2015 (12) TMI 1203 - HC - Customs

Court upholds prohibition on petitioner from CHA business under CHALR, 2004 regulations. Compliance and jurisdictional issues discussed.

M/s Prathamesh Shipping Pvt. Ltd. Versus Customs Central Excise And Service Tax

The court upheld the prohibition imposed on the petitioner from transacting Custom House Agent (CHA) business under Regulation 21 of the Custom House ... Violation of Regulation 13 (O) of Custom House Agents Licensing Regulations, 2004 - petitioner failed to produce the exporter as per terms of Regulation 13 (o) of CHALR, 2004 - petitioner presented goods for export on behalf of fictitious/bogus exporter whom he cannot produce before the Customs Department though sufficient time was given for same time and again - Held that:- It is a case of clear violation of Clause 6 of Regulation No.13 of CHALR, 2004. The petitioner will not get any help from clause 6 of Circular No.09/10 of the Board. The respondent had not committed any mistake in passing the impugned order with holding the license of the petitioner and petitioner had admitted in ground 6.10 that exporter is involved in bogus and illegal activies and he was not aware of the previous or future transactions of the exporter. The petitioner had further admitted that original exporter had vanished and is absconding and it cannot be said that powers under Regulation 21 could not be exercised. - Decided against Appellant. Issues Involved:1. Violation of Regulation 13 (o) of Custom House Agents Licensing Regulations, 2004 (CHALR, 2004).2. Prohibition from transacting CHA business under Regulation 21 of CHALR, 2004.3. Compliance with Circular No.09/10-Customs dated 8.4.2010.4. Jurisdiction and maintainability of the appeal before CESTAT.5. Binding nature of departmental circulars and judgments of higher courts.Issue-wise Detailed Analysis:1. Violation of Regulation 13 (o) of CHALR, 2004:The petitioner, a Custom House Agent (CHA), failed to verify the authenticity of the exporter, M/s. D.K. Exports, as required under Regulation 13 (o) of CHALR, 2004. Despite being granted permission to export, the petitioner could not produce the exporter when requested by the Customs authorities. Investigations revealed that the exporter was untraceable and likely fictitious. The petitioner argued that they had complied with the KYC norms as per the Board's Circular No.09/2010-Customs. However, the authority found that the petitioner did not physically verify the credentials of M/s. D.K. Exports, which is a mandatory requirement under Regulation 13 (o).2. Prohibition from Transacting CHA Business under Regulation 21 of CHALR, 2004:Due to the violation of Regulation 13 (o), the Commissioner of Customs and Central Excise, Indore, prohibited the petitioner from conducting any CHA-related business within the Indore Commissionerate. This decision was based on the authority granted under Regulation 21 of CHALR, 2004. The petitioner's appeal to CESTAT was rejected on jurisdictional grounds, and a subsequent writ petition led to a direction for the petitioner to submit a detailed representation. The Commissioner reaffirmed the prohibition after considering the representation and following the principles of natural justice.3. Compliance with Circular No.09/10-Customs dated 8.4.2010:The petitioner contended that they adhered to the guidelines of Circular No.09/10-Customs, which outlines the KYC requirements for CHAs. The authority, however, concluded that the petitioner's compliance was insufficient as they failed to ensure the exporter's actual functioning from the declared address. The Circular mandates the verification of the client's functioning at the declared address, which the petitioner did not perform.4. Jurisdiction and Maintainability of the Appeal before CESTAT:The petitioner's appeal to the CESTAT was dismissed on the grounds of jurisdiction. The High Court had previously directed the petitioner to file a detailed representation before the Commissioner, who was then to pass a reasoned order. The Commissioner's subsequent order upheld the prohibition based on the petitioner's failure to comply with the regulatory requirements.5. Binding Nature of Departmental Circulars and Judgments of Higher Courts:The petitioner referenced the decision in Bharat Heavy Electricals Ltd. v/s. Commr. of Cus. & C. Ex., Bhopal, asserting that departmental circulars are binding on the authorities unless contrary to higher court rulings. The court acknowledged this principle but found that the petitioner's actions were in clear violation of the regulatory framework. The court also referenced the Supreme Court's decision in Commr., Central Excise, Bolpur v/s. M/s. Ratan Melting and Wire Industries, emphasizing that court decisions prevail over conflicting departmental circulars.Conclusion:The court concluded that the petitioner had clearly violated Regulation 13 (o) of CHALR, 2004, by failing to verify the exporter's authenticity and functioning. The prohibition from transacting CHA business under Regulation 21 was upheld. The petitioner's reliance on Circular No.09/10-Customs was deemed insufficient to absolve them of their regulatory obligations. Consequently, the writ petition was dismissed, affirming the Commissioner's order.