M.K.Shipping Services Vs. Commissioner of Customs (Gen), Mumbai - Court Judgment

SooperKanoon Citationsooperkanoon.com/943109
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided OnMay-22-2012
Case Number Appln.No.C/S/1902/11 APPEAL No.C/760/11 (Arising out of Order-in-Original No.CAO No.56/2011/CAC
Judge THE HONOURABLE MR. ASHOK JINDAL, MEMBER (JUDICIAL) & THE HONOURABLE MR. P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL)
AppellantM.K.Shipping Services
RespondentCommissioner of Customs (Gen), Mumbai
Advocates:For the Appellant : Shri.V.N. Ansurkar, Advocate. For the Respondent : Shri.A.K.Prabhakar, Supdt. (AR).
Excerpt:
p.r. chandrasekharan 1. this appeal and stay application are directed against the order-in-original no.56/2011/cac/cc(g)/slm/cha (admn) dated 18/08/2011 passed by commissioner of customs (general), mumbai. 2. the appellant, m/s.m.k. shipping services, is a custom house agent holding cha license no.11/958 issued under the provisions of chalr 2004 as a proprietary concern. the appellant filed four shipping bills bearing nos.7557073 dated 30/07/2009, 7563198 dated 01/08/2009, 7571506 dated 04/08/2009 and 7575681 dated 06/08/2009 on behalf of m/s.chawla trading co., nagpur, by declaring the goods as ‘basmati rice’ as per the export documents such as invoices, packing list and original certificate issued by agricultural and processed food products export development authority (apeda) provided by the exporter. the goods were received by the appellant at navkar cfs, panvel, directly from the suppliers of the exporter. after completion of the carting procedure, the shipping bills were presented before the superintendent of customs for inspection of goods for issuance of let export order (leo). representative samples were drawn from the consignments and forwarded to the group for further inspection and the concerned custom officers and the deputy commissioner also made endorsements to the effect that the samples be forwarded to agmark for testing and shipment may be allowed, if otherwise, in order. as per the directions of the dy. commissioner, the appellants completed all the formalities and let export order in respect of shipping bill no.7557073 dated 30/07/2009 was issued by the superintendent of customs. in respect of other three shipping bills, the appellant was in the process of completion of formalities as per the standard operating procedure. in the meanwhile, the directorate of revenue intelligence detained the consignments and the leo was never issued. during the course of investigation, the dri recorded a statement of shri mukesh thakkar, proprietor of the appellant firm on 19/08/2009 wherein the appellant under duress admitted that the goods under export were not basmati rice and he had prior knowledge of the same. the appellant was arrested and produced before the special magistrate at cmm court, mumbai on 20/08/2009 wherein the appellant retracted the statement recorded by dri alleging that the same was recorded under physical torture and duress. on 27/08/2009, the dri again recorded the statement of the appellant confirming the earlier statement dated 19/08/2009. 2.1  the dri, thereafter, informed the commissioner of customs, mumbai vide letter dated 16/10/2009 alleging misuse of the cha license by the appellant for monetary consideration and aiding and abetting the exporter in the export of non-basmati rice as basmati rice. the appellant’s cha licence was suspended vide order dated 22/10/2009. thereafter, a post decisional hearing was granted by the commissioner of customs (general) and a final order confirming the suspension was issued vide order no.77/2010 dated 04/03/2010. 2.2  the appellant approached this tribunal against the suspension and this tribunal vide order no.m/21/11/cstb/c-ii in a/39/11/cstb/c-ii dated 07/02/2011 directed the ld. commissioner to complete the proceedings under chalr, 2004 within a period of three months and pass final order on the matter. 2.3 a charge sheet was issued to the appellants alleging violation of the provisions of regulation 12 of chalr, 2004 on the ground that the appellant had sub-let his licence to shri vijay mange of shree gurukrupa shipping agency; violation of 13 (b) of chalr, 2004 holding that the appellant did not transact his business either personally or through his employee; violation of regulation 13 (d) alleging failure to advise the client to comply with the provisions of customs act in respect of shipping bill no.7557073 dated 30/07/2009; violation of regulation 13 (e) alleging non-exercise of due diligence in ascertaining the correctness of information; and violation of regulation 13 (n) alleging non-discharge of duty with utmost speed and efficiency. 2.4 thereafter, inquiry proceedings were conducted against the appellants by the dy. commissioner of customs. the department introduced four witnesses and recorded their testimony during the course inquiry proceedings. these witnesses are one shri vijay mange, proprietor of m/s.shree gurukrupa shipping agency, shri pradeep mange, employee of m/s.shree gurukrupa shipping agency, shri suresh kataria of m/s.rishi ice and cold storage, turbhe and shri santosh chawla of m/s.chawla trading co. nagpur. the appellants sought cross examination of the dri officers who had recorded the statements of the appellant. however, the dri officers did not appear before the inquiry officer in spite of notice. 2.5 on completion of inquiry, the inquiry officer held the charges to be proved and thereafter, the case was heard by the commissioner of customs (general), who has passed the impugned order. on the basis of inquiry report, the commissioner came to the conclusion that the appellant has violated the provisions of regulations 12 and 13 of chalr, 2004 and accordingly, he revoked the cha licence of the appellant. hence, the appellants are before us. 3. the ld. counsel for the appellant submits the following: 3.1 the charges made against the appellant were claimed to have been proved by the inquiry officer against the appellant on the basis of the statement dated 19/08/2009 wherein the appellant had admitted prior knowledge about the mis-declaration by the exporter and also sub-letting his licence to shri vijay mange for monetary consideration. however, the said statement was retracted by the appellant on 20/08/2009 before the chief metropolitan magistrate before whom the appellant was produced after arrest. in the said retraction, the appellant had clearly stated that the statement given by him on 19/08/2009 was not true or voluntary and the retraction should be taken on record. this retraction of the appellant was not rebutted by the dri. however, the dri once again recorded a statement from the appellant stating merely that whatever has been deposed by the appellant before the dri on 19/08/2009 is true and correct. the reliability or the veracity of the inculpatory statement of the appellant is suspect as the same has been obtained under duress. the appellant had also retracted the inculpatory statement on 20/08/2009 before the magistrate. further, the appellant under the rti act obtained a copy of the examination report given by the agmark laboratory in respect of shipping bill no.7557073 dated 30/07/2009 and as per the certificate the product covered by the shipping bill is ‘raw milled basmati rice’. this clearly shows that there has been no mis-declaration by the appellant in the concerned shipping bill. this report of the agmark authorities was never brought on record either by the investigating team or by the inquiry officer and by suppressing this vital piece of evidence , which is in favour of the appellant, great injustice has been done to the appellant and the entire inquiry proceedings are vitiated. the ld. counsel further submits that the department produced four prosecution witnesses viz., s/shri. vijay mange, pradeep mange, suresh kataria and santosh chawla. as per the averments made by these four departmental witnesses during the inquiry proceedings it is seen that shri vijay mange and shri pradeep mange have clearly stated that they have not used the cha licence of the appellants by way of subletting or otherwise. shri santosh chawla has also confirmed this fact. shri suresh kataria, from whose warehousing facility, it is alleged that the non-basmati rice was procured and attempted to be exported, has clearly stated that the said non-basmati rice is still available in their godown and the goods under export have not been obtained from the premises of rishi ice and cold storage. from the submissions of the departmental witnesses itself, it is clearly established that there has been no violations of the customs act or the chalr, 2004 by the appellant in the instant case. the ld. counsel further points out that the cross examination sought by the appellant in respect of investigating officers though allowed did not materialize inasmuch as the inquiry officer did not make available these officers for cross examination and these officers abstained from inquiry proceedings in spite of notice. thus, the principles of natural justice have been violated and the entire inquiry proceedings are vitiated. 3.2 in the light of these submissions, the ld. advocate says that the findings and conclusions drawn in the inquiry proceedings and in the impugned order have not been substantiated and, therefore, the revocation of cha licence of the appellant is bad in law and must be set aside. 4. the ld. ar appearing for the revenue reiterates the findings of the adjudicating authority. 5. we have carefully considered the rival submissions. we are of the view that the appeal itself can be disposed of at this stage and hence, take up the same for consideration. 5.1 the basis for the investigation is that the cha knowingly mis-declared the goods under export in respect of shipping bill no.7557073 dated 30/07/2009 wherein he had declared the goods under export as basmati rice whereas the goods were non-basmati rice. the samples of these goods were drawn by the customs and sent to the regional agmark laboratory and the said laboratory vide analytical report dated 20/08/2009 confirmed that the goods under export were ‘milled basmati rice’. this report was not considered either by the inquiry authority or by the adjudicating authority, in the proceedings under chalr 2004. the appellant obtained a certificate under rti and the same was supplied to the appellant vide letter dated 22/12/2011. since the goods under export have been proved to be basmati rice, the charge of mis-declaration of the goods under export which was the basis for the investigation, has been completely disproved. in fact, the basis for the imputation of charges for violation of regulations 13 (e) and 13 (n) is misdeclaration in the shipping bill no.7557073; inasmuch as it has been established that there has been no mis-declaration in respect of the aforesaid shipping bill, the charge of violation of regulation 13 (e) and 13 (n) is also completely untenable. similarly, for the violation of regulation 13 (d) also, the basis for the charge is misdeclaration in respect of shipping bill no.7557073 dated 30/07/2009 in addition to the other shipping bills. therefore, violation of regulation 13 (d) is also not established. in respect of the other shipping bills, the appellant had filed the shipping bills after receiving the apeda certificate stating that the goods were basmati rice and based on the apeda certificate he has made the entry in the shipping bill as basmati rice. therefore, the appellant cha cannot be blamed for making any false declaration in the shipping bills, since his declaration is based on the certificate issued by the competent authorities. as regards the violation of regulation 13 (b), the allegation is that the appellant conducted the business not through his employees but by engaging somebody else. in the instant case from the records, it is seen that the shipping bills and other documents have been duly signed by the appellant and the carting and examination of the goods were also done by the appellant through his employees. therefore, there is no evidence to show that the appellant employed somebody else for transacting the business. accordingly, this charge is also clearly unsustainable. as regards the charge that the appellant sublet his licence to one shri vijay mange, the investigating agencies did not record any statement of shri vijay mange in this regard. during the inquiry proceedings, shri vijay mange has completely denied that the licence was sublet to him. as regards the reliance placed by the inquiry officer on the statement of the appellant inculpating himself, the said statement was retracted by the appellant the very next day at the first available opportunity before the chief metropolitan magistrate. therefore, based on a retracted statement without any corroborative evidence, this charge cannot be established. further, during the inquiry proceedings, the exporter as also the employee of shri vijay mange have testified the licence was not sublet at all and the transaction was undertaken by the appellant himself. thus, from the documents available in the record, it is clearly established that none of the charges imputed against the appellant have any basis. further the investigating officers, whose cross-examination was sought for by the appellant, never presented themselves for cross examination during the inquiry proceedings, thereby denying the appellant a reasonable opportunity to prove his case. 6. in these facts and circumstances, the order of the ld. commissioner holding that the charges have been proved does not stand any legal scrutiny and is perverse and bad in law. accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any. stay application is also disposed of.
Judgment:

P.R. Chandrasekharan

1. This appeal and stay application are directed against the order-in-original No.56/2011/CAC/CC(G)/SLM/CHA (Admn) dated 18/08/2011 passed by Commissioner of Customs (General), Mumbai.

2. The appellant, M/s.M.K. Shipping Services, is a Custom House Agent holding CHA license No.11/958 issued under the provisions of CHALR 2004 as a proprietary concern. The appellant filed four shipping bills bearing Nos.7557073 dated 30/07/2009, 7563198 dated 01/08/2009, 7571506 dated 04/08/2009 and 7575681 dated 06/08/2009 on behalf of M/s.Chawla Trading Co., Nagpur, by declaring the goods as ‘basmati rice’ as per the export documents such as invoices, packing list and original certificate issued by Agricultural and Processed Food Products Export Development Authority (APEDA) provided by the exporter. The goods were received by the appellant at Navkar CFS, Panvel, directly from the suppliers of the exporter. After completion of the carting procedure, the shipping bills were presented before the Superintendent of Customs for inspection of goods for issuance of Let Export Order (LEO). Representative samples were drawn from the consignments and forwarded to the Group for further inspection and the concerned Custom Officers and the Deputy Commissioner also made endorsements to the effect that the samples be forwarded to AGMARK for testing and shipment may be allowed, if otherwise, in order. As per the directions of the Dy. Commissioner, the appellants completed all the formalities and Let Export Order in respect of shipping bill No.7557073 dated 30/07/2009 was issued by the Superintendent of Customs. In respect of other three shipping bills, the appellant was in the process of completion of formalities as per the standard operating procedure. In the meanwhile, the Directorate of Revenue Intelligence detained the consignments and the LEO was never issued. During the course of investigation, the DRI recorded a statement of Shri Mukesh Thakkar, Proprietor of the appellant firm on 19/08/2009 wherein the appellant under duress admitted that the goods under export were not basmati rice and he had prior knowledge of the same. The appellant was arrested and produced before the Special Magistrate at CMM Court, Mumbai on 20/08/2009 wherein the appellant retracted the statement recorded by DRI alleging that the same was recorded under physical torture and duress. On 27/08/2009, the DRI again recorded the statement of the appellant confirming the earlier statement dated 19/08/2009.

2.1  The DRI, thereafter, informed the Commissioner of Customs, Mumbai vide letter dated 16/10/2009 alleging misuse of the CHA license by the appellant for monetary consideration and aiding and abetting the exporter in the export of non-basmati rice as basmati rice. The appellant’s CHA licence was suspended vide order dated 22/10/2009. Thereafter, a post decisional hearing was granted by the Commissioner of Customs (General) and a final order confirming the suspension was issued vide order No.77/2010 dated 04/03/2010.

2.2  The appellant approached this Tribunal against the suspension and this Tribunal vide order No.M/21/11/CSTB/C-II in A/39/11/CSTB/C-II dated 07/02/2011 directed the Ld. Commissioner to complete the proceedings under CHALR, 2004 within a period of three months and pass final order on the matter.

2.3 A charge sheet was issued to the appellants alleging violation of the provisions of Regulation 12 of CHALR, 2004 on the ground that the appellant had sub-let his licence to Shri Vijay Mange of Shree Gurukrupa Shipping Agency; violation of 13 (b) of CHALR, 2004 holding that the appellant did not transact his business either personally or through his employee; violation of Regulation 13 (d) alleging failure to advise the client to comply with the provisions of Customs Act in respect of shipping bill No.7557073 dated 30/07/2009; violation of Regulation 13 (e) alleging non-exercise of due diligence in ascertaining the correctness of information; and violation of Regulation 13 (n) alleging non-discharge of duty with utmost speed and efficiency.

2.4 Thereafter, inquiry proceedings were conducted against the appellants by the Dy. Commissioner of Customs. The department introduced four witnesses and recorded their testimony during the course inquiry proceedings. These witnesses are one Shri Vijay Mange, Proprietor of M/s.Shree Gurukrupa Shipping Agency, Shri Pradeep Mange, employee of M/s.Shree Gurukrupa Shipping Agency, Shri Suresh Kataria of M/s.Rishi Ice and Cold Storage, Turbhe and Shri Santosh Chawla of M/s.Chawla Trading Co. Nagpur. The appellants sought cross examination of the DRI officers who had recorded the statements of the appellant. However, the DRI officers did not appear before the inquiry officer in spite of notice.

2.5 On completion of inquiry, the inquiry officer held the charges to be proved and thereafter, the case was heard by the Commissioner of Customs (General), who has passed the impugned order. On the basis of inquiry report, the Commissioner came to the conclusion that the appellant has violated the provisions of Regulations 12 and 13 of CHALR, 2004 and accordingly, he revoked the CHA licence of the appellant. Hence, the appellants are before us.

3. The Ld. Counsel for the appellant submits the following:

3.1 The charges made against the appellant were claimed to have been proved by the inquiry officer against the appellant on the basis of the statement dated 19/08/2009 wherein the appellant had admitted prior knowledge about the mis-declaration by the exporter and also sub-letting his licence to Shri Vijay Mange for monetary consideration. However, the said statement was retracted by the appellant on 20/08/2009 before the Chief Metropolitan Magistrate before whom the appellant was produced after arrest. In the said retraction, the appellant had clearly stated that the statement given by him on 19/08/2009 was not true or voluntary and the retraction should be taken on record. This retraction of the appellant was not rebutted by the DRI. However, the DRI once again recorded a statement from the appellant stating merely that whatever has been deposed by the appellant before the DRI on 19/08/2009 is true and correct. The reliability oR the veracity of the inculpatory statement of the appellant is suspect as the same has been obtained under duress. The appellant had also retracted the inculpatory statement on 20/08/2009 before the Magistrate. Further, the appellant under the RTI act obtained a copy of the examination report given by the AGMARK laboratory in respect of shipping bill No.7557073 dated 30/07/2009 and as per the certificate the product covered by the shipping bill is ‘raw milled basmati rice’. This clearly shows that there has been no mis-declaration by the appellant in the concerned shipping bill. This report of the AGMARK authorities was never brought on record either by the investigating team or by the inquiry officer and by suppressing this vital piece of evidence , which is in favour of the appellant, great injustice has been done to the appellant and the entire inquiry proceedings are vitiated. The Ld. Counsel further submits that the department produced four prosecution witnesses viz., S/Shri. Vijay Mange, Pradeep Mange, Suresh Kataria and Santosh Chawla. As per the averments made by these four departmental witnesses during the inquiry proceedings it is seen that Shri Vijay Mange and Shri Pradeep Mange have clearly stated that they have not used the CHA licence of the appellants by way of subletting or otherwise. Shri Santosh Chawla has also confirmed this fact. Shri Suresh Kataria, from whose warehousing facility, it is alleged that the non-basmati rice was procured and attempted to be exported, has clearly stated that the said non-basmati rice is still available in their godown and the goods under export have not been obtained from the premises of Rishi Ice and Cold Storage. From the submissions of the departmental witnesses itself, it is clearly established that there has been no violations of the Customs Act or the CHALR, 2004 by the appellant in the instant case. The Ld. Counsel further points out that the cross examination sought by the appellant in respect of investigating officers though allowed did not materialize inasmuch as the inquiry officer did not make available these officers for cross examination and these officers abstained from inquiry proceedings in spite of notice. Thus, the principles of natural justice have been violated and the entire inquiry proceedings are vitiated.

3.2 In the light of these submissions, the Ld. Advocate says that the findings and conclusions drawn in the inquiry proceedings and in the impugned order have not been substantiated and, therefore, the revocation of CHA licence of the appellant is bad in law and must be set aside.

4. The Ld. AR appearing for the Revenue reiterates the findings of the adjudicating authority.

5. We have carefully considered the rival submissions. We are of the view that the appeal itself can be disposed of at this stage and hence, take up the same for consideration.

5.1 The basis for the investigation is that the CHA knowingly mis-declared the goods under export in respect of shipping bill No.7557073 dated 30/07/2009 wherein he had declared the goods under export as basmati rice whereas the goods were non-basmati rice. The samples of these goods were drawn by the Customs and sent to the Regional AGMARK laboratory and the said laboratory vide analytical report dated 20/08/2009 confirmed that the goods under export were ‘milled basmati rice’. This report was not considered either by the inquiry authority or by the adjudicating authority, in the proceedings under CHALR 2004. The appellant obtained a certificate under RTI and the same was supplied to the appellant vide letter dated 22/12/2011. Since the goods under export have been proved to be basmati rice, the charge of mis-declaration of the goods under export which was the basis for the investigation, has been completely disproved. In fact, the basis for the imputation of charges for violation of Regulations 13 (e) and 13 (n) is misdeclaration in the shipping bill No.7557073; inasmuch as it has been established that there has been no mis-declaration in respect of the aforesaid shipping bill, the charge of violation of Regulation 13 (e) and 13 (n) is also completely untenable. Similarly, for the violation of Regulation 13 (d) also, the basis for the charge is misdeclaration in respect of shipping bill No.7557073 dated 30/07/2009 in addition to the other shipping bills. Therefore, violation of Regulation 13 (d) is also not established. In respect of the other shipping bills, the appellant had filed the shipping bills after receiving the APEDA certificate stating that the goods were basmati rice and based on the APEDA certificate he has made the entry in the shipping bill as basmati rice. Therefore, the appellant CHA cannot be blamed for making any false declaration in the shipping bills, since his declaration is based on the certificate issued by the competent authorities. As regards the violation of Regulation 13 (b), the allegation is that the appellant conducted the business not through his employees but by engaging somebody else. In the instant case from the records, it is seen that the shipping bills and other documents have been duly signed by the appellant and the carting and examination of the goods were also done by the appellant through his employees. Therefore, there is no evidence to show that the appellant employed somebody else for transacting the business. Accordingly, this charge is also clearly unsustainable. As regards the charge that the appellant sublet his licence to one Shri Vijay Mange, the investigating agencies did not record any statement of Shri Vijay Mange in this regard. During the inquiry proceedings, Shri Vijay Mange has completely denied that the licence was sublet to him. As regards the reliance placed by the inquiry officer on the statement of the appellant inculpating himself, the said statement was retracted by the appellant the very next day at the first available opportunity before the Chief Metropolitan Magistrate. Therefore, based on a retracted statement without any corroborative evidence, this charge cannot be established. Further, during the inquiry proceedings, the exporter as also the employee of Shri Vijay Mange have testified the licence was not sublet at all and the transaction was undertaken by the appellant himself. Thus, from the documents available in the record, it is clearly established that none of the charges imputed against the appellant have any basis. Further the investigating officers, whose cross-examination was sought for by the appellant, never presented themselves for cross examination during the inquiry proceedings, thereby denying the appellant a reasonable opportunity to prove his case.

6. In these facts and circumstances, the order of the Ld. Commissioner holding that the charges have been proved does not stand any legal scrutiny and is perverse and bad in law. Accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any. Stay application is also disposed of.