TaxTMI 
TaxTMI 
2022 (5) TMI 211
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....o its findings that the petitioner had violated the provisions of Regulation 13 (b), 13 (d) and 19 (8) of Customs House Agents Licensing Regulation, 2004 resulting in revocation of the license of the petitioner, by solely relying upon statement given by the Managing Director of the petitioner without taking into consideration the other part of the evidence available on record, and whether the said finding is legal, proper and justified or whether the said finding is vitiated being perverse in law? (II) Whether on the facts and in the circumstances of the case the Tribunal grossly erred in law incoming to its conclusion that finding given in a collateral proceeding will not be taken into consideration for adjudicating a case when the background and genus of the offence committed is same in both the cases? 2. The facts as stated by the appellant are that the appellant is a private limited company registered under the provisions of the Companies Act, 1956 and engaged in the business as the Customs House Agent (CHA). The appellant was granted a license to function as a CHA by order dated 27.01.2007 passed by the Commissioner of Customs (Administration) Kolkata in terms of S....
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....e Act and the statement was recorded from the Managing Director which according to the appellant was obtained under threat, undue influence and coercion. It is thereafter by order dated 11.05.2009 the CHA license granted to the appellant was suspended in exercise of the powers conferred under Regulation 20(2) of the CHALR. It was alleged that the appellant has contravened the provisions of the CHALR and the conditions of license warranting immediate action so as to prevent further exercise of his CHA license. The order further stated that proceedings for revoking the license under Regulation 22 of CHALR will be initiated separately. The appellant filed WP NO. 454 of 2009 challenging the order of suspension and by order dated 22.05.2009 an interim order was granted till 26.06.2009 subject to the condition that the appellant shall not allow the CHA license to be used by any other person other than the appellant and the employees of the appellant. Simultaneously, the department issued notice dated 05.05.2009 under proviso to Section 110 (2) of the Act calling upon the appellant to show cause as to why the time limit for issuance of show-cause notice under Section 110 (2) should not be....
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....y and the Managing Director was under duress and coercion and no reliance could be placed on the statement. The sum and substance of the reply given by the appellant was that there is no allegation that the appellant was involved in mis-declaration and/or export of red sanders and there is no provision under the Act or under CHALR that there should be a written agreement between the forwarding agent and the clearing agent to undertake the export. Further it was stated that it is absolutely false to state that the Jetty Sircar, Mithun Ghosh was not an employee of the appellant and the copy of a Jetty Sircar license issued by the Kolkata Port Trust was relied upon to state that Mithun Ghosh was an employee of the appellant. Further it was stated that the appellant was duly authorized to carry on the export formalities and copy of the authorization letter was appended to the reply. Further with regard to the allegations that the appellant failed to verify the genuineness of the export Cargo, it was stated that the Cargo was in a sealed container and question of verifying the same by the appellant, a clearing agent, does not arise and they have no authority to break open the lock of th....
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....ppellant and forfeited the security deposit. Earlier, the Commissioner of Customs (Preventive), Kolkata adjudicated a show-cause notice dated 11th November, 2009 issued by the DRI to nine noticees and the appellant and its Managing Director were the 6th and 7^th noticees in the said show-cause notice. An order-in-original dated 5th January, 2012 was passed confiscating the red sanders under Sections 113(d) and 119 of the Act. Insofar as the penalty which was proposed against the appellant and its Managing Director, the Commissioner dropped the penalty proceedings. Penalty was imposed on the exporter and its Managing Director to the tune of Rs. 5,00,000/- each and penalty of Rs. 10,00,000/- was imposed on one Ashok Thakur who was the third noticee. 2.5 The appellant filed an appeal before the Tribunal, challenging the order dated 5th August, 2011 revoking that CHA license and forfeiting the security deposit. Before the learned Tribunal, the appellant relied upon the order-in- original dated 5th January, 2012 passed by the Commissioner of Customs (Preventive) dropping the penalty proceeding against the appellant and its Managing Director. It was contended that based on identical a....
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.... of the appellant which was duly retracted, the order revoking the license ought to have been set aside. Further, the Jetty Sircar license issued to Mithun Ghosh is by the Kolkata Port Trust and not by a private concern or an individual and due weightage ought to have been given to the said document. Further, the learned Tribunal ought to have given due consideration to the retraction made by the Managing Director to the statement which was recorded from him under Section 108 of the Act and due weightage ought to have been given to the evidential value of such a statement which was subsequently retracted. Further, it was contended that the learned Tribunal did not analyze the case in the context of doctrine of proportionality which should have been given due consideration. The learned Advocate referred to Regulation 30 of the CHALR and submitted that no case has been made out to revoke the license issued to the appellant. Further, it is contended that the appellant had bonafidely carried out that assignment as CHA license in accordance with the license issued and in accordance with the CHALR and it does not warrant regulation of the CHA license. 4. In support of his contention, ....
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....Preventive) in his order dated 5th January, 2012 wherein it has been observed that though action under the Customs Act may not be required to be taken, the appellant can be proceeded under the relevant regulations (CHALR). Therefore, it is submitted that the learned Tribunal after considering the effect of the order, dropping the penalty proceedings and taking note of the fact that the appellant failed to discharge their responsibilities properly in dealing with the goods handling without verifying the antecedents of the exporter and allowed the forwarding agent, Draft Cargoways to use that CHA license for financial considerations and the Jetty Sircar, Mithun Ghosh who actually did the clearance work at the dock, was not the employee of the CHA and they even authorized three employees to Draft Cargoways for obtaining Jetty Sircar license and all clearly exhibits that the appellant did not discharge their duties, enjoyed upon them as a CHA. The learned standing Counsel further submitted the appellant having allowed the freight forwarder, Draft Cargoways to use their CHA license for the purpose of Customs clearance for monetary considerations, that too, without any written agreement ....
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....or importer has been advised by the appellant in terms of the provisions of Regulation 30(d) of the CHALR. Thus, the appellant ignored the mandatory obligation under the statutory regulations and thereby, encouraged the unscrupulous exporter to smuggle red sanders. Further, the Tribunal examined the facts and found that there is nothing to indicate that the inquiry officer had overlooked a provision of Regulation 22(3) of the CHALR, nor the appellant was able to find out that the inquiry officer had overlooked the said provision or that documents were not supplied to them. Further, it is submitted that the statement recorded under Section 108 of the Act is admissible in evidence and can form the sole basis for suspending the CHA license subject to it being voluntary and truthful and retracted statements can be relied upon only if, on examination of evidence it is concluded that statement was true and voluntary. Bearing this legal principle in mind, the Commissioner after analyzing the facts has recorded the finding that the appellant could not produce any documentary evidence to prove that the statement of the managing Director were duly retracted, nor produced any evidence that th....
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....urt refused to interfere with the order passed by the authorities. Reliance was placed on the decision in Commissioner of Customs Versus K.M. Ganatra & Co. AIR (online) 2016 (SC) 536 to explain the important position of a CHA in the customs house. Reliance was placed on the decision of the High Court of Andhra Pradesh in Commissioner of Customs & CX., Hyderabad-II Versus H.B. Cargo Services 2011 (268) ELT 448 (A.P.) which affirmed the imposition of maximum punishment of revocation of license granted to a CHA. 7. On the doctrine of proportionality the learned standing Counsel referred to the decision of the High Court of Gujarat at Ahmadabad in Ota Kandla Pvt. Ltd. Versus Union of India 2011 (269) ELT 457 (Guj.) wherein the Court affirmed that punishment of revocation of license was neither harsh nor disproportionate. Reliance was placed on the decision of the High Court of Judicature at Madras in Shri Kamakshi Agency Versus Commissioner of Customs (Mad.) 2001 (129) ELT 29 (Mad.), wherein the Court affirmed the order of revocation of license that blank documents were signed by the proprietor of the CHA without knowing the importers/ exporters and nature of goods imported/ exporte....
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....the entry or departure of conveyances or the import or export of goods at any Customs station. Regulation 3 places an embargo stating that no person shall carry on business as a CHA relating to the entry or departure of a conveyance or the import or export of goods of any Customs station unless such person holds a license granted under the Regulations (CHALR). The proviso exempts three categories where no license is required, of which we are not concerned in this appeal. The application for being appointed as a CHA can be made only upon the same being invited by the Commissioner of Customs in terms of Regulation 4. Regulation 5 deals with the applications for license, Regulation 6 deals with the conditions to be fulfilled by the applicant, Regulation 7 deals with scrutiny of applications for license and Regulation 8 deals with the examination which the applicant has to undertake for being considered for grant of license. Regulation 9 deals with grant of license. Sub-Regulation (1) of Regulation 9 states that the Commissioner of Customs shall on payment of a fee grant a license to an applicant who has passed the examination referred to in Regulation 8. Sub-Regulations (2) to (6A) of....
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....ies as Custom House Agent with utmost speed and efficiency and without avoidable delay; o) Verify antecedent, correctness of Importer Exporter Code (IEC) No., identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information. 12. Regulation 19 deals with the employment of persons. The CHA may having regard to the volume of work as transacted by him employing any number of persons to assist and the minimum educational qualification required to be possessed by such person shall be 10+2 or equivalent. Appointment of such a person shall be made only after obtaining the approval of the Deputy Commissioner of Customs or Assistant Commissioner of Customs or by a Committee by Officers of Customs. Sub-Regulation 8 of Regulation 19 states that the CHA shall exercise such supervision as may be necessary to ensure the proper conduct of any such employees in the transaction of business as agents and be held responsible for acts or omissions of his employees in regard to that employment. Regulation 20 deals with suspension or revocation of license, Regulation 22, deals with the procedure for suspendin....
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....CHA is required to obtain an authorization from the person who has employed him as a CHA and produce such authorization as and when required by the Customs Authorities. Therefore, the appellant cannot be heard to say that he received the authorization from a freight forwarder, Cargoways and he bonafidely believed the said freight forwarder. This candid admission of the appellant would clearly show that the appellant has disregarded and violated Regulation 13(a). Furthermore, there was no document produced by the appellant to show that the person/ persons who handled the cargo were the employee/ employees of the appellant duly approved by the Customs Authorities. The appellant had placed strong reliance on the Jetty Sircar License issued by the Kolkata Port Trust, a temporary license, authorizing Mithun Kumar Ghosh to deliver cargo and take delivery of cargo from Kolkata Port Trust on behalf of the appellant. The case of the respondent department is based upon a statement recorded from the Managing Director of the appellant under Section 108 of the Act. Statement recorded under Section 108 of the Act is admissible in evidence and can be a sole basis for taking appropriate action bas....
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....rightly affirmed the view of the Commissioner. 14. The next aspect to be considered is with regard to the effect of the order passed by the Commissioner dated 05.01.2012 dropping the penalty proceedings initiated under Section 114 of the Act. In the said proceedings there were totally 9 noticees and the appellant was the 6th noticee and its Managing Director the 7th noticee. On a perusal of the order-in-original date 05.01.2012 we find that the Commissioner has elaborately discussed the factual matrix and found that a racket of unscrupulous persons involved themselves in a conspiracy to organize smuggling of red sanders out of the country in violation of the Exim Policy, 2004-2009. Further, it was observed that the main offenders had engaged some personal agents to handle the official formalities relating to the export of the consignment on their behalf. Three persons have been named to be the main culprits who have master- minded the conspiracy in the attempt of smuggling the red sanders and they mis-declared the description of the export goods to cover the attempt of smuggling. Further, it was noted that a similar consignment declared as sponge iron, had been exported by the s....
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....ancial considerations. After noting all the above facts which were referred to in the show cause notice the adjudication proceedings was commenced. The seized red sanders were ordered to be confiscated. With regard to the charge against the appellant and its Managing Director, the Commissioner took note of the submissions of the appellant that their involvement as hirer of container and CHA by itself cannot make them liable for penal action under the Customs Act and at best they can be proceeded against under the relevant regulations. This submissions made by the appellant was accepted by the Commissioner. In other words, the Commissioner was convinced that the involvement of the CHA in the entire matter cannot be solely the reason to take penal action under the Customs Act, but the appellant themselves admitted that at best action could be taken under the relevant Regulation. This aspect was considered coupled with the aspect regarding whether there was criminal involvement on the part of the Customs officers and when there was no specific and direct evidence available in that regard, the Commissioner held that the appellant cannot be made liable for penal action under the Customs....
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....ion in Vijender Singh is distinguishable. The decision in Ramaratan would be wholly inapplicable to the facts of the present case as in the said matter, the Division Bench of the High Court of Bombay took note of the findings rendered by the Criminal Court which was taken note of by the Tribunal and such order was affirmed. Equally the decision in East & West Shipping Agency is also distinguishable as the Court granted relief since the order passed by the Settlement Commission was not challenged and that being a judicial proceeding in terms of Section 127 M of the Customs Act, findings rendered therein were held to be binding on the department. 18. Mr. Ananda Sen placed reliance on the decision in Shiva Khurana and it was argued that the duty of the CHA is as a mere agent and not that of a revenue official who is empowered to investigate and enquire into the veracity of the statement made orally or in a document and there is nothing in the Regulations nor in the Customs Act which can cast the higher responsibility on a CHA. This decision cannot be applied to the case on hand as the appellant themselves have admitted that they have received the authorization from the freight forw....
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....s conducted to test the capability of the person in the matter of preparation of various documents, determination of value procedures for assessment and payment of duty, the extent to which he is conversant with the provisions of certain enactments etc. Therefore, the grant of licence to act as a Custom House Agent has got a definite purpose and intent. On a reading of the Regulations relating to the grant of licence to act as Custom House Agent, it is seen that while Custom House Agent should be in a position to act as agent for the transaction of any business relating to the entry or departure of conveyance or the import or export of goods at any customs station, he should also ensure that he does not act as an Agent for carrying on certain illegal activities of any of the persons who avail his services as Custom House Agent. In such circumstances, the person playing the role of Custom House Agent has got greater responsibility. The very prescription that one should be conversant with the various procedures including the offences under the Customs Act to act as a Custom House Agent would show that while acting as Custom House Agent, he should not be a cause for violation of those....
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....tual importer and the goods to be imported is a serious issue and the CHA having misused the license acted recklessly and carelessly by lending support to unscrupulous persons for facilitating smuggling activities, cannot be viewed lightly. Accordingly, the substantial questions of law framed were answered against the CHA. The said decision could very well be applied to the facts of the case on hand. 24. In Bhaskar Logistics Services Private Limited, the Court refused to interfere with the factual findings recorded by the authorities as under Article 226 of the Constitution of India, the Court will only evaluate the correctness of the decisions making process and not the decision itself. In fact, the scope of the present appeal has been clearly circumscribed under the provisions of the Customs Act and the Court is required to decide the substantial questions of law and therefore the contentions advanced on behalf of the appellant have to be tested on the anvil as provided under Section 130 of the Act. Ongoing through the order passed by the Commissioner revoking the licence issued to the CHA, and the order passed by the Tribunal we find that there is no error in the decision-mak....
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....The learned Advocate appearing for the appellant submitted that the punishment of revocation of licence is a major punishment and considering the facts and circumstances of the case is wholly disproportionate. To buttress the said submissions, reliance was placed on the decision in Ashiana Cargo Services. In the said, G Cards were issued to two employees of M/s. V K International and it was found that those employees were misusing the G Cards and indulging in illegal narcotics exports. Action was initiated against V K International under the provisions of the CHALR for contravention of Regulation 13 (b) (e) and 19 (8). This ultimately culminated in an order revoking the CHA license under Regulation 20 (1) which was challenged before the Learned Tribunal. Before the Tribunal, there was a difference of opinion wherein one of the Learned Members held that the punishment of revocation was too harsh. The other Learned Member held that the punishment of revocation was justified under the facts and circumstances. The matter was referred to a third member who held that the punishment of revocation of licence was justified. The matter travelled to the High Court wherein it was contended tha....
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....from procedural improprieties or was one which no sensible decision-maker could on the material before him and within the framework of the law, have arrived at. The Court would consider whether relevant matters had not been taken into account or whether irrelevant matters had been taken into account or whether the action was not bona fide. The Court would also consider whether the decision was absurd or perverse. The Court would not however go into the correctness of the choice made by the administrator amongst the various alternatives open to him. Nor could the Court substitute its decision to that of the administrator. This is the Wednesbury test. (2) The Court would not interfere with the administrator's decision unless it was illegal or suffered from procedural impropriety or was irrational in the sense that it was in outrageous defiance of logic or moral standards. The possibility of other tests, including proportionality being brought into English Administrative Law in future is not ruled out. These are the CCSU principles. (3) (a) As per Bugdaycay, Brind and Smith, as long as the Convention is not incorporated into English Law, the English Courts merely exe....
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....on that the punishment was in outrageous defiance of logic and was shocking. It was also described as perverse and irrational. In other words, this Court felt that, on facts, Wednesbury and CCSu tests are satisfied. In another case, in B.C Chaturvedi Versus Union of India [1995] (6) SCC 749] a three Judge Bench said the same thing as follows (SCC P. 762 para 18) "The High Court/Tribunal while exercising the power of judicial review, cannot normally substitute its own conclusions on penalty and impose some other penalty. If the punishment imposed by the disciplinary authority or the appellate authority shocks the conscience of the High Court/Tribunal it would appropriately would the relief, either by directing the disciplinary authority/appellate authority to reconsider the penalty imposed or to shorten the litigation, it may itself, in exceptional and rare case, impose appropriate punishment with cogent reasons in support thereof" Similar view was taken in Indian Oil Corporation Versus Ashok Kumar Arora [1997 (3) SCC 72] that the Court will not intervene unless the punishment is wholly disproportionate. 28. In Coimbatore District Central Cooperative Bank while consideri....
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.... revoking the licence of the petitioner as CHA on the ground of petitioner having committed breach of statutory regulations and the misconduct by misusing its licence. In the opinion, of this Court, once the decision of the respondent Authorities that the petitioner committed violation of statutory regulations and the misconduct if found to be within the legal parameters, all the legal consequences as a result of such violation and the breach have to follow. The case of the petitioner being the case of contravention of said regulations and misuse of licence as CHA, the respondent Authorities have rightly revoked the licence of the petitioner. The said decision having been arrived at by the respondents, after taking into consideration all relevant material and the said Regulation, and after following the due process of law, it could not be said that the said decision was illegal, unreasonable, perverse or irrational. Under the circumstances, it could also be not said that the punishment of revocation of licence was a harsh punishment or the punishment dehors the doctrine of proportionality. The petitioner having failed to point out any perversity or unreasonableness on the part of r....