TMI Blog2015 (9) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been done if the intention was to facilitate smuggling of red sanders as observed by us earlier. The same applies for obtaining dock permit also. The very fact that appellant simply obtained the dock permits and ignored the fact that the name was different gives a feeling that they may not be actively involved in smuggling because if they were involved they would have advised the client that this could create a problem and they would have changed the transporter or the truck or found some other way. There is no evidence of collusion at the port gate. The fact that they simply obtained the dock permits, in our opinion, cannot mean that it shows malafide intention. The punishment of revocation of licence is disproportionate to the offence committed and therefore cannot be sustained. - Decided in favor of appellant. - C/20468/2015-DB - Final Order No. 21103/2015 - Dated:- 3-6-2015 - Archana Wadhwa , Member (J) And B. S. V. Murthy, Member (T), JJ. For the Appellant : Mr G Shivadass, Adv For the Respondent : Mr A K Nigam, AR ORDER Per: B S V Murthy: The appellants are engaged in freight forwarding, warehousing, Customs Broker activities, et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued on 28.7.2014 and thereafter, an appeal was filed by the Commissioner of Customs, Bangalore before the Hon'ble High Court of Karnataka on 5.8.2014 and the Hon'ble High Court in their order dated 12.8.2014 directed the Commissioner of Customs for renewal of the licence within two weeks and report compliance and granted stay against the order of the Tribunal. 4. However, the licence was renewed only for six months and therefore, the licence issued to the appellant was valid only up to 24.2.2015. In the meanwhile, another show-cause notice was issued by the Commissioner on 1.9.2014 requiring the appellant to show-cause as to why the licence should not be revoked or appropriate penalties should not be imposed on the appellant for the offence relating to smuggling of Red Sanders in the guise of granite slabs. After following the procedure prescribed under the Customs Brokers Licensing Regulations, 2013 (CBLR), the impugned order was passed on 20.2.2015. In the impugned order, the learned Commissioner revoked the licence and forfeited the entire security deposited by them. A penalty was also imposed amounting to ₹ 50,000/- which is the maximum that can be imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. and Kaseera Resources Pvt. Ltd. by SGE Ltd., the exporter and all communications are between Avinash on his personal e-mail id and the exporter. 11. The charge sheet also mentioned that a lorry WB 39 4846 operating on fake papers in the name of a non-existent firm M/s. Pankaj Transport with damaged identity marks as regards engine and Chassis No. was used for transportation of Red sanders under the garb of polished granite. The services of driver and khalasi named hereinabove were used for this purpose. 12. SGE and others obtained a covered container No. SIKU 2966294 and a corresponding bottle seal No. 763772 was obtained from Samudera Shipping Line (I) Pvt. Ltd. by the transporters, Shri Saif Ahmed and others. Thereafter SGE Ltd. prepared invoice and other documents and availing the facility of self declaration and self sealing facilities prepared ARE-1 Form on 17.02.2009 and while preparing the ARE-1 Form did not reflect the bottle seal No. even though it was required to be declared as per Circular No. 1/2006-Cus. dated 02.01.2006. Md. Sakil hired a godown in his name and according to the CBI Red sanders were loaded from this godown and the bottle seal was affixed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctions and failed to inform the department of this non compliance. (ii) The CB obtained 3 dock permits, two on 21.02.2009 and one on 23.02.2009 for the same lorry No. in the name of a non-existent transporter M/s. Pankaj Transport, but failed to take any action when the dock permits for the same lorry No. indicated the name of another transporter. (iii) The CB took the second bottle seal even though the transporter had already obtained a bottle seal for the same container. 17. It was submitted that the proceedings are hit by the principles of res judicata since the present impugned order has been passed on the basis of the offence report which is substantially the same as the report submitted at the time of verification before renewal of licence. Further even the show-cause notice is also substantially the same. The offence report was very much in existence when the issue of refusal to renew the licence was being litigated before the Tribunal and before the Hon'ble High Court of Karnataka. 18. No doubt, as submitted, Section 11 of CPC prohibits the authorities to initiate fresh proceedings on a concluded subject matter between the same parties under the same title ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent suit or the suit in which such issue has been subsequently raised. 19. The question that arises is whether the issue can be said to be same as the one which was considered at the time of renewal of licence and in the second order for revocation of licence. The Commissioner has dealt with these issues in detail and after considering various submissions, has come to the conclusion that the issue is not hit by the principles of res judicata . According to the learned Commissioner, the present proceedings are initiated with a proposal to revoke the licence, forfeit the security and impose penalty on the customs broker under Regulation 18 of CBLR 2013 by following the procedure under Regulation 20. Whereas in the case of renewal, the procedure prescribed under Regulation 9 is required to be followed and the renewal and revocation are separate areas. In the case of renewal, the Commissioner has to take into account the performance of customs broker with regard to regulations and complaints of misconduct whereas in the case of Regulation 18, the misconduct or violation of regulation has to be proved. There is no such specified requirement under Regulation 9 according to the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiture of security and imposition of penalty can be made on various grounds which include violation of conditions of bond, failure to comply with regulations, committing any misconduct and other grounds mentioned therein. Unfortunately nowhere it has been stated what exactly amounts to misconduct. This would require a much more detailed consideration. In any case as observed by the learned Commissioner, the renewal of licence has different conditions and a penal proceeding under Regulation 18 has additional conditions which can be the grounds for revocation. In the case of renewal, there is no need for any enquiry to be conducted by an enquiry officer and a detailed procedure. However whether it gives total discretion to the Commissioner for renewal or non-renewal is a question that is not required to be considered by us at this stage. Nevertheless when the provisions are seen, it appears that non-renewal can be on grounds which are not as serious as the grounds for revocation. Moreover in the case of non renewal, there is no provision for forfeiture of security and imposition of penalty. Therefore the Commissioner cannot be prevented from verifying whether the grounds taken for no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 01/2006-Cus dated 2.1.2006 provides that when any of the goods where containers are sealed, the tamper proof one time bottle sealing alone should be adopted as it to ensures safety and security of sealing process and avoid any resealing at the point of export (if the container is not examined). It also provides that exporters/manufacturers need not be compelled to procure such bottle seals only from the department as this would defeat the very purpose of self sealing facility and avoid delay. (CBEC recognizes the fact that there can be delay if this is made a mandatory requirement). 24. Sum and substance of the above Circular is that in the case of self sealed container, exporter has to give declaration (if stuffing of the container is not done under the supervision of Central Excise or Customs officer) regarding verification of description of goods, packages and also seal number. Further one time bottle seal should be utilized and it need not necessarily be procured from the Customs officers. 25. The commissioner has taken note of the fact that the Customs Broker did not deny the obligation but contended that it is for the departmental officer to verify whether the ARE-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engine number and chassis number since lorries other than those registered with the dock authorities are not allowed to enter the docks. The Commissioner has gone on to observe that this practice is followed to ensure that unknown parties cannot visit to dock area and to prevent consequent misuse. Investigation has shown that the chassis number and the engine number had been chiseled and fake number plate had been placed. 28. It also emerged that the registered vehicle of M/s East India Carriers was a tanker. 29. It has not been indicated by the Commissioner as to which Regulation and which provision of Customs Act has been violated in this process. This is the service rendered by the Customs Broker to the exporter. The exporter has provided certain details on the basis of which the dock permit was obtained by the appellant. It has been noted that when the vehicle entered in the dock, the officers at the gate before allowing the vehicle in question has to ensure that dock permit has been issued and vehicle is authorized to enter the dock and the details given are correct. When the truck entered the docks, it is to be noted that chassis number and engine number are also speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the export cargo was mentioned for examination they had obtained the bottle seal. It has to be agreed that there is no basis for the belief on the part of customs broker or their manager that container would be taken up for examination and therefore they obtained the second bottle seal. There is no evidence to show that the appellants were aware that the transporter had already obtained the bottle seal. The Commissioner has observed that normally it is not the duty of the customs broker to obtain a bottle seal which is to be obtained either by the exporter or the transporter from the shipping line. He has also observed that the claim of the appellants that they had taken the second bottle seal to affix in case container is opened for examination and the original bottle seal is broken to open the container cannot be accepted. Further he has also observed that in the case of self sealed container only selective examination is done. Even if the container is selected and opened for examination, the customs officers affix their own bottle seal and therefore there would be no need for a liner bottle seal. Based on these observations Commissioner has come to the conclusion that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not be any delay in exports and hence has specifically provided that seal can be procured from any source. Unfortunately in this case the transporter and the persons concerned with smuggling of red sanders have not been traced at all. As a result whether the employees of broker were aware of smuggling is not known. Similarly even in the case of exporter, there is no admission by any of the employees or the Managing Director of the exporter about the involvement of Customs broker. There is no corroborating evidence to show that customs broker was aware of the fact that Pankaj Transport was a non existent entity; the transporter had obtained a bottle seal; the truck had a bogus no. plate etc. The conclusions have arisen only from circumstantial evidence and those are the ones which we have discussed above. In view of the instructions issued by the Board that bottle seal can be sourced from any place excepting when the containers are sealed under supervision which may result in non examination of the container, in other cases there is absolutely no restriction in obtaining a bottle seal from any source. Therefore it is quite possible to assume that the Customs officer instead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to facilitate the smuggling of prohibited red sanders. 36. We have already come to the conclusion that the broker should have advised the exporter as regards declaration. Now the question is whether by the omissions and commissions of CB red sanders smuggling was facilitated. If the broker was aware and wanted to facilitate the smuggling, he would have advised the exporter to make proper declaration in the ARE-1, since with the expertise, CB could easily anticipate that container will be opened and if the container is opened, red sanders was bound to be found. The chances of smuggling succeeding would have increased if the documentation was proper and there was no defect in the declaration. Because any omission in the documentation would lead to doubts about the consignment and the chances of container being taken up for examination would increase substantially. In fact it would become definite. Therefore even though not advising the client is an omission on the part of the appellant, it cannot be said that this action was one of the series of acts of the appellant to facilitate smuggling of red sanders. In fact the opposite would have been done if the intention was to facilitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vicarious responsibility, except for the verification of ARE-1 documentation and advising the client suitably, in other cases, we have already taken a view that the appellant's action may not be contrary to the provisions of law. In such a situation, in our opinion, the vicarious responsibility principle would apply to the appellant as far as non declaration of seal no. in ARE-1 is concerned. This shows that appellant had not trained their employees properly in scrutiny of the documents and the consequences. It has to be taken note that these requirements are contained in the instructions relating to procedure. Therefore the issue requires a more detailed knowledge of the law as well as the circulars. In view of the conclusion we have reached that appellant-firm had deliberately facilitated smuggling is not correct, obviously the omission in not advising the client has occurred because of lack of knowledge or lack of training of the employees by the appellant. Therefore in view of the specific provision in the regulations that appellant would be responsible for actions of the employees, it would not be proper to take a view that appellant is not responsible for not advising th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to be based on facts and this is one of those cases where the facts are totally unique and are not comparable with any other case and therefore it would be unfair to either side if we come to any conclusion based on precedent decisions in the absence of any comparable facts whatsoever. 42. Another observation with which we are not in agreement is contained in paragraph 18 of the impugned order wherein the Commissioner has observed that the customs broker has ignored the repeated infractions and did not bring the same to the notice of the department. We have already held that the only omission that can be considered as an infraction is non-mentioning the bottle seal no. in the declaration filed by the exporter. Even this infraction in fact has helped customs since the customs would have examined the container in any case in the absence of declaration relating to bottle seal and the red sanders loaded in the container would have been detected. Therefore the infraction which was ignored by the customs broker, though would be a violation of regulations, did not result in facilitation of smuggling of red sanders. We cannot say that there were repeated infractions. 43. Another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner in response to the submission that the proposal to revoke the licence would be in contempt of the Tribunal, has observed that the decision of the Tribunal has been stayed. As regards the first submission that Commissioner should have renewed the licence till the appeal is finally decided as per the Hon'ble High Court's decision and any action taken to revoke the licence would be against the directions of the High Court, he has observed that both are separate proceedings with which we have also agreed. Nevertheless when the issue is considered, which we do below, would show that Commissioner should have considered these submissions in greater detail and should have considered the consequences of his actions. Merely because the proceedings are separate, before proceeding further, there is no need to look at the submissions of the appellant is not correct. 46. The learned counsel for the appellant placed details of proceedings before the Hon'ble High Court before us starting from the appeal filed by the Revenue against the order of this Tribunal dated 23.05.2014 which came up for consideration on 05.08.2014. Hon'ble High Court stayed the order of this Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not as per the whims of the appellant or as it may be understood by him. The appellant may thus file a response as to why proceedings for disobeying the orders of this Court be not initiated against the officer who had passed the order of renewal after this Court had ordered on 12.8.2014. As prayed by the learned counsel for the appellant, list on 8.4.2015 by which date the officer who has passed the renewal order may file his response. The matter is pending at this stage. 47. By passing this impugned order, the Commissioner has created a situation where the orders passed either by the Tribunal or by the High Court can become in fructuous. 48. If the appeal filed by the Revenue against the order of this Tribunal dated 23.05.2014 is allowed by the Hon'ble High Court, upholding non-renewal of the licence, the entire proceedings taken for revocation become in fructuous. This is because, the appeal has already been filed by the appellants before the Tribunal and if the Tribunal takes a view that revocation was wrong, there is no licence to operate because non-renewal would have been upheld by the Hon'ble High Court and the decision of this Tribunal would be of no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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