ORDER
Archana Wadhwa, Member (J)
1. Vide his impugned order, Commissioner of Customs has ordered for cancellation of CHA Licence of the appellant and has also confiscated security amount of Rs. 25,000/- (Rupees Twenty Five Thousand Only).
2. As per the facts on record, investigation conducted by the revenue in respect of the import of waste paper by M/s. Star Pulp and Paper Products, Jaipur during the year 1982-83, revealed that the said imported waste paper cleared at concessional rate of duty was meant for use in the factory for production of cardboard but the same was diverted to the local market and sold. Shri Dharam Prakash Singhal, Prop of Star Pulp in his statement, recorded during the investigation revealed that the imports and clearance of consignment was arranged by one Shri Tapan Kumar Banerjee. The said Shri T.K. Banerjee was introduced to Shri D.P. Singhal by one of Shri Jayantilal Patel, who financed the’ import and also agreed to pay Rs. 300/- per MT to Shri T.K. Banerjee. It was also found that the importer M/s. Star Pulp and Paper Products produced bogus consumption certificates and bogus affidavits with the active connivance of Shri Jayantilal Patel & Shri T.K. Banerjee.
2. Shri T.K. Banerjee joined the present CHA as Docks clerk in 1987. As per the allegation in the impugned order, T.K. Banerjee was introduced to Shri Jayantilal Patel by Shri Himmat Bhatia, the Prop of the appellant M/s. V.B. Bhatia & Co., CHA. It is primarily on this basis and the fact that Shri T.K. Banerjee was in employment of the said CHA, it has been concluded by the Commissioner that the appellant has failed to exercise control over the activities of T.K. Banerjee, as employee and was aware of misuse of imported material by the importer, and did not inform the revenue, he has cancelled the license of the CHA.
3. Shri S.P. Mathew, Id. Advocate appearing for the appellant draws our attention to the articles of charge and the evidence considered by the adjudicating authority, as detailed in the present order. First, article of charge is that the appellant failed to exercise any supervision over his employees Shri T.K. Banerjee. It has been further alleged that the appellant as a CHA did not ensure that the goods were dispatched to the importer’s factory at Jaipur. Third article of charge against the appellant is that he was a party and his employee was the principal architect for submission of false documents like OGL declaration, false certificate like end use certificate of actual users etc. He did not ensure that the Customs department was informed of the conspiracy of cheating and as such he has aided and abetted the conspiracy.
4. On the above three charges, Commissioner by relying upon the inquiry officers reported has held against CHA.
5. On the other hand, the appellant’s contention is that introducing Shri J.B. Patel to Shri T.K. Banerjee is not enough to prove that both these persons would conspire to sell the goods in Mumbai market and the appellant would be aware of these conspiracy. There is nothing in the statement of Shri T.K. Banerjee to show that he was involved with the appellant in such diversion. By relying upon the Tribunal’s decision in the case of Rank Shipping Agency Pvt. Ltd. v. CC (Prev), Mumbai , it has been argued that the CHA has to follow the directions of the importer with regards to the delivery of the goods and after the goods are delivered at a particular warehouse as directed by the importer, there is nothing unlawful in the custom house agency complying with the requirement. Mere fact that the goods were delivered at warehouse cannot necessarily have led the CHA, in the absence of any other information, to conclude that the goods cannot reach the factory of the importer. The CHA cannot be agent presuming to be aware of whatever importer does to the goods imported by him. Reference has also been made to the other decisions in the case of Falcon Air Cargo Travel (P) Ltd. v. CC (New Delhi) (Tri.-Del.) laying down that the punishment imposed upon the Custom House agent should commensurate with the offence and the charges of improper employee supervision and negligence concerning value of the goods resulting in excess drawback are not grave enough to invite punishment of revocation of licence which deprives CHA of means of his livelihood.
6. After hearing Id. DR, we find that the charges against the appellant in the present case stand on a very week ground. It has been mainly contended that the appellant was the one, who introduced T.K. Banerjee to Shri J.B. Patel, who further committed the fraud along with the importer. Such introduction by itself cannot be made a basis for holding that CHA was also a party to the fraudulent activity of Shri J.B. Patel along with Shri T.K. Banerjee. Similarly, it is seen that sub-regulation 7 of the Regulation 20 provides for exercise of control by the CHA over his employees in the transaction of business as agent and holds him responsible for all acts or omission of his employee in regards to their employment. This sub-regulation cannot be pressed into service and cannot be extended to private or personally conduct of such employees. Similarly production of bogus evidence by the importer as regards end use by itself cannot reflect upon the involvement or knowledge of CHA. He cannot be expected to verify and exercise control over the goods imported for the purpose of end use. As rightly argued CHA deals with number of consignment and it would be not only difficult but impracticable for him to follow the routes of all the consignment and to show that the imports made are actually used for the purpose for which they were imported. Similarly, he would file the end use certificate provided by the importer with the revenue, when there is no facility to verify the correctness or otherwise of the same. We also note that the alleged import was in the year 1982-83 and action was initiated against the appellant in September, 97 but was kept in abeyance and was reopened in 2003 only. During this period, CHA license was renewed 4 to 5 times without any adverse remarks. During the said period no contravention has been noticed against the said CHA. As observed by the Tribunal in the case of Falcon Air Cargo referred supra revocation of license is harsh punishment and should be adopted only in deserving case. In the present case, there is no valid evidence on record to establish that the said CHA was a party to the fraudulent activities and has actively associated himself with the import or any other persons to deceive the revenue. As such, we are of the view that the present case is not fit for revoking licence or to confiscate the security. The Commissioner’s order is thus set aside and appeal is allowed with consequential relief to the appellant.
Sd/-
(Archana Wadhwa)
Member (Judicial)
7. [Contra per : C. Satapathy, Member (T)]. – I have carefully gone through the proposed order recorded above. On perusal of case records and submissions made by both sides, I am of the opinion that the findings given by the lower authority are reasonable and based on evidence in so far as charges of contravention of the provisions of the CHA Regulations, 1984 against the appellants are concerned. As regards cancellation of the CHA licence, I am of the view that the action is harsh considering the fact that after the impugned incident, the appellants’ licence has been renewed from tune to time and no further contravention has been noticed. However, the forfeiture of the security amount of Rs. 25,000/- as ordered by the adjudicating Commissioner is fully justified in the circumstances of the case. Accordingly, I allow the appeal partly by setting aside the order of cancellation of the CHA licence, but the forfeiture of the security deposit of Rs. 25,000/- is upheld.
Sd/-
(C. Satapathy)
Member (Technical)
8. The following difference of opinion is placed before the Hon’ble President in terms of Section 129C(5) of the Customs Act, 1962:
Whether the appeal is to be allowed as held by the Member (Judicial)
OR
Whether the appeal is to be partly allowed as held by the Member (Technical)
Sd/- Sd/-
(C. Satapathy) (Archana Wadhwa)
Member (Technical) Member (Judicial)
S.S. Sekhon, Member (T)
9. In this reference made both sides were heard on 16-9-2005. The submissions and the material on record including the stay order dated 25-1-1995 in Appeal No. C/404/94-Bom. produced by the Id. Advocate for the Appellant is also considered. After considering the material it is found :
(a) the facts of the case have been analysed and recorded in the order prepared by Id. Member (J) and are not being repeated in order to avoid uncalled for duplication.
(b) The CHA has been charged under the CHA Licensing Regulations, 1984 (herein after referred to as CHALR). A perusal of the charges and the findings reveal (i) article of charge No. 1 is bringing a liability on the CHA for having violated Regulation 29(c) of the CHALR on the ground that that CHA has failed to exercise supervision on his employee Shri Tapan Kumar Banerjee whose role was of a conspirator and the enquiry officer finding that Banerjee was introduced to one J.B. Patel, by the Appellant herein and it was J.B. Patel’s suggestion to him to find out some paper mills who would lend their names and licence for importing waste paper and on basis of this proposal Banerjee has admitted the import of 750 MTS of waste paper. This has been held to show that the CHA was fully aware of the arrangements/scheme/plan of importing the waste paper at concessional rate of duty and sell the same in Bombay. The statement of Shri Bhatia, dated 26-2-91, on a perusal, reveals that, he admits to have introduced his dock clerk Banerjee to J.B. Patel, and also subsequently getting the documents from J.B. Patel, for clearances of the goods imported by M/s. Star Pulp and Paper Products, Jaipur. The goods were also admitted to be delivered at Mahalaxmi Warehouse Agency, Mahalaxmi and Kotkar Industrial Estate, Goregaon as per the instructions of Jayanti Bai. He has categorically stated that he has not sent any waste paper under the cover of the G.C. Notes of M/s. Thacker Cargo Movers and Nasik Cargo Carriers, showing M/s. V.B. Batia & Co., as senders and the consumption certificate etc. was filed with the Customs by Banerjee, who collected the cancelled bond and returned the same to the parties. He also admits to be not knowing Shri D.P. Songal, the Proprietor of Star Papers. The statement of Shri Banerjee, on perusal, shows that he admits to be a paid employee of the Appellant, who would also be getting commission for clients and business brought by him. Shri Banerjee is admitted to have assisted in clearance and disposal of the waste papers. Shri Banerjee, an employee, has admitted his role and has involved the Appellant, however, in the subsequent statements, he does not implicate any knowledge on part of the present Appellant. However he implicates another CHA viz. M/s. Valji Dhamji & Co., through whom the goods were also cleared. The deposition of Banerjee, regarding the handing over of the import documents by Jayanli Patel to the Appellant herein for filing bill of entry in the Custom House and the processing and typing of various documents in CHA’s office, will not implicate any pre-concert or knowledge on part of Shri Himmatbai of the CHA company, as in the CHA business, this would be a routine affair, where documents for imports are being brought by various persons on behalf of firms situated in Mumbai or outside Mumbai as in this case. A perusal of the admission made by Shri Banerjee, indicates that the end use bond, OGL declaration, import declaration and other documents were personally obtained by him and the present appellant was not in the knowledge of the same, especially as regards the consumption certificates obtained by giving false lorry receipt numbers. A Custom House Agent’s licence is creating an agency for the purpose of clearance of goods through the Customs and on such a clearance being effected, the agency would terminate subsequent obtaining of false consumption certificate, lorry receipts etc. after the goods are delivered at a site in Mumbai i.e. the godowns mentioned herein above, the agency function terminated. All fabricated documents thereafter obtained and submitted without the knowledge of the CHA licensee will not call for article of charge to be established. There is no evidence of exercise of lack of supervision, as there is no improper conduct of an employee up to the termination of the agency function, that is delivery of goods at godown in Mumbai. The mere introduction of J.B. Patel to Banerjee cannot be said to be helping the employee to do the mis-conduct to call for violation of the provisions of Regulation 20(7) of CHALR, 1984. The articles of charge 1 against the CHA cannot be upheld.
(c) The article of charge 2, is violation of Regulation 14(d) of CHALR 1984 in as much as the CHA did not inform the custom department that the goods had been delivered to Mahalxmi Warehouse and not sent to Jaipur. The Custom House Agent is required to deliver the goods at the site, the importer or his agent as in this case Shri J.B. Patel, specified. There was no obligation on part of CHA to have transported the goods to Jaipur or to any other place functioning as licensed agent. There is no reason arrived at that the CHA had not advised the client. Documents, as required, have been obtained and that these documents are false or forged to the knowledge of the CHA is not established. Therefore I find no violation of Regulation 14(d) of CHALR 1984 to have taken place in the facts of this case, as regards the conduct of licensed CHA.
(d) As regards the article of charge III based on the acts of Banerjee, an employee of the Appellant, who was the principal conspirator and arranged for actual user certificate knowing them to be incorrect and goods were not used in the factory of importer will not call for arriving at any mis-conduct on part of the CHA, since a CHA agency is only up to the clearance of goods from Customs and their delivery to the importer/his representative in Mumbai. There is no evidence that there was another agreement, if any, to transport the goods on behalf of the importer to Jaipur. There is no material that the CHA had not complied with any of the Customs Law during the agency of the engagement for the clearance of the subject goods through Customs. The document submitted, based on which the clearance was made, are not proved to be false/forged. If any end use certificate, as in this case, which is found to be false or forged, the same is not proved to be with the knowledge and or connivance of the CHA. The CHA cannot be responsible for the vicarious acts of his employee, Banerjee for the acts performed by Banerjee, beyond the terms of Banerjee’s employment as a dock clerk. The article of charge III are therefore cannot be upheld.
(e) In this case the imports were made longtime back and the CHA licence had been renewed from 1986-89, 1989-92, 1992-95, 1995-2000 and 2000-2005 without any adverse remarks or observations. Therefore for this incident, which appears to have taken place in the year 1982-83 for which the Appellants had been given a notice and are in appeal before this Tribunal vide Appeal No. C/404/94-BOM and the fate of that appeal decision has not been considered by the Ld. Commissioner, no reason could be find to revoke this licence in the year 2003. There is reason to arrive at a bar of limitation but revocation of a licence of a CHA for an act done in 1986-87 to the knowledge of the department almost a decade and a half thereafter is a punishment not commensurate with the acts, even if proved to be upheld. Revocation of a CHA licencee causes not only the loss of business for the licencee but also affects other employees. Timely action is therefore called for in case the acts committed are nefarious. By extending the CHA licenses from time to time, the department should be held to have foregone right to revoke the licence, especially when, since 1987 till the date of revocation, there is no other mis-conduct brought on record.
(f) In view of my findings and on observing that Ld. Member (T) has also concluded that the action of revocation was harsh and there is no difference of opinion as regards revocation order, the order of revocation is required to be set aside. I have considered the order of Ld. Member (J) as regards confirming the forfeiture of the security amount to be upheld. Regulation 21(1) CHALR 1984 reads as follows :
21. Suspension or revocation of licence.- (1) The (Commissioner) may, subject to the provisions of Regulation 23, suspend or revoke the licence of a Custom Mouse Agent so far as the jurisdiction of the (Commissioner) is concerned and also order for forfeiture of security on any of the following grounds:
(a) failure of the Custom House Agent to comply with any of the conditions of the bond executed by him under Regulation 11;
(b) failure of the Custom House Agent to comply with any of the provisions of these regulations, whether within the jurisdiction of the said (Commissioner) or anywhere else;
(c) any misconduct on his part whether within the jurisdiction of the said (Commissioner) or anywhere else which in the opinion of the (Commissioner) renders him unfit to transact any business in the Customs Station.
which would indicate that separate forfeiture in full or part of the security amount as proposed by the Ld. Member (T) in his order cannot be arrived at, due to the use of the term “…revoked and also order forfeiture of security on any of the following grounds. . . “. The use of the word ‘and also’ cannot be interpreted in this case to mean and read as or. If order of revocation as arrived by Ld. Member (T) is harsh and uncalled for, the forfeiture of the security which would go hand in hand with the order of revocation, which cannot be divorced under CHALR 1984 has also to go. This proposition would be confirmed by reading provisions of Regulations 20 of CHALR 2004, where part forfeiture has been permitted where the term reads as “…revoke the licence of a Custom House Agent and order for forfeiture of part or whole of security, or only order forfeiture of part of whole of security…” Therefore if revocation cannot be upheld on merits, on facts, as per the findings of the two members, the question of upholding only the forfeiture cannot be upheld.
10. In the above view and findings, I am inclined to agree with the order of Ld. Member (J) and would answer the reference accordingly by holding that the appeal is to be allowed in full.
11. Reference determined accordingly to be placed before the referring Bench.
Sd/-
(S.S. Sekhon)
Member (Technical)
FINAL ORDER
12. In view of the majority order, the appeal is allowed with consequential relief.
Sd/- Sd/-
(C. Satapathy) (Archana Wadhwa)
Member (Technical) Member (Judicial)
(Pronounced)