Transfreight Marine Services Private ... vs Commissioner Of Customs ...

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal No.C/40896/2014

[Arising out of Order-in-Original No.25099/2014 dt.5.5.2014 passed by the Commissioner of Customs (Seaport-Import), Chennai]

Transfreight Marine Services Private Ltd. Appellant

Versus

Commissioner of Customs (Seaport-Import), Chennai Respondent

Appearance:

Shri N. Viswanathan, Advocate For the Appellant

Ms. Indira Sisupal, AC (AR) For the Respondent

CORAM :

Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member

Date of Hearing/Decision : 8.6.2015

FINAL ORDER No.41725/2015

Per R. Periasami

The present appeal is arising out of the order dt. 5.5.2014 passed by Commissioner of Customs (Seaport-Import), Chennai against revocation of licence of Customs Broker under CBLR, 2013.

2. The brief facts of the case are that appellant is a Licenced Customs Broker having Licence No.R-292/CHA issued under the provisions of CHALR 2004 (now CBLR 2013). The Appellants licence was suspended on 10.5.2013 based on the investigation report received from DRI that appellant have violated the Regulations and one of their employees forged the document of export shipment of polished granite slabs. Subsequently, suspension was revoked on 15.5.2013 vide Order No.21019/2013. However, proceedings continued under Rule 22 of CHALR . Subsequently, SCN dt. 27.9.2003 was issued for revocation of licence and on receipt of the Inquiry Officer Report from the Inquiry Officer and following the principles of natural justice, the adjudicating authority revoked the licence only for a period upto 31.7.2014 and also forfeited the security deposit in full. The adjudicating authority also cautioned the appellant to conduct his business in future in strict compliance with obligations cast upon them under CBLR 2013. Hence the present appeal.

3. Ld. Advocate representing for the appellant reiterated the grounds of appeal and submits that the revocation order is liable to be set aside on the preliminary ground that SCN was not issued within 90 days from the date of suspension as per CHALR and also submits that no specific allegation was made for any contravention in the CHALR clause against the appellant. The authority has invoked Regulation 18 only on the ground that failure of supervision of their employee. He submits that the adjudicating authority also has clearly held that the act of employee is only for the personal gain where the appellant is not at all involved. The act of employee is beyond the appellant's control. He also submits that Customs have not initiated any proceedings against the exporter for any contravention of export of goods. In the SCN, it was stated that there is no violation in the Customs procedure and the export of goods was in order except for procedural lapse. He also submits that even though licence was suspended, the Commissioner has immediately revoked the suspension based on their representation and their past performance and credential for the last several years where they have earned more than Rs.100 crores of revenue to the Department. He relied the following case laws :-

(1) ARK Logistics (P) Ltd. Vs CCE Hyderabad 2010 (261) ELT 648 (Tri.-Bang.) (2) Shri Ganesh Shipping Agency Vs CC Bangalore 2011 (271)ELT 236 (Tri.-Bang.)

(3) Worldwide Cargo Movers Vs CC Mumbai 2006 (202) ELT 729 (Tri.-Mumbai) (4) Falcon Air Cargo Travel Pvt. Ltd. Vs UOI 2002 (140) ELT 8 (Del.)

4. On the other hand, Ld. A.R for Revenue reiterated the findings of the adjudicating authority and submits that CHA cannot be absolved from the misconduct or forgery committed by the employee. Therefore, the adjudicating authority rightly invoked CHALR regulation for revoking the licence.

5. We have carefully considered the submissions of both sides and examined the records. The issue in this case relates to revocation of CHA licence under Regulation 18 of CHALR on the alleged misconduct of an employee of CHA in forging of document of export shipment of polished granites.

6. On perusal of records, we find that the licence was suspended on 10.5.2013 and the suspension was revoked immediately on 10.5.2013 vide Order No.21019/2013 but the proceedings continued. The relevant portion of the above order is reproduced as under :-

"15. Prima facie the allegation mentioned at Para 8 that the CHA failed to supervise conduct of his employee, is found to be true. However, it is also seen that the CHA is operating in five locations in which a large number of people are employed; that the CHA is operating without any adverse notice against them for the past twenty three years; that they have helped in contribution of over Rs. 100 Crores of foreign exchange per year to the Govt. of India, through their business operations; that based on a single incident a general perception cannot be made that the CHA has no proper supervision over their staff; that immediate suspension of the CHA has affected the livelihood of more than 90 people employed under them; that aberration of a staff at a particular customs station is not sufficient to suspend the operation of the CHA across the country without issuance of any Show Cause Notice.

16. In view of the above, track record of the CHA for the past fifteen years, arguments made by the CHA during the personal hearing and the, written submissions dt. 15.05.2013 and taking into account the decision taken by the Division Bench of Hon'ble Delhi High Court in the case of M/s. Falcon Air Cargo and Travels (P) Ltd. vs Union of India, reported in 2002(140) EL.T. 8 (Del.), in which the Hon'ble Court observed that punishment has to be proportionate to the offence, suspension of the CHA in all 5 locations, where the CHA is operating, will not be commensurate with the offence, I feel that immediate suspension of the CHA, ordered under Regulation 20(2) of the CHALR, 2004 can be revoked. I place reliance on case law referred by the CHA in their written submissions mentioned at Para 13.12(iv) above, in which Hon'ble Tribunal observed that in absence of any material, whatsoever, to show either the involvement of any of the Director or even any other employee of the CHA in the fraud stated to have been committed, invoking the provisions of Regulation 21(2) of the CHALR, 1984 (now Regulation 20(2) of the CHALR, 2004) is not justified."

It is evident from the above order that the Commissioner of Customs was satisfied on the bonafide of the appellants and their performance and relied Tribunal decisions. Further, we find from the SCN dt. 27.9.2003 at para 13.4 that the limited allegation is only the act of forgery committed by employee for personal gain and at para 13.5 of SCN the department accepted that there is no violation committed under Customs Act except procedural deviation. The adjudicating authority in the impugned order revoked the licence for a limited period upto 31.7.2014.

7. From the above facts, it is evident that no proceedings initiated against the exporter or appellant under Customs Act as there is no violation but proceeded action under CHALR. This fact is confirmed by the adjudicating authority in the findings at para 22 of order and also expressed in clear terms that there is no involvement of the management i.e. Appellant in the act committed by the employee. In spite of the above findings, the adjudicating authority choose to agree with the I.O report and revoked the Licence without any basis. This being the facts of the case, there is no justification for ordering extreme penal action of revocation of licence.

8. In this regard, we find several Tribunal's decisions consistently held that the CHA cannot be held liable for the acts of employee and set aside the revocation of Licence. The important Tribunal decisions are in the case of (1) ARK Logistics (P) Ltd. Vs CC (supra) (2) Shri Ganesh Shipping Agency Vs CC (supra) (3) Worldwide Cargo Movers Vs CC (supra) and (4) Falcon Air Cargo Travel Pvt. Ltd. Vs CC (supra).

9. Further, we find that the Hon'ble High Court of Delhi in the case of Asiana Cargo Services Vs CC Delhi in their Final Order No.Cus.AA.24/2012, C.M. APPL. 19694/2012 dt. 14.3.2014 set aside the revocation of licence. The relevant paragraphs of the Hon'ble High Court order are reproduced as under :-

"12. Learned Senior Standing Counsel for the Customs has stressed that the infraction in this case is not a routine matter, but rather, illegal smuggling of narcotics by the G card users. However, given the factual finding that the CHA was not aware of the misuse of the G cards (and thus, also unaware of the contents being smuggled), no additional blame can be heaped upon the CHA on that count alone. Rather, the only proved infraction on record is of the issuance of G cards to non-employees, as opposed to the active facilitation of any infraction, or any other violation of the CHA Regulations, whether gross or otherwise. Neither have any such allegations been raised as to the past conduct of the appellant, from the time the license was granted in January, 1996. Equally, it is important to note that the appellant has  as of today  been unable to work the license for 8 years, and thus been penalized in this manner. This is not to say that the trust operating between the Customs Authorities and the CHA is to be taken lightly, or that violations of the Cl-IA Regulations should not be dealt with sternly. A penalty must be imposed. At the same time, the penalty must  as in any ordered system  be proportional to the violation. Just as the law abhors impunity for infractions, it cautions against a disproportionate penalty. Neither extreme is to be encouraged. In this case, in view of the absence of any mens rea, the violation concerns the provision of G cards to two individuals and that alone. A penalty of revocation of license for this contravention of the CHA Regulations unjustly restricts the appellant's ability to engage in the business of the CHA for his noble lifetime. As importantly, it skews the proportionality doctrine, substantially lowering the bar for revocation as a permissible penalty, especially given the dire civil consequences that follow. On the other hand, the minority Opinion of the CESTAT, delivered by the Judicial Member, correctly appreciates the balance of relevant factors, i.e. knowledge/mens rea, gravity of the infraction, the stringency of the penalty of revocation, the fact that the appellant has already been unable to work his license for a period of 6 years (now 8 years), and accordingly sets aside the order of the Commissioner dated 24.01.2005.

13. In light of the above discussion, the majority Opinion of the CESTAT is hereby set aside. The Minority Opinion of the Judicial Member, Ms. Archana Wadhwa, is restored, and the revocation of the license of the appellant is quashed. There shall be no order as to costs."

The Hon'ble High Court in the above order clearly held that any penalty should commensurate to the violation and penalty of revocation of Licence for this violation is unjust. The ratio of the High Court order is equally applicable to the present case. As already discussed in the preceding paragraphs the adjudicating authority admitted the fact that there is no involvement of the appellant in the act of employee and no violations detected on the export goods by exporter or appellant. Therefore, by respectfully following the above Hon'ble High Court decision and the Tribunal decisions we have no hesitation in holding that the impugned orders revoking the CHA licence of the appellant is unsustainable and liable to be set aside. Accordingly, we set aside the impugned order and allow the appeal. Order by Dasti.

(Operative part of the order pronounced in open court on 8.6.2015)

(P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER

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