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2016 (7) TMI 859 - CESTAT MUMBAI

2016 (7) TMI 859 - CESTAT MUMBAI - TMI - Suspension of licence of CHA - Whetehr the CHA was negligent or not - Coming to a conclusion that the prima facie CHA has derelicted their duties, the licence was suspended and a charge sheet was issued and inquiry was conducted for failure to discharge obligation of CHA under Regulation no. 13(a), 13(d), 13(e), 13(n) and 13(o) of CHALR 2004. - Held that:- We note that during examinations and cross examination Shri Zeeshan Anwar, it was clearly recorded t .....

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ant herein was not at fault. It is also to be noted that the authorisation etc. were produced before the authorities at the time of clearance of goods and was accepted and goods were cleared, would mean that main appellant could not have contravened the provisions of Regulations 13(a) of CHALR 2004. - It can be noticed the Regulation mandates the CHA to verify antecedent, correction of IEC identity of client and functioning of his client at the declared address. It is on record that appellan .....

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him with a business proposal for clearance of imported consignment. In our view the Adjudicating Authority has misconceived the purpose of this Regulation. - That there is no violation of CHALR is established against the appellant, nor there is any finding that appellant had advised importers to undervalue the goods. - licence to be restored - Decided in favor of CHA. - Appeal No. C/86266/14 Mum & C/88552/14- Mum - A/88393-88394/16/CB - Dated:- 12-7-2016 - SHRI M.V. RAVINDRAN, MEMBER (JUDI .....

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main appellant ) was holding a CHA licence no. 11/973. It was noticed by customs authorities that a number of consignments of Glass Sheet and coated aluminium mirror were imported in the name of two firms M/s Riya Enterprises and M/s Apex Enterprises through the CHA M/s Parvath Shipping Agency from March 2012 onwards. Further, before March 2012, the import of Glass Sheet and Aluminium coated mirror was in the name of M/s F.K. International. Total duty evasion in case of M/s Riya International is .....

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al duty liability quantified in the three cases (M/s Apex Enterprises, Riya Enterprises & Bombay Fashion) as mentioned above is ₹ 42,57,352/-. Initial offence report from the Special Investigation and Intelligence Branch (Import), New Custom House, Mumbai vide letter F. No. SG/Misc-61/FN/2011-SIIB(I); SG/Inv-26/FN/2012-SIIB(I) dated 06/12/2012 incorporating the above and mentioning role of the CHA was received in this office on 06/12/2012 and further communication dated 14/12/2012 was .....

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r was recorded under Section 108 of the Customs Act, 1962 on 23/05/2012. He accepted that he is the owner of the goods. He accepted that the actual value of the container is around ₹ 2,50,000/-. The value of the Glass Sheet is 1.05 US $ per sqm. Whereas value of aluminium coated mirror is 1.17 US $ per sqm. He agreed to pay Customs Duty for the past imports in the name of M/s Riya International and M/s Apex International. 5. The differential duty in the case of M/s Apex Enterprises works o .....

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well as IEC user to appear on 06/11/2012 and 07/11/2012. CHA has sent letter that he is unable to appear that he is travelling on 06/11/2012. The investigating unit has reported that further progress in the case could not be made due to non-co-operation of the importer as well as the CHA. Accordingly, a Warning Memorandum vide F. No. S/8-56/2009-Admn/1348 dated 12/12/2012 was issued to the CHA by this office directing them to fully co-operate with the department and report to the investigating .....

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has derelicted their duties, the licence was suspended and a charge sheet was issued and inquiry was conducted for failure to discharge obligation of CHA under Regulation no. 13(a), 13(d), 13(e), 13(n) and 13(o) of CHALR 2004. 8. Inquiry proceedings were conducted by inquiry officer. Appellant participated in the inquiry and cross examined persons. Inquiry officer held all the charges stand proven. Consequent to such inquiry report, the appellant filed a detailed written submission vide letter d .....

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t there is under-invoicing, has no legs to stand, as CHA filed the Bill of Entry based on the documents supplied to him by the importer. 9.2. The CHA has followed the official procedure and not had any occasion to inspect the goods before the filing of Bill of Entry. Further in the case of import in the name of Harmony Trading, the proprietor/IEC holder is Hamid Bhai Ansari and pursuant to assessment of the import consignment, the import duty was paid, but the Customs were not releasing the cons .....

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aving valid IEC No. and having paid the customs duty is prevented from importing goods. In case of any misrepresentation in obtaining the IEC code, it is the office of the DGFT to take action for the same. Accordingly, the said IEC holder/Writ Petitioner Hamid Bhai Ansari was held to be entitled to release of the goods 2009 (24) ELT 168. Thus, in view of the order of the Honble High Court, it is established that there is no violation under the imports in question, particularly on part of the ap .....

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appellant further submits that the Commissioner totally failed to appreciate that as per Article of Charge I in the notice dated 20.4.2010 the allegation was the CHA had accepted the clearance document from one Shri Rizwanbhai who is neither the IEC holder nor the representative of the ICE holders. In other words, the case of the Department is that since the proprietor of the appellant-CHA had not verified IEC holders address personally and had not interacted with any of the importers directly .....

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the documents were obtained from Shri Rizwanbhai, the Commissioner has failed to appreciate that when both the authority letters were received by the appellant, the charge of violation of Regulation 13(a) cannot be said to be proved. As per provisions of Regulation 13(a) A Custom House Agent shall obtain an authorization from each of the companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorization whenever required by the Dy. Co .....

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re in the statements or at any time during the inquiry the appellant admitted that he was aware of the import of goods being under invoiced. The said findings have not been proved to be wrong by the Commissioner by producing any evidence thereto. As such, the findings that the CHA is responsible for violation of Regulation 13(e) of the CHALR, 2004 are bad in law and required to be set aside. 9.5. The Commissioner failed to appreciate provisions of Regulation 22(5) of CHALR, 2004 wherein it is st .....

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Commissioner has also not followed CBEC Circular No. 9/2010 dated 8.4.2010 which is issued prior to the issuance of notice of Inquiry dated 20.4.2010. It is a settled law that CBEC Circulars are binding upon the Departmental officers. On this ground too the impugned order is not legally sustainable. 9.6. The appellant further submits that the show-cause notice dated 8.12.2009 in respect of imports by M/s Harmony Trading was adjudicated upon by Add. Commissioner of Customs, Gr. 11A/JNCH vide Ord .....

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ion 13(a) of the CHALR, 2004 is not legally sustainable. 10. Ld. Departmental Representative would submit that the issue is not as simple as the ld. Consultant has put up. It is his submission that the main appellant was very well aware of the fact that imports undertaken by person who was holder of IEC; that the main appellant has not conducted any background checks before undertaking the clearance work; that due to such negligence there is a loss of exchequer which was noticed due to alertness .....

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is case change wise, hence we reproduce the various violations as alleged against appellant as per Regulations of CHALR. 11(i) Article of Charge - I: Regulation 13(a) of CHALR 2004 states that A Customs House Agent shall obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs 11(ii) Article of .....

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ference to any work related to clearance of cargo or baggage. 11(iv) Article of Charge - IV: Regulation 13(n) of CHALR 2004 states -A Customs House Agent shall ensure that he discharges his duties as Customs House Agent with utmost speed and efficiency and without avoidable delay. 11(v) Article of Charge - V: Regulation 13(o) of CHALR 2004 states that A Customs House Agent shall verify antecedent, correctness of Importer Exporter Code (IEC) Number, identity of his client and functioning of his .....

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Besides the above confessions it is seen that the copy of authorisation letter dt l6.04.11 of M/s Apex Enterprises and declaration form for Invoice No. 120221-3 seized from the CHAs premises shows that these are not signed by the importer as the signatures do not tally with the signature on the KYC forms. Moreover the variation in signature is very evident and obvious even to the naked eye and evidently indicates that the authorization is fabricated. It is thus clear beyond any doubt that Shri Z .....

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holders were dummies and the real imports were effected by Shri Zeeshan Anwar. A Power of Attorney cannot eliminate the requirement for a genuine authorization. The misuse of IEC by a person other than the IEC holder cannot be legitimized merely on the ground of a Power of Attorney in favour of the IEC user. 20(vi). I also note that Shri Zeeshan Khan has admitted in his statement dt 23.05.12 that due to some legal problems he cannot start a company in his name and hence he is importing goods in .....

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Attorney on behalf of the IEC holders. It is also to be noted that the Power of Attorney is not registered. All these facts tend to the conclusion that the Power of Attorney is the result of afterthought in an attempt to circumvent the allegation of mis-use of IEC. 14. We find that the Adjudicating Authority has totally misdirected the issue. It is on record that Shri Zeeshan Anwar is a power of attorney holder. This fact is not denied but sought to be brushed aside on the ground that power of .....

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er before the CHA in the office of CHA, while giving papers for clearance of consignment, it is also recorded that CHA advised him to give all proper papers and enquired about genuineness of the consignment and the payment. During cross examination by the presenting officer, Shri Zeeshan Anwar has admitted he was responsible for all the faults in importation of consignments. This would indicate that main appellant herein was not at fault. It is also to be noted that the authorisation etc. were p .....

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aware that the Proprietors of these IECs were different individuals. This implies that the CHA was aware of the misuse of IEC by Zeeshan Anwar and yet chose to deal with Zeeshan Anwar Khan for the clearance of several consignments over a period of a few months. Any person of ordinary prudence will know that when dummy IECs are being misused7 by a third party then such misuse is usually for effecting imports in contravention of the rules and I or to evade Customs duty. A genuine importer who does .....

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e of the CHA's failure to adhere to the stipulations of Regulation 13(d) of CHALR, 2004. On this count also the findings of Adjudicating Authority are mis directed as it is on record that there was no specific allegation of non-compliance of the provisions of the Act i.e. Customs Act, 1962. The main appellant had taken care to enquire about the genuineness of the consignment etc. and then only took up the clearances. We find that Adjudicating Authority has not recorded any specific violation .....

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ions 13(e) of CHALR 2004 The finding of Adjudicating Authority on this are as under:- 22(ii).My discussions above have already laid made it clear that the CHA was aware that Shri Zeeshan was not the IEC holder and yet chose to deal only with him for the clearance of goods in the names of different IECs without even scant scrutiny of the import documents. It is seen that the Shops & Establishment Certificate of MIs Riya Enterprises is for cutlery items and that of M/s Apex Enterprises is for .....

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forms. This also should have served as a wake-up call for the CHA to be alert and interact with and inform the IEC holders of the requirements under the CHALR, 2004. By the above findings the Adjudicating Authority has negated the findings of the inquiry officer that charge for contravention of Regulation 13(e) is not proved. It is to be seen that the CHA went by documents of imported consignment, and the power of attorney given to Zeeshan Anwar. It is also undisputed that IEC numbers were genu .....

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on by CHA as regards this regulation. 17. Regulations 13(n) of CHALR 2004 On this point we again find that Adjudicating Authority has in his finding at para 23(i) to 23(iv) brought on record that main appellant has not discharged his duties as a CHA with utmost speed and efficiency and without avoidable delay in respect of the consignment that were cleared. It seems that purpose of this regulation is no understood by the lower authorities in its true sense. To our mind this Regulation expects th .....

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ng of their client at the declared address by using reliable, independent, authentic document, data or information. In the present instance when the CHA was aware that he was not dealing with the IEC holder, it was incumbent on the CHA to confirm the identity and functioning of the client at the declared address even if it meant making a personal visit to confirm the authenticity. This particularly so in view of the fact that the letters addressed to one of the IEC holders have been returned ind .....

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