TaxTMI 
TaxTMI 
2009 (2) TMI 57
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....ent License under regulation 20 of the Customs House Agents Licensing Regulation, 2004 without there being any violation of the provisions of the said Regulations? 2. Whether the suspension order can be sustained solely on the basis of the confessional statement recorded under Section 108 of the Customs Act, 1962? 3. Whether the delay of 4-1/2 years on the part of the Department for not taking immediate action against the alleged violation would not cause the suspension order to be revoked? 4. Whether the Clearing House Agent can be penalized for the mis-declaration, if any, even though it is not his duty/obligation under the Customs House Agents Licensing Regulation, 2004, while the importer is left free to work?" 3. In order to adjudicate upon the Appeal, it would be necessary to note the facts given hereinafter to the extent they are relevant for the said purpose. 3.1 In the year 1996-97, the appellant had applied to get appointed as a CHA under the then prevailing Custom House Agent Licensing Regulations Act, 1984 (hereinafter referred to as 'CHALR, 1984'). The appellant's application was processed and he was issued a licence. 3.2 It appears that in 2002-03, t....
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..... Dupont India Ltd Rs 3,03,416/- M/s Sight & Sound Rs 3,18,181/- M/s Sound Teriffic Rs 2,37,985/- 3.6 As a consequence of the aforesaid events, on 17.08.2004 a show cause notice was issued by the DRI to not only the three importers, but also, to the appellant. By way of the said notice, the afore-mentioned noticees were, inter alia, called upon to show cause as to why: (i) differential duty ought not to be recovered from them which was proposed to be levied on the ground of evasion by resorting to mis-declaration and suppression of facts; (ii) duty already deposited ought not to be appropriated towards the demand of differential customs duty; (iii) goods imported/cleared be not confiscated under Section 111(d)(m) of the Act; (iv) penalty under Section 112(a) and 114A be not imposed for various offences of omission and commission and; (v) lastly, interest be not recovered on duty under Section 28AB of the Act. The noticees were given an opportunity to file their response and also to indicate as to whether they were desirous of being heard in person. 3.7 Accordingly, the appellant filed a reply and also availed of an opportunity of personal hearing. 3.8 After ....
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....ntries as they were aware that the exemptions under Notification No. 17/01 and 21/02 are not admissible to them on hangtags imported by them as they are not doing any export. In reply to show cause notice, the Noticee I have claimed that they are entitle to get exemption under Notification No. 153/94 dated 13.07.94. The exemption under this Notification No. 153/94 is admissible only when. (i) the said goods have been imported for fixing on articles for export or for the packaging of such article, (ii) the importer by execution of a bond in such form and for such same as may be prescribed by the Assistant Commissioner of Customs or Deputy Commissioner of Customs binds himself to pay on demand in respect of the said goods as are not proved to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs to have been used for the aforesaid purposes, an amount equal to the duty leviable on such tags or labels or printed bags but for the exemption contained herein; (iii) the importer satisfies the Assistant Commissioner that the articles so imported have been exported within six months of the date of importation or within such extended period as ma....
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.... the whims and wishes of officers. Such claim by the CHA appears after thought as for clearing hangtags from Customs he submitted forged certificates which he had not denied even in reply to the show cause notice. As regard Plasma Monitors, as discussed above, it is quite clear that there was misclassification of same to evade Customs duty. In view of above there appear to be no ground to believe that his statement recorded under Section 108 of Customs Act 1962 was not given voluntarily without any pressure. In his reply the CHA have stated that in case of M/s Sound Terrific and M/s Sight and Sound India the goods were examined and catalogues were seen but I find that the party has not produced any catalogues during reply to SCN or at the time of personal hearing. Even the examination of goods does not exclude the possibility of that not being able to be used as Reception apparition for Television, more over as already discussed above the same are used as T.V. being of size 42" to 61" and on verification through internet it has been found that these are actually T. V. of various sizes. The CHA the Noticee is Customs House Agent and by involving himself in evasion of Customs Duty in....
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....nt taking into account the findings recorded against the appellant in the adjudication order dated 20.10.2006. 3.12 As a consequence, a show cause notice dated 18.07.2007 was also issued to the appellant calling upon the appellant to demonstrate as to why the CHA licence be not revoked. The appellant being aggrieved by both; the order dated 17.04.2007, whereby Respondent no. 2 had confirmed the order of suspension dated 29.01.2007, as well as, by the show cause notice dated 18.07.2007 calling upon him to furnish an explanation, in respect of, proposed revocation of his CHA licence; filed a statutory Appeal with the Tribunal, in so far as order dated 17.04.2007 was concerned. While, in respect of, show cause notice dated 18.07.2007, the appellant preferred to file a writ petition bearing No. 8168/2007 under Article 226 of the Constitution of India. 3.13 The writ petition bearing No. 8168/2007 was disposed of by a single Judge of this Court by an order dated 7.11.2007. By the said order, the respondents were restrained from taking any further action with respect to the show cause notice dated 18.07.2007 seeking to revoke the CHA licence of the appellant till such time the resul....
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....utory application for stay by observing that in view of the fact that the dispute was in respect of classification of goods imported by M/s Sound Terrific and given the fact that the differential rate of duty had already been paid by the importer, the condition of pre-deposit of penalty was required to be waived. With these observations, the interlocutory applications were allowed. 3.17 We are informed that on 14.03.2008 the appellant alongwith M/s Sound Terrific had moved an application for early hearing of their respective Appeals being Appeal Nos. 79/2008 and 80/2008, which was rejected by the Tribunal. 3.18 By the impugned judgment dated 04.06.2008, the Tribunal dismissed the Appeal of the appellant against the Commissioner's Order dated 17.04.2007, thereby confirming the order suspending the appellant's licence. The Appellant being aggrieved by the impugned judgment as noted hereinabove, has preferred the present appeal before us. 4. In the background of the aforesaid facts, the counsel for both the Petitioner and the Respondents made their respective submissions before us. 4.1 It was contended by the counsel for the petitioner, that the, impugned judgment of the T....
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....d judgment of the Tribunal deserved to be sustained as: (i) the respondent no. 2 had correctly exercised the power under Regulation 20(2) of the CHALR, 2004. It was submitted that in view of the adjudication order dated 20.12.2006 the Customs Department could not have but passed the order of suspension of the appellant's licence. It was, thus, submitted that there was not an inordinate delay, as alleged, by the learned counsel for the petitioner; (ii) in the statement made by the noticees including the appellant under Section 108 of the Act, it has been admitted that while clearing the goods the imports pertaining to M/s Sight & Sound and M/s Sound Terrific had been incorrectly described i.e., there was a mis-declaration; only with a view to avail the benefit of a lower rate of duty, and that the noticee- importers had clearly assigned the job of filing and filling bills of entry to the appellant in his capacity as the CHA; (iii) the importers had paid the differential custom duty. In view of this, the infraction of law stood admitted and hence, no fault could be found with the order of the Tribunal; (iv) till date, the respondents have not filed their reply to the show....
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....er notification Nos. 17/2002 and 21/2002. Evidently, as per the stand of E.I. Dupont India Ltd taken before the adjudicating authority; the tags/labels were issued free of cost by the manufacturers of lycra and were imported into the country for the purposes of publicity in order to gain market for lycra in the country; and that the importers had cleared the said tags/labels at a concessional rate of duty by claiming the benefit of Notification no. 21/2002 dated 01.03.2002 (which prior to 01.03.2002 was pari materia to Notification no. 17/2001 dated 01.03.2001). We may note, a fact which was not disputed, that the condition prescribed for claiming exemption as per the said Notification no. 21/2002 was that the tags/labels ought to have been imported by a bona fide exporter. It transpires that E.I. Dupont India Limited were supplying the lycra brand tags, free of cost, to various manufacturers-exporters of readymade garments. Thus, to avail of the benefit of the afore-mentioned notification export was necessary. It is in that context, the AEPC Certificate became an issue. The department based on the search carried out at the premises of the appellant discovered a forged AEPC certifi....
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....rrying out any export. He also dealt with the submission of E. I. Dupont India Limited that they were entitled to an exemption under notification 153 of 1994 dated 13.07.1994 and rejected the same on the ground that firstly, E. I. Dupont India Limited had not claimed exemption in the bill of entry under Notification no.153/1994 and secondly, the said exemption was available only if the importer was in a position to satisfy the Assistant Commissioner that the articles had been exported within six months from the date of importation or within such extended period as may be permitted by the Assistant Commissioner. In view of the above, since the condition stipulated under Notification no. 153/1994 was not fulfilled, the Additional Commissioner (Customs) held that the importer was not entitled to the benefit of the said exemption notification. It may be pertinent to note here that in Paragraph 23 of the adjudication order one of the submissions of the representatives of E.I. Dupont India Limited clearly establishes that the importer decided to pay the differential customs duty of Rs 5,79,217/- in respect of the 14 bills of entry in issue as E.I. Dupont India Limited felt that it may no....
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....to the benefit of Notification no. 21/2002 was incorrect as they were aware of the fact that the said benefit of exemption from custom duty was available only to those importers which were bona fide exporters. It is another thing that the representative of E.I. Dupont India Ltd had explained that the work of clearance of goods had been handed over to CHA i.e., the appellant and that they had no knowledge whatsoever of the AEPC Certificate having been forged and submitted by the CHA. We find that in the context of the findings in the adjudication order, as well as, the allegations made in the show cause notice, the observations of Commissioner (Appeals) in paragraph 5 of his order to the effect; that the department has not stated in the show cause notice or in the impugned order the fact that E.I. Dupont India Ltd was not a bonafide exporter is not quite correct. This is more so as we have noticed hereinabove, which is in fact recorded in sub-paragraph 23 of para 1 pertaining to E.I. Dupont India Ltd, of the adjudication order, that the, representative of E.I. Dupont India Ltd in his reply before the Additional Commissioner (Customs) had clearly stated that they had paid the differe....
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....mis-declaration, concluded, based on the statement of the appellant, as also, the fact that no catalogues had been produced either in reply to the show cause notice or at the time of personal hearing, that the goods, in issue were 'reception apparatus' for television. 5.6 It was contented before us by the learned counsel for the appellant that there is no reference to the said fact i.e. the goods imported are a 'reception apparatus' for television in the show cause notice. This submission is factually incorrect as a perusal of the paragraph 5 and paragraph 7 (3) of the show cause notice dated 17.08.2008 would clearly show that an allegation has been made that 'reception apparatus' for television have been mis-declared as flat panel display for automatic data processing machine. The Commissioner (Appeals) in his order dated 31.12.2007 has upheld the charge of mis-declaration against M/s Sight & Sound and M/s Sound Terrific on the ground that both the importers, as well as, the appellant have accepted the fact that the goods were mis-declared, which according to the Commissioner (Appeals) was reinforced by the fact that the differential customs duty had been paid. The Commissioner....
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....the truth of the contents of such bill of entry and in support of such declaration he is required to produce before the proper officer the invoice, if any, relating to the imported goods. 5.10 In Section 146 of the Act, it is provided that no person shall carry on business as an agent relating to the entry or departure of a conveyance or import or export of goods at any custom station unless such a person holds a licence granted in this behalf in accordance with the regulations. Sub-section (2) of Section 146 empowers the Board to make regulations for the purpose of carrying out the provisions of this section and, in particular such regulation may provide for matters as stated in sub-clause (a) to (f) pertaining the subject matter of a licence. Sub-clause (e) of sub-section (2) of Section 146 clearly states that the regulations may provide for circumstances in which a licence may be suspended or revoked. 5.11 Similarly, Section 147 provides that where an Act requires anything to be done by the owner, importer or exporter of any goods it may be done on his behalf by his agent. Sub-section (2) of Section 147 provides that it shall be deemed, that the, acts undertaken by the age....
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....ch may not exceed Rs 1,000/- or five times of value of the goods, whichever is more. 5.15 Sub-section (4) of Section 11 of the Foreign Trade Act provides for recovery of penalty by way of land revenue, and in the event the person concerned does not pay the penalty, the adjudicating authority is empowered to suspend the importer/exporter code number till penalty is paid. The rules made under the Foreign Trade Act, that is, the Foreign Trade (Regulation), Rules 1993 (in short 'Foreign Trade Rules') provide for various aspects, including in Rule 11, issues pertaining to declaration as to the value and quality of imported goods. Rule 11 of the Foreign Trade Rules imposes an obligation on the owner on importation of any goods whether or not liable to duty, to state the value, quality and description of such goods to the best of his knowledge and belief in the bill of entry and further that at the foot of the bill of entry he subscribes to the declaration of truth of such statement made in the bill of entry. Rule 14 prohibits a person from making, signing or using or caused to be made, signed or used in the declaration inter alia for importing any goods which he knows or has reason to....
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....he CHA of the importers, both filed as well as filled up the contents of the bill of entry, a fact which is not denied, on behalf of the three importers referred to hereinabove. In view of these facts and the provisions referred to hereinabove, it cannot be said that the agent cannot be held to be liable for violation of the provisions of the Act. The purpose of providing for appointment of an accredited agent, that is, an agent who has been issued a licence under the Regulations framed under the Act, is not only to facilitate the clearance of goods, but in doing so, to hold either one of them or both accountable for the actions which they take, based on which the clearance of goods imported into the country is brought about. The contention that the licence of a CHA can be suspended only for violation of the Regulations framed under the Act i.e., CHALR, 2004 is clearly untenable given the purpose for which the licence is issued and the provisions of the Act. 6.4 This aspect is also brought out upon a bare perusal of the provisions of the CHALR, 2004. Sub-regulation (1) of Regulation 20 provides for revocation of licence of a CHA, amongst others, subject to compliance of the proc....
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....6) is required to give a copy of the inquiry report to the CHA, seeking his representation within a period prescribed which is not less than 60 days. Upon receipt of the representation, the Commissioner of Customs is obliged to consider both the inquiry report and the representation and thereafter pass any order as he deems fit. If the CHA is aggrieved by the decision of the Commissioner of Customs, under sub-regulation (8), he has a right to appeal to the Tribunal under Section 129A of the Act. 6.7 In the present case, it is quite clear that the inquiry has not proceeded beyond the stage of issuance of show cause notice under Regulation 22. However, a combined reading of Regulation 13 (d) & (e) read with sub-regulation (1) of Regulation 20 and Rule 10 of CV Rules and the provisions of the Act referred to hereinabove clearly lead to the conclusion that the CHA's licence can be suspended under Regulation 20 even for violation of the provisions of the Act or where there is a penalty imposed on the CHA on account of infraction of the provisions of the Act. This is quite clear from a bare reading of Regulation 13, in particular, sub-clause (d) and (e) and clause (c) of sub-regulatio....
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....4 is not tenable in law for the reasons which follows. 6.10 In all three cases the Tribunal proceeds on the premise that, both under CHALR, 1984 and CHALR, 2004, while conducting an enquiry the concerned authority is required to offer the delinquent CHA a chance of cross-examining the person who is examined in support of grounds which form the basis of the proceedings. The Tribunal in the case of Smita International (supra) has referred to Regulation 22 sub-clause (3) & (4) of CHALR, 2004 which has been held to be in pari materia with Regulation 23 of CHALR, 1984. Regulation 22 (3) and (4) of CHALR, 2004 to the extent necessary is extracted hereinafter:- "(3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs shall, in the course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the inquiry in regard to the grounds forming the basis of the proceedings and he may also put any question to any person tendering evidence for or against the customs House Agent, for the purpose of ascertaining the correct position. (4) The Customs House Agent shall be entitled to cross-examine the persons examined ....
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....he appellant-CHA. The appellant- CHA in their representation before the Inquiry Officer contended that they had inter alia not acted as agents for the two passengers. They also pleaded that uncorroborated statements of the two passengers could not be relied upon. It was also contended by the appellant-CHA i.e., Vijay Thakkar that he had retracted from his statement, and thus pleaded that no adverse conclusion could be drawn on the basis of uncorroborated statement of the two passengers. Lastly, it was contended that the two passengers, namely, K. Gangadhar and C. Abdulla had not been offered for cross-examination, though it was demanded, and it was not proved that the Appellant/CHA i.e., Vijay Thakkar had acted as the CHA for them. 6.14 It is in this context that the Tribunal held, by relying upon clauses (3) & (4) of Regulation 23 of CHALR, 1984, that the very purpose of making use of oral evidence is that such evidence has to be recorded by the Inquiry Officer and the person giving such oral evidence has to be offered to the delinquent for cross-examination. The Tribunal further went on to hold that there does not exist any provision which authorises the use of statement recor....
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....., Vijay Thakkar and given the fact that Vijay Thakkar himself had retracted his own statement under Section 108, the statements could not be relied upon. In our view, the Tribunal did not understand the law to be that statements made by a CHA under Section 108 cannot be used against him in proceedings under the CHALR, 1984. The same position would obtain viz-a-viz CHALR, 2004. This is quite clear upon reading paragraph 11 and 12 of the decision of the Tribunal. In our view the Tribunal in the subsequent decisions in the case of Varma & Sons (supra) and Smita International (supra) had misconstrued the ratio of the decision in the case of Thakkar Shipping Agency (supra). In our view a statement recorded under Section 108 of the Customs Act ,1962 of the CHA by the Custom authorities is admissible in evidence and can form the sole basis for suspending the CHA's licence, however, subject to the usual safeguards that it is voluntarily and truthful. Where the statement under Section 108 of the Act is retracted it can only be relied upon if on examination of evidence one arrives at a conclusion, that the, retracted statement is true and voluntary. Therefore, in the instant case the Tribun....
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....ituations where there is a violation of the CHALR, 2004 Regulation. 7.2 In so far as question no. 2 is concerned, the CHA's licence can be suspended based on the confession made under Section 108 of the Act provided it is voluntary and the statement is truthful and is not the result of such inducement, threat or promise as mentioned in Section 24 of the Indian Evidence Act, 1872. 7.3 In so far as question no. 3 is concerned, in the given circumstances, we are of the view that there was no inordinate delay on the part of the respondents in suspending the licence of the CHA if one were to account for the fact that the order of the adjudication was passed on 20.10.2006 and also, the subsequent events which lead to the suspension of licence by an order dated 29.01.2007. 7.4 In so far as question no. 4 is concerned, we are of the view that since a CHA acts on behalf of the importer, it is not only his obligation to ensure that the entries made in the bill of entry are correct but also that a true and correct declaration of value and description of goods is made, and in the event of any infraction such as mis-declaration, he can be penalized under the Regulation 20 of CHALR, 200....