Whether the licence of the appellant should be restored, or should be permanently revoked? 22. I have heard both sides and perused the order recorded by both Members of the Bench which heard the appeal. I find that the offence of subletting/transferring of the licence by appellant to M/s. Prabhat Kiran Marine in violation of Regulation No. 13 of the Customs House Agents Licensing Regulations, 1984, of non-maintenance of statutory records in contravention of Regulation No. 19 and obtaining of Customs pass for persons who were not their employees, in violation of Regulations 14(b) and 20(6) have been established, on a reading of paras 6, 7, 8 and 10 of the order recorded by the ld. Member (T). In these circumstances, I agree with the ld. Member (J) that the gravity of the offence is such as to warrant revocation of the CHA licence. I also find that in the case of Eagle Transport Services v. CC, Mumbai [1997 (96) E.L.T. 469 (T) = 1997 (23) RLT 450] and Noble Agency v. CC, Mumbai [2002 (142) E.L.T. 84] revocation of licence has been upheld for the offence of subletting of licence for pecuniary benefit and failure to maintain accounts. Following the ratio of the above decisions, I hold that the revocation of licence is sustainable. I concur with the order proposed by ld. Member (Judicial) that the appeal is to be rejected.
23. The file is now returned to the original Bench for recording majority order.
(P.G. Chacko) (Gowri Shankar) Member (J) Member (T) Dated : 18-9-2002 Dated : 18-9-2002