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Ratnadip Shipping Pvt. Ltd. Versus Commr. of Customs (General) , Mumbai

2016 (3) TMI 217 - CESTAT MUMBAI

Charges under Regulation 13(d), (e), (i) & (n) of CHALR, 2004 - Revokation of CHA licence - Department contended that appellant is a CHA and was involved in gross irregularities such as misdeclaration in description, quantity as well as undervaluation and was was aware about the actual description as well as actual quantity of goods imported which is evident from the original copy of Bill of Lading bearing the details of the actual description and quantity, as the appellant on the backside of Bi .....

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e, which cannot be noticed by a man of ordinary prudence. No facts are coming on record to indicate that the appellant-CHA have aided and abetted the importers in evasion of customs duty. However, evidences which have come on record indicate that the importers have misled successfully the CHA, Revenue and Bank by fabrication and forgery of documents being minor manipulation, which is not easily made out unless one compares the documents with the investigative eyes. The original and forged docume .....

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lack of efficiency took place on part of the CHA and that is because of a regular dealing with the said importers and not because of gross negligence or misconduct in discharge of duty. Therefore, the appellant needs to be visited with some penal action in view of violation of Regulation 13(n). The period of revocation restricts up to 30-11-2015 and also the amount of forfeiture reduced to 50% of security deposit. - Partly decided in favour of appellant with consequential relief - C/85 .....

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2. The brief facts are that the appellant company was incorporated in the year 2006 having present Directors namely, Mr. Deepak Aggarwal, Mr. Dilip Parrikar and Mukesh Desai. Prior to incorporation in the year 2006, the partnership firm existed since 31-12-1994 in the name and style of M/s. Ratan Deep Shipping. The CHA license issued originally to the firm, being Customs Broker License No. 11/949, was subsequently transferred in the name of the appellant company upon conversion from partne .....

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Garg Woollen Mills (hereinafter referred to as the Importers or Jaldhara group) both at JN Port and ICD, Ludhiana. These firms and companies were family owned and managed, headed by Shri Brijlal Garg and his son Shri Binod Garg along with other family members. These firms/companies imported various types of yarn and Acrylic Fiber/Tow and also Textile Machinery from China and other country on payment of duty as well as under exemption from payment of duty, under the various schemes. The appellan .....

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During the scrutiny of those documents, gross irregularities such as misdeclaration in description, quantity as well as undervaluation were found. It was also found that the importers had fabricated Bills of Entry by forging and fabricating signatures of Customs Officers and presented them to their Banks. It was alleged that CHA - M/s. Ratnadip Shipping Pvt. Ltd. (appellant) was aware about the actual description as well as actual quantity of goods imported which is evident from the original cop .....

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rters were located at Ludhiana, having their offices and work-factory at Ludhiana. Subsequently statement of the Director of the appellant Mr. Deepak Aggarwal was recorded on 4-2-2011. The statement of Mr. Deepak Aggarwal was again recorded on 5-2-2011. In the course of enquiry, it transpired that these importers have resorted to misdeclaration of the goods imported including forgery of the documents and have evaded customs duty. For the alleged violation of law and misdeclaration, etc. includin .....

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aced under suspension, which on representation of the appellant, as the transaction were pertaining to the year 2007 and show cause notice has been issued in the year 2011, thus there being no proximity between the alleged offences and exercise of emergent power, the said order of suspension was revoked by the ld. Commissioner, and further regular inquiry was ordered. Thereafter, memorandum dated 2-4-2012 was issued inter alia alleging charges under 4 articles under the CHA Regulations 13(d), (e .....

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- (i) That we have received the memorandum dated 2-4-2012 on 13-4-2012 and we were directed to file defence statement within 30 days from the date of receipt of the memorandum. (ii) That the copies of Bills of Entry along with all related documents such as invoice, B/L., certificate of original, etc., retained by the JNCH at the time of clearance of the goods under Section 47 of the Customs Act, 1962 should be made available. (iii) That the learned Inquiry Officer had accepted the .....

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amined Shri Deepak Agarwal as a prosecution witness and the deposition of Shri Deepak Agarwal is recorded in Daily Order Sheet No. 5, dated 9-10-2012. (v) That the defence has examined one witnesses Shri Sunil Soma Shingwan and his deposition is annexed to Daily Order Sheet No. 6, dated 15-10-2012. (vi) That the regular inquiry was closed on 15-10-2012 and the Presenting Officer was given 10 days time to file his final report in the matter and thereafter the defence was to file defence .....

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Entry. Non-furnishing of these documents clearly violates the principles of natural justice and it also establishes that the fair and just opportunities of participating/representing in the inquiry has not been given. (viii) From the investigation and other documentary evidence, it appears that the Bills of Entry for the import of the impugned goods (Acrylic Fiber/Tow) in respect of import by these importers were filed at JNCH, Nhava Sheva, Maharashtra through the CHA M/s. Ratnadip Shipping .....

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under CTH 55033000 by mis-describing the same as Acrylic Tow and thereby mis-classifying the same under CTH 55013000 . The importers were also declaring less quantity than the actual quantity imparted in the import documents and simultaneously undervaluing the same with the sole intention to evade the Customs duty. They also acted in collusion with each other by adopting similar modus operandi in case of High Sea Sales of import consignments imported and sold among themselves. To justify their a .....

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ntry showing actual quantity, description and actual value and presented the same to their bank and in case of High Seas Seller (M/s. Arisudana Industries Ltd.) to his bank for the purpose of repatriating remittances representing actual value of the import consignments against L.C. or otherwise to the foreign supplier. In some cases they even forged signatures of Customs Officials on such forged bills of entry. The differential money on account of undervaluation i.e. the actual import price nego .....

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4 states that a CHA shall advise his clients to comply with the provisions of the Act and in case of non-compliance, shall bring to the notice of the Dy. Commissioner of Customs or Assistant Commissioner of Customs. (ii) Article of charge 2 - Regulation 13(e) of CHALR, 2004 states that a CHA shall exercise the 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. (iii) Article of charge 3 - .....

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ble delay. 3.1 As regards the articles of charges under Regulation 13(d) of CHALR which required the CHA to advice his client to comply with the provisions of the Act and to inform the Revenue in case of non-compliance. It is alleged that the CHA was aware about the actual description as well as actual quantity of the goods imported which is evident from the original copy of Bill of Lading giving the actual description of the goods and its quantity. On the back side of the Bill of Lading, t .....

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the shipping line for delivery order, bear the signature of representative of the appellant on the reverse thereof. It is further observed that in the course of deposition, the Director of the appellant company, Mr. Deepak Aggarwal stated that they used to compare checklist in the Bill of Entry on the basis of copies of invoices and Bill of Lading received through Fax and on receipt of original Bill of Lading through courier they used to compare only the Container No. and Bill of Lading No. with .....

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fax copy with the original subsequently received through courier, but it appears the CHA in fact have failed to compare. Although, the CHA preserved the fax copy on the basis of which check lists was filed, but they failed to keep copy of original Bill of Lading, which has been endorsed and forwarded by the appellant to the shipping line. It further appeared to ld. Commissioner that the CHA was aware of the mis-declaration under Bill of Entry, who had denied the allegation to save the importers .....

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8 and also the deposition in the course of inquiry. The inquiry officer has held that the appellant have failed to compare the fax copy of the invoices and Bill of Lading used for filing of the Bill of Entry with the original Bill of Lading received subsequently through courier. Had the appellant been little more diligent, they could have detected the discrepancy and could have been in a position to advice the importer and/or bring the non-compliance to the notice of the Customs Department. Sinc .....

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fax copy of the same and as the appellant was dealing with the said importer over a longer period of time, they did not suspect their wrong doing and malice on part of the importer. It is further observed that in respect of the same Bill of Entry, the documents such as Bill of Entry, invoice and Bill of Lading have been fabricated for dual use - one to be shown to the Customs for clearance and other to the Bank for the purpose of sending correct remittance. So far the defence of the appellant, .....

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would have been detected by a man of ordinary prudence. It is further observed that the appellant-CHA are handling clearance of several consignments relating to fabrics. Accordingly, the presumption was drawn that the omission on part of the appellant is deliberate, indicating to their complicity with the importers in aiding and abetting the clearance in irregular manner. Accordingly, these charges were held to be established. 3.2 So far the second charge is concerned under Regulation 13(e .....

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ic tow was same, however, at some point of time acrylic fiber imported from the Thailand was subjected to anti-dumping duty. It appeared to the Revenue that the appellant have colluded with the importer in the illegal act of evasion of customs duty as the appellant have filed Bill of Entry containing misdeclaration in respect of description, quantity and value of the goods. Further, the CHA have signed on the reverse side of original Bill of Lading having actual description and quantity and they .....

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IO have given his report in a pre-determined manner and that statement dated 5-2-2011 of Mr. Deepak Aggarwal have been relied upon as an evidence for framing the article of charge and such charge was required to be proved with the help of statement or the evidence which have come on record during the inquiry proceedings. The inquiry officer has not referred to the statement nor any evidence which has come on record during the inquiry proceedings, and have mechanically drawn inference and held t .....

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mitted by Shri Deepak Aggarwal that he failed to take notice of the difference in the fax copy and original copy of the documents. It is further observed that it is an admitted fact that in respect of some consignment, the appellant-CHA had become aware of the description of the goods when the original Bill of Lading was received by them. Further, observing that the appellant could have noticed the discrepancies and could have advised the importer to rectify the mistake and appellant could also .....

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his subordinates by the use of threat, false accusation, duress or the offer of any special inducement or promise of advantage or by the bestowing of any gift or favour or other thing of value. This charge was held not sustainable in view of the defence that there is no allegation on the appellant that they have attempted to influence the conduct of any official or its subordinates in any manner and nothing has been brought on record to the effect that the appellant-CHA have resorted any malprac .....

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er this regulation and accordingly, it was held that this charge does not stand and the appellant is not liable for the alleged violation of this charge. 3.4 So far the fourth charge under Regulation 13(n) of CHALR, which states that the CHA shall ensure that he discharges his duties as CHA with utmost speed and efficiency and without avoidable delay. It has been alleged that investigation revealed that the importer had himself declared the value, description and quantity of the goods impor .....

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er observed that the IO has held this charge proved primarily on account of the fact that Mr. Deepak Aggarwal in his statement dated 5-2-2011 has admitted that the appellant have failed to compare the invoice/Bill of Lading received by Fax and the original received through courier later on and they have failed to correct their mistake in respect of the description of the goods and in this way they have failed to perform their duties required under Regulation 13(n). The appellant s contention tha .....

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ding of IO with respect to this charge is that the appellant-CHA was hand in glove with the importer in clearing the goods in clandestine manner. The defence of the CHA that they came to know of the misdeclaration only on 5-2-2011 is not acceptable as the CHA have long association with the importer. The appellant failed to take the notice of discrepancies in the original invoice/Bill of Entry vis-à-vis the fax copy based on which the Bill of Entry was filed. This evidence points to conniv .....

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. 498 (Tri.) (sic) and the ruling of the Hon ble Madras High Court in the case of Shri Kamakshi Agencies v. CCE - 2001 (129) E.L.T. 29 (Mad.). In exercise of his powers under Regulation 22(7), 20(i) of the CHALR, 2004 have ordered for revocation of the CHA license and have also ordered forfeiture of entire security deposit of the appellant. 4. Being aggrieved, the appellant-CHA is in appeal before this Tribunal. 5. The learned Counsel for the appellant urges that it is an admitted fact .....

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ut the points of difference. 5.1 The Counsel have illustrated by drawing our attention to the two set of documents. In respect of Bill of Lading No. 27687211 relating to Bill of Entry No. 774369, dated 4-4-2008 the invoice issued by the exporter as well as the Bill of Lading show the item under import as acrylic tow quantity 97933 kg. @ US$ 1.39 per kg. whereas the original copy of the Bill of Lading shows the same number of bales have the same weight and the only difference is interchange .....

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Lading received through Fax, shows the description as acrylic staple fiber . The weight in the said two documents have been shown at 43,824 kgs. whereas in the copy of original Bill of Lading received by the Revenue through the Bank, the quantity shown is 51,824 kgs. Thus, the importer was allegedly declaring less quantity and/or value for evading customs duty by misleading both the appellant-CHA and the Revenue, whereas it was filing the correct Bill of Lading or invoice before the Bankers for .....

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kg. @ 1.41 US$ per kg., whereas the actual Bill of Entry received by the Revenue from the shipping line and bank shows the description as acrylic fiber , even in the certificate of origin it is from Thailand and description is acrylic tow, it is also thereon the High Seas Sales agreement. 5.3 With respect of Bill of Entry 811220, dated 3-5-2008 relating to Bill of Lading No. 27690996 as per the invoice received by the appellant-CHA shows the description as acrylic tow, whereas in the Bill .....

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. 2253998, as per the copy of invoice and Bill of Lading received by the appellant-CHA shows the quantity at 39,884 kgs., whereas in the original copy of Bill of Lading received through shipping company by the Revenue shows the quantity of 39,994 kgs. (net weight) and 48,424, kgs. (gross weight). 5.5 The learned Counsel further takes us through the deposition of Mr. Deepak Aggarwal, Director of the appellant before the DRI on 4-2-2011 and 5-2-2011, the relevant portions are reproduced herei .....

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e said documents & file the same through online to the Customs. In the mean­while we used to receive the original documents through courier from the said 3 firms of Garg family. I want to submit that all the documents being received by courier were compared with the fax copy of Invoice & Bill of Lading received by us earlier through fax on the basis of which we have already presented/filed bill of entry to Customs through online. On enquiry I state that original document of Bill of L .....

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d Garg or Shri Raman Garg about the duty liabilities & other port charges. After this they used to deposit Customs Duty & other charges in lumpsum in our roaming A/C No. 01102300000024 maintained with HDFC Bank. They after depositing the amount used to inform us telephonically and we further proceeded for getting the consignment cleared from Customs. On being asked about who used to give authority to your company for getting import consignments of said 3 firms/company cleared from Custom .....

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ting after signing by me in today s date. On being asked about the mode of our charges on A/c of CHA services provided to these 3 firms of Garg family of Ludhiana, I state that we never received such charges in cash from them and it was always through banking channel which I have explained above. 5.6 The learned Counsel further urges that it is evident from the statement recorded that there is no complicity of the appellant-CHA with the importers in the alleged misdeclaration, fraud and for .....

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basis of the documents called from the appellant and when the same has been compared with the documents called from the State Bank of India (importer s Bank). APL Shipping Line and JNPT, on scrutiny of those documents gross irregularities such as misdeclaration of quantity as well as undervaluation was found. It was also found that the importers had fabricated Bill of Entry by forging and fabricating signature of customs officer and presented them to their Bank for remittance of the exact purch .....

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the appellant-CHA. The facts which are evident from statements (of appellant s Director and employee) and copy of documents on record is that the importers have misled the CHA by supplying separate set of documents at the time of filing of the Bill of Entry and after passing of the Bill of Entry have supplied separate set of documents being original Bill of Lading to be filed with the shipping line for obtaining delivery order, and further have forged and fabricated Bill of Entry for the purpose .....

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rate per kg. modified, there being no change in the number of bales and/or other description. 5.8 The learned Counsel further points out that no person of ordinary prudence at the time of recording of the statement on 5-2-2011, it was stated to the effect although we have signed on the back side of original Bill of Lading received through courier from importer for further submission to the shipping line for obtaining delivery order, at that time also we have failed to correct our mistake in .....

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letion of the adjudication under main show cause notice under Section 124, the Commissioner has erred in pre-judging allegations, and arrived at erroneous conclusion and as such the impugned order is fit to be set aside. It is further urged that it have nowhere come on record that the importers have disowned their misdeed, which includes misdeclaration, fraud and forgery or have any statement implicated the CHA-appellant. Further, the conclusions of the learned Commissioner are based on wild all .....

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their knowledge raising suspicion. The learned Commissioner has also erred in holding that there is connivance or aiding and abetting on the part the staff of CHA, who have deposed in the inquiry proceedings Shri Sunil Soma Singhwan, it has come out that the variation in the description and the quantity as shown in the fax copy of the Bill of Lading and invoice as compared to the original Bill of Lading could not be noticed by them. It is also stated by Mr. Singhwan that in absence of any suspic .....

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r the first few Bills of Entry being processed there being nothing suspicious and/or illegal found, the appellant developed trust in their dealing with the importers and as such in absence of suspicion could not notice minor manipulation committed later on. It is further urged that in the facts and circumstances, the only thing which have come to light is that, had the appellant-CHA been very vigilant and would have scrutinized and/or compared each and every documents line by line, they could ha .....

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mis-describing the same and manipulated as acrylic tow, they were classifying the same under CTH 5501 30 00. The importers were also declaring the less quantity than the actual quantity imported under the import documents and simultaneously undervalued the same with sole intention to evade customs duty. The importers fabricated and forged various documents such as invoice, packing list, High Seas Sale Agreement and presented such forged and fabricated documents to the customs in violation of Sec .....

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y the importer to the shipper either by through Hawala or by resorting to actual payment through Bank by forging and fabricating the Bill of Entry. Further, the learned Commissioner has erred in holding that it appears that the appellant-CHA have colluded with the importer without there being any finding either oral or documentary in this regard. 5.12 Accordingly, the learned Counsel prays for allowing the appeal and setting aside the impugned order. 6. The learned AR relies on the fin .....

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icated documents through fax to the appellant-CHA for filing the Bill of Entry by making minor alteration in the quantity or description or value, which cannot be noticed by a man of ordinary prudence. No facts are coming on record to indicate that the appellant-CHA have aided and abetted the importers in evasion of customs duty. However, evidences which have come on record indicate that the importers have misled successfully the CHA, Revenue and Bank by fabrication and forgery of documents bein .....

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iding and abetting, in holding the charges as proved under Regulations 13(d) & (e) as proved. We also take notice of the finding recorded in para 43(ii) of the impugned order where the learned Commissioner has recorded - I find merits in the submission made by the charged CHA in defence of this charge. I find that the charge has been framed in the first place because of the fact that forgery of official document and signatures were committed by the importers and the CHA is sought to be charg .....

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th utmost speed and efficiency, is proved merely on account on the fact that Mr. Deepak Aggarwal has submitted that they have failed to compare the invoice/Bill of Lading received by fax and the original received through courier later on and that they have failed to correct their mistake in respect of description of the goods and in this way they have failed to perform the duty of CHA. 7.1 Further, the learned Commissioner has erred in holding that there is connivance of the CHA with the im .....

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