Custom House Agent License Revocation Upheld for Serious Violations

PUNDOLE SHAHRUKH & CO Versus COMMISSIONER OF CUSTOMS (GEN), MUMBAI

PUNDOLE SHAHRUKH & CO Versus COMMISSIONER OF CUSTOMS (GEN), MUMBAI - 2014 (313) E.L.T. 573 (Tri. - Mumbai) Issues Involved:
1. Violation of Regulation 13(d) of Custom House Agents Licensing Regulations, 2004 (CHALR).
2. Violation of Regulation 13(a) of CHALR.
3. Violation of Regulation 19(8) of CHALR.
4. Violation of Regulation 13(k) of CHALR.
5. Violation of Regulation 13(n) of CHALR.

Issue-wise Detailed Analysis:

1. Violation of Regulation 13(d) of Custom House Agents Licensing Regulations, 2004 (CHALR):
The Directorate of Revenue Intelligence (DRI) uncovered fraudulent export activities by two companies, M/s. Aditya Recycling P. Ltd. and M/s. Khaitan Textiles Mills Ltd., involving mis-declaration of the weight of copper and brass ingots. The appellant, a Custom House Agent (CHA), was found to have aided and abetted these fraudulent exports. The investigation revealed that the appellant's firm, including its Managing Partner and employees, knowingly presented falsified documents to Customs authorities and facilitated the fraudulent shipments. The CHA's involvement in the fraudulent exports was established through detailed statements recorded under Section 108 of the Customs Act, 1962, which were supported by corroborative evidence. The Tribunal concluded that the CHA had violated Regulation 13(d) by failing to advise their clients to comply with Customs provisions and not bringing non-compliance to the notice of Customs authorities.

2. Violation of Regulation 13(a) of CHALR:
The charge under Regulation 13(a) was for not obtaining authorization from the exporter for each transaction. While the Inquiry Officer found most charges proved, the Tribunal did not find sufficient evidence to establish a violation of Regulation 13(a) beyond doubt. Therefore, this specific charge was not upheld.

3. Violation of Regulation 19(8) of CHALR:
The Tribunal found that the CHA failed to exercise necessary supervision over its employees, which is a requirement under Regulation 19(8). The involvement of the partner and employees in the fraudulent activities indicated a lack of proper oversight. Statements from the CHA's employees confirmed that they were aware of the discrepancies in the export consignments and proceeded with the shipments under instructions from their superior, Mr. Sudhakar More. This lack of supervision and control over employees' conduct was deemed a clear violation of Regulation 19(8).

4. Violation of Regulation 13(k) of CHALR:
The CHA was also charged with non-maintenance of records and accounts related to the fraudulent exports, violating Regulation 13(k). The investigation showed that the CHA did not obtain copies of transport documents from the transporter, indicating a failure to maintain proper records. This was corroborated by statements from the employees involved, who admitted that they did not follow proper documentation procedures. The Tribunal concluded that the CHA's failure to maintain accurate records and accounts was a violation of Regulation 13(k).

5. Violation of Regulation 13(n) of CHALR:
Lastly, the charge of not discharging duties with utmost speed and efficiency under Regulation 13(n) was established. The CHA's active participation in the fraudulent exports, including directing the shipping line to book LCL cargo as FCL and collecting FCL charges from the exporter, demonstrated a lack of efficiency and integrity in their duties. The Tribunal noted that the CHA's actions were not only inefficient but also fraudulent, leading to a significant loss of revenue for the exchequer.

Conclusion:
The Tribunal, after considering all the evidence and arguments, concluded that the charges of violating Regulations 13(d), 13(k), 13(n), and 19(8) were clearly established. The appeal was dismissed, and the revocation of the CHA licence was upheld as the maximum punishment prescribed under the CHALR for such serious violations. The Tribunal emphasized that the CHA's actions constituted a major fraud, justifying the severe penalty imposed.