2018 (1) TMI 924 - HC - Customs

Court reduces penalty, revokes license for 5 years instead of permanent, emphasizes agent duties.

Karamshi J. Nakhua Versus The Commissioner of Customs (General)

The High Court modified the penalty imposed on the appellant, substituting the permanent revocation of the Customs House Agent License with a revocation ... Revocation of CHA License - forfeiture of security deposit - main allegation against the appellant was that the appellant has allegedly allowed Mr.Rajesh to use their licence for monetary consideration which violates the provisions of Regulation 12 of the 2004 Regulations - Held that: - an authorised person was allowed to transact business. At the same time, the Commissioner holds that the said Rajesh may not have done complete acts which are to be done and contemplated to be performed by the Customs House Agent, but the appellant allowed him and thus was not vigilant in fulfilling his obligations and discharging his duties as Customs House Agent. The fraudulent acts attributable to Rajesh and the exporters do not in any manner concern the Customs House Agent before us. The extreme penalty of revocation of Customs House Agent License along with forfeiture of security deposit was not justified - The charge of negligence and non-adherence to the Regulation, in the sense of failing to discharge his duties and responsibilities, has been held to be proved - Since the charge of negligence and nonadherence to the Regulations insofar as failure to fulfill and discharge the responsibilities has been proved, the penalty of revocation of license for a period of five years from 28th February 2013 is justified - security deposit is also rightly forfeited. Appeal allowed in part. Issues:1. Revocation of Customs House Agent License2. Failure to conclude inquiry within 90 days3. Breach of principles of natural justiceRevocation of Customs House Agent License:The appellant, a sole proprietor of a customs house agency, was aggrieved by the revocation of his Customs House Agent License by the Commissioner, which was upheld by the Customs, Excise & Service Tax Appellant Tribunal (CESTAT). The appellant's license was revoked due to alleged involvement in fraudulent exports facilitated by an unauthorized individual, Rajesh. The Commissioner disagreed with the inquiry report's findings and issued an order canceling the license. The Tribunal dismissed the appeal against this order. However, upon review, the High Court found that while the charge of negligence and non-adherence to regulations was proved, the extreme penalty of permanent revocation was not justified. The High Court substituted the penalty with a revocation for a period of five years, along with the forfeiture of the security deposit.Failure to Conclude Inquiry within 90 Days:The appellant contended that the revocation of the license was invalid as the Revenue failed to conclude the inquiry within the statutory period of 90 days, which commenced from a specific date. The High Court examined the timeline of events, including the suspension and restoration of the license, the initiation of the inquiry, and the submission of the inquiry report. The Court noted that the inquiry proceedings concluded on a certain date, and the Inquiry Officer's detailed report found one charge proved while others were not. Despite a disagreement memo expressing concerns, the Court observed that the inquiry report's specific findings should be given weight and not solely based on a different possible view.Breach of Principles of Natural Justice:The appellant highlighted the breach of principles of natural justice in the revocation of the license. The Court considered the arguments based on previous court orders and the mandatory nature of the statutory period for inquiry conclusion. While the Court acknowledged the appellant's contentions, it ultimately focused on the proven charges of negligence and non-adherence to regulations in determining the appropriate penalty. The Court upheld the findings of both the Tribunal and the Commissioner, emphasizing the importance of fulfilling responsibilities as a Customs House Agent.In conclusion, the High Court modified the penalty imposed on the appellant, substituting the permanent revocation of the Customs House Agent License with a revocation for a period of five years, along with the forfeiture of the security deposit. The Court disposed of the appeal, maintaining the decisions of the Tribunal and the Commissioner, while clarifying that the judgment should not be considered a precedent for future cases.