2009 (7) TMI 411 - AT - Customs

Customs license suspended for fraud; no violations found. Revenue directed to expedite enquiry.

The Tribunal upheld the Commissioner's suspension of M/s. Baraskar Brothers' Customs House Agent (CHA) license due to their involvement in a drawback ... Appeal against the order of Commissioner of Customs (General), Mumbai suspending the CHA licence of the appellant – Suspension of licence pending enquiry - drawback had been fraudulently availed – CHA admitted that they had cleared the consignments on behalf of the exporters, though they had never met the actual IEC holders or verified their genuineness at the time of filing the Shipping Bills. - Commissioner came to the conclusion that the CHA has failed to discharge his obligations as a Custom House Agent under CHA Licensing Regulations, 2004, and pending enquiry under Regulation 22, an immediate action was required to prevent further misuse of the CHA licence and he has suspended the operation of the CHA licence – Commissioner of Customs is fully empowered to suspend the licence where an enquiry against such an agent is pending - Suspension of licence pending enquiry is upheld – We hold that the grant of personal hearing is not mandatory and will not be violative of the principles of natural justice in cases of suspension, where the disciplinary authority i.e. Commissioner of Customs finds it to be a fit case for immediate action, when an enquiry is pending or contemplated. - We respectfully hold that the judgments on the points of law of any Hon’ble High Court on a Central legislation will have to be given precedence for arriving at the rationale compared to the decisions, where there is no question of law discussed. - CHA cannot find shelter in the submission that they had verified the IEC No. at the DGFT website. – Revenue’s submission is that this is not a substitute to physically verifying the existence of the exporter, when he acts as an agent for all purposes related to Customs - We are in agreement with his contention and hold that physical verification cannot be dispensed with by the CHA, when he acts for and on behalf of the importer or the exporter for all Customs matters. - we uphold the Commissioner’s order Issues Involved:1. Violation of CHA Licensing Regulations2. Procedural violations in suspension3. Urgency and delay in suspension4. Verification responsibilities of CHA5. Impact on livelihood due to suspensionDetailed Analysis:1. Violation of CHA Licensing Regulations:The Commissioner of Customs suspended the CHA license of M/s. Baraskar Brothers due to their involvement in a drawback fraud. The Directorate of Revenue Intelligence (DRI) detected that the CHA cleared consignments without verifying the genuineness of the Import Export Codes (IEC), which were obtained on fictitious addresses. The Commissioner concluded that the CHA failed to discharge their obligations under the CHA Licensing Regulations, 2004.2. Procedural Violations in Suspension:The appellant argued that the suspension order was unwarranted and violated the procedure prescribed in Regulation 22. They claimed they were not given a copy of the DRI report or a hearing, thus breaching the principles of natural justice. However, the Tribunal noted that Regulation 20(2) allows for immediate suspension without prior notice if the Commissioner finds it necessary. The Tribunal referenced the judgment in Commissioner of Customs (G), Mumbai v. Raj Clearing Agency, which held that personal hearings are not mandatory in all suspension cases.3. Urgency and Delay in Suspension:The appellant contended there was no urgency in suspending the license and pointed to a delay of over two years. They cited cases where suspensions were revoked due to delays. Conversely, the JDR argued that the Commissioner acted within three days of receiving the DRI's letter, indicating no delay on the Commissioner's part. The Tribunal upheld this view, referencing the Delhi High Court's judgment in Jasjeet Singh Marwaha v. Union of India, which allowed for suspension despite a delay of 4 1/2 years, emphasizing that 'immediate action' does not strictly mean immediate post-detection action.4. Verification Responsibilities of CHA:The appellant claimed they verified the exporter details on the DGFT website, arguing they took necessary precautions. However, the Tribunal held that physical verification of the exporter is indispensable. The CHA's failure to meet the IEC holders and verify their genuineness led to significant revenue loss. The Tribunal agreed with the JDR that the CHA's actions, or lack thereof, were sufficient grounds for suspension, as the CHA did not fulfill their responsibility to ensure the correctness of entries in the bill of entry and the declaration of goods.5. Impact on Livelihood Due to Suspension:The appellant highlighted the hardship caused by the suspension, affecting the livelihood of many people dependent on the CHA firm. The Tribunal, however, cited the Bombay High Court's decision in Commissioner of Customs v. Worldwide Cargo Movers, which stated that disciplinary decisions by the Commissioner should not be interfered with based on the difficulties faced by the CHA or its employees, except in cases of disproportionate or mala fide actions.Conclusion:The Tribunal upheld the Commissioner's suspension order, finding no procedural violations or undue delay. They emphasized the importance of the CHA's role in customs administration and the necessity for strict adherence to verification responsibilities. The Tribunal directed the Revenue to expedite the ongoing enquiry and complete it within six months.