2015 (4) TMI 1052 - AT - Customs

Tribunal upholds CHA license revocation but deems permanent forfeiture harsh. Violations of CHALR Regulations cited.

The Tribunal upheld the revocation of the Customs House Agent (CHA) license until 31-12-2015 due to violations of CHALR Regulations but deemed permanent ... Revocation of the Customs House Agent (CHA) License of the appellant - forfeiture of the entire amount of security deposit. - The presenting officer cross-examined the persons concerned. On completion of cross-examination and inquiry, he came to the conclusion that Violation of Regulations 13(a), 13(e) and 13(o) is not recommended as proved. Further, the enquiry officer dropped all charges as not proved. However the Commissioner of Customs disagreed with the enquiry report and issued a disagreement memo dated 3-2-2014. After following principles of natural justice, the Commissioner of Customs vide his order dated 14-3-2014 held the CHA guilty of violation of all the sub-regulations, namely (a), (d), (e), (n), (o) of Regulation 13 of CHALR, 2004 and ordered revocation of the CHA license and also forfeiture of the entire amount of security deposit. Held that:- The serious negligence resulted in an attempt to smuggle prohibited goods. - the appellant CHA certainly did not exercise due diligence to impart correct information to the real exporter with reference to the clearance of goods and therefore, the appellant are guilty of Violation of Regulation 13(e). The appellant is guilty of violating the CHALR Regulations. However we also hold the view that the appellant cannot be disabled permanently for the violations as that would deprive him of his source of livelihood as well as deprive his employees of their source of livelihood. It would meet the ends of justice if the license is revoked for limited period. Having already suffered revocation for a year it would be sufficient punishment to continue the revocation till 31-12-2015. Accordingly we order that the revocation of the license would continue till 31-12-2015. From 1-1-2016 the license would become operative on forfeiture of the security deposit. - Decided partly in favor of appellant. Issues Involved:1. Revocation of Customs House Agent (CHA) License.2. Forfeiture of security deposit.3. Alleged violations of CHALR Regulations 13(a), 13(d), 13(e), 13(n), and 13(o).Issue-wise Detailed Analysis:1. Revocation of Customs House Agent (CHA) License:The appellant's CHA license was revoked by the Commissioner of Customs, Mumbai, on 14-3-2014, due to alleged violations of CHALR Regulations. The appellant contended that they had no prior knowledge of the prohibited goods (non-basmati rice) being exported and had informed Customs about the misdeclaration upon discovery. The Commissioner, however, found the CHA guilty of violating multiple regulations, including failing to verify the credentials of the exporter and not exercising due diligence. The Tribunal concluded that while the appellant violated the regulations, a permanent revocation would be too harsh. Instead, the revocation was ordered to continue until 31-12-2015.2. Forfeiture of Security Deposit:The Commissioner of Customs ordered the forfeiture of the entire security deposit of the appellant. The Tribunal upheld this forfeiture, noting that the appellant had failed to meet the necessary regulatory requirements, which justified the forfeiture as part of the penalty.3. Alleged Violations of CHALR Regulations:Regulation 13(a):The appellant failed to take adequate precautions to verify the authorization from the exporter and the credentials of the person pretending to be the exporter's representative. The Tribunal found that the appellant did not exercise due diligence in obtaining authorization directly from the exporter or verifying the identity of the representative, thus violating Regulation 13(a).Regulation 13(d):This regulation requires the CHA to advise their client on compliance with the Customs Act. The Tribunal found that the appellant could not have advised the exporter properly as they did not verify the credentials of the person claiming to represent the exporter. Therefore, the appellant was found guilty of violating Regulation 13(d).Regulation 13(e):The appellant was charged with failing to exercise due diligence in ascertaining the correctness of information provided to their client. The Tribunal noted that the appellant did not follow proper procedures, such as ensuring the goods were carted in bags rather than containers, which would have facilitated easier detection of prohibited goods. This constituted a violation of Regulation 13(e).Regulation 13(n):The Tribunal found that the appellant did not verify the antecedents of the exporter, which is a requirement under Regulation 13(n). The appellant's failure to make any effort to verify the credentials of the exporter, such as contacting the exporter directly, was seen as a serious oversight, leading to a violation of this regulation.Regulation 13(o):The Tribunal determined that this regulation, which pertains to the CHA's duty to discharge their responsibilities with speed and efficiency, was inappropriately invoked by the Department in this case, as the issue at hand was one of fraud rather than efficiency.Conclusion:The Tribunal upheld the findings of the Commissioner of Customs except for the charge under Regulation 13(o). The appellant was found guilty of violating CHALR Regulations 13(a), 13(d), 13(e), and 13(n). The Tribunal ordered that the revocation of the CHA license would continue until 31-12-2015, after which the license would become operative again on the condition of forfeiture of the security deposit. The appeal was disposed of accordingly.