ORDER
Jeet Ram Kait, Member (T)
1. This appeal is directed against Order-in-Original No. 7/2003 dated : 20.06.2003 by which the appellant Shri Arokiaraj, Proprietor of Pentafour Services, Chennai and holder of regular CHA licence has been imposed a penalty of Rs. 2.50 lakhs under Section 112(b) of the Customs Act, 1962.
2. The appellant in his appeal memorandum has submitted that in the normal course of his job requirement as a CHA he came in contact with one Shri Durai Srinivasan who offered to give clearance documents, posing himself as a businessman dealing in electronics and other consumer goods and running an institute in the name and style of M/s. Sumi supertech to import computer for education purposes. Shri durai brought also some documents for clearance of one M/s. Saravana exports, Chennai of which Sri Kasirajan was the proprietor, Five clearances – three through Chennai Airport and two though Sea were made and goods were delivered to the nominee of the Importers. No irregularities have been noticed in these consignments and the importers have not been initiated with proceedings by the department.
3. The present case relates to the re-import of alleged exported goods. At the behest of Shri Durai, Shri Arokiaraj obtained the delivery order from the Airlines Authorities and the moment he came to know that the cargo has been detained by the customs authorities and apprehended problems with this cargo, he returned all the documents to Shri durai srinivasan. For the above incident he was asked to give statements and the first statement was made by Shri Arokiaraj on 4.4.2002 and later appeared whenever he was called. In his statement dated 4.4.2002 Shri Arokiaraj has stated interalia that he had cleared five consignments for M/s. Saravana Exports, three through Chennai Air Cargo complex and two through Chennai Sea Port; that one Durai of M/s. Sumi supertech had given the import documents for these consignments; that he knew durai for the past one year; that Shri durai had told that M/s. Saravana Exports belonged to his friend and had requested him to clear the consignment; that at Air Cargo complex for M/s. Saravana Exports, he had cleared spectacle frames from Hong Kong, automotive parts from singapore and glass beads from Durai; that Shri durai used to pay him all the charges through cash; that Durai had told him that one Kasirajan was the owner of the company; that he had never seen Kasirajan or spoken to him; that the delivery of the cleared goods used to be organised by Durai, and that he had no knowledge where the cleared goods were delivered. Regarding the seized consignment he stated further that he had obtained delivery order on 13.2.2002 but when he came to know about the customs detention of the cargo by the customs authorities he returned the documents to Durai apprehending that there was some problem with the consignment and that he did not have any of copy of these documents pertaining to this consignment. In his appeal memorandum Shri Arokiaraj further submitted on 5.4.2002 that he gave all the documents relating to the clearance of five past clearances and also produced Shri Durai before the Investigating Officers of the Customs who were searching for him to apprehend and take his statements. He, therefore, submitted that he had nothing to hide and it was a normal transaction as a CHA with the representative of the importer.
4. Appearing on behalf of the appellant Shri Arokiaraj, Shri A.K. Jayaraj, Advocate and Shri M.S. Kumarasamy, Consultant submitted that there was no positive evidence against the appellant Shri Arokiaraj. He has not even filed any bill of entry as a CHA and hence in no way he has abetted the commission of the offence as alleged by the department. In this connection he invited my attention to the findings recorded by the ld. Commissioner of customs (Air Port) as contained in Order-in-Original No. 7/2003 dated 20.06.2003 appearing in internal page No. 9 of the impugned Order-in-Original wherein ld. Commissioner has recorded as under:
“With regard to the ownership, as discussed above, though the airway bill showed the consignee as M/s. Saravana Exports, no one has claimed ownership of the goods under seizure. The statements of S/Shri Arokiaraj and Durai indicate that on earlier occasions also, such consignments were imported by Shri Kasirajan of M/s. Saravana Exports, and they were being handed over by the CHA Shri Arokiaraj to Shri Durai’s employees. However Shri Kasirajan has not been located and apprehended. With regard to Shri Arokiaraj, CHA, it is difficult to believe that he undertook the job of clearance of goods for M/s. Saravana Exports, without ever meeting the owner of the company, the importer, just because Shri Durai, his friend had told him to do the Customs clearance job for them. It is also unbelievable that the CHA after clearance of the goods in the past has been handing over the goods only to Shri durai and not to the importer. As a licenced CHA, Shri Arokiaraj is required to verify the bonafide of any person approaching him for customs clearance work, particularly when he has done the job on four or five occasions earlier for the same person, without meeting him and handing over the goods to another person, etc. Therefore, it is clear that Shri Arokiaraj was aware of the nature of the goods being imported and the offence committed and he has, therefore, abetted Shri Kasirajan in the illegal act. Therefore I hold him liable to penalty under Section 112(b) of the Customs Act, 1962.”
5. Ld. Advocate and ld. Consultant submitted that the ld. Commissioner in his findings has held that with regard to Shri Arokiaraj, CHA it is difficult to believe that he undertook the job of clearance of goods for M/s. Saravana Exports, without ever meeting the owner of the company, the importer, just because Shri durai his friend had told him to do the customs clearance job for them. The ld. Commissioner further assumed that it was also unbelievable that the CHA after clearance of the goods in the past has been handing over the goods only to Shri Durai and not to the importer and as a licensed CHA, Shri Arokiaraj was required to verify the bonafide of any person approaching him for customs clearance work, particularly when he has done the job on four of five occasions earlier for the same person without meeting him and handing over the goods to another person, etc. On this ground, ld. Commissioner has held that Shri Arokiaraj, the CHA has abetted Shri Kasirajan in this illegal act and because of the above he held him as an abettor. He therefore held him liable for penalty under Section 112(b) of the customs Act, 1962. They further submitted that all the above findings of the Commissioner are based on simple assumption and presumption and that too for past clearances for which no proceedings have been initiated by the Customs Authorities. The present consignment for which the department has imposed a penalty consignment for which the department has imposed a penalty under Section 112(b) of the customs Act, 1962, he has not even filed the bill of entry and there is no positive evidence against the appellant for abetting the above crime or for his active involvement in the whole matter. They further submitted that Shri Durai, the man who came in their contact and who was produced before the Customs authorities immediately and where statement could be recorded by the Customs authorities because of active cooperative and assistance by the appellant Shri Arokiaraj, the CHA. In this connection they pressed into service the judgment of the Hon’ble apex court in the matter of Shri Ram, Appellant Vs. The State of U.P. Respondent, reported in AIR 1975 Supreme Court 175. In para 7 of the above judgment, the Apex Court had held that in order to constitute abetment, the abettor must be shown to have ‘intentionally’ aided the commission of the crime. Mere proof that the crime charged could not have been committed without the interposition of the alleged abettor is not enough compliance with the requirements of Section 107 of the Indian penal Code 1860. A person may, for example, invite another casually or for a friendly purpose and that may facilitate the murder of the invitee. But unless the invitation was extended with intent to facilitate the commission of the murder, the person inviting cannot be said to have abetted the murder. It is not enough that an act on the part of the alleged abettor happens to facilitate the commission of crime. Intentional aiding and therefore active complicity is the gist of the offence of abetment under the third paragraph of Section 107 of the IPC, 1860. They also pressed into service the judgment rendered by the Tribunal in the case of A.N. Bhat Vs. CC – 1991 (55) ELT 580 wherein it has been held that for imposition of penalty on clearing agent it is not sufficient if he acted with negligence and when clearing agent had no knowledge about the illegal acts of the exporters, he could not be imposed penalty under Section 114 of the customs Act, 1962. Ld Advocate submitted that the clearing agent has not been held to be having any positive knowledge about any illegal acts of the importer. Ld. advocate also invited my attention to the judgment rendered by the Tribunal in the case of Liladhar Pasoo Forwarders Pvt. Ltd. Vs. CC, Mumbai – 2000 (122) ELT 737 wherein it has been held that for imposing penalty for abetment, some degree of knowledge of contravention of law on the part of abettor must be shown for imposition of penalty under Section 112 of the customs Act, 1962. Ld. Advocate also invited my attention to the judgment rendered by this bench in the case of K.L. Alagu Murugappan Vs. CC, Trichy – 2003 (90) ECC 865 wherein it has been held that no penalty on the clearing agent would be imposeable for mis-declaration of export goods in cases where the clearing agent is not implicated in any manner by partner or export firm and that although the CHA acted with negligence, imposition of penalty was not justified when the clearing agent had no knowledge about the illegal activities of the exporters because of the above facts and circumstances of the case this bench had set aside the order of the Commissioner imposing penalty on the CHA under Section 114 (i) and 114 (iii) of the Customs Act, 1962. They also invited my attention to the judgment rendered in the case of P. S. Bedi & Co. Vs. CC, New Delhi – 2001 (133) ELT 86 wherein also it was held that when there is no findings against the CHA for some commissioner or omission of the CHA rendering the goods confiscable, penalty under Section 112(a) of the Customs Act, 1962 cannot be imposed. They also invited my attention to the judgment rendered by the Tribunal in the case of M/s. Syndicate Shipping Services (P) Ltd. Vs. CC (Imports) wherein it was held that introduction of a middle man and arranging meeting between importer and the middle man is the normal practice and that by itself could not lead to the conclusion that the CHA was involved and was privy to the commission of offence committed by the importer in the absence of a positive evidence to that effect. In the present case, no evidence has been brought on record to show that CHA had intentionally aided or abetted the commission of the offence by the importer. Therefore the judgment rendered by this Bench is squarely applicable to the facts of their case. He also invited my attention to the judgment rendered by this Bench in the case of Syndicate Shipping Services Pvt. Ltd. Vs. CC, Chennai – 2003 (154) ELT 756 wherein it was held that no penalty can be imposed on the CHA in the absence of positive evidence on record to show any mala fide intention on the part of the CHA, or that he was an accomplice or abettor under Section 117 of the Customs Act, 1962. They, therefore, prayed that in the absence of any conclusive evidence against the CHA that he had abetted the commission of offence by the importer penalty is required to be set aside since the penalty has been imposed purely based on assumption and presumption that he had abetted the crime. They therefore, prayed for allowing the appeal with consequential relief, as per law.
6. Appearing on behalf of the revenue Shri C. Mani, JDR submitted that the CHA has violated the Custom House Agent Licensing Regulation Act, (CHALR) 1984 inasmuch as he has not fulfilled the obligation of dealing with the importer directly as could be seen from his own statement dated 4.4.2002 and as admitted by him that he did not know the importer or the importer-company viz. M/s. Saravana Exports. Investigation also revealed that there is no company by name of M/s Saravana Exports. He further submitted that kasirajan, the supposed owner of M/s. Saravana could not be located by the customs authorities and M/s. Saravana Exports is also a fictitious firm. He further submitted that the CHA had collected the delivery order and documents for the said company from Indian Airlines, though he returned those documents after apprehending some problem with the customs authorities. He further submitted that Shri Arokiaraj, the CHA had filed bill of entry on behalf of M/s. Saravana Exports on five earlier occasions. His action of producing Durai to the Customs authorities would not absolve the CHA’s obligation under the CHALR, 1984. Further because of this negligence on the part of the CHA, a non-existent firm was allowed to carry out the import business and had the CHA followed the obligation under the CHA a 1984 norm, this fraud would not have taken place on earlier occasions. As regards the present consignment, ld. JDR submitted that the CHA had collected the delivery order from the Airlines Authorities and it was only after he came to know that the customs authorities are investigating the case he handed over the papers back to Shri Durai and did not take precaution to contact Kasirajan or to inform the customs authorities but instead handed over the papers collected from Airlines Authorities back to Shri Durai. Shri C. Mani, submitted that all the above action of the CHA led to the fraudulent import by a fictitious firm. Therefore the CHA is liable to be penalised under Section 112(b) of the Customs Act, 1962 for abetting the offence, since he has not fulfilled the obligation under the CHALR, 1984.
7. In counter, Shri A.K. Jayaraj, Counsel submitted that the whole arguments by the ld. JDR is regarding the violation of the provisions of CHALR, 1984 but that was never the charge in the show cause notice. Ld. Advocate took me to para 17 of the show cause notice wherein he showed me that there is no allegation of violation of CHALR. He further submitted that the only penal provision which has been invoked is under Section 112(b) of the Customs Act, 1962. Ld. Advocate further submitted that in the present impugned order also there is no allegation of any wrong act done earlier by the CHA and the findings is for imposing penalty under Section 112(b) of the customs Act on the ground that the CHA has not verified the bonafide of any person approaching him for customs clearance work. In this case Durai had approached the appellant for customs clearance and this Durai was produced before the customs authorities immediately which fact is also admitted in the impugned Order-in-original. The penalty has been imposed under Section 112(b) of the Customs Act on the charge of abetting Shri Kasirajan, the importer.
8. In counter, Shri C. Mani, JDR invited my attention to provisions of Rule 14(a) of the CHALR, 1984 which provides that a CHA SHALL obtain an authorisation of each company/firm/individual by whom he is for the time being employed as a CHA. Since the CHA did not get the authorisation and did not even know anything about the importer or the company for whom he was engaged, he has therefore been rightly imposed penalty under Section 112(b) of the Customs Act. Shri C. Mani, JDR also invited my attention to the judgment rendered by the Tribunal in the matter of V. Abdul Rahman Musaliya Vs. CC – 2001 (155) ELT 145 wherein it has been held that penalty can be imposed under Section 112(b) of the Customs Act, 1962 on the CHA. He therefore prayed that the order of imposition of penalty may be upheld by rejecting the appeal filed by the appellant, Shri Arokiaraj.
9. At this stage, when arguments for nearly two hours had taken place and when I was about to dictate the order in the open Court, Shri C. Mani, JDR pressed into service the Office Order No. 41/98 dated 22.12.1998 issued by the then Hon’ble President of CEGAT Shri S.K. Bhatnagar, wherein it is mentioned that all cases relating to clearing agents may be listed before Double Member Benches keeping in view the importance of these matters.
10. In counter, ld. Counsel Shri A.K. Jayaraj Submitted that all the cases of suspension or cancellation of the licenses of the CHA only have to be decided before the Division Bench and Single Member Bench have been deciding all penalty cases on the CHA imposed under Section 112(b) or under Section 114 where the amounts are less than Rs. 10.00 lakhs. This practice is followed by this Bench as well as other coordinate Benches throughout the country. He also gave a copy of the judgment which was readily available with him rendered in the case of M/s. Syndicate Shipping Services (P) Ltd. Vs. CC (Imports) were a penalty of Rs. 5.00 lakh was imposed by the Commissioner of customs (Imports) on the CHA of M/s Syndicate Shipping Services (P) Ltd. and the order of imposition of penalty was set aside and the appeal was allowed by the Single Member Bench. At this stage, ld. Advocate also pressed into service the judgment rendered by the Apex Court in the case of Reckitt & Colman of India Ltd. Vs. CCE – 1996 (88) ELT 641 (SC) wherein it has been held that the Appellate Tribunal is not competent to make out in favour of revenue a case which revenue never canvassed and which the assessee was never required to meet. He, therefore submitted that the order passed by the Commissioner of Customs imposing penalty of Rs. 2.50 lakhs deserves to be set aside by allowing the appeal.
11. I have carefully considered the rival submissions and gone through the case records including the various case laws cited. I note that towards fag end of the submission on the merits of the case for about two hours, and when I was about to dictate the order in the open Court, Shri C Mani, JDR raised the question on jurisdiction submitting that Single Member does not have jurisdiction to decide this case. He has pressed into service an Office order No. 41/98 dated 22nd December 1998 issued by the then President of the Tribunal Shri SK Bhatnagar wherein it was mentioned that cases relating to Clearing Agents or CHA may be listed before the Double Member Benches. On going through the office order, it is observed that his office order was issued internally by way of guidance of Members/Registry and copy of the same has not been marked to the Board/Trade/Chief Departmental Representative. This office order also does not specifically set out anything that matter relating to imposition of penalty on CHA has to be dealt with by Division Bench. More over, after issue of this Office order in 1998, cases involving identical issue are being decided by Single Member Bench by various co-ordinate Benches of the Tribunal through out the country including by this zone and it is only when the issue of suspension or cancellation of liencnce is involved, such matter is posted before the Division Bench and not otherwise. Before I proceed to decide the case on merits, it is, therefore, necessary to decide the question of jurisdiction raised by the JDR. Therefore, let me first decide this question as it goes to the root of the matter. Section 129C (4) (c) of the Customs Act, 1962 stipulates that where the fine imposed or penalty involved does not exceed rupees ten lakhs, Single Member is competent to decide the appeal. In the present case, the penalty imposed on the appellant is Rs. 2,50,000/- under Section 112(b) of the Customs Act, 1962. The JDR ought to have been aware of the provisions of this Section before raising such important question before me when it was already settled. This Section does not stipulate that even if the amount involved is less than rupees ten lakhs, in a case which involves CHA, it should be decided by the Division Bench. Further more, when the Stay petition in this matter came up for consideration before the Division Bench consisting of Shri SL Peeran, Member (Judicial) and me, specific direction was given in the Stay order No. 447/2003 dated 17.11.2003 that the matter be listed before Single Member Bench, in accordance with the practice being followed by the Tribunal. The stay order was dictated in the open Court in the presence of the JDR. Further, identical cases in the matter of Shri K.L.Alagu Murugappan Vs. CC Trichy vide final order No. 704/2003 dated : 25.08.2003 and also in the matter of M/s Syndicate Shipping Services (P) Ltd vs. CC (Imports) Chennai were decided by Single Member Bench vide final order No. 68/2004 dated 9.1.2004. Therefore, the Registry has correctly posted this matter before the Single Member Bench. In spite of the express provision in the Act in regard to the jurisdiction and in spite of the specific direction of the Division Bench to hear the present appeal by a single Member in accordance with the prevailing practice in the Tribunal and inspite of having decided identical matters by Single Member Bench and having remained silent till towards fag end of the argument on merits when the appeal came up for consideration, it is not understandable as to how the JDR has all of a sudden chosen to raise this question when I was about to dictate the order in the open Court. This shows apart from lethargy, total ignorance on the part of the JDR in regard to the law laid down on the subject and the practice being followed in the Tribunal more particularly when identical issues have already been decided by the Single Member Bench, on more than one occasion. The JDR ought to have been aware of the above position. He was also not in a position to show any instruction issued by the Board/CDR by which he was guided to raised such settled issue. It was therefore, unconscionable and abject on the part of the JDR to have raised this question to say the least. I, therefore, hold that Single Member has the jurisdiction to hear all cases of imposition of penalty including penalty imposed on the customs House Agent subject to the limitation laid down under Section 129C (4) (c) of the Customs Act, 1962. However cases involving suspension/cancellation of CHA licence alone are required to be heard by a Division Bench.
12. Having decided the question of jurisdiction, I now proceed to decide the case on merits based on the arguments and counter arguments advanced before me. As rightly contended by the learned Counsel/Consultant for the appellant, in this case the issue to be decided is legality or otherwise of the penalty of Rs. 2,50,000/- imposed on the appellant. There is no suspension/cancellation of the licence of the CHA. Admittedly CHA has also not filed any Bill of entry in the present case. Further, I find that the learned Commissioner has recorded a finding that “it is difficult to believe that he (CHA) undertook the job of clearance of goods for M/s Saravana Exports without ever meeting the importer….. It is also unbelievable that the CHA after clearing the goods in the past has been handing over the goods only to Shri Durai and not to the importer”. Having held so, the adjudicating authority has proceeded to hold that “It is clear that Shri Arokiaraj was aware of the nature of the offence committed and he has therefore abetted Shri Kasirajan in the illegal act. Therefore, I hold him liable to penalty under Section 112(b) of the Customs 1962.Act”. When there is no dispute that the CHA has not even filed the Bill of Entry for clearance of the goods, in my opinion, it cannot be said the CHA has abetted the commission of offence by actively involving in the matter of clearance of the goods. I am therefore of the considered opinion that the finding of the commissioner that the appellant has abetted the commission of offence committed by Kasirajan is not backed by any evidence on record and is mere presumption and hence the said finding is not sustainable. The Hon’ble supreme Court in the case of Shri Ram vs. The State of UP reported in AIR 1975 SC 175 in para 7 has held that in order to constitute abetment, the abettor must be shown to have “intentionally” aided the commission of the crime. It was further held by the Hon’ble Apex Court that mere proof that crime charged could not have been committed without the interposition of the alleged abettor is not enough compliance with the requirement of Section 107 of the Indian Penal Code. Further in the case of AN Bhat vs. CCE reported in 1991 (55) ELT 580 the Tribunal has held that Imposition of penalty is not justified when Clearing Agent had no knowledge about illegal acts of exporters. In the case of Liladhar Pasoo Forwarders Pvt Ltd. vs. CC Mumbai reported in 200 (122) ELT 737, it was held by the Tribunal that for imposing penalty for abetment, some degree of knowledge of contravention of law on the part of abettor must be shown under Section 112 of the Customs Act, 1962. Further in the case of KL Alagu Murugappan vs. CC Trichy reported in 2003 (90) ECC 685 it was held that no penalty on the clearing agent would be imposable for mis-declaration of export goods in cases where the clearing agent is not implicated in any manner by partner or export firm and although the CHA acted with negligence, imposition of penalty was not justified when the clearing agent had no knowledge about the illegal activities of the exporters. further in the case of PS Bedi & Co. Vs. CC. New Delhi reported in 2001 (133) ELT 86 (Tri-Del) decided by a Single Member Bench, it was held that when there was no evidence of any incriminating conduct against the CHA, no penalty could be imposed on the CHA. In the case of M/s Syndicate Shipping Services (P) Ltd vs. CCE reported in 2003 (154) ELT 756, it was held that no penalty is imposable on the CHA when there is no positive evidence on record to show any mala fide intention on the part of the CHA. In another appeal in the case of M/s Syndicate Shipping Service (P) Ltd. vs. CC (Imports), Chennai decided on 9.1.2004 vide final order No. 68/2004, it was held that introduction of a middle man and arranging meeting between importer and the middle man is the normal practice and that by itself could not lead to a conclusion that the CHA was involved and was privy to the commission of offence committed by the importer in the absence of any positive evidence to that effect. In the face of the finding recorded by the Commissioner as extracted under para 4 above and in the light of the law laid down by the Hon’ble supreme Court, and the various decisions of the Tribunal as noted above, I am of the considered opinion that the Revenue has failed to bring home the charge of abetement against the appellant. Accordingly, I set aside the impugned order so far as it relates to imposition of penalty on the appellant herein and allow his appeal. It is ordered accordingly.
13. The operative portion of this appeal was pronounced in the open Court on 12.4.2004.
14. The Registry is directed to send a copy of this Order to Shri Inder Raj Soni, CDR (Chief Commissioner), by name for issuing suitable direction/guidelines to the Departmental Representative of this Zone.