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M/s. A.B. AGENCIES Versus CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL AND COMMISSIONER OF CUSTOMS

2015 (8) TMI 143 - KERALA HIGH COURT

Revocation of CHA license - Submission of forged certificate - Held that:- The license issued to the appellant is under the provisions of the Regulations 2004. Clause 19 of the Regulations regulates 'Employment of Persons'. As per Clause 19(8), it is the responsibility of the Customs House Agent to exercise such supervision as is necessary to ensure the proper conduct of his employees in the transaction of his business as agent. This provision further provides that the agent shall be held respon .....

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issue of 'H' card and 'G' card and various other documents submitted to the Customs Department. He was enabled to do all the forgeries and derive the benefit thereof only because of his employment under the appellant and obviously on account of the failure of the appellant in effectively supervising the activities of his employees to ensure that they conduct themselves properly in the transaction of his business as a Customs House Agent. Therefore, the appellant cannot be absolved of his lapse .....

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e fact that the appellant did not have any role in what was done by Sri.Vipin Kumar and his team and that the lapse found is supervisory lapse assumes importance the absence of any previous misconduct on the part of the appellant has also to be considered. - termination of the license ordered in Annexure A8 order and confirmed in Annexure A9 order of the Tribunal is too harsh and disproportionate. This view that we take, is supported by the principles laid down in the judgment in Ashiana Cargo S .....

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A9 order passed by the Customs, Excise and Service Tax Appellate Tribunal, Bangalore confirming Annexure A8 order passed by second respondent, the Commissioner of Customs, Cochin whereby the Custom House Agents License No.236 (ABGPA1333F) issued to the appellant was ordered to be revoked under Regulation 20(1) of the Custom House Agents Licensing Regulations, 2004 (hereinafter referred to as 'Regulations 2004') and the Security of ₹ 50,000/- deposited by the appellant was also ord .....

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who was issued an identity card and 'G' card bearing Sl.No.48 which was valid upto 22.8.2014. 4. It appears that Bill of Entry No.7690810 dated 17.8.2012 on behalf of M/S Madeena Dates, Trivandrum was filed in the name of appellant for clearance of goods which required Clearance Certificate from Plant Quarantine Agencies and Port Health Officers. The required documents were produced and the goods were cleared. On investigation, it was revealed that Sri.Vipin Kumar, the 'G' card h .....

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Alleging that these actions of Vipin Kumar, the employee of the appellant, amounted to irregularities in terms of the provisions contained in the Regulations 2004, the license issued to the appellant was suspended by Annexure A1 order dated 18.1.2012. Subsequently, Annexure A2 order was issued by the Commissioner ordering continuance of suspension of the licence. 6. Thereafter, Annexure A3 show cause notice dated 19.11.2012 was issued to the appellant requiring it to show cause why the Custom Ho .....

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013 before the Inquiry Officer, inquiry report dated 18.03.2013, the reply submitted by M/S A.B.Agencies dated 24.05.2013 and the submissions made during the personal hearing on 31.05.2013. 16. Brief facts of the case are as follows:- M/S A.B.Agencies was issued Custom House Agents License No.236 (ABGPA1333F) under Regulation 9(1) of Custom House Agents Licensing Regulations, 2004 )CHALR, 2004). M/S A.B.Agencies filed Bill of Entry No.7690810 dated 17.8.2012 on behalf of the importer, M/S Madeen .....

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prietor Shri.Anil Kumar on the Bill of Entry, in the applications for issue of H card and G cards for Shri.Kannan L and Shri.Anil Kumar Alex, respectively and various documents submitted to Customs. Since, it appeared that an employee of M/S A.B.Agencies has committed irregularities in the clearance of goods imported vide Bill of Entry No.7690810 dated 17.8.2012 by forging the endorsement of Port Health Officer and signature of Shri.Anil Kumar in the said Bill of Entry and the said employee had .....

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B Agencies made in reply to the Show Cause Notice and at the time of personal hearing, the Inquiry Officer had arrived at the conclusion that M/S A B Agencies had failed to exercise proper supervision and to ensure proper conduct of its employee in the transaction of business as CHA and had thereby violated Regulation 19(8) of CHALR, 2004. 18. The fact that the endorsement of the Port Health Officer on Bill of Entry No.7690810/17.8.2012 that "the item ie., vigor power energy drink, monster .....

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i.Vipin Kumar had forged the signature f Shri.Anil Kumar, Proprietor on various documents submitted to the Customs, including the above said Bill of Entry, the applications for issue of H card and G card for Shri.L.Kannan and Anil Kumar Alex respectively. I also find that during the investigation Shri.Vipin Kumar had deposed that he had been indulging in forging of the signature of the proprietor in several Bills of Entry submitted by him in the Bill of Entry. 19. I find that the defense put for .....

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icial had failed to notice the clandestine activities during clearance. On the other hand I find that Shri Anil Kumar, the Proprietor himself had admitted in his statements under Section 108 of the Customs Act, 1962 dated 25.9.2012 and 8.10.2012 that he had not taken the precaution of meeting the importer personally to verify the genuinity and that he allowed the documents for import to be handled by his Employee Shri Vipin Kumar on behalf of his firm. 20. From the facts of the case it is eviden .....

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ibility cast upon him under the CHALR, 2004, Regulation 19(8) states that "the Customs House Agent shall exercise such supervision as may be necessary to ensure the proper conduct of any such employees in the transaction of business as agents and be held responsible for all acts or omissions of his employees in regard to their employment." Thus, the Regulation is very clear about the responsibility of the CHA on the acts and omissions of his employees. Further, Shri.Anil Kumar had, by .....

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employees had encouraged Shri.Vipin Kumar and his associates to indulge in such nefarious activities. Thus the observation made by the Inquiry Officer that the principles of vicarious liability of a master would apply in this case merits acceptance. The principles of vicarious liability states that an employer can incur liability for the acts and omissions of an employee, if committed by the employee in the course of employment and if the employer has the right to control the way in which the em .....

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Hon'ble High Court held that revocation of CHA License by the Commissioner of Customs for involvement of the employee in smuggling activity is valid. Further, the Hon'ble CESTAT Bombay in the case of M/S Tara Jewels Export Ltd., vs. Commissioner of Customs CSI Airport, Mumbai [2011(273)ELT 0554 Tri.(Bom)] has held that the employer has vicarious liablity for the actions of the employee. Hence, the submission of Shri.Anil Kumar that the principles of vicarious liability of master are not .....

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er alone but encompass all employees employed by him in transaction of business as agents. In fact Shri.Vipin Kumar is a 'G' card holder of the CHA employed in transaction of the business of the CHA. Hence, the above contention of M/S A B Agencies is rejected. 23. From the above it emerges that M/S A B Agencies has violated sub regulation (8) of Regulation 19 of the CHALR, 2004. In view of the above violation, the Custom House Agents License No.236 (ABGPA1333F) issued to them is liable f .....

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m 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 any where else which in the opinion of the Commissioner renders him unfit to transact any business in the Customs Station. Accordingly I pass the following order: ORDER (i) I order revocation the Cu .....

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his background, this appeal is filed. 8. Learned senior counsel for the appellant contended that the irregularities which are relied on by the Department to cancel the licence of the appellant were the fraudulent activities of Sri.Vipin Kumar. It is argued that in the impugned order there is no finding that the appellant was either a party to that fraudulent activities of Sri.Vipin Kumar nor is there any finding that the appellant was even aware of his fraudulent activities. Therefore, it is con .....

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by the Tribunal and contended that it was in the course of the employment that Sri.Vipin Kumar has committed irregularities and according to him, in view of Clause 19 of the Regulations 2004, the agent is responsible for all acts and omissions of his employees and that therefore the appellant cannot be absolved of the consequences for the irregularities committed by its employees. 10. We have considered the submissions made. The license issued to the appellant is under the provisions of the Regu .....

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egulation 20, which provides that the Commissioner may revoke the licence of a Customs House Agent and order forfeiture of part or whole of the security, or only order forfeiture of part or whole of security. 11. In so far as this case is concerned, admittedly, Sri.Vipin Kumar was an employee of the appellant and he was also issued 'G' card, enabling him to transact the business of the appellant as a Customs House Agent. It was while working in that capacity that he has forged the signat .....

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of his business as a Customs House Agent. Therefore, the appellant cannot be absolved of his lapse of supervision attracting Clause 19 of the Regulations warranting action against him under Regulation 20. 12. The remaining issue to be considered is whether in the facts of the case the extreme penalty of revocation of license and forfeiture of security was warranted. 13. We have already referred to the Annexure A8 order passed by the Commissioner. The relevant findings of the Commissioner, which .....

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was even aware of what was being done by Sri.Vipin Kumar and two others mentioned above. Department does not also have a case that on any previous occasion, the appellant was proceeded against on the allegation of breach of the provisions of the Regulations. 14. Eventhough the appellant functioned as a Customs Office of Agent on the basis of the license that was issued under the Regulations and was liable to be proceeded against under Clauses 19 and 20 of the Regulations penalty to be levied on .....

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as issued, the license issued to the appellant remained suspended and by Annexure A8 order dated 31.5.2013 the license has been terminated. In other words, for the misconduct of his workers, for which the appellant is also responsible, it has suffered the penalty of being kept out of business from 18.10.2012. 15. Considering all these, we feel that termination of the license ordered in Annexure A8 order and confirmed in Annexure A9 order of the Tribunal is too harsh and disproportionate. This vi .....

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o 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 import .....

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