Harini Freight Logistics vs Commissioner Of Customs (General), ...

(Arising out of Order-in-Original No.49/2014-15 dated 07/10/2014 passed by the Commissioner of Customs (General), Mumbai )

For approval and signature:

Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

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1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : of the Order?

4. Whether Order is to be circulated to the Departmental : authorities?

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Harini Freight Logistics : Appellant

VS

Commissioner of Customs (General), Mumbai : Respondent

Appearance

Shri Anil Balani, Advocate for Appellant

Shri M.K. Mall, Assistant Commissioner (A.R) for respondent

CORAM:

Mr. Anil Choudhary, Member (Judicial) Mr. P.S. Pruthi, Member (Technical)

Date of hearing : 05/03/2015 Date of decision : /2015

ORDER NO.

Per : P.S. Pruthi

The appellant who are a Customs Broker are in appeal against the Order of Commissioner of Customs No. 49/2014-15 dt. 7.10.2014 prohibiting them from working in all Sections of the Mumbai Customs Zone-I, II & III, under the power conferred on him under Regulations 23 of Customs Broker Licensing Regulation (CBLR) 2013.

2. Shri Pravin Jha an employee of the appellant had helped one Mr. Atish, who was a private person, in taking delivery of the goods under Bill of Entry 9778610 dt. 5.4.2013 after the Out of Charge order was given by the Customs. Shri Atish had provided Mr. Pravin Jha documents such as Duplicate/Triplicate copies of the Bill of Entry, Gate pass, Delivery Order, Airway Bill etc. for taking delivery of the goods. Mr. Pravin Jha had allowed Mr. Atish to fill the details of his Kardex pass (Customs pass) and sign the same on his behalf. In other words, he allowed his employee details (as employee of appellant-CHA) and signature to be misused for taking illegal delivery of the consignment of goods. The goods were imported and cleared by M/s. Team 24 Marketing Pvt. Ltd. without a proper FSSAI NOC which is required under the Food Safety and Standards Act 2006. Mr. Pravin Jha had gained access to the Customs area only because of the Customs pass given to him as an employee of the appellant Shri Rahul Habbu, Director of appellant stated that the appellant had not filed the said Bill of entry and Shri Rahul Habbu expressed ignorance about Mr. Pravin Jha taking delivery of goods imported vide above said Bill of entry. The Commissioner of Customs (Export) Air Cargo Complex, Mumbai, on the basis of preliminary investigations came to the conclusion that the appellant had violated Regulation 11(a) (not obtaining authorization from the importer to act as Customs Broker) of the CBLR 2013 and Regulation 17 (9) (exercising supervision over the conduct of his employees in the transaction of business). He therefore ordered prohibition of the appellants CB License. As the License had been issued by Commissioner of Customs, Chennai under Regulation 7(2), the Commissioner Mumbai forwarded the case for inquiry in terms of Regulations 20 & 22 to the Chennai Customs Commissionerate. Thereafter the Commissioner of Customs (G) Mumbai, after affording a post decisional hearing, passed Order dt. 7.10.2014 continuing the prohibition of the License under Regulation 23 pending the inquiry proceedings under Regulation 20. The appellant are in appeal against this order of Commissioner of Customs.

3. Heard both sides.

4. The Ld. Counsel for the appellant stated that the importer M/s. Team 24 Marketing Pvt. Ltd. is not their client and they were not at all aware of the act of their employee Mr. Pravin Jha till the order of prohibition of their License was received by them. Thereafter, they terminated the services of Mr. Pravin Jha on 30.4.2014. According to him, Mr. Pravin Jha had acted in his own capacity and not as their employee and the act of Mr. Pravin Jha is not an act to be considered within the scope of employment with them. Therefore, there is no question of violation of CBLR Regulations for which their license has been prohibited to be used in Mumbai. He pleaded that punishment by way of suspension of license is disproportionate to the violation alleged merely on misconstrued interpretation of vicarious liability. He relied on Ashiana Cargo Services Vs. Commissioner of Customs 2014 (302) ELT 161 (Del.).

5. The Ld. AR appearing for the Revenue reiterated the findings of the Commissioner. He emphasized that Mr. Pravin Jha had used the Customs pass issued to him as an employee of the appellant to take the illegal delivery of the goods in a fraudulent manner. He further stated that Mr. Pravin Jha took delivery of the goods knowing fully well that the appellant were not authorized by the importer and they had not filed the Bill of Entry relating to the imported goods.

6. We have carefully considered the submissions of both sides.

7. From the facts, it is clear that Mr. Pravin Jha, employee of the appellant misused his Customs pass issued to him as an employee of the appellant, in helping the delivery of goods which did not meet the requirements of the Food Safety and Standards Act 2006. This is a serious offence committed by Mr. Pravin Jha in allowing his employee details and signature to be misused in the gate pass issued after the Out of Charge is given by Customs for the imported goods. For such illegal act; Mr. Pravin Jha, who had abetted in taking delivery of the goods deserves punishment. The Customs Commissioner would have been justified in prohibiting Mr. Pravin Jha from working in the Customs area in future on behalf of any employer. But it is not on record whether such action has been proposed against Mr. Pravin Jha.

7. As regards the punishment meted out to the appellant by way of prohibition of License, we find that there is not even a iota of evidence to the effect that the appellant was aware of the fraudulent activities of Mr. Pravin Jha. From the record it is not established at all that the appellant either knew the importer or knew Shri Atish, who had taken the help of Mr. Pravin Jha in the clearance of the goods. In fact, the appellant terminated the employment of Shri Pravin Jha. But the appellants License has been prohibited under Regulation 23 of the CBLR. Nowhere has it been brought out that the appellant had any business relation with the importer. Thus, the act of Shri Pravin Jha in helping another importer in an illegal activity cannot be considered as an act by him under the shadow of his employment with the appellant. It is a far fetched and rather unreasonable contention that the appellant must pay the price for deeds committed by his employee in his private capacity. Only because a person misuses an Identity Card (Customs Pass in this case) issued by his employer which entitled him to access the Customs area cannot and does not lead to a belief or suspicion in every case that the employer is aware of the misdeed in the absence of evidence to the contrary.

We are therefore not convinced that the appellant is guilty of violating Regulation 11(a). Similarly, the finding that Regulation 17(9) is violated is not established because the employee has acted on his own accord and has not acted in the transaction of business of his employer. If it were held otherwise, it would lead to a rather absurd conclusion that every employer is responsible for the act of his employee irrespective of the circumstances surrounding the case. The Commissioner has come to a conclusion that Shri Pravin Jha could not have convinced Shri Atish to hand over the import documents for delivery of the goods, without confidence of the appellant. This conclusion is without any supporting evidence and therefore not justified. The Tribunal held in the case of K.S.Sawant & Co. Vs. Commissioner of Customs 2012(284) ELT 363 that procurement of business through an intermediary does not amount to sub-letting of business in every case. In the present case the facts are even more diluted and the appellant has neither filed the Bill of Entry nor allowed his License to be used. Therefore, the punishment of prohibiting him from using the license in Mumbai Zone is unwarranted.

The incident took place in April 2013 and the license was prohibited in September 2014. This delay itself is not explained satisfactorily. In any case as we have held above, prohibition under Regulation 23 is set aside.

8. Accordingly, we set aside the impugned order. The appeal is accepted and the appellant is allowed to work as Customs Broker in the Mumbai Customs Zones-I, II & III with immediate effect.

(Pronounced in court on /03/2015)

(Anil Choudhary) Member (Judicial)

(P. S. Pruthi) Member (Technical)

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