Customs House Agent duties: silent acquiescence in diversion breached licensing rules, but did not by itself prove abetment of smuggling.

A Customs House Agent who became aware, while handling clearance and delivery, that imported goods under the DEEC scheme were being diverted and nonetheless remained silent breached the duties of proper advice, due diligence and prompt intimation under the Customs House Agents Licensing Regulations, 1984. That omission established regulatory misconduct, but it did not by itself prove abetment of smuggling because there was no proof of prior conspiracy or participation in the diversion. Revocation of the Bombay CHA licence was also held unsustainable in its original form because the show cause notice did not expressly propose revocation, and the punishment was moderated by restoring the licence after the period already undergone.

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Issues: (i) Whether the Customs House Agent failed to discharge the obligations of proper advice, due diligence, and prompt intimation to Customs in relation to diversion of goods imported under the DEEC scheme; (ii) whether the finding that the conduct amounted to abetment of smuggling could be sustained; and (iii) whether revocation of the Bombay CHA licence was valid without a fresh enquiry and without an express proposal for revocation in the show cause notice.

Issue (i): Whether the Customs House Agent failed to discharge the obligations of proper advice, due diligence, and prompt intimation to Customs in relation to diversion of goods imported under the DEEC scheme.

Analysis: The evidence showed that the appellant became aware, while handling the clearance and delivery of the consignments, that the imported goods were being diverted to parties other than the supporting manufacturers. Even if the delivery orders were ignored, the appellant's prior knowledge of diversion and continued inaction showed a failure to act in accordance with the duties expected of a Customs House Agent. A Customs House Agent is not required to be an informer in every case, but cannot remain silent when diversion and violation of the scheme are taking place in his presence.

Conclusion: The charge was established to the extent of breach of the obligations under the Customs House Agents Licensing Regulations, 1984, and the finding was against the appellant.

Issue (ii): Whether the finding that the conduct amounted to abetment of smuggling could be sustained.

Analysis: The material did not establish prior conspiracy with the importers or proof that the appellant had participated in the pre-arranged sale of the goods in the open market. The appellant was engaged after import for customs clearance work, and the evidence supported only acquiescence or failure to intimate Customs after coming to know of the diversion. That conduct was sufficient for regulatory breach, but not for a finding that the appellant itself had resulted in smuggling of the goods.

Conclusion: The allegation of abetment of smuggling was not fully sustained, and this issue was partly in favour of the appellant.

Issue (iii): Whether revocation of the Bombay CHA licence was valid without a fresh enquiry and without an express proposal for revocation in the show cause notice.

Analysis: The misconduct at Kandla furnished the basis for action against the Bombay licence as well, and a separate enquiry on the same facts was not necessary merely because the licence was issued at another port. However, the show cause notice did not specifically propose revocation, and that omission created a procedural defect. In view of the overall circumstances and the limited nature of the misconduct attributable to the appellant, the punishment also called for moderation.

Conclusion: The revocation of the Bombay licence could not stand as originally ordered, and relief was granted by restoring the licence after the period already undergone.

Final Conclusion: The appeals were disposed of by sustaining the regulatory breach, rejecting the wider charge of smuggling abetment, and granting partial relief by limiting the revocation period and restoring the Bombay licence.

Ratio Decidendi: A Customs House Agent who knowingly fails to intimate Customs about diversion of imported goods in his presence breaches the licensing regulations, but such omission does not by itself establish abetment of smuggling absent proof of prior participation; revocation action must also conform to the show cause notice and proportionality requirements.

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