2015 (7) TMI 881 - AT - Customs

Tribunal overturns CHA license revocation and forfeiture, emphasizing proportionality and lack of evidence

The Tribunal set aside the revocation of the CHA license and forfeiture of the security deposit, ruling in favor of the appellant. It found that the ... Revocation of license - Violation of the CHALR Regulations - Non-compliance to the specific time limits - Subletting of license - whether the time line periods laid down in Regulation 22 are directory in nature or mandatory in nature - Held that:- No evidence to show that there has been sale or transfer of the license. No consideration is shown for such transfer nor any transfer agreement. The only evidence is that the appellant was receiving fixed amounts per container from Shri Pandey. We find no provision in the Regulations that the CHA should receive payments directly from the importers/exporters for the services rendered. We also find that Section 147 of the Customs Act allows for an agent to work on behalf of the principal. Therefore, if the importers/exporters have contracted an intermediary person for Customs clearance work, no contravention of the CHALR is proved if the CHA is satisfied about the credentials of the importer for whom he is doing the Customs clearance work. Entire case is based on the original statements of Shri Vishal Madan and Shri Pal Singh Lohia and their statements at the time of cross examination have been discarded. In the relied upon documents, only statement dated 09.10.2012 of Shri Madan is considered and his other statements have not been made relied upon documents. Therefore, unless the original statements are corroborated by other material evidence it is difficult to sustain the charge of subletting of license. More so when the Commissioner has placed no reliance in his Order on the statements of Shri Pandey, taken on 7.11.2012 and 09.11.2012, to whom the license is said to be sublet. This method of relying only on some statements lends bias to the decision. In the circumstances we are of the view that the charge of subletting of license is not proved and it cannot be said that the license was transferred. Further, in the absence of any charge of violation of Regulation 13 (a) which requires the Custom House Agent to obtain an authorization from each of the companies for whom he is employed as a CHA, we do not find any reason to sustain the violation of Regulations 13(d) and 13(e) which require imparting correct information and rendering proper advice to the clients. The charge that the CHA advised the importer to stack thinner material in the front of the container is not supported by the physical examination of the containers nor by any other corroborative evidence. - Therefore the retraction of statements appear to carry weight due to lack of supporting evidence for the violation of the Regulation. Similarly the charge of violation of Regulation 22(n) which requires the CHA to be efficient is not on a strong footing and cannot be sustained. Except for a statement regarding undervaluation no concrete evidence is forthcoming against the CHA. Revenue has not been able to establish with any reasonable degree of certainty the violation of the Regulations for which they have charged the appellant. The circumstances do not call for revocation of the License which will deprive the CHA and his employees of the source of their livelihood. We therefore set aside the revocation as well as the forfeiture of the security deposit. - Decided in favour of appellant. Issues Involved:1. Delay in Enquiry Proceedings.2. Admissibility of Statements under Section 108 of the Customs Act in CHALR Proceedings.3. Alleged Subletting of the CHA License.4. Violation of Regulation 13(b) - Transacting Business through Unauthorized Persons.5. Violation of Regulation 13(d) and 13(e) - Providing Correct Information and Proper Advice to Clients.6. Violation of Regulation 13(n) - Efficiency of the CHA.7. Violation of Regulation 19(8) - Supervision over the Proper Conduct of Employees.Issue-wise Detailed Analysis:1. Delay in Enquiry Proceedings:The appellant argued that the delay in the enquiry proceedings violated the specific time limits laid down under Regulation 22. The Revenue countered that the delay was partly due to the appellant's failure to attend personal hearings. The Tribunal found that both sides contributed to the delay and concluded that the time lines in Regulation 22 are directory in nature, not mandatory. The Tribunal emphasized that the purpose of the Regulations is to ensure a thorough examination of the CHA's role in the fraud committed, and non-adherence to the time periods should not invalidate the proceedings.2. Admissibility of Statements under Section 108 of the Customs Act in CHALR Proceedings:The Tribunal considered the admissibility of statements recorded under Section 108. The appellant argued that these statements should not be relied upon, especially since they were retracted. The Tribunal referred to the case of Jasjeet Singh Marwaha, which held that such statements are admissible if they are voluntary and truthful. The Tribunal noted that retraction before the High Court could be considered if there was sufficient corroborative evidence to disprove the charges.3. Alleged Subletting of the CHA License:The main violation alleged was subletting of the license in contravention of Regulation 12. The Tribunal found no evidence of sale or transfer of the license, nor any transfer agreement. The Tribunal noted that the appellant was receiving fixed amounts per container from Shri Pandey, but this did not constitute subletting. The Tribunal found that the CHA commission and other clearing charges were paid through demand drafts, and the allegation of payments in cash was not supported by evidence. The Tribunal concluded that the charge of subletting the license was not proved.4. Violation of Regulation 13(b) - Transacting Business through Unauthorized Persons:The Tribunal found no definite violation of Regulation 13(b). It was not established that persons other than the CHA pass holders of the appellant were working in the Custom House on behalf of the appellant. The Tribunal noted that the salaries of the pass holders were paid by the appellant, not by Shri Pandey, and concluded that it was not established that they were working for Shri Pandey.5. Violation of Regulation 13(d) and 13(e) - Providing Correct Information and Proper Advice to Clients:The Tribunal found no reason to sustain the violation of Regulations 13(d) and 13(e). The charge that the CHA advised the importer to stack thinner material in the front of the container was not supported by physical examination or corroborative evidence. The Tribunal noted that the statement of Shri Vishal Madan, who claimed coercion, carried weight due to the lack of supporting evidence.6. Violation of Regulation 13(n) - Efficiency of the CHA:The Tribunal found that the charge of violation of Regulation 13(n) was not on a strong footing and could not be sustained. The Tribunal noted that except for a statement regarding undervaluation, no concrete evidence was forthcoming against the CHA.7. Violation of Regulation 19(8) - Supervision over the Proper Conduct of Employees:The Tribunal found no substantial violation of Regulation 19(8). The Tribunal noted that the CHA's pass holders were authorized and their salaries were paid by the appellant. The Tribunal concluded that there was no act of omission or commission against the Regulations by the CHA's pass holders.Conclusion:The Tribunal found that the Revenue did not establish with reasonable certainty the violation of the Regulations for which the appellant was charged. The Tribunal emphasized the proportionality of the punishment and the impact on the CHA's livelihood. Consequently, the Tribunal set aside the revocation of the CHA license and the forfeiture of the security deposit, allowing the appeal.