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TMI Blog2014 (3) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... d that V.K.'s employees were misusing their G Cards and indulging in illegal narcotics export. During the course of investigation, the proprietor of the appellant, in his statement under Section 108 of the Customs Act, 1962, admitted that V.K.'s employees were holding G Cards and misrepresenting themselves to be his employees but were in reality carrying on work on behalf of M/s. V.K. International. He further stated that this presented VK's employees the opportunity to misuse the G Cards and indulge in the illegal activities. He also admitted to receiving Rs.15,000/- per month from M/s. V.K. International for granting facility of G Cards to its employees. This was in contravention of Sections 13(b) and 13(e) and 19(8) of the Custom House Agents Licensing Regulation, 2004 (hereafter referred to as "the Regulations"). On 24.01.2005, the Commissioner of Customs deemed this to be sufficiently grave to suspend the appellant's license. Thereafter, enquiry proceedings were initiated, by which the order-in-original of 08.08.2007 revoked the appellant's license under Regulation 20(1). The order also forfeit Rs.50,000/-. The appellant challenged this order before the CESTAT. Before the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the appellant. No doubt, as CHA, the appellant concerned committed a wrong in allowing the outsiders, i.e. V.K.'s employees, into restricted premises by the issuance of G cards. However, unlike in the cases relied upon by the Revenue, there was no element of mens rea, or any direct or indirect involvement. Learned counsel relied upon the order reported as Sanco Trans Ltd. v. Collector of Customs, 1996 (83) ELT 557; A.N. Bhat v. Collector of Customs, 1991 (55) ELT 580 (Tri- Chennai); Samrat Shipping Services v. Commissioner of Customs, 2007 (213) ELT 103 and the Bombay High Court judgment in Commissioner of Customs (G) v. K.M. Ganatra and Co., 2010 (254) ELT 454. He also relied upon Falcon Air Cargo and Travels (P) Ltd. v. Union of India, 2002 (140) ELT 8 (Del). Sh. Kamal Nijhawan, learned Senior Standing Counsel for the Revenue, relied upon the majority opinions of the Tribunal and submitted that there is no question of the penalty being disproportionate. Whilst direct or indirect involvement of the CHA in the nefarious activities of V.K.'s employees was not established, or proved, its role as a facilitator, which enabled those individuals to indulge in such behaviour, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms House Agent to comply with any of the conditions of the bond executed by him under regulation 10; (b) failure of the Customs House Agent to comply with any of the provisions of these regulations, within the jurisdiction of the said Commissioner of Customs or anywhere else; (c) any misconduct on his part, whether within the jurisdiction of the said Commissioner of Customs or anywhere else which in the opinion of the Commissioner renders him unfit to transact any business in the Customs Station." 7. The appellant today does not question the findings leading to revocation of the license. Neither does the appellant dispute the fact that VK's employees were wrongly granted G Cards, which were subsequent used by them to engage in the illegal export of narcotics. Rather, the appellant only impugns the quantum of punishment (revocation of license) imposed by the majority opinion of the CESTAT, which is the maximum punishment prescribed by the CHA Regulations. The appellant is thus barred from becoming a CHA. 8. The issue before the Court is the proportionality of the penalty awarded in this case. The CHA Regulations prescribe two penalties: suspension of the license for a particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in approach for consideration of cases warranting revocation or suspension has to be borne in mind while dealing with individual cases. The proportionality question is of great significance as action is under a fiscal statute, and may ultimately lead to a civil death." 9. The consequences of revocation being serious, the proportionality doctrine must inform the Commissioner's analysis. This is also the exercise the Court must undertake, though with a measure of deference towards the Commissioner's conclusions. 10. Beginning with the facts, there is virtually no dispute. There is a concurrent finding of fact by the Commissioner and the CESTAT that the appellant did not have knowledge that the illegal exports were effected using the G cards given to VK's employees. There was no active or passive facilitation by the appellant in that sense. Undoubtedly, the provision of the G cards to non-employees itself violated the CHA Regulations. This is an admitted fact, but it is not the Revenue's argument (nor is it the reasoning adopted by the Commissioner or the CESTAT) that this violation in itself is sufficiently grave so as to justify the extreme measure of revocation. Not any and ever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipated in its release from the Kandla Port. In Santon Shipping (supra), the adjudicating authority came "to the conclusion that the fraud in this case has been committed in so many consignments over a long period of time and the same could not have happened without the connivance of the CHA". The revocation of the license was again informed by the fact of connivance (i.e. mens rea as to the infraction) of the CHA. In Eagle Transport (supra), the CHA transferred the license altogether. As the CESTAT noted, "... the activities of the appellant firm were controlled day to day, not by Shrimankar but by employees of Amol Shipping Agency. We do not see how this does not amount to transfer of the licence in all but name. Hence, we must hold that the first and second articles of charge have been rightly held as proved." Moreover, more than 100 blank shipping bill forms were sent to a third-party. Following these aggravating factors, the penalty of revocation was justified by the CESTAT. Similarly, in HB Cargo (supra), relied upon by the majority of the CESTAT, the case did not concern any ordinary infraction of the CHA Regulations, but "an act of corruption", where blank shipping bills wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors impunity for infractions, it cautions against a disproportionate penalty. Neither extreme is to be encouraged. In this case, in view of the absence of any mens rea, the violation concerns the provision of G cards to two individuals and that alone. A penalty of revocation of license for this contravention of the CHA Regulations unjustly restricts the appellant's ability to engage in the business of the CHA for his entire lifetime. As importantly, it skews the proportionality doctrine, substantially lowering the bar for revocation as a permissible penalty, especially given the dire civil consequences that follow. On the other hand, the minority Opinion of the CESTAT, delivered by the Judicial Member, correctly appreciates the balance of relevant factors, i.e. knowledge/mens rea, gravity of the infraction, the stringency of the penalty of revocation, the fact that the appellant has already been unable to work his license for a period of 6 years (now 8 years), and accordingly sets aside the order of the Commissioner dated 24.01.2005. 13. In light of the above discussion, the majority Opinion of the CESTAT is hereby set aside. The Minority Opinion of the Judicial Member, Ms. Archan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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