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M/s. Cappithan Agencies represented by its Authorised Signatory Liza Sathish Versus The Commissioner of Customs, Chennai-VIII

2015 (10) TMI 1909 - MADRAS HIGH COURT

Prohibition on working as Customs House Agent - Allowed unauthorized persons to handle customs clearance work; cleared consignments of pharmaceuticals and drugs, without import licence - Petitioner contended that impugned order has been passed without jurisdiction - Held That:- great confidence is reposed in a CHA. Any misuse of such position by the CHA will have far reaching consequences in the transaction of business by the customs house officials. Therefore, when, by such malpractices, there .....

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to bring the matter to notice of Assistant Commissioner of Customs/Deputy Commissioner of Customs and never tried to verify the antecedents of importer and relied upon third parties; thus failed to act in a bona fide manner – Impugned order is sustainable – Decided in favour of Revenue. - WP. No. 16832/2015, MP. No. 1/2015 - Dated:- 13-10-2015 - The Honourable Mr. Justice R. Mahadevan, J. For the Petitioner : Mr. Hari Radhakrishnan For the Respondent : Mr. K. Mohanamurali, SCCG ORDER This Wri .....

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s. During the year 2012-2013, on investigation the Department alleged that one Company by name, M/s. Antonie and Becouerel Organic Chemical Company had cleared raw materials used to manufacture drugs and pharmaceuticals without import licence issued under the Drugs and Cosmetics Act, 1940 and without Assistant Drug Controller's clearance. The Respondent, vide order dated 12. 7. 2013 prohibited the Petitioner from working as a Customs House Agent, in terms of Regulation 21 and hence, the Peti .....

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er filed an appeal in C. 40192/2014-DB before the Tribunal. In the meantime, the Commissioner of Customs, Cochin had passed an order in original dated 7. 4. 2014 imposing penalty of R. 10,000/- on the Petitioner Company and thereafter, the Tribunal after considering the said order dated 7. 4. 2014, passed final order in No. 40781/2014 dated 15. 10. 2014, directing the Respondent to pass necessary orders. On repeated reminders from the Petitioner, the Respondent passed the impugned order dated 29 .....

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signatory of the customs broker for their Chennai operations. A report was received from ACIU informing that during investigation of a case pertaining to clearance of raw materials used to manufacture drugs and pharmaceuticals, without import license and assistant drug controller's clearance, imported by M/s. Antoine and Becouerel Organic Chemical Co. , Chennai, it was found that bills of entry were filed in the name of the Petitioner Company and M/s. Evertrust Shipping and Logistics Pvt Lim .....

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horised signatory of M/s. The Trading Corporation pvt Limited) who was running his own firm M/s. SL Shipping Services along with his wife Liza Sathish (also 'G' card holder and authorised signatory of the Petitioner Company). Sh. Sourirajan has also utilized the services of Sh. B. karthik, 'H' Card Holder of the Petitioner Company and Sh. M. Kanna, 'G' card holder of M/s. Steadfast International. In this connection, statements were recorded from Sh. Sourirajan, Sh. Sathee .....

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ing Corporation pvt Limited; that he utilized his office and banner for clearance of some consignments; that during December 2012, one Sh. Sandeep contacted him and asked whether he could clear their imports of pharmaceuticals chemicals at Chennai Airport; that he enquired from Sh. Kannan, who was a 'G' Card holder of CHA, M/s. Steadfast International Pvt. Limited engaged in clearing of similar consignments, about feasibility of smooth clearance of the consignments; that Sh. Kannan assur .....

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of charge (OOC) order from the shed A. O. ; that he did not possess any CHA license; that he utilized Sh. Satheesan B. Menon's Office and some CHA's licenses under which his client's Bills were cleared. c. M. Kannan, in his voluntary statement, dated 20. 4. 2013, stated that actually he used to cut the word verify ADC clearance in hard copy of open order copy and scribble something like signature and presented the bills pertaining to M/s. Antoine and Becouerel Organic Chemical Co. f .....

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ted using CHA license of M/s. Evertrust Shipping and Logistics Pvt. Limited and used it till 31. 3. 2013; that after that he got transfer license in the name of M/s. Cappithan Agencies with his wife Liza Sathish as authorized signatory; that he misused the CHA license of M/s. The Trading Corporation Pvt Limited, M/s. Evertrust Shipping and Logistics Pvt Limited and M/s. Cappithan Agencies; that he allowed Sh. Sourirajan to utilize his office premises and allowed him to use the CHA license of all .....

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rom April 2013 onwards; that so far they have filed 5 bills of entry for M/s. Antoine and Becouerel Organic chemical Company, out of which, three bills of entry were cleared by their staff Sh. Karthick and 2 bills of entries were pending for clearance; that the said importer has imported pharmaceuticals chemicals/drugs, which required a valid import license and ADC's clearance; that she was aware that the three consignments cleared by them for the said importer were cleared without ADC's .....

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rized persons to handle customs clearance work, who in turn used this opportunity to clear the consignments of pharmaceuticals and drugs without ADC's clearance in contravention of the provisions of the Drug and Cosmetics Act, 1940 and the rules made thereunder and hence, there had been major lapses on the part of the Petitioner, inasmuch as:- 1. The Customs broker allowed Sh. Sourirajan and Sh. Satheesan B. Menon to file documents on their behalf and signed documents for them without verify .....

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n 13(b) of CHALR, 2004 (now Regulation 11(b) of the CBLR, 2013). 3. Liza Sathish, authorised signatory of the customs broker in her statement accepted that she was aware that the three consignments cleared by them for the said importer were cleared without ADC's clearance; that as CHA she is responsible for clearance of the said consignments without ADC's clearance; that as a signing authority, she should have advised the importers that the consignments required proper import license/ADC .....

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ntravened the provisions of Regulation 13(o) of the CHALR, 2004 (now Regulation 11(n) of the CBLR, 2013). f. In view of the above, it was found that a prima facie case existed against the Customs broker M/s. Cappithan Agencies and if the said customs broker was allowed to continue to operate, it would be detrimental to the interest of revenue and therefore, it was necessary to take immediate action against the said customs broker, to prevent them from further misuse of their licence. Hence, in e .....

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ther action against the Customs Broker. The Commissioner of Customs, Cochin issued a show cause notice to the Customs Broker under Regulation 20 of CBLR, 2013, vide F. No. S34/07/2013 I&B Cus. Dated 24. 10. 2013. In the meanwhile, aggrieved by the prohibition order dated 12. 07. 2013, the Customs Broker filed WP. No. 19670/2013, which was disposed of by order dated 24. 9. 2013, giving liberty to the Customs Broker to submit a representation before the Commissioner of Customs (Imports) to wit .....

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the customs broker had failed to fulfil their obligations under the Regulations 12, 13(b), 13(d) and 13(o) of CHALR, 2004 (now Regulation 10, 11(b), 11(d) and 11(o) of CBLR, 2013), as alleged in the prohibition order dated 12. 07. 2013 and the Commissioner of Customs (Imports) continued the prohibition of the customs broker's licence vide order in original No. 22447/2013, dated 12. 11. 2013 and as against the same the customs broker filed an appeal before the Tribunal and the Tribunal by or .....

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5 in Order in Original No. 38294/2015 for the reasons stated above. g. Clause 5. 2 of Circular No. 09/2010 clearly indicates that the Commissioner of Customs who had authorised the CHA to operate on 'C' form intimation at a Customs Station, may 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/Custom Station. Since the Petitioner has not fulfilled their obligations under the above said r .....

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only imposed a penalty of ₹ 10,000/- and that the Respondent cannot go beyond more than the punishment that is contemplated by the Customs Commissionerate, who had issued the licence and that if the license issuing authority does not revoke the license, the prohibitory order ought to be withdrawn and as the licensing authority has not revoked the license, the Respondent has no jurisdiction to continue the prohibition and prayed for quashing of the impugned order. 5. The learned Standing C .....

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tioner and if the Petitioner was allowed to continue to operate, it would be detrimental to the interest of revenue and therefore, it was necessary to take action against the Petitioner to prevent them from further misuse of their licence and that in exercise of powers conferred under the provisions of Regulation 21, the Petitioner was prohibited from operating in the jurisdiction of Chennai Customs Zone and prayed for dismissal of this Writ Petition. 6. This court heard and considered the submi .....

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ted 12. 7. 2013, prohibited the Petitioner from working as a Customs House Agent. On the representation of the Petitioner, the Respondent again passed an order dated 12. 11. 2013, continuing the prohibition order and in the appeal, the Tribunal passed final order dated 15. 10. 2014, directing the Respondent to pass necessary orders. In the meantime, as per the order of the the Commissioner of Customs, Cochin, the Petitioner had paid penalty of R. 10,000/-. Thereafter, the Respondent passed the i .....

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s, the Respondent Department found that the Petitioner/ Customs Broker allowed unauthorized persons to handle customs clearance work, who in turn misused the opportunity to clear the consignments of pharmaceuticals and drugs, without import licence and without ADC's clearance, in contravention of the provisions of the Drug and Cosmetics Act, 1940 and the Rules made thereunder and hence, there had been major lapses on the part of the Petitioner and holding so, the Respondent Department prohib .....

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operate on 'C' form intimation, 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 duplication 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 author .....

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d or other transferred. (iii) Regulation 13(b) of the CHALR, 2004 (now Regulation 11(b) of the CBLR, 2013), reads as under:- A CHA shall transact business either personally or through an employee duly approved by the Deputy Commissioner of Customs or Assistant Commissioner of Customs. (iv) Regulation 13(d) of the CHALR, 2004 (now Regulation 11(d) of the CBLR, 2013) reads as under:- A CHA shall advise his client to comply with the provisions of the Act and in case of non-compliance, shall bring t .....

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he parties concerned that (1) the Petitioner/the Customs broker allowed Sh. Sourirajan and Sh. Satheesan B. Menon to file documents on their behalf and signed documents for them, without verifying the details of the documents and by allowing unauthorized persons to misuse their license, the customs broker transferred their license to third party, in contravention of the Regulation 12 of CHALR, 2004. (Now Regulation 10 of CBLR, 2013); (2) the Petitioner allowed Sh. Satheesan B. Menon, who was not .....

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stoms and thus, violated the provisions of Regulation 13(d) of the CHALR, 2004 (now Regulation 11(d) of the CBLR, 2013) and (4) the Petitioner/customs broker never tried to verify the antecedents of the importer and relied upon Sh. Satheesan B. Menon and hence, contravened the provisions of Regulation 13(o) of the CHALR, 2004 (now Regulation 11(n) of the CBLR, 2013). 10. Clause 5. 2 of Circular No. 09/2010 clearly indicates that the Commissioner of Customs, who had authorised the CHA to operate .....

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produced by the Petitioner to show that they fulfilled their obligations under the said provisions of Act, Rules and Regulations. The payment of penalty of ₹ 10,000/- by the Petitioner would go to show the acceptance of the order of the Respondent. 12. Therefore, it is finally concluded that in contravention of the above said provisions of the Act, Rules and Regulations, the Petitioner/custom brokers allowed third parties to use their licence and allowed third parties, who was not their em .....

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to a person to act as a Customs House Agent is for transacting any business relating to the entry or departure of conveyance or the import or export of goods in any customs station. For that purpose, under Regulation 9 necessary examination is conducted to test the capability of the person in the matter of preparation of various documents determination of value procedures for assessment and payment of duty, the extent to which he is conversant with the provisions of certain enactments, etc. The .....

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