Draft Circular on some of the issues relating to the CHALR, 2004 formulated by CBEC seeking comments / suggestions - Customs - Draft F.No.502/5/2008-Cus.VI

Draft Circular on some of the issues relating to the CHALR, 2004 formulated by CBEC seeking comments / suggestions NOTICE DRAFT CIRCULAR (To elicit response / Comments only) F.No.502/5/2008-Cus.VI Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs 159A, North Block, New Delhi - 110 001. 10th August, 2009 . The Central Board of Excise Customs (CBEC) solicits views, comments and suggestions on some of the issues relating to the Customs House Agents Licensing Regulations (CHALR), 2004 from the trade and industry associations, departmental officers and others. The views, comments and suggestions to the draft Circular may please be sent to the Under Secretary (Cus. III / VI), Ministry of Finance, Department of Revenue, Central Board of Excise Customs, Room No.227-B, North Block, New Delhi - 110 001 or on Fax No. (011) 23092173 or at E-mail I.D.: uscusiii@nic.in latest by 25.08.2009. To All Concerned. Disclaimer:- These Draft Circular has been put up only to elicit public response. No final decision has been taken by the Government / Board. Government / Board will proceed further in the matter only after due examination of the response received. -------------------------------------------------------------------------------- DRAFT Circular No. /2009-Customs F.No.502/5/2008-Cus.VI Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs 159A, North Block, New Delhi - 110 001. August, 2009. To All Chief Commissioners of Customs. All Chief Commissioners of Customs Central Excise. All Commissioners of Customs. All Commissioners of Customs Central Excise. Subject: Issue of Customs House Agent License - Reference from field formations - regarding. *** Sir / Madam, It has been brought to the notice of the Board by certain field formations that they are facing difficulties in appointment of Customs House Agents (CHA) License for eligible persons and in implementation of the Customs House Agents Licensing Regulations (CHALR), 2004. 2. These issues were examined by the Board in consultation with customs field formations. Further a meeting was also held with the Chief Commissioners of Customs having jurisdiction over major Custom Houses. Accordingly the following decisions have been taken on the following issues. (i) Minimum number of CHAs required in a Customs station: 3. The Regulation 4 of the CHALR, 2004 provides the process of issue of CHA licenses whereby the Commissioner of Customs may invite applications for the grant of such number of licences as assessed by him, to act as Customs House Agents in a customs station. The CHALR, 2004 do not provide for any restrictions on the number of CHAs. Board was of the view that, ideally, no restriction should be placed on the number of CHAs operating in the Custom Houses and the market forces should govern the number of proficient and qualified persons required to carry out the job of CHA commensurate with the volume of import / export cargo. The Board also did not find any justification in prescribing a turnover based criteria for ascertainment of the number of CHA licenses required to be issued at a particular Custom House / Station, in as much as the practice of undertaking CHA services on the basis of Form 'C' intimation was already in vogue and would render such exercise meaningless. The Board, therefore, has decided against fixing a numeric criterion governing the number of CHA licenses being issued. However, the Board is examining the suggestion for enhancement of the quality of services provided by CHAs in consultation with all concerned. Till a final view is taken the present provisions for inviting application for grant of CHA licences shall continue and the examination under Regulation 8 shall be conducted on an annual basis instead of twice a year, by suitably amending the sub-regulation (1) to Regulation 8 . (ii) Employment of person by a CHA: 4. In the present scheme of CHALR, 2004 under regulation 19(1) , the Customs House Agent shall employ any person who shall have a minimum educational qualification of 10+2 School education. However, appointment of such person shall be made only after obtaining approval of the Deputy Commissioner / Assistance Commissioner (DC/AC) designated by the Commissioner of Customs, who shall take into consideration the antecedents and character of the person as provided in regulation 19(2) of CHALR, 2004 . In this regard, Board has decided that the DC/AC concerned, may ensure that while approving the employment of any person with a CHA, the individuals involved in any fraudulent activity (i.e., individuals suspended or blacklisted or denied permission to work in any section of the Custom House) shall not be allowed to be employed by a CHA for transacting business with Customs. Necessary undertaking in this regard may also be taken from the CHA at the time of submission of application giving details of the person who are proposed to be employed by them. 4.2. CHALR, 2004 do not provide for any restriction on the number of persons a CHA can employ as it would depend upon the workload and requirements of a CHA. However, under the regulation 19(3) , any person employed by CHA is required to appear through an examination conducted by DC/AC designated or a Committee of officers to ascertain the adequacy of the knowledge of such persons about the provisions of the Customs Act, 1962 before they are granted 'G' Card. Hence, it is reiterated that it is only those persons who have qualified themselves in the examination conducted under regulation 19(3) and who have been authorized by CHA in terms of regulation 19(5) alone are allowed to sign the declarations filed before Customs for transacting the work at any Custom station. Those persons who have not qualified in the examination but who are still in employment with CHA are being given 'H' card for identifying the persons who may assist the CHA in his work. However, the Commissioner of Customs in a Custom House / Station shall undertake an annual review of the number of such 'H' Cardholders with each CHA to ensure that discredited individuals are not being allowed to work as 'H' Cardholders. The examination under Regulation 19(3) shall also be conducted by Commissionerate of Customs on annual basis. (iii) Suspension or revocation against CHAs operating on 'C' form intimation basis: 5.1. CHALR, 2004 provide a facility for the CHAs who have been issued a license from a particular customs station to operate under Form 'C' intimation at another customs station. In case of such CHAs, who are found to have violated any provision of the CHALR, 2004 at any customs station, it is clarified that the suspension action against CHA's operations may be taken by the Commissioner of Customs at the station who issued the CHA license and such action would either be limited to a particular customs station where a violation has been noticed or action against the CHA in general, applicable at all customs stations where the CHA operates, depending upon the gravity and seriousness of the violation. 5.2. Further, it is also clarified that the Commissioner of Customs at a customs station who had authorised a CHA to operate on 'C' form basis, should inform the details of violations to the Commissioner of Customs at the customs station from where the CHA licence was issued for such CHA, so that necessary action for suspension or revocation of CHA licence, could be initiated by him. This would avoid duplicity and ensure uniformity in adjudication of a case against a CHA in suspension or revocation proceedings by the Customs field formations. However, the Commissioner of Customs, who had authorised a CHA to operate on 'C' form basis at a customs station, may however take action in deserving cases under regulation 21 of CHALR, 2004 for prohibiting the working of such defaulting CHA in any section of the Custom House/Customs Station. (iv) Know Your Customs (KYC) norms for identification of clients by CHAs: 6. In the context of increasing number of offences involving various modus-operandi such as misuse of export promotion schemes, fraudulent availment of export incentives, unscrupulous imports evading duty by bogus IEC holders etc., it has been decided by the Board to put in place the "Know Your Customer (KYC)" guidelines for CHAs so that they are not used intentionally or unintentionally by importers / exporters who indulge in fraudulent activities. Accordingly, Regulation 13 of CHALR, 2004 , has been suitably amended to provide that certain obligations on the CHAs to verify the antecedent, correctness of Import Export Code (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents, data or information. In this regard, a detailed guideline on the list of documents to be verified and obtained from the client/ customer is enclosed in the annexure. It would also be obligatory for the client/ customer to furnish to the CHA, a photograph of himself/herself in the case of an individual and those of the authorised signatory in respect of other forms of organizations such as company/ trusts etc., and any two of the listed documents in the annexure. (v) Time limit for completion of suspension proceedings against CHA licensee under regulation 22 : 7.1. The present procedure prescribed for completion of regular suspension proceedings takes longer time since it involves inquiry proceedings, and there is no time limit prescribed for completion of such proceedings. Hence, it has been decided by the Board to prescribe an overall time limit of nine months from the date of receipt of offence report, by prescribing various time limits for issue of Show Cause Notice, submission of inquiry report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs recording his findings on the issue of suspension of CHA license within ninety days from the date of issue of SCN under sub-regulation 22(1) and for passing of an order by the Commissioner of Customs within ninety days from submission of a report by DC/AC as above. Suitable changes have been made in the present time limit of forty five days for reply by CHA to the notice of suspension, sixty days time for representation against the report of AC/DC on the grounds not accepted by CHA, by reducing the time to thirty days in both the cases under the Regulations. 7.2. In cases where immediate suspension action against a CHA is required to be taken by a Commissioner of Customs under regulation 20(2) , there is no need for following the procedure prescribed under Regulation 22 since such an action is taken immediately and only in justified cases depending upon the seriousness or gravity of offence. However, it has been decided by the Board that a 'post-decisional hearing' should be given in all such cases, so that errors apparent, if any, can be corrected and an opportunity for personal hearing is given to the aggrieved party. Further, Board has also prescribed certain time limits in cases warranting immediate suspension under Regulation 20(2) . Accordingly, the investigating authority shall furnish its report to the Commissioner of Customs who had issued the CHA license (Licensing authority), within thirty days of the detection of an offence. The Licensing authority shall take necessary immediate suspension action within fifteen days of the receipt of the report of the investigating authority. A post-decisional hearing shall be granted to the party within fifteen days from the date of his suspension. The Commissioner of Customs concerned shall issue an Adjudication Order, where it is possible to do so, within fifteen days from the date of personal hearing so granted by him. (vi) CHA licenses in respect of individuals who had passed the examination under CHALR, 1984: 8. The Board considered the issue of CHA licence for individuals who had passed examination under earlier CHALR, 1984 in its entirety, and in the context of the pronouncement of the Hon'ble Madras High Court in W.P.No.707-716/2009 in the case of Isak Ebinesar Ors. Vs Chairman (CBEC) Ors. [2009 -TMI - 33215 - MADRAS HIGH COURT] and that of the Hon'ble Delhi High Court in the case of Sunil Kohli Ors. Vs Union of India in W.P.(C) No.17808-73 of 2004 and that of Hon'ble Punjab Haryana High Court in the case of Union of India Vs Shree Narendra M. Prabhakar in CWP No.15463 of 2005. It also noted that the examination for grant of CHA licence had been conducted seven times since the promulgation of the CHALR, 2004 and that five years have lapsed since the new Regulations have come into force. It also took cognizance of the departure in the norms and the revised contents of the examination prescribed under CHALR, 2004 . The conditions under CHALR, 2004 have been made more stringent and higher eligibility criteria in educational qualification like CA, MBA, LLB have now been prescribed. More importantly, new subjects like Export Oriented schemes, computerization and Prevention of Corruption Act have been introduced in CHALR, 2004 examination. The Board noted that on All India basis, there were a large number of such applicants having passed Regulation 9 Examination under the CHALR, 1984 presently seeking CHA licences. In view of the aforesaid, the Board had decided that there was no generalized case for grant of CHA licences to those who have not qualified the requisite examination prescribed under the CHALR, 2004 , and the concerned persons for the aforesaid reasons will have to pass the Examination under CHALR, 2004 . 9. Any difficulties in implementation of these Regulations may be brought to the notice of the Board immediately. Yours faithfully, ( ) Under Secretary (I- III/VI) Copy for information to: Member (Customs). All Directorate General under CBEC. All CCs/CCE(Appeals). Internal Circulation as usual. Client/ Customer Identification Procedure Features to be verified and documents to be obtained from clients/ customers S.No Form of organisation Features to be verified Documents to be obtained 1 Individual (i) Legal name and any other names used (ii) Present and Permanent address, in full, complete and correct. (i) Passport (ii) PAN card (iii) Voter's Identity card (iv) Driving licence (v) Bank account statement (vi) Ration card Note: Any two of the documents listed above, which provides client/ customer information to the satisfaction of the CHA will suffice. 2 Company (i)Name of the company (ii) principal place of business (iii) mailing address of the company (iv) telephone, fax number, e-mail address. (i) Certificate of incorporation (ii) Memorandum of Association (iii) Articles of Association (iv) Power of Attorney granted to its managers, officers or employees to transact business on its behalf (v) Copy of PAN allotment letter (vi) Copy of telephone bill 3 Partnership firm (i)Legal name (ii) Permanent address, in full, complete and correct. (iii) Name of all partners and their addresses, in full complete and correct. (iv) telephone, fax number, e-mail address of the firm and partners. (i) Registration certificate, if registered (ii) Partnership deed (iii) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf (iv) Any officially valid document identifying the partners and the person holding the Power of Attorney and their addresses (v) Telephone bill in the name of firm/ partners 4 Trusts, Foundations (i) Name of trustees, settlers, beneficiaries and signatories (ii) Name and address of the founder, the managers, Directors and the beneficiaries, in full, complete and correct. (iii) Telephone and fax number, e-mail address of the trust, founder and trustees. (i) Certificate of Registration, if registered (ii) Power of Attorney granted to transact business on its behalf (iii) Any officially valid document to identify the trustees, settlers, beneficiaries and those holding the Power of Attorney, founders/ managers/ directors and their addresses (iv) Resolution of the managing body of the foundation/ association (v) Telephone bill ***