2020 (1) TMI 1338 - AT - Customs

Tribunal Upholds Penalty Proportionality; Dismisses Appeals by Licensing-Commissioner and Custom House Agent.

The Tribunal dismissed both the appeal by the licensing-Commissioner for enhancement of the penalty and the appeal by the Custom House Agent (CHA) against ... Revocation of CHA License - forfeiture of security deposit - custom house agent is in appeal on the submission that the charge against them had been framed for not obtaining letter of authority from the exporter which, according to them, does not constitute breach of obligation as ‘custom house agent’ as there is no mandate in the Regulations for obtaining such letter of authority for every instance of shipment - HELD THAT:- The appeal of custom house agent has not advanced any plea of breach of the procedure laid down in Custom House Agents Licensing Regulations, 2003. Nor is there any submission that the principles of natural justice have been denied to them. There is a clear finding of the licensing authority that the ‘custom house agent’, though dealing with the exporter for a long time, had failed to maintain the authority letter which was required to be obtained for each job undertaken. Power of Commissioner of Customs (General) to review orders of Commissioners of Customs - section 129D (1) of CA, 1962 - HELD THAT:- It was held in the case of COMMISSIONER OF CUSTOMS (GENERAL) , MUMBAI VERSUS MUKADAM FREIGHT SYSTEMS PVT LTD [2017 (5) TMI 798 - CESTAT MUMBAI] that there is no such provision for review in the Customs House Agents Licencing Regulations, 1984. Furthermore, from a reading of section 146 of Customs Act, 1962 that enables notification of regulations for governing the operation of custom house agents and in which the scope and extent of such regulations to encompass, specifically, appeals are enumerated while limiting such appeals only to the appeals, if any, against an order of suspension or revocation of a license, and the period within which such appeals shall be filed - Had the general provision of appellate jurisdiction in Customs Act, 1962 sufficed, this specific enablement would not have been necessary. By enabling appellate jurisdiction through the power to frame regulations under section 146 of Customs Act, 1962, which is conspicuously absent in the general power to frame rules and regulations under section 156 and 157 of Customs Act, 1962, not only is a separate framework contemplated but also limited the recourse only to the licensee. Appeal dismissed. Issues Involved:1. Forfeiture of security deposit and continued operation of license upon deposit of fresh security.2. Appeal by the custom house agent (CHA) against the penalty.3. Appeal by the Commissioner of Customs for enhancement of the penalty to permanent revocation of the license.4. Proportionality of the penalty and the scope of appellate jurisdiction under the Customs Act, 1962.Detailed Analysis:1. Forfeiture of Security Deposit and Continued Operation of License:The impugned order dated 17th December 2009 by the Commissioner of Customs (General), Mumbai, acting as the licensing authority under Regulation 22 of the Custom House Agents Licensing Regulation, 2004 (CHALR), resulted in the forfeiture of the security deposit collected under Regulation 10 and permitted the continued operation of the license upon the deposit of fresh security as prescribed.2. Appeal by the Custom House Agent (CHA) Against the Penalty:The CHA, M/s Fast Forward, was penalized for enabling the utilization of their license by another person for handling a fraudulent export consignment. The CHA appealed against the penalty, arguing that the charge of not obtaining a letter of authority from the exporter did not constitute a breach of obligation under the CHALR as there was no mandate in the Regulations for obtaining such a letter for every shipment. The Tribunal noted that the CHA did not advance any plea of breach of procedure laid down in the CHALR, nor did they claim a denial of natural justice. The licensing authority had found that the CHA failed to maintain the required authority letter for each job undertaken.3. Appeal by the Commissioner of Customs for Enhancement of Penalty:The Committee of Chief Commissioners directed the licensing authority to appeal against its own order for enhancing the penalty to permanent revocation of the license. The Tribunal referenced the case of Ashiana Cargo Services v. Commissioner of Customs, where it was held that the proportionality of the penalty must be considered based on the gravity and nature of the infraction. The Tribunal found no reason to accept the plea of the licensee for setting aside the penalty.4. Proportionality of the Penalty and Scope of Appellate Jurisdiction:The Tribunal referred to several precedents, including Commissioner of Customs (General), Mumbai v. Mukadam Freight Systems Pvt Ltd and MD Sadrani v. Commissioner of Customs (General), Mumbai, to emphasize that the Regulations vest the authority to license and penalize CHAs solely in the Commissioner of Customs, with no higher authority envisaged for the discharge of any function related to CHAs. The Tribunal highlighted that the Regulations specifically allow appeals only to an aggrieved licensee and not to the licensing authority. The Tribunal concluded that there is no scope for review of the licensing authority's order under the general provisions of the Customs Act, 1962.The Tribunal further noted that section 146 of the Customs Act, 1962, which enables the notification of regulations for governing the operation of CHAs, specifically limits appeals to those against an order of suspension or revocation of a license by the licensee. This legislative intent makes it clear that the general provision of appellate jurisdiction in the Customs Act, 1962, does not apply to the licensing authority's decisions.Conclusion:The Tribunal dismissed both the appeal filed by the licensing-Commissioner for enhancement of the penalty and the appeal of M/s Fast Forward against the penalty. The Tribunal affirmed that the proportionality of the penalty was appropriate and that the framework of the CHALR does not allow for appeals by the licensing authority against its own orders. The decision was pronounced in open court.