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2015 (10) TMI 2330 - CESTAT CHENNAI

2015 (10) TMI 2330 - CESTAT CHENNAI - TMI - Revocation of license - Misdeclaration of goods as scrap metal - Appellant contends that there was a lapse of two years in completion of proceedings whereas it should be within nine months from date of receipt of offence report as specified in Circular No. 9/10-Cus and order not in confirmity with Regulation 22 - In absence of any evidence of involvement in fraud and as appellant has already suffered huge loss, he should not be penalised and order need .....

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g and as such obtained examination report thus it clearly proves involvement of CHA and his employees and he cannot plead innocence - Applicant committed gross violation of Regulation 20 while acting as CHA and Applicant being experienced as a CHA when he paved way for his Power of Attorney to indulge in serious malpractices which ultimately resulted in loss of revenue to Custom House to the extent of more than 80 lakhs, Revenue is justified in revoking the license as it would be detrimental to .....

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inal C.No. VIII/13/33/2003-CHAL dated 21.08.2012 passed by the Commissioner of Customs, Tuticorin, revocation of the license issued and forfeiture of the security deposit of ₹ 75,000/-. 2. The brief facts of the case are that the appellant M/s.Santon Shipping Services, licensed Custom House Agent, who has been issued license by the Tuticorin Commissionarate in terms of Regulations 9(2) of CHALR, 2004, and the same is valid up to 31.07.2018. The appellant has also been operating at Chennai .....

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containers were selected for examination and it was found that instead of the declared item of scrap metal there were 501 MTs of used railway sleepers valued at Rs. One crore. The importers deposited an amount of ₹ 75 Lakhs towards duty and submitted a bank guarantee of ₹ 33,80,000/- which has already been encashed by the department and provided a bond for ₹ 1.6 Crores to release the goods. It is seen that proceedings were initiated against M/s. J.R. Smelters Pvt. Ltd. The Com .....

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ppropriate order after hearing the appellants. Vide order dated 07.10.2011, continuation of the suspension of the licence was confirmed. The Assistant Commissioner conducted an enquiry on 12.01.2012 and vide his report dated 09.04.2012, he held that the appellants failed to discharge the obligations in terms of Regulations 10, 13 and 19 of CHALR, 2004. In response to the AC s report, the appellants submitted a detailed reply dated 22.05.2012. Vide OIO dated 21.08.2012, the Commissioner of Custom .....

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f the events as under:- 1. Bill of Entry dated 02.09.2010 2. DRI letter dated 08.09.2010 3. DRI examination dated 17.09.2010 4. DRI Offence Report dated 21.09.2010 5. Suspension of CHA license under 20 (2) dated 04.10.2010 6. Continuance of suspension dated 07.10.2011 7. Show Cause Notice dated 18.11.2011 8. Reply to SCN dated 20.12.2011 9. Personal Hearing on 12.01.2012 10.Inquiry Report dated 09.04.2012 11. Reply to the Inquiry report dated 22.05.2012 12.Personal Hearing on 25.07.2012 13. Revo .....

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ir clerk without knowing the implications carried out the examination as mentioned in the SCN. There was no instructions given to declare to carry out examination at the gateway CFS. Therefore, action of the clearing clerk was in accordance with instructions in general. The SCN itself concedes that the power of Attorney holder of the firm was not aware of the misdeclaration and that there was no proper supervision over the employees. Once this position is accepted for the omissions made by the c .....

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f any evidence regarding the involvement in the alleged fraud, the OIO needs to be set aside with consequential relief. He relied on the following case laws in support of his contentions: 1. M/s. HIM Logistics P.Ltd Vs. CC, New Delhi 2013-TIOL-662-CESTAT-DEL 2. M/s. ARK Logistics P. Ltd. 2010 (261) ELT 648 (Tri.-Bang.) 3. M/s. Mhatre & Sons Vs. CC (General), Mumbai 2009 (241) ELT 401 (Tri.-Mum.) 4. M/s. Global Linkerz United Agencies Vs. CC, N.Delhi 2009 (238) ELT 76 (Tri.-Del.) 5. M/s. Falc .....

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eral years. That itself will be more than sufficient to take care of any omission by the clearing clerk. 4. On the other hand, the Ld. AC (AR) Shri B. Balamurugan, reiterated the findings of the Commissioner. He submits that the CHA does not know the importer and as has been decided by the Board to put in place the Know Your Customer (KYC) guidelines for CHAs so that the importers/exporters who indulge in fraudulent activities cannot misuse the export promotion schemes, fraudulent availment o .....

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al and those of the authorized signatory in respect of other forms of organizations such as firms/companies etc. and in proof of address, any two documents as listed in the annexure. He further submitted that the bill was given to unauthorized person. After the initial investigation, the behavior of the CHA shows that they were aware of the contents in the container. It was further alleged that the CHA firm has gone hand in glove with the importer M/s. J.R. Smelters Pvt. Ltd., by deciding to ove .....

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004 in violation of the said Regulations: 1. The CHA violated the conditions in the bond executed by them under Regulation 10 of CHALR 2004. 2. They have not obtained authorization from the company by whom they are for the time being employed a CHA and failed to comply with the provisions under Regulation 13(a) of CHALR, 2004. 3. They have signed blank documents and handed over to an unauthorized person to facilitate the import, who was to be duly approved by the Dy. Commissioner or Assistant Co .....

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empted clearance of imported goods by mis-declaring the same under CTH 72044900 instead of CTH 7302 in the guise of scrap metal by claiming Notification benefit under Notification No. 21/2002 S.No. 200 and thus failed to fulfill the obligations under Regulation 13 (f) of CHALR, 2004. 7. They failed to exercise supervision as may be necessary to ensure the proper conduct of the persons and thus responsible for all acts or omissions of his employees under Regulation 19(8) of CHALR, 2004. He relied .....

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his case is regarding the revocation of CHA licence of the appellant for the misconduct of one of his employees in respect of goods sought to be imported in violation of provisions of law. On perusal of the impugned order and the mahazar dated 17.09.2010 and the statements of various persons, we find that, it is the case where the appellants have violated the CHALR. We find that the imported goods declared as the scrap metals brought in 20 containers were detained. On examination it was found to .....

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ent for examination of goods from another D.C. Customs located at different CFS i.e., Gateway CFS on 09.09.2010. He submitted the said documents for examination at Gateway CFS where the goods were not lying and obtained the examination report. Whereas the goods are actually lying under SANCO CFS, which was to be examined by D.C Customs of that FS. Thus it clearly proves the involvement of CHA and his employees. CHA cannot plead innocence. The relevant portion of the findings of the adjudicating .....

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ntainers for examination to Examiner (SANCO CFS) and informed AO (CFS) to produce the remainingfour containers for examination the next day. DRI officers, vide their letter dated 09.09.2010, sent message to DC (Docks) in charge of SANCO CFS to examine the cargo in the present of DRI officers. But the CHA, on the same day (i.e. 09.09.2010) but in charge of GATEWAY CFS for first check examination. The DC in-charge of GATEWAY CFS approached AO/EO in-charge of GATEWAY CFS and fraudulently obtained e .....

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gh the said AC (Docks) on the same date by fraudulent means and misrepresentation of facts by the CHA. 16.03. The CHA deliberately prepared difference set of documents approached different set of officers who were not in-charge of the concerned CFS where the goods were physically available, got the examination report prepared by the officers by misrepresenting the facts and got it forwarded to the group appraisers from different DC/ACs and AO/Eos, knowing well that, the goods were lying at SANCO .....

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Commissioner at Custom House. Thereby the CHA has violated Regulation 13(d) of CHALR, 2004. Instead of advising the clients to comply with the provisions of CHALR, 2004, the CHA himself colluded with the importer and facilitated the assessment of Bill of Entry even after knowing the mis-declaration and undervaluation of cargo. The CHA has failed to comply with Regulation 13(f) of CHALR, 2004. 18. Shri. Bose J. Fernando, the authorized signatory of the CHA signed blank documents without knowing .....

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ulation 13(b) of CHALR, 2004. 19. The CHA did not conduct any supervisory work of handling documents/cargo and entrusted the customs clearance work to some unapproved employees and the CHA failed to exercise due diligence. He took shelter by claiming that he was in Bombay at the time of assessment but the period of spanning 13 days (from 02.09.2010 to 14.0-9.2010) is too long to ignore any supervision on the part of CHA or his employees. The CHA did not produce any evidence or reasons for his pr .....

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2004. 21. The CHA, in his letter dated 29.09.2011 admitted that he has not obtained specific authorization from the importer, by oversight. The reasons given by him was that the importer had been giving business for four years. The reason appears to be not reasonable and the CHA has failed to comply with the Regulation 13(a) of CHALT, 2004. 22. The employees of the CHA manipulated the documents and fraudulently got assessment of Bill of Entry and examination report as stated above. Since the CH .....

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lation 10 of CHALR, 2004. 23. The counsel for the CHA stated that mis declaration of cargo was within the knowledge of the importer and CHA cannot be mistaken for that. If is was so, why the CHA presented the Bill of Entry at BATEWAY CFS for second time endorsement for examination. Mis-declaration of cargo appears to be known both to the importer and CHA. The counsel stated that endorsement taken was only a mistake, procedural irregularity and human error without any ulterior motive. By saying s .....

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the CHA was issued show cause notice under CHALR, 2004 for revocation of licence and forfeiture of security for the allegation of not obtaining proper authorization from the importer. In that background it was held that the CHA should not have acted without authorization on behalf of its clients; that at the same time it was also duty of the Customs officer to check authorization in favour of the CHA before allowing him to act as CHA for the importer; that thus there was a contributory default o .....

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x allegations like not obtaining authorization, allowed unapproved employees to act as a CHA, not verified antecedents of the importer etc. The facts of the case referred is not applicable to the facts of the present case. In this regard, he rely on the Hon ble High Court of Madras order in the case of Sri Kamakshi Agency Vs. CC, Madras 2001 (129) ELT 29 (Mad.), wherein the Hon ble High Court upheld the Tribunal s order for revocation of licence. The relevant portion of the Order of the High Cou .....

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the documents. The Tribunal also found that the Proprietor of the Applicant did not obtain the authorisation from the exporters as contemplated under Regulation 14(a) of the Regulations. The statement of Sri Sukumaran who was the Power of Attorney of the Applicant-Proprietor disclose that the evasion of the customs duty was with his connivance and the Applicant had no part in the same. The Tribunal after upholding the finding of the adjudicating authority however taking into account the deposit .....

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iture security deposit of ₹ 25,000/- held that the suspension order of licence No. R359/CHA to be restricted up to 1-1-1997 and on depositing further sum of ₹ 25,000/-, the licence would stand renewed with effect from 1-1-1997. The Tribunal also directed that the Applicant should conduct the business personally in future and not to appoint any Power of Attorney Holder and that he should comply with the Act more scrupulously. With the above modifications of the order of the respondent .....

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questions earlier mentioned above have been referred for our consideration. A reading of Regulations 13 and 14 of CHALR, 1984 disclose that under Regulation 13, Every licence granted or renewed under the Regulations should be deemed to have been granted in favour of the licensee and no licence should be sold or otherwise transferred. The various sub-clauses under Regulations 14 disclose that Custom House Agent should obtain an authorisation from each of the companies, firms or individuals by .....

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Customs; that he should exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage; that he should not refuse access to, conceal, remove or destroy the whole or any part of any book, paper or other record, relating to his transactions as a Customs House Agent which is sought or may be sought by the Collector; that he should ensure that all documents prepared or presented by him or on his .....

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ority in his behalf and give prompt notice in writing, if such authorisation was modified, or withdrawn. It is further stipulated under Regulation 20(7), the Custom House Agent should exercise such supervision as may be necessary to ensure the proper conduct of any such employees in the transaction of business as agent and be held responsible for all acts of omissions of his employees in regard to their employment. 9. On perusal of the report of the Enquiry Officer as well as the orders of the r .....

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ligence had taken place. He only contended that by way of caution, he had taken a deposit of ₹ 75,000/- from the Power of Attorney to safeguard himself from any misuse. It only disclose that the Applicant instead of discharging his functions as a Customs House Agent in accordance with the Regulations, in fragrant violation of those Regulations went to the extent of encashing the facilities made available to him as a CHA by selling it for a price which action of the Applicant can never be c .....

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he provisions of certain enactments etc. Therefore the grant of licence to act as a Custom House Agent has got a definite purpose and intent. On a reading of the Regulations relating to the grant of licence to act as Custom House Agent, it is seen that while Custom House Agent should be in a position to act as agent for the transaction of any business relating to the entry or departure of conveyance or the import or export of goods at any customs station, he should also ensure that he does not a .....

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CHA cannot be permitted to misuse his position as a CHA by taking advantage of his access to the Department. The grant of licence to a person to act as Custom House Agent is to some extent to assist the Department with the various procedures such as scrutinising the various documents to be presented in the course of transaction of business for entry and exit of conveyance or the import or export of the goods. In such circumstances, great confidence is reposed in a Custom House Agent. Any misuse .....

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t as detrimental to the interest of the nation and pass the final order of revoking his licence. As far as the allegations levelled against the Applicant are concerned, it has been found established that the Proprietor of the Applicant Thiru Natarajan had signed on certain blank documents such as Bs/F and S/Bs without knowing the importers/exporters and the nature of goods imported/exported in spite of being in the clearing line over thirty years. It is also admitted that Sri D. Sukumaran, Manag .....

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n himself. Even assuming that the role played by Thiru D. Sukumaran is to be construe as that of an employee of the Applicant, the same would not in any way alter the situation since that had resulted in a serious loss to the respondent. The fact remains that the respondent sustained a loss of duty by the reckless and irresponsible behavior of the Applicant in the course of discharge of his functions as Custom House Agent licensee. The respondent therefore rightly revoked the Custom House Agent .....

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he Hon ble High Court order is squarely applicable to the facts of the present case. Further, the Hon ble Supreme Court dismissed the SLP filed by the appellant against the High Court s Order reported in 2002 (142) ELT A87 (S.C.). In view of the Apex Court s ruling which is directly binding on us and the issues are identical wherein the appellants deliberately, presented the documents to another CFS and obtained a fraudulent examination report. Further, we find that the Hon ble Andhra Pradesh Hi .....

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alty which, under the CHALR, is of revocation of the license. (State of Punjab v. Ex-Constable Ram Singh - (1992) 4 SCC 54. That the respondent has been found guilty under Section 114 of the Customs Act, which proceedings have attained finality, is also a factor which must be borne in mind. While Tribunals constituted under the Customs Act, and this Court exercising jurisdiction under Section 130 of the Customs Act, are required to ensure that the punishment imposed is commensurate to the proved .....

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