2022 (9) TMI 1175 - HC - Customs

Appeal outcome: License revocation upheld, security deposit forfeiture overturned. Compliance required for renewal.

Commissioner Of Customs (Airport & Administration), Kolkata Versus M/s. S. Pandey & Company

The Court upheld the Tribunal's decision to set aside the revocation of the respondent's license but overturned the decision to set aside the forfeiture ... Exoneration from penalty in the proceeding under Section 124 of the Customs Act, 1962 - revocation of Customs Broker license or not - Whether the Tribunal ought to have done so when the charge against the agent was serious i.e. not advising the customs properly under the regulations with regard to the mis-declaration of the description of the goods by the exporter? HELD THAT:- The respondent having received the export order from a third party is also to be held guilty for not being able to advise his client to comply with the provisions of the Act as the respondent did not know who his client was and it is through a third party they had received the job order. Therefore, the respondent cannot be fully exonerated from the proceedings. Thus, taking into consideration the reasoning of the learned Tribunal which was arrived at taking note of the fact that the respondent was completely exonerated in the proceedings initiated under Section 124 of the Act and proposal to levy penalty was dropped and also the fact, that the respondent cooperated with the investigating agency, the discretion exercised by the learned Tribunal cannot be termed to be either arbitrary or perverse. The period during which the license stood revoked, i.e., commencing from the date of suspension till the date of revocation vide order dated April 13, 2012 and till date would be a deterrent to the respondent to carry on his functions in future as a Customs House Agent strictly in accordance with the terms of the license and faithfully and diligently undertake the activities bearing in mind the important role played by a CHA in the Customs House. The order passed by the learned Tribunal setting aside the revocation of license cannot be held to be wholly perverse considering the facts and circumstances of the case, however, setting aside the order forfeiting the security deposit is not tenable - The respondent having failed to adhere to Regulation 13(a) of the CHALR, 2004 cannot be exonerated completely and, therefore, the period during which the license stood revoked till it is restored shall be treated as a penalty and the order of confiscation of security deposit passed by the competent authority stands restored with a direction to the respondent to furnish fresh security deposit to the satisfaction of the Department. The appeal is allowed in part. Issues Involved:1. Whether the Tribunal's order is perverse for exonerating the respondent from penalty under Section 124 of the Customs Act, 1962, and setting aside the order revoking their license.2. Whether the Tribunal should have upheld the revocation of the license given the serious charge against the agent for not advising customs properly regarding the mis-declaration of goods.Detailed Analysis:Issue 1: Tribunal's Order and Exoneration from PenaltyThe appeal by the Revenue challenges the Tribunal's order that exonerated the respondent from penalty under Section 124 of the Customs Act, 1962, and set aside the revocation of their license. The respondent, a Customs House Agent (CHA), was implicated in an investigation by the Directorate of Revenue Intelligence (DRI) for alleged involvement in the illicit export of Red Sanders wood under the guise of ductile iron casting. The DRI issued a show-cause notice under Section 124 of the Act, proposing a penalty under Section 114(i) for the respondent's alleged failure to discharge their responsibilities properly.The respondent denied the allegations, stating they were unaware of the container contents and had merely processed documents provided by another CHA, M/s. Suman International. The adjudicating authority, in its order dated January 4, 2012, dropped the penalty proposal, concluding that the Department failed to establish the respondent's knowledge or involvement in the smuggling conspiracy. The Tribunal, considering this exoneration and the respondent's cooperation with the investigation, found the revocation of the license and forfeiture of the security deposit excessive.Issue 2: Serious Charge and License RevocationThe Revenue argued that the respondent violated Regulations 13(a) and 13(d) of the Customs House Agents Licensing Regulation, 2004, which mandate obtaining authorization from clients and advising them to comply with the Act. The respondent admitted to receiving the export order through another CHA, whose license was suspended, thus not directly from the exporter. This was deemed a violation of Regulation 13(a).The Tribunal's decision was influenced by the respondent's complete exoneration in the penalty proceedings under Section 124 of the Act. The Tribunal noted that the proceedings under CHALR, though independent, were initiated based on the same factual matrix as the Section 124 proceedings. The Tribunal concluded that the revocation of the license was excessive, considering the respondent's cooperation with the investigation and the fact that the penalty proceedings were dropped.Tribunal's Jurisdiction and ProportionalityThe Tribunal has the jurisdiction to confirm, modify, or annul the decisions of the competent authority, exercising this power in accordance with the law and the factual matrix of each case. The Tribunal's decision to set aside the revocation of the license but not the forfeiture of the security deposit was seen as a balanced exercise of discretion. The Tribunal considered the respondent's exoneration in the penalty proceedings and their cooperation with the investigation, concluding that the revocation period already served was sufficient punishment.Conclusion and Court's DecisionThe Court held that the Tribunal's order setting aside the revocation of the license was not wholly perverse but found that setting aside the forfeiture of the security deposit was not tenable. The respondent's failure to adhere to Regulation 13(a) warranted a penalty. The Court directed that the period during which the license was revoked be treated as a penalty and restored the order of confiscation of the security deposit, requiring the respondent to furnish a fresh security deposit for license renewal.Final Judgment:1. The Tribunal's order setting aside the revocation of the license is upheld, but the order setting aside the forfeiture of the security deposit is overturned.2. The respondent must furnish a fresh security deposit for license renewal.3. The period during which the license was revoked will be considered as a penalty.The appeal is allowed in part, and the Customs House Agents License will be renewed upon the respondent furnishing fresh security within eight weeks.