2009 (2) TMI 57 - HC - Customs

Suspension of CHA licence upheld for Customs Act violations; voluntary Section 108 confession and mis-declaration justify suspension

HC upheld suspension of the CHA licence and dismissed the appeal. The court held a CHA's licence may be suspended for violations of the Customs Act or ... Suspension of CHA licence - payment of requisite customs duty - Mis-declaration of value and description of goods - Opportunity of personal hearing - Whether any violation under the Customs Act or imposition of penalty can be a ground to suspend the License without there being any violation of the provisions of Customs House Agents Licensing Regulation, 2004 - Held That:- Looking at entire gamut of the provisions, that is, the Customs Act, 1962, the Foreign Trade Act, 1992, the CV Rules framed under the Customs Act, 1962 and the Foreign Trade Rules, 1993, it is quite clear that upon the import of goods an entry is to be made with the proper officer in the form of a bill of entry in the Form prescribed. For the purposes of correct valuation and, in turn to, determine the correct Customs duty, which is to be imposed on the goods, in issue, it is important that the description and the value is accurate. For this purpose amongst others, that is, both for filing as well filing of the bill of entry, the owner or the importer of goods can either engage an agent or act by himself. If the owner or importer of the goods decides to act through an agent, the agent would have to be one who necessarily has a licence granted to him in accordance with the provisions of Section 146 of the Act and the Regulations framed thereunder, in the instant case, CHALR, 2004. It is quite clear that the inquiry has not proceeded beyond the stage of issuance of show cause notice under Regulation 22. However, a combined reading of Regulation 13 (d) & (e) read with sub-regulation (1) of Regulation 20 and Rule 10 of CV Rules and the provisions of the Act referred to hereinabove clearly lead to the conclusion that the CHA's licence can be suspended under Regulation 20 even for violation of the provisions of the Act or where there is a penalty imposed on the CHA on account of infraction of the provisions of the Act. This is quite clear from a bare reading of Regulation 13, in particular, sub-clause (d) and (e) and clause (c) of sub-regulation 1 of Regulation 20. In view of discussions hereinabove, our answers to the questions of law framed are as follows:- In so far as question no. 1 is concerned, we are of the view that the licence of a CHA can be suspended where there is a violation of the provisions of the Act or imposition of penalty, the power of suspension of licence is not confined to only those situations where there is a violation of the CHALR, 2004 Regulation. In so far as question no. 2 is concerned, the CHA's licence can be suspended based on the confession made under Section 108 of the Act provided it is voluntary and the statement is truthful and is not the result of such inducement, threat or promise as mentioned in Section 24 of the Indian Evidence Act, 1872. In so far as question no. 3 is concerned, in the given circumstances, we are of the view that there was no inordinate delay on the part of the respondents in suspending the licence of the CHA if one were to account for the fact that the order of the adjudication was passed on 20.10.2006 and also, the subsequent events which lead to the suspension of licence by an order dated 29.01.2007. In so far as question no. 4 is concerned, we are of the view that since a CHA acts on behalf of the importer, it is not only his obligation to ensure that the entries made in the bill of entry are correct but also that a true and correct declaration of value and description of goods is made, and in the event of any infraction such as mis-declaration, he can be penalized under the Regulation 20 of CHALR, 2004 if it results in a misconduct which is of the nature which renders him unfit to transact the business of a CHA, at the Customs Station. The Tribunal's order cannot be faulted. Hence, the appeal is dismissed. Issues Involved:1. Suspension of Custom House Agent (CHA) License under Regulation 20 of CHALR, 2004.2. Reliance on confessional statements recorded under Section 108 of the Customs Act, 1962.3. Delay in departmental action and its impact on the suspension order.4. Liability of CHA for mis-declaration of goods by the importer.Detailed Analysis:1. Suspension of Custom House Agent (CHA) License under Regulation 20 of CHALR, 2004:The primary issue was whether the CHA's license could be suspended for violations under the Customs Act, 1962, even if there was no direct violation of CHALR, 2004 regulations. The court held that the CHA's license could indeed be suspended for violations of the Customs Act, as the CHA is responsible for ensuring the accuracy of the declarations made in the bill of entry. The CHA's involvement in mis-declaration and forgery justified the suspension under Regulation 20(2) of CHALR, 2004, which allows for immediate suspension if necessary.2. Reliance on Confessional Statements Recorded under Section 108 of the Customs Act, 1962:The court examined whether the suspension order could be sustained solely based on the confessional statement recorded under Section 108 of the Customs Act. It was concluded that such statements could be relied upon, provided they were voluntary and truthful. The court referenced Supreme Court judgments, indicating that statements under Section 108 are admissible, subject to usual checks and balances to ensure they are not made under duress.3. Delay in Departmental Action and its Impact on the Suspension Order:The appellant contended that the delay of 4-1/2 years in taking action against the alleged violations rendered the suspension order invalid. The court found no inordinate delay, noting that the suspension order followed closely after the adjudication order dated 20.10.2006. The court emphasized that the timing of the suspension was justified based on the severity of the charges and the necessity for immediate action.4. Liability of CHA for Mis-declaration of Goods by the Importer:The court addressed whether the CHA could be penalized for mis-declaration of goods, even though it is primarily the importer's duty. The court held that the CHA, acting on behalf of the importer, is obligated to ensure the correctness of the entries in the bill of entry. Mis-declaration by the CHA, resulting in evasion of customs duty, constitutes misconduct under Regulation 20 of CHALR, 2004, making the CHA liable for penalties.Conclusion:The court upheld the Tribunal's decision to sustain the suspension of the CHA's license, emphasizing the CHA's responsibility in ensuring accurate declarations and compliance with customs regulations. The appeal was dismissed, and the court requested the Tribunal to expedite the hearing of the pending appeals to avoid further prejudice to the appellant. The Tribunal was instructed to decide the appeals without being influenced by the observations made in the present judgment.