TaxTMI 
TaxTMI 
2017 (3) TMI 1494
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....s authorities it was found that against the declared weight of 10200 kg, the consignment weighed only 3820 kgs. in respect of one of the bills besides the goods/garments were of low quality and of irregular size. Hence the customs authorities concluded that there was a deliberate mis-declaration apropos the quality, quantity, value and weight of the consignments with the intention to defraud the government and illegitimately claim the benefit of duty-drawback. 3. The investigation apropos the exporter M/s H.M. Impex, at its given address WZ-156, Madipur, New Delhi - 63, of which one Mr. Rajiv Kumar was claimed to be its proprietor, but its Import Export Code (IE Code), revealed that no such entity existed at the said address. An employee of the appellant, Mr. Lalit Katoch, was said to be involved in the filing of the export documentation and inspection of the consignments. The appellant's proprietor, Mr. Sunil Bhatia had contended that the exporter was introduced to the CHA by Mr. Lalit Katoch who was the appellant's sales executive, and the latter in turn had been approached by one Mr. Vijay Gupta; the proprietor claimed ignorance of the nature or quantum of the goods in terms ....
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....n not verifying the genuineness of the exporter or of the consignment and iii) such conduct would have high financial and security consequences. The appellant's reliance on M/s Pranil Shipping (supra) was found to be inapplicable to the facts of the case, instead the CESTAT found favour with the judgments cited by the respondent i.e. Worldwide Cargo Movers (supra) and H.B. Cargo Services (supra). The latter judgment held that "a single act of corruption is sufficient to award the maximum penalty which under the CHALR is of revocation of the license", whereas the former held that the punishment for misconduct is best left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or malafide. 6. Worldwide Cargo Movers (supra) had in turn relied upon a judgment of Madras High Court in Arvind C. Bhagat Vs. CC, Chennai, 2000 (122) ELT 678 (Mad), in which the CHA had failed to discharge its obligation to exercise proper supervision, as in the case of Shri Kamakshi Agency Vs. Commissioner of Customs, Madras 2001 (129) ELT 29 (Mad), also referred to in the same judgment. The CHA was held responsible for fraudulent activity of the third parties to wh....
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....asoned order would be passed. On 06.10.2005 an inquiry report was prepared by the Assistant Commissioner of Customs under Regulation 22 of CHALR, 2004. It concluded that i) the appellant had not contravened Regulation 13(n) as there was nothing to prove that it caused unavoidable delay or did not attend to its duties with utmost speed ii) since the exporter was a non-existent entity and the documents were prepared in the office of the CHA and were filed by its employees, and the goods were incorrectly declared with an inflated value so as to fraudulently obtain the duty drawback, there was a lack of due diligence by the CHA in terms of the said regulations. The appellant's submissions against the report and the procedure did not find favour with the Commissioner of Customs, who vide order dated 01.05.2007 imposed a penalty of Rs. 1 lakh under Section 114 of the Customs Act, 1962 on the appellant and revoked its CHA license. This was an appeal against the said revocation, penalty and forfeiture before the CESTAT, which resulted in the impugned order. 10. The appellant contends that the impugned order erred in concluding that M/s H.M. Impex had never approached it for filing the s....
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....omply with the provisions of the Act and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs; (e) exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage; (f) not withhold information contained in any order, instruction or public notice relating to clearance of cargo or baggage issued by the Commissioner of Customs, from a client who is entitled to such information; (g) promptly pay over to the Government, when due, sums received for payment of any duty, tax or other debt or obligations owing to the Government and promptly account to his client for funds received for him from the Government or received from him in excess of Governmental or other charges payable in respect of the clearance of cargo or baggage on behalf of the client; (h) not procure or attempt to procure directly or indirectly, information from the Government records or other Government sources of any kind to which access is not granted by the proper officer; (i) not attempt to influence the conduct of any....
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....d been undertaken by the customs authorities, therefore, there was no doubt about the identity of the said exporter. It would be far too onerous to expect the CHA to inquire into and verify the genuineness of the IE Code given to it by a client for each import/ export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard i.e. KYC etc. would have been done by the customs authorities. There is nothing on record to show that the appellant had knowledge that the goods mentioned in the shipping bills did not reflect the truth of the consignment sought to be exported. In the absence of such knowledge, there cannot be any mens rea attributed to the appellant or its proprietor. Whatever may be the value of the goods, in the present case, simply because upon inspection of the goods they did not corroborate with what was declared in the shipping bills, cannot be deemed as mis-declaration by the CHA because the said document was filed on the basis of information provided to it by M/s H.M. Impex, which had already been granted an IE Code by the DGFT. The grant of the IE Code presupposes a verification of facts etc. made in such app....
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....f is sufficiently grave so as to justify the extreme measure of revocation. Not any and every infraction of the CHA Regulations, either under Regulation 13 ("Obligations of CHA") or elsewhere, leads to the revocation of license; rather, in line with a proportionality analysis, only grave and serious violations justify revocation. In other cases, suspension for an adequate period of time (resulting in loss of business and income) suffices, both as a punishment for the infraction and as a deterrent to future violations. For the punishment to be proportional to the violation, revocation of the license under Rule 20(1) can only be justified in the presence of aggravating factors that allow the infraction to be labeled grave. It would be inadvisable, even if possible, to provide an exhaustive list of such aggravating factors, but a review of case law throws some light on this aspect. In cases where revocation of license has been upheld (i.e. the cases relied upon by the Revenue), there has been an element of active facilitation of the infraction, i.e. a finding of mens rea, or a gross and flagrant violation of the CHA Regulations. In Sri Kamakshi Agency (supra), the licensee stopped wor....
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....fraction of the CHA Regulations, but "an act of corruption", where blank shipping bills were issued by the partner and authorized representative of the CHA for a consideration of Rs. 150 per shipping bill. 11. Viewing these cases, in the background of the proportionality doctrine, it becomes clear that the presence of an aggravating factor is important to justify the penalty of revocation. While matters of discipline lie with the Commissioner, whose best judgment should not second-guessed, any administrative order must demonstrate an ordering of priorities, or an appreciation of the aggravating (or mitigating) circumstances. In this case, the Commissioner and the CESTAT (majority) hold that "there is no finding nor any allegation to the effect that the appellant was aware of the misuse if the said G cards", but do not give adequate, if any weight, to this crucial factor. There is no finding of any mala fide on the part of the appellant, such that the trust operating between a CHA and the Customs Authorities (as a matter of law, and of fact) can be said to have been violated, or be irretrievably lost for the future operation of the license. In effect, thus, the proportionality do....