TMI Blog2006 (11) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... sible for happenings in custom area. Tribunal not expected to interfere on basis of own notions difficulties of CHA or employees. Tribunal not justified in setting aside revocation. - 37 of 2006 with 39 of 2006 - - - Dated:- 29-11-2006 - H.L. Gokhale and J.P. Devadhar, JJ. Shri Pradeep S. Jetly, for the Appellant. Shri Sujay Kantawala, for the Respondent. [Judgment per : H.L. Gokhale, J.]. - Customs Appeal No. 37 of 2006 is filed by the Commissioner of Customs (General). Respondent to this Appeal is Worldwide Cargo Movers, a Firm functioning as a Custom House Agent ("CHA" for short). This Firm has filed the connected Appeal No. 39 of 2006. Union of India and the Commissioner of Customs (General) are the respondents to this Appeal. Both these Appeals are filed under Section 130 of the Customs Act, 1962 ("the said Act" for short) against an order dated 4th April 2006 passed by the Customs Excise and Service Tax Appellate Tribunal, Mumbai ("CESTAT" for short) in Appeal No. C-72 of 2006 which was filed by the said Firm. Since the order under challenge is one and the same, both the Appeals are heard and are being decided together. However, for the sake of convenience ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence be restored, though on giving a fresh security and obtaining another Regulation 8 employees' service (since the respondent had terminated the services of the employee involved in the said misconduct). This order of the CESTAT is challenged by the appellant by filing Customs Appeal No. 37 of 2006. The respondent herein has challenged that very order by filing Customs Appeal No. 39 of 2006 since the respondent is aggrieved by the part of the order which directs giving of a fresh security. 5. As far as Customs Appeal No. 37 of 2006 is concerned, it was admitted on 24th August 2006 to examine the following question of law :- "Whether the CESTAT is justified in setting aside the revocation of the CEA licence considering that in the facts and circumstances of the case and upon the material available on record such setting aside is perverse in law." An ad-interim stay on the order passed by the CESTAT was also granted. 6. As far as Customs Appeal No. 39 of 2006 is concerned, it was also admitted on the same day to consider the following question of law :- "Whether the Tribunal could have insisted upon a fresh security for the restoration of the licence when otherwise the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,46,014.47. Since the declared value of the said vehicle appeared to be on lower side the Special Investigation and Intelligence Branch (SIIB) took the matter for investigation. They examined the vehicle in the presence of the said Rehman Shaikh. They found that the vehicle was fitted with optional accessories such as Anti-theft signal equipment, Napa leather upholstery, Electronic control system, Fire extinguisher system, Garage door opener, Reversible mat for luggage, Compass etc. They were quite expensive items and these accessories were not declared. Since the person whose name was given as importer was Ahmed Imran Shaikh, this Ahmed Imran was summoned and his statement was recorded under Section 108 of the Customs Act, 1962 ("the said Act" for short). He voluntarily accepted that he was not the actual owner but the actual owner was one Sumesh Menon, whose address and whereabouts were not known. He further stated that his financial condition was not so sound that he could purchase even a small car. He was working with M/s. Metro Electronics at Bandra and earning a salary of Rs. 5,000/- per month. He further stated that this was all done at the instance of the said Sumesh Menon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the violation of the provisions of Regulations 13(n), 19(8) and 20(1)(c) of the above Regulations. 12. From the record of the enquiry, it is seen that all the relevant documents were produced on behalf of the Department to prove the misconduct alleged. Thus, as far as the incident at Area Cargo Complex, Sahar is concerned, the Department produced the order in original passed by the Commissioner of Customs at Sahar as well as statements of Ahmed Imran Shaikh and Rehman Shaikh recorded under Section 108 of the said Act and the copy of Bill of Entry and the Invoice. As far as the incident at Jawaharlal Nehru Port is concerned, it produced the arrest memo and the statements of Rehman Shaikh, the above-referred Sanjay Surshetwar, Sanjay Chhabria, Yusuf Poonawalla, the Operation Manager and the Chief Executive Officer of CFS recorded under Section 108 of the said Act, freight manifest and Bill of Lading showing Sanjay Chhabria as the consignee and various panchanamas at the time of arrest and recovery of the vehicle. 13. The regulations which were invoked against the respondent in the first case were Regulations 13(d), 13(e), 13(1) and 19(8). Regulation 13 gives the obligations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess in the Customs Station. (2) Notwithstanding anything contained in sub-regulation (1) the Commissioner of Customs may in appropriate cases where immediate action is necessary, suspend the licence of a Customs House Agent where an enquiry against such agent is pending or contemplated." 14. As stated above, the Enquiring Officer held that all the articles of charges were established. The respondent did not participate in the enquiry. After the report of Enquiring Officer was served on the respondent, it filed one reply dated 6th January 2006. This reply is in three parts. In the first part, it is stated that the grounds of imputation are framed against the respondent. In the second part, the respondent has dealt with the incident at the Air Cargo Complex and in the third part, it has dealt with the incident at the Jawaharlal Nehru Port. As far as the incident at Jawaharlal Nehru Port is concerned, the respondent has stated that it was not even aware of these activities of Rehman Shaikh and whether there was any flouting of the provisions of the Customs Act. It is stated that no show cause notice was issued to it regarding the smuggling/clandestine removal of car. It is further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must show the correct names of the parties. In the Sahar case, obviously fake names were given. Regulation 19(8) requires CHA to exercise all necessary supervision of the conduct of its employees and clearly states that the CHA will be held responsible for the acts or omissions of his employees. In view of these findings the appellant has passed the order revoking the licence. 17. As far as the Tribunal is concerned, the main factor, which has impressed it, is that according to it, the Firm is not responsible for the alleged two incidents. In sub-para (a) of para 2.1, it stated that there is no question of vicarious liability since the Firm was not served with any Show Cause Notice for the alleged complexity in clearance of the Volkswagen car at Sahar. As far as the clearance of Mercedes car at JNPT is concerned, the Tribunal says that the Firm came to know about it only after the arrest of Rehman Shaikh. In sub-para (b) it observed as follows :- "There is no material which could be shown to us from the statements of Shri Rehman I. Shaikh to even remotely suggest that the partners of the said firm or the firm in any way was privy to or in concert to these activities of Rehman. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el appearing for the appellant-Revenue, on the other hand, submitted that the facts of the case did not warrant any leniency and that this was a fit case where the appellant had taken the correct remedial measure and that the Tribunal was not expected to interfere. He drew our attention to the two judgments of two Division Benches of the Madras High Court. The first is in the case of Arvind C. Bhagat v. Commissioner of Customs, Chennai reported in 2000 (122) E.L.T. 678 (Mad.). That was a case where the CHA had stood surety for a party without satisfying himself that the importer was a real one and was an actual user. The Department found that the importer was a fictitious entity and refused to renew the licence of the CHA. The action of the Department was upheld by the Division Bench. An SLP against this judgment being SLP (Civil) Nos. 19713-19714 of 2000 has been dismissed by the Apex Court as recorded in Arvind C. Bhagat v. Commissioner - 2001 (129) E.L.T. A191 (S.C.). 22. A similar view is taken by another Division Bench of the Madras High Court in Sri Kamakshi Agency v. Commissioner of Customs, Madras reported in 2001 (129) E.L.T. 29 (Mad.). In that matter, the CHA had given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent-firm could not be held responsible for the acts of Rehman Shaikh. However, from the record of the proceedings, it is clear that the appellant did not take this stand in its only document which it has filed on record. This was the only response of the respondent. As far as the incident at Sahar Air Port is concerned, it does not say that Rehman Shaikh is responsible for this incident and that the respondent has nothing to do with it. If the appellant was to take such a stand, one could perhaps understand. The fact, however, remains that the appellant has not taken any such stand. This being the position, the Tribunal had no reason to come to the conclusion as it has done in sub-para (a) of para 2.1 that the Firm was not liable for the alleged acts of its employees. The Firm was clearly told that it was being proceeded for failure of its obligations under Regulations 13(d), (e), (1) and (n) of the CHA Licensing Regulations. These regulations clearly stated that the CHA has to advise its clients correctly, exercise due diligence, ensure that the correct documents and information are given and discharge its duties in accordance with law. The respondent knew that the appellant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned, it is grave enough for the appellant to come to the conclusion that the respondent does not deserve to have the CHA licence any more. The CHA Regulations which have been quoted above, are very clear and the CHA is responsible for all acts and omissions of his employees. It is further material to note that it is for the Commissioner of Customs to decide how many such agents should be permitted to operate in the Customs area. This is clear from Regulation 4 which states that the Commissioner of Customs has to invite the application for grant of such number of licence as assessed by him to act as an CHA. There is an examination to become a CHA and the Commissioner has to satisfy himself that the persons concerned are persons of integrity. Thus, Regulation 11(2)(b) states that when it comes to renewal, also the Commissioner has to be satisfied of absence of instances of any complaint or misconduct, including non-compliance of any of the obligations specified in Regulation 13. In the present case, the Assistant Commissioner had clearly held that as far as the first incident at Sahar was concerned, the violation of Regulations 13(d), (e), (1), (n) and 19(8) was clearly establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vicariously. 28. In our view, the Tribunal has committed a grave error in interfering with the decision of a domestic authority. In a departmental proceeding one has to see whether the principles of natural justice are followed and the findings are justified from material on record. Once both these aspects are satisfied if an outsider Tribunal interferes, its findings and order will be improper and perverse which is what has happened in the present case. Similarly when one comes to the disciplinary measures, one must not lose sight of the fact that the appellant-Commissioner of Customs is responsible for happenings in the Customs area and for the discipline to be maintained over there. If he takes a decision necessary for that purpose, the Tribunal is not expected to interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or his employees. The decision is best to be left to the disciplinary authority save in exceptional cases where it is shockingly disproportionate or mala fide. That is not the case here. 29. In the circumstances, we allow Customs Appeal No. 37 of 2006 filed by the appellant-Commissioner of Customs since the CESTAT was not ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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