ORDER
V.K. Ashtana, Member (T)
1. This is an appeal against the Order-in-Original passed by the Commissioner of Customs, Madras bearing No. R. 434/CHA dt. 27.11.1997. The Ld. Commissioner has in the impugned order held that as the appellant’s past has not been very encouraging therefore entrusting the sensitive work of Power of Attorney holder to sign customs documents on behalf of the Custom House Agent is not considered appropriate and therefore the appellant’s request has been rejected.
2. Briefly stated the facts of the case are that the appellant appeared for the examination held under the Custom House Agents Regulations, 1984 issued under notification No. 85-Cus, dt. 19.3.1984 as amended, under Regulation 9 thereof, and having passed the same had been working as an employee of an existing Custom House Agent viz. M/s. Jeena and Company, Chennai after obtaining a Power of Attorney approval from the proper officer of Custom House. Later, he changed his employment and joined M/s. Arista Skyship Agencies with their Head Office at Cochin who are also licensed CHA. He was employed as Director at the Madras office. Since, he had already passed the examination under Regulation 9, he applied for an approval of PoA under his new employment by Chennai Custom House. After prolonged correspondence, the Ld. Commissioner issued a notice requiring the appellant to show cause why his request should not be rejected, which was followed by the impugned order-in-original.
3. Heard the Ld. Consultant Shri S. Murugappan for the appellant. He argued that in the first place, the entire proceedings resting with the impugned OIO were without jurisdiction under law. This was because the appellant had qualified in the examination and had been working as an authorised employee in M/s. Jeena & Co., under the Custom House Regulations, 1983 and there is no provision to refuse the Power of Attorney after an employee has passed the examination. The Regulations give the authorities only the power to suspend or revoke or cancel the CHA licence, which is not the issue involved here. As there is no power available with the Customs House authorities in this regard therefore the impugned OIO is without jurisdiction and needs to be set aside.
4. Secondly, the Ld. Consultant argued that under Clause 18 of the said Regulations, it was provided that a person who is qualified in an examination held under Regulation 9 may engage himself in the work relating to the clearance of the goods through Custom House on behalf of a firm or a company licensed under Regulation 10. The only condition is that such person shall not engage himself on behalf of more than one such firm or company. It also provided that in case such an employee changes employment from one CHA to another, such a change will be communicated to the Customs Authorities. He therefore argued that the said clause places no discretion with the Customs Authorities to refuse PoA applied for, once the appellant had passed the examination under Regulation 9.
5. Thirdly, Shri Murugappan, the Ld. Consultant argued that the SCN dt. 14.5 1997 was vague and therefore the appellant had asked the customs authorities for providing detailed grounds on which the notice had been based. As per the Assistant Commissioner’s reply dt. 13.6.1997, three main grounds had been intimated, namely (a) statement of the appellant to the DRI (b) statement of Shri K. Natarajan and (c) observations of the Hon’ble Tribunal (SRB) in their order dt. 1.11.1996 in respect of this appellant. Dealing with each of these three grounds, the Ld. Consultant argued that in each case there is no proof about the appellant’s involvement as all the statements referred to by the customs authorities are exculpatory. The observations of the Hon’ble Tribunal in their order dt. 1.11.1996 is also no proof of the appellant’s involvement for the reasons that it is not supported by any evidence as also that the appellant was not a party in that proceedings and therefore it was a casual observation which cannot be held against the appellant at this stage as he had not been given an opportunity to defend himself in that regard.
6. Fourthly, he argued that the appellant was not a noticee in the proceedings against their agencies which was pending final decision. He, therefore, concluded that since no material evidence had been led to support the impugned OIO, therefore the said order be set aside and directions be given for issue of a PoA.
7. Heard the Ld. SDR Shri R. Victor Thiagaraj. He argued that the PoA was denied in the impugned OIO in view of the appellant’s questionable activities in the past as is very clearly explained in the impugned OIO. He referred to the role played by the appellant in the case of M/s. Kamakshi Agency and in particular a letter dt. 3.3.1994 addressed to the Collector of Customs, Madras which clearly shows that the appellant’s own employer has no faith in him. He stressed that under the Custom House Agent scheme, an employee thereof cannot function properly unless good faith exists. He further reiterated paras 13 & 14 of the OIO.
8. The Ld. Consultant Shri Murugappan rebutted these arguments by pointing out that the case of renewal of licence of M/s. Kamakshi Agency is pending in the Hon’ble High Court on reference from this Tribunal and is a separate issue. Therefore, it has no bearing to this subject appeal.
9. At this point, the Ld. SDR rose to point out that the observations of this Hon’ble Tribunal in their order dt. 1.11.1996 is of great relevance as it has been held that no PoA should be given in future in view of antecedents.
10. The Ld. Consultant at this point rebutted this argument by saying that the said observations have no relevance in this case. In fact appellant’s employer Shri Natarajan had a quarrel with the appellant and wanted to ruin him and therefore he wrote the letter referred to above to the Collector of Customs Madras to suspend the CHA licence.
11. I have considered the arguments from both the sides as well as the records of the case. I find that under the Custom House Agents Regulations, 1984, under Rule 3(b), an employee does not need a licence. However, Regulation 14(b), recognising the need to employ additional manpower for the purposes of pursuing the legitimate business for customs clearance purposes, provides that “a Custom House Agent shall transact business in the Customs Station either personally or through an employee duly approved by the Assistant Collector of Customs, designated by the Collector”.
12. Regulation 18 further provides that such an employee, if he has passed the examination referred to in Regulation 9 ibid, may engage himself in the work relating to clearance of goods through customs on behalf of a firm or a company licensed under Regulation 10. However, I find that it is Regulation 20 which is more specific to this issue of employing additional manpower to assist a CHA in his normal bonafide work. It reads as follows:
20. Employment of persons.(1) A licensee may, having regard to the volume of business transacted by him, employ one or more persons to assist him in his work as Custom House Agent.
(2) Appointment of a person referred to in Sub-regulation (1) shall be made only after obtaining the approval of the Assistant Collector of Customs designated by the Collector for this purpose and in the matter of granting approval, he shall take into consideration the antecedents and any other information pertaining to the character of such person.
(3) Appointment of a person referred to in Sub-regulation (1) shall be subject to the condition that he shall, within six months from the date of his appointment, pass an examination conducted by the said Assistant Collector of Customs or by a Committee of Officers of Customs to be appointed by him for the purpose, and the examination shall be such as to ascertain the adequacy of knowledge of such person regarding the provisions of the statutes subject to which goods and baggage are cleared through the Customs.
13. Applying Regulation 20 to the facts of the present case, it is clear that the appellant had been employed first by M/s. Jeena and Co. and thereafter by M/s. Kamakshi Agency and now with M/s. Arista Skyship Agencies Ltd. I also find that the appellant Shri D. Sukumaran had in fact passed the examination under Regulation 9 while in the employment of M/s. Jeena and Co., and therefore there was no need to appear for such an examination again in terms of Regulation 20(4). Therefore, the only issue to be decided is whether the designated Assistant Collector of Customs or the Collector himself had rightly refused to approve the PoA under Regulation 20 on the ground that the antecedents of the appellant were not encouraging. On a plain reading of Regulation 20(2), it is clear that the Assistant Collector of Customs designated by the Collector (in this case the issue has been decided by the Collector himself) “shall” (Emphasis Supplied) take into consideration the antecedents and any other information pertaining to the character of such person. This shows that the said Customs Officer has no discretion to disregard consideration of the antecedents as well as the character of an individual to be so employed. In fact, the Regulations make it incumbent on the customs authority to enquire into such antecedents, before granting the approval.
14. I also find that the words in Regulation 20(2) which reads as follows:
He shall take into consideration the antecedents and any other information pertaining to the character of such person.
are very wide in scope. A plain reading of these words and phrases indicates that if the customs authorities, on enquiry, find that the individual to be employed has antecedents of questionable nature and if there is any information on record in any case which throws light on the character of such individual adversely, then the said customs authority would be within the ambit of law to refuse such an approval. These words and phrases do not restrict the scope of this decision-making to a situation where the individual has already been penalised departmentally or convicted by a Court for any violation of law. On the contrary, an enquiry into his antecedents is much wider and if the result thereof brings him out in an adverse or suspicious light, then no further concrete proof is required. The only precaution that has to be taken is that such a finding on antecedents is not arbitrary or subjective. In the instant case, I find that the conduct of the appellant has been adversely noticed in the case of M/s Kamakshi Agency in connection with some serious lapses which had even resulted in the suspension of the CHA licence to that firm.
15. I also note that the Ld. SDR has pointed out that the appellant’s very own employer had, in that case, written to the Collector implicating the conduct of the present appellant and asking for suspension of his own CHA licence. I also find that the observations of this Hon’ble Tribunal in their Order No. 1776/96 dt. 1.11.1996 in para-12 refers to the statement of this appellant that the oils were exported by misdeclaring their description. This clearly puts a cloud on the antecedents of the appellant.
16. The Ld. Consultant had argued that the statement of Shri Natarajan relied upon by the department, recorded on 19.2.1994 by the DRI Zonal Unit under Section 108 of the Customs Act does not in any way show the appellant to have been involved in illegal activities. The question No. 9 and 10 thereof and the answers thereto read as follows:
Q. 9. Do you know person in charges of running the concerns by name of M/s. G.D. Enterprises and M/s. Rekha Overseas both at Madras?
Ans. I know nothing about those concerns or as to their proprietors. For little money, I signed documents of clearance at the instances of Sukumaran. Sukumaran assured me that there would not be any problem and in the event of there being any problem he would take care. This made me to believe signing and I signed the documents.
Q. 10. Do you know or aware of any customs problem relating to import/export clearances that had taken place in the name of G.D. Enterprises and Rekha Overseas?
Ans. I was told by Sukumaran that there are certain problems and that DRI is investigating the matter and he had asked me that I should appear and explain my position as CHA. As already stated, though I have signed clearance documents I know nothing about the same. Everything was looked after by Sukumaran.
Question No. 15 thereof and the answer thereto also reads as under:
Q. 15. How is that with long experience in customs clearance matters you have chosen to sign blank Bills of Entry/Shipping Bills in the name of Rekha Overseas and G.D. Enterprises as CHA on many occasions?
Ans. I have no answer. I sincerely repent for my omissions and commissions. I ought not to have done like that without knowing the Importer/Exporter and without knowing the nature of goods imported/exported. As I was interested in showing in certain volume of business and as I was preoccupied with lot of family problems I obliged persons like Mr. Sukumaran and landed myself in trouble. I request to be excused as I am innocent. I request the proceedings be adjourned to Tuesday (22.2.1994). I have given this statement in my own handwriting without any threat, inducement or coercion.
17. The tenor of these answers to the above questions clearly indicates that it was Mr. Sukumaran, present appellant, who was managing the entire activity with respect to these customs clearances; that there were problems connected with the legality of those clearances and that it was because of Mr. Sukumaran that the deponent had landed himself in trouble. I therefore find that the argument of the Ld. Consultant that the statement of Shri K. Natarajan is exculpatory is not correct. On the contrary, the statement of Shri K. Natarajan very clearly brings out the character and antecedents of the appellant in a poor light.
18. I have also perused the appellant’s statement recorded under Section 108 of the Customs Act, 1962 by the DRI at Madras on 1.9.1994 wherein the appellant has, inter alia deposed that after he left Jeena and Co. in 1993, he started the company called M/s. Arun Hi-Tech Cargo Agents (P) Ltd., Madras and since he did not have a CHA licence, he arranged the business of this unlicensed company through the licensed CHA M/s. Kamakshi Agency and others on payment of certain considerations, though Mr. Natarajan of Kamakshi Agency was not aware of the physical identity of certain persons who were involved in the import or export of the concerned goods illegally. This shows that the appellant had in fact operated a Private Limited Co., in which he engaged himself in regular activities which normally a licensed CHA alone was entitled to. This he did on the strength of convincing Shri Natarajan of M/s. Kamakshi Agency to sign all blank Bills of Entry etc., that is to say that he misused the licence of CHA M/s. Kamakshi Agency to promote his own business even though his company did not hold a CHA Licence. In other words, he was a party to the activities by M/s. Kamakshi which did not reflect the transactions in the correct light is infringement of the condition that a CHA licence is not transferable. This activity of the appellant again clearly brings out his antecedents in a poor light. It is significant to note that he has confessed about these activities in his own statement given voluntarily under Section 108 of the Customs Act, 1962.
19. In view of the discussions above, and taking into consideration the legal position that the Customs Authorities are obliged under law to enquire into the antecedents of the character of the applicant/employee, and therefore Regulation 20 itself gives the Customs authorities the power to deny such an approval in case these antecedents are found to be questionable in nature, therefore, the argument of the Ld. Consultant that the entire decision in the impugned O1O is without jurisdiction is not correct.
20. I also find that from the discussion above, it is clear that the Ld. Commissioner of Customs has not given arbitrary or subjective conclusion regarding questionable antecedents of the appellants and that he was well within his rights therefore to deny the appellant the approval regarding the PoA. I, therefore, find that there is no merit in the appeal and it is dismissed accordingly.