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2016 (3) TMI 217 - CESTAT MUMBAI

2016 (3) TMI 217 - CESTAT MUMBAI - 2015 (330) E.L.T. 488 (Tri. - 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 .....

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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 being minor manipulation, which is not easily made out unless one compare .....

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R, 2004 for violation of Regulation 13(i).

Some inadvertence or 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. - Part .....

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ated 2-12-2013 by which the CHA license of the appellant have been revoked. 2.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 t .....

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on behalf of - (i) Jaldhara Cotspin Pvt. Ltd., (ii) Jaldhara Exports, (iii) 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 un .....

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India, Ludhiana (importer s Bank), M/s. APL Shipping Lines, JNPT, Mumbai. 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 .....

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ss to the Govt. exchequer. 2.2 It is relevant to mention that the importers 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 custo .....

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dated 14-2-2011 under Regulation 22 of CHALR, 2004, the CHA license was placed 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 .....

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a submitting, the Appraising Officer have committed grave errors, namely : - (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 m .....

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inquiry. (iv) That during the course of Inquiry, the department has examined 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 hi .....

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available though the Articles of Charge refers to a minimum of 5 Bills of 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 fil .....

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, to the Customs. They were actually importing Acrylic Fibre, classifiable 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 .....

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of rupees. The importers even fabricated and forged some of the bills of entry 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 differ .....

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les of charges : - (i) Article of charge 1 - Regulation 13(d) of CHALR, 2004 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 .....

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as Customs House Agent with utmost speed and efficiency and without avoidable 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 descripti .....

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also fact that original copy of the Bill of Lading which were submitted to 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 cour .....

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CHA. It has been further observed that the CHA claims to have compared the 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-declarati .....

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ges based on the statement of Mr. Deepak Aggarwal recorded under Section 108 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 an .....

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s that the appellant failed to compare the original Bill of Lading with the 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 p .....

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t is further observed that the discrepancies which were by no means trivial 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 establ .....

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ion and was also aware that the rate of duty on the acrylic fiber and acrylic 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 .....

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ovisions of Regulation 13(e) of CHALR. The contention of the appellant that 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 durin .....

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with the importers in making clearance of fabrics. Further, it has been admitted 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 .....

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that the CHA shall not attempt to influence the conduct of any official or 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 broug .....

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is by the importers, the CHA cannot ipso facto be charged for violation under 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 .....

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and accordingly were charged under Regulation 13(n). The learned Commissioner 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 t .....

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e advanced by the appellant. The learned Commissioner observed that the finding 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 .....

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ase of Commissioner of Customs v. Worldwide Cargo Movers - 2002 (139) E.L.T. 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.&e .....

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g of the two documents. Any man of ordinary prudence will not easily find out 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 n .....

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o Bill of Lading No. APLU 027593873 - that as per the invoice & Bill of 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 .....

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ellant-CHA, the description is acrylic tow, quantity 51,824 kg & 57,753 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 t .....

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of Bill of Entry No. 770224, dated 22-5-2007 relating to Bill of Lading No. 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 t .....

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hrough fax we used to prepare checklist of Bill of Entry on the basis of the 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 Cus .....

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g the Bill of Entry processed from the Customs, we used to inform Shri Vinod 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 .....

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x from my office at Mumbai today at the DRI Office fax on which I am submitting 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 ap .....

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anti-dumping duty at the time of import. It is further admitted that on the 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 .....

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5.7 It is further urged that none of the charges stand proved against 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 .....

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ve been used vice-versa or the quantity have been modified as to weight or 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 .....

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surmises and as such fit to be set aside. It is also urged that before completion 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. .....

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e discovered the misdeclaration being committed without anything coming to 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 notic .....

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the appellant have handled about 45 Bills of Entry for the importers, after 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 scrut .....

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actually importing the acrylic fiber classifiable under CTH 5503 30 00, by 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 presen .....

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forged Bill of Entry. The difference due to undervaluation was being paid by 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 .....

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ills of Entry (5 in No.), importers have resorted to giving forged and fabricated 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 successf .....

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d that the learned Commissioner is in error, in absence of any finding of aiding 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 s .....

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ges under Regulation 13(n) are proved, where the CHA is required to work with 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 Commis .....

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