TMI Blog2017 (3) TMI 1494X X X X Extracts X X X X X X X X Extracts X X X X ..... hy is that the IE Code of the exporter M/s H.M. Impex was mentioned in the shipping bills, this itself reflects that before the grant of said IE Code, the background check of the said importer/ exporter had 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. The revocation of the appellant’s CHA license is unjustified and is accordingly, set aside - the forfeiture of the security amount and the imposed penalty of ₹ 1 lakh also is set aside - appeal allowed - decided in favor of appellant-CHA. - CU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of documents by his employee was too harsh an action and it ought to be recalled. He relied upon the judgment of the CESTAT in M/s Pranil Shipping Vs . CC, Jamnagar by Final Order No. A/11432 dated 24.7.2014. 4. The respondent, however, argued that the shipping bills were filed without verifying the identity of the exporter or ascertaining the veracity of the declarations made in the shipping bills for clearance of the goods through customs for export; this was a necessary precaution that the CHA ought to have taken before the documents were filed; this default shows a lack of due diligence and of serious misconduct, hence the respondent s action was justified. Especially, in view of the judgement of the Bombay High Court in CC (General) Vs Worldwide Cargo Movers, 2010 (253) ELT 190 (Bom.) and the Andhra Pradesh High Court in CC Hyderabad-Il Vs H.B. Cargo Services, 2011 (268) ELT 448 (A.P.). 5. In the impugned order the CESTAT had concluded that the shipping bills were filed in the name of a non-existent entity/exporter viz. M/s H.M. Impex, and there was nothing on record to show that anyone on behalf of the said exporter had ever approached the appellant for fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an importer for undervaluing the imported car... . 7. In the present case, however, the appellant has not defended the action of Mr Lalit Katoch, on the contrary it is the appellant s case that Mr. Lalit Katoch was merely a marketing executive and not a G or H Card Holder under the CHALR, 2004, therefore, the latter and Mr. Dheeraj Khurana had no business entering the customs house or having the goods examined and their presence at the ICD, Tughlakabad was unauthorized. Nor were they authorized to sign any documents on behalf of the CHA. Furthermore, Mr. Roshan Sharma - the appellants G card holder had denied having signed any documents of M/s HM Impex. The appellant had denied the allegations in the show cause notice dated 16.06.2004. It had contended that since the actions of Mr. Lalit Katoch were without any authority the appellant ought not to be penalized for it. 8. The appellant s license was suspended w.e.f. 20.09.2004. In the challenge before the CESTAT, this suspension was set aside on 12.10.2004 and the Commissioner of Customs was directed to re-appreciate the appellant s case since the Commissioner had not satisfied himself about the urgency which was requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so in the shipping bills; indeed this was prominently mentioned on top of the shipping bills; that there was no delay in the discharge of duty towards the CHA; it had properly maintained its books and had not refused access to any material which was sought by the respondent; it had submitted copies of its attendance register as and when required by the customs authorities; it had not sought to influence any government officials apropos the shipping bills; it had paid the requisite government dues; it had exercised due diligence apropos the correctness of the information as provided by its clients regarding the clearance of the cargo consignment. In the present case it had not represented M/s H.M. Impex before the custom authorities in any manner since the entire action had been taken by an employee i.e. Mr. Lalit Katoch without the CHAs authorization; and finally that the show cause notice does not specify as to which clause of Regulation 13(e) of the CHALR, 2004 had been violated by it. The appellant submitted that Mr. Lalit Katoch was never authorized by it to act apropos clearance of export consignment and his duties were limited to that of a sales and marketing executive; he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial inducement or promise of advantage or by the bestowing of any gift or favour or other thing of value; m not refuse access to, conceal, remove or destroy the whole or any part of any book, paper or other record, relating to his transactions as a Customs House Agent which is sought or may be sought by the Commissioner of Customs; (k) maintain records and accounts in such form and manner as may be directed from time to time by a Deputy Commissioner of Customs or Assistant Commissioner of Customs and submit them for inspection to the said Deputy Commissioner of Customs or Assistant Commissioner of Customs or an officer authorised by him whenever required; (1) ensure that all documents, such as bills of entry and shipping bills delivered in the Customs Station by him show the name of the importer or exporter, as the case may be, and the name of the Customs House Agent, prominently at the top of such documents; (m) in the event of the licence granted to him being lost, immediately report the fact to the Commissioner of Customs; (n) ensure that he discharges his duties as Customs House Agent with utmost speed and efficiency and without avoidable delay.... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in doubt, then for such erroneous grant of the IE Code, the appellant cannot be faulted. The IE Code is the proof of locus standi of the exporter. The CHA is not expected to do a background check of the exporter/client who approaches it for facilitation services in export and imports. Regulation 13(e) of the CHALR 2004 requires the CHA to: 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 (emphasis supplied). The CHAs due diligence is for information that he may give to its client and not necessarily to do a background check of either the client or of the consignment. Documents prepared or filed by a CHA are on the basis of instructions/documents received from its client/importer/exporter. Furnishing of wrong or incorrect information cannot be attributed to the CHA if it was innocently filed in the belief and faith that its client has furnished correct information and veritable documents. The mis-declaration would be attributable to the client if wrong information were deliberately supplied to the CHA. Hence there could be no guilt, wrong, fault or penalty on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney. As the CESTAT noted, 9.......................[a]pplicant instead of discharging his functions as a Custom House Agent in accordance with the Regulations, in flagrant violation of those Regulations went to the extent of encashing the facilities made available to him as a CHA by selling it for a price . Moreover, the Power of Attorney was - as a matter of fact - actively involved in the fraudulent act in connivance with the importers and others and that as per the Power of Attorney Bond executed by Sri K. Natarajan, all acts, deeds and things done by Sri D. Sukumaran were to be construed as if they were done by himself. Therefore virtually all the fraudulent activities carried out by the Power of Attorney of Thiru Natarajan were to be treated as having been carried out by Thiru K. Natarajan himself , i.e. the licensee. In OTA Kandla, too, mens rea (i.e. knowledge) of the licensee was established. By a statement of the petitioner under Section 108, Customs Act, followed by the inquiry, it was clear that the licensee was aware that the consignment contained gypseous alabaster, a prohibited substance, but nonetheless, participated in its release from the Kandla Port. In CUS.A.A.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has stressed that the infraction in this case is not a routine matter, but rather, illegal smuggling of narcotics by the G card users. However, given the factual finding that the CHA was not aware of the misuse of the G cards (and thus, also unaware of the contents being smuggled), no additional blame can be heaped upon the CHA on that count alone. Rather, the only proved infraction on record is of the issuance of G cards to non-employees, as opposed to the active facilitation of any infraction, or any other violation of the CHA Regulations, whether gross or otherwise. Neither have any such allegations been raised as to the past conduct of the appellant, from the time the license was granted in January, 1996. Equally, it is important to note that the appellant has - as of today - been unable to work the license for 8 years, and thus been penalized in this manner. This is not to say that CUS.A.A.24/2012 Page 12 the trust operating between the Customs Authorities and the CHA is to be taken lightly, or that violations of the CHA Regulations should not be dealt with sternly. A penalty must be imposed. At the same time, the penalty must - as in any ordered system - be proportional to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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