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2016 (5) TMI 1061 - CESTAT BANGALORE

2016 (5) TMI 1061 - CESTAT BANGALORE - TMI - Revokation of CHA licence - Whether the grant of G Card to Shri Naresh Makwana amounts to sub-letting of licence by the present broker so as to hold contravention of Regulation 10 against him - Held that:- when the law itself permits engaging a G Card holder for running an extended office of the CHA at any other place then the place of appellant's commissionerate and when such G card holder stands engaged, by following the due processes of law and wit .....

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e months on account of revocation of his licence (which has also been a punishment for him) and when there was no mens rea involved on the part of the appellant in mis-use of the licence in Mumbai and the decisions pronounced by the Hon'ble Bombay High Court in the case of Shri Venkatesh Shipping Services Pvt. Ltd. Vs. Union of India [2012 (9) TMI 425 - BOMBAY HIGH COURT], the present appellant deserves restoration of his Customs Broker Licence.

Forfeiture of security - Held that:- th .....

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7; 35,000/- is proved. Thus the retracted statement of the appellant is not corroborated by any independent evidence. The department has failed to establish the flow of consideration from Shri Naresh Makhwana to appellant and the sub-let of license. The Hon'ble Member(Technical) has ordered forfeiture of security on the finding that there is subletting of license and that appellant violated Regulation 10 of Customs Brokers License Regulations, 2013 but I disagree with the view of Member (Technic .....

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S. K. Singh, Commissioner (AR) ORDER Per : ARCHANA WADHWA The appeal is against the order of the Commissioner of Customs, Cochin, revoking the appellants Customs Broker Licence. 2. After hearing both the sides duly represented by Mr. P. A. Augustian, Advocate for the appellant and Mr. S. K. Singh, Commissioner (AR) for the Revenue, we find that the appellants have been granted Customs Broker Licence in 2012, valid till 2022 by the Commissioner of Customs, Cochin. The appellant opened another of .....

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ctivities in respect of imports made by one M/s. Abhay Enterprises in respect of clearances of the consignments of mobile phones and accessories. As a result, the appellants activities at Mumbai were suspended immediately. The appellants licence in Cochin was also suspended. Subsequently, however, after grant of personal hearing, the said order of suspension was revoked and the matter was referred for detailed investigations. As a result of detailed enquiry report, proceedings stand initiated .....

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. For better appreciation, we reproduce paragraph 10 of his order. The case before me is not a case of minor infraction of the provisions of CBLR, 2013, but a major one involving subletting of the licence to the third party for monetary consideration, with complete disregard to the rules therein. The very purpose of granting licence authorizing a person to act as customs broker on behalf of importers and exporters is to facilitate import and export of goods at any customs station in accordance w .....

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us, the object of granting licence to a customs broker is to ensure that he acts in a responsible manner as the agent of the importer/exporter, while providing prompt, correct advice and guidance and simultaneously making certain that all rules and regulations are followed. The obligations of a customs broker covers not only certain procedural aspects, but also their conduct and character. Hence a person so licenced by the Department is expected to abide by all the provisions of the statute. The .....

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of misconduct or infraction, I am constrained to impose the maximum punishment prescribed under the provisions of the CBLR, 2013, on the CB for subletting his licence to another, for monetary consideration, thereby contravening provisions of Regulation 10 of CBLR, 2013. As it is seen from the above, there is no allegation sustained against the appellant that he was associated with the clearances of the goods by Shri Naresh Makwana on behalf of M/s. Abhay Enterprises, neither is there any allega .....

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of Regulation 15, a person qualified in the examination referred to in Regulation 6 can be engaged by the Customs Broker for doing the work relating to clearance of goods. Engaging of the said qualified person has to be communicated by the Customs Broker to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, who shall be allowed to work in the customs station as a duly authorized employee on behalf of that firm or company. As such, as per the appellant the said Shri Nar .....

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o sub-letting of his licence. On the other hand, the assessees stand, right from the beginning has been that their Mumbai office was running into losses and on account of financial difficulties they were not able to run the same. As such, the G card holder was appointed therein who was meeting all the expenses of the Mumbai office and as such, in said terms it cannot be said that the licence was sub-letted. 7. We find favour with the above contention of the learned advocate. In the impugned ord .....

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r running an extended office of the CHA at any other place then the place of appellants commissionerate and when such G card holder stands engaged, by following the due processes of law and with the knowledge and consent of the Customs authorities, it cannot be held to be sub-letting of the licence. Inasmuch as the said ground is the only ground adopted by the Commissioner for revoking the licence in question and having held that appointment of a G card holder does not amount to subletting of t .....

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Honble Delhi High Court referred to the then provisions of Custom House Agent Regulations and Clauses 13 and 19 of the same. Clause 19 of CHA Regulation provided engagement of the person to assist the broker. The Honble High Court observed that when the CHA did not have knowledge about the illegal activity of the G Card holder and in the absence of any active or passive facilitation by the CHA, the serious punishment of revocation of the licence should not be adhered to. Accordingly, the Hon .....

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go Services: 2015 (320) E.L.T. A175 (S.C.). 9. At this stage, we may deal with the contention of the learned DR appearing for the Revenue for upholding the forfeiture of the security deposit. First of all, having set aside the revocation of the licence, upholding of forfeiture of security deposit would be a self-contradictory order inasmuch as we have not found anything against the customs broker. Secondly, we find that the Commissioner himself in his impugned order has held that there is no rel .....

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of security amount which is nothing but a penal action against the customs broker cannot be upheld, especially when the revocation of his licence has already been set aside by us. As such, we find no merits in the said plea of the learned DR. 10. In view of the foregoing discussions, we set aside the impugned order and allow the appeal with consequential relief to the appellant. SEPARATE ORDER ORDER PER: ASHOK K. ARYA 11. As per the facts on record, the appellant allowed one Shri Naresh Makwana .....

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ustains the charge that the appellant allowed his licence to be used by Shri Naresh Makwana on certain monetary consideration which has been mentioned in the findings as ₹ 35,000/-. The impugned order inter alia mentions that Shri Naresh Makwana has not worked as an employee or authorized representative of the appellant but as a person who handled obligations of the appellant independently. The impugned order also says that this amounts to sub-letting of the licence of Customs Broker to an .....

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er mentions that as the appellant was running into losses and Shri Naresh Makwana came forward to run his office and give him business, the appellant therefore allowed him to run his office in Mumbai. The learned advocate points out that the mis-conduct which came to the appellant s notice later in respect of certain imports by M/s. Abhay Enterprises, it was the first instance and because of this mis-conduct, his licence was prohibited by the Commissioner of Customs, Mumbai, who issued the prohi .....

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her the maintenance of office money which was being paid to the appellant by G Card holder Shri Naresh Makwana. The learned advocate further clarifies that this monetary consideration of ₹ 35,000/- was not being paid but rather used by G Card holder Shri Naresh Makwana in maintenance of the office at Mumbai itself. However, the findings given in para 8 of the impugned order of the Commissioner of Customs, Cochin points out as below: 8. . That Sri Naresh Makwana had been independently ope .....

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ary consideration. Therefore, I concur with the findings of the Inquiry Officer in this regard and hold that CB had abdicated all the duties of a responsible customs broker and sublet his license to a third person for monetary consideration, thus contravening provisions of Regulation 10 of CBLR 2013. 14.1 Further, in para 9 of his order, the Commissioner of Customs, Cochin gives the findings that 9. This is a situation where CB granted power of attorney to Sri Naresh Makhwana, who was initially .....

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earned advocate appearing on behalf of the appellant, I am of the considered view that the licence of Customs Broker which was granted to the appellant has been misused in the jurisdictional area of Mumbai Customs because of which their licence was suspended. The Commissioner of Customs, Cochin in his impugned order has treated this as a subletting of the licence which is a violation of Regulation 10 of the Customs Broker Licensing Regulation, 2013. After examination of full facts on record and .....

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ations in the jurisdictional area of Mumbai Customs, one cannot judiciously say that the appellant has not violated Regulation 10 of Customs Broker Licensing Regulations, 2013. 16. I find that impugned order dated 29.4.2015 has ordered revocation of the appellants Customs Broker Licence with forfeiture of whole of security deposited. The implication of this is that the appellant is out of his business of running customs broker operations since 29.4.2015. The appellant has thus almost been witho .....

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dering facts and circumstances on record and the law prevalent today, now it is to be examined and considered that what punishment here is warranted to meet the ends of justice. 16.1. Here I would like to refer to the CESTAT, Mumbai s decision in the case of Manilal Patel Clearing Forwarding P. Ltd. Vs. Commissioner of Customs (General), Mumbai [2013 (294) E.L.T. 472 (Tri.-Mumbai)], wherein it was held that the punishment suffered by the appellant was sufficient and the revocation of CHA licence .....

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wherein the Honble Bombay High Court expressed regarding the concerned appellant, Shri Venkatesh Shipping Services Pvt. Ltd., that the revocation of CHA licence along with forfeiture of security deposit is too harsh and confirmed the order of the forfeiture of security deposit only;, the Honble High Court ordered that the licnece of the said appellant namely Shri Venkatesh Shipping Services Pvt. Ltd. shall stand restored. The Hon ble High Court here clarifies that this arrangement has to be t .....

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called Customs House Agents Licensing Regulations, 2004. I find that Regulation 18 of the current Regulations namely Customs Brokers Licensing Regulations (CHALR), 2013 are almost similar to the Regulation 20 of the earlier Regulation i.e. the Customs House Agents Licensing Regulations, 2004 and the case laws quoted above, therefore, would be very much applicable to the present facts. 17. Considering the facts that the appellant has been completely out of his business and losing his earnings and .....

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w that the present appellant deserves restoration of his Customs Broker Licence but the security deposit given to the Customs has to be forfeited and the impugned order can be sustained only to this much extent. When we are ordering here restoration of Customs Broker Licence and forfeiture of security deposit, it is to meet the ends of justice so that the violation of Regulation 10 of Customs Broker Licensing Regulations, (CBLR), 2013 does not go completely unpunished. It has been proved beyond .....

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ustom Broker Licence, the appellant will have to deposit firstly the required security amount again with the Cochin Customs. The learned advocate for the appellant points out that under the Regulation 8 of new Regulations i.e., Customs Brokers Licensing Regulations, 2013, a security for the new licence has to be furnished for an amount of ₹ 5 lakhs to carry out the business as Customs Broker. As the appellants licence (which was granted to him under the predecessor law i.e., CHALR, 2004), .....

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50,000/- on the Customs Broker, who contravenes any provision of these Regulations. However, as the appellant has to give the security again after forfeiture of his earlier security under this order, there would not be any justification to impose any additional penalty on the appellant under the Regulation 22 of the Customs Broker Licence Regulation, 2013. 18. It is made clear that regarding withdrawal of revocation of licence i.e. restoration of the licence of the appellant, I have agreed with .....

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er of revocation of licence, we accept the prayer of the learned advocate for restoration of the licence with immediate effect and the point of difference of opinion of forfeiture penalty can be resolved by the third Member. However, on going through the order sinned by the learned Member (Technical), it is seen that following differences of opinion emerge : - (i) When both the Members have set aside the revocation of the licence, whether the appellant's licence should be restored with immed .....

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owed partially requiring the Customs Broker to deposit an amount of ₹ 75,000/- for restoration of his licence. The above Differences of Opinion are referred to the Honble President for referring the same to Third Member to be appointed by him. Archana Wadhwa Judicial Member Ashok K. Arya Technical Member ORDER PER: SULEKHA BEEVI, C.S. 1. This difference of opinion was referred as per orders of Honble President for resolving the following points of difference which arose between the Member .....

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to the extent of ₹ 75,000/- as ordered by learned Member(Technical) ; and (iii) Whether the appeal has to be allowed fully as held by learned Member(Judicial) or the same has to be allowed partially requiring the customs Broker to deposit an amount of ₹ 75,000/- for restoration of his license. 2. Before entering into the analysis of the issue, it needs to be mentioned that after recording the difference of opinion by the Members, the appellant, M/s Mark Logistics, has approached the .....

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ibunal to dispose the appeal within three months from the date of receipt of judgment. The matter was posted for hearing before me (Third member) on 16-12-2015 at the regional Bench at Hyderabad, which was newly formed w.e.f 14-12-2015. The counsel for appellants sought adjournment on 16-12-2015. Thereafter, the case was adjourned to 19-02-2016 and was taken up on the same day. The time limit stipulated by the Honble Court could not be complied for the above reasons. 3. I have perused the order .....

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ion, later part I agree 4. From the totality of all the differences of opinion I understand that both members agree that the impugned order to the extent of revocation of license of appellant requires to be set aside. The learned Member(Judicial) has held that the order to forfeit the security also is to be set aside. Whereas, the learned Member(Technical) has held that the security deposit of ₹ 75,000/- made at the time of taking the license has to be forfeited. In the impugned order, the .....

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er: when the law itself permits engaging a G card Holder for running an extended office of the CHA at any other place than the place of appellant s Commissionerate and when such G card holder stands engaged, by following the due processes of law and with the knowledge and consent of the customs authorities, it cannot be held to be sub-letting of the license Thus the Judicial Member has arrived at the conclusion that Shri Naresh Makhwana is a person engaged by appellant to act on his behalf and t .....

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ms Brokers License Regulations, 2013. At this juncture, it would be worthwhile to notice Regulation 10 of Customs Brokers License Regulations, 2013 which reads as under: Licence not transferable: - Every licence granted or renewed under these regulations shall be deemed to have been granted or renewed in favour of the licensee, and no licence shall be sold or otherwise transferred. 6. Regulations 15 and 17 of Customs Brokers License Regulations, 2013 permit a Customs Broker to engage/employ othe .....

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day to day activities as the appellant is in Cochin. That the appellants above statement was twisted by the department to the effect that Shri Naresh Makhwana was giving ₹ 35,000/- as commission and that appellant has sub-let the license to Shri Naresh Makhwana in return of the monetary consideration. The learned Member (Technical) has heavily relied upon the findings made in the impugned order to arrive at the conclusion that the license was sub-let and there is violation of Regulation 1 .....

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ons, 2013. The learned Member (Judicial) held that appointment of G-card Holder does not tantamount to sub-letting of license. 8. The difference revolves around the question, whether there is any evidence to conclude that there was sub-letting of license or not. The learned Member(Technical) has placed reliance on the findings of the Commissioner in the impugned order which states that there was return of monetary consideration of ₹ 35,000/- paid by Shri Naresh Makhwana per month to the ap .....

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The only evidence relied by the department to hold that consideration of ₹ 35,000/- per month is paid by Shri Naresh Makhwana for sublease of license is the statement of appellant. During the investigation regarding seizure of import consignment of M/s Abay Enterprises, the statement of appellant was recorded on 16-04-2014. It is the case of department that the appellant deposed that he has given power of attorney to Shri Naresh Makhwana at Mumbai to operate his license and for that appell .....

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giving the appellant a commission of ₹ 35,000/- per month. The appellant has strongly denied and retracted his earlier statement. It is to be noted that the said retraction dated 20-10-2014 has not been countered or disproved by department. 9. Apart from the above discussed statement, on examination of evidence, there is nothing on record to arrive at the conclusion that Shri Naresh Makhwana paid ₹ 35,000/- per month to the appellant as consideration for sub-letting his license. Ther .....

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nt issued notice to the appellant for the alleged imported consignment of M/s Abay Enterprises in which the documents were prepared and presented by Shri Naresh Makhwana. It is not disputed that there was a valid authorisation given by appellant to Shri Naresh Makhwana. When department has issued notice to appellant for documents prepared by Shri Naresh Makhwana, it can only mean that department is aware that only an authority has been granted to Shri Makhwana to operate on the license of appell .....

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