Commr. of Cus. (General) vs Shiv Om Shipping Agency

S.C. Dharmadhikari, J.—In the light of our order dated 25th June 2014, an affidavit-cum-undertaking has been filed by the respondent and that is affirmed by Kantilal Laxmidas Boda, partner of the respondent. The appeal challenges the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai in Stay Application No. S/762/2012/CSTB/C-I in Appeal No. A/409/2012/CSTB/C-I, dated 19th June 2012 (2012 (284) E.L.T. 703 (Tri. - Mum.)). By the impugned order, the Tribunal has at the stage of hearing of the interim application set aside the order passed by the Commissioner and particularly revocation of the Customs House Agent Licence No. 11/772.

Since the Stay Application as also the appeal were before the Tribunal, we proceeded on the basis that in the facts and circumstances in the present case the Tribunal was empowered to dispose of the appeal finally. Both the learned counsel consented to this course.

Mr. Jetly, learned counsel appearing in support of this appeal, submits that the appeal raises substantial questions of law and which have been formulated in the Memo of Appeal by the Revenue. They are as under:-

"(A) Whether the findings of the CESTAT holding that the charges of violation of Regulations 13(n) read with 19(8) of the Customs House Agents Licensing Regulations, 2004 are not proved was based on no evidence or partly relevant or partly irrelevant evidence and is otherwise perverse and arbitrary?

(B) Whether the CESTAT is right in law in holding that when the Inquiry Officer has held the charges as not proved, the Commissioner cannot take a contrary view?"

Mr. Jetly submits that this is a serious case of a Customs House Agent violating the regulations under which a licence to operate as Customs House Agent is issued. The Customs House Agent in this case is a partnership firm. The employee of this partnership firm - Mehul Kantilal Boda was stated to be appearing for the Regulation 8 Examination. That was to be held on 31st March, 2010. The letter was received by the Office of the Commissioner of Customs (General) that the said Mehul K. Boda has produced a bogus S.S.C. Examination Passing Certificate and Graduation Certificate. This complaint was forwarded to the Central Intelligence Unit for thorough investigation. The report came to be submitted by this Unit which indicates that the respondent-Customs House Agent before us has deliberately made false statement under Section 108 of the Customs Act and failed to discharge their obligation under Regulation 13(n) r/w Regulation 19(8) of the Customs House Agents Licensing Regulations, 2004. In terms of that communication/report, the licence of the respondent was placed under suspension from 21st October, 2010. Thereafter, inquiry was initiated. There were two charges framed and one pertains to the violation of Regulation 19(8), i.e. alleging that the Customs House Agent failed to exercise necessary supervision and ensure proper conduct of any of its employees in the transaction of business as agent. The second charge was that the Customs House Agent failed to discharge his duties with the utmost speed and efficiency and without any delay. The Enquiry Officer submitted his report on 23rd June, 2011 and concluded that the charges were not established and proved. The Commissioner discarded that these findings of the Enquiry Officer and revoked the licence. Against the order passed by the Commissioner styled as Order-in-Original dated 19th October, 2011, the appeal was preferred to the Tribunal. The Tribunal has set aside revocation of the licence. That is how the subject appeal.

This appeal was heard extensively by us earlier and today. The learned counsel appearing for the respondent submitted that the Customs House Agent Licence issued to the respondent was suspended for about 20 months. Thereafter, the Commissioner''s order came to be set aside by the Tribunal but that is only in June 2012. The learned counsel submitted that for the lapse on the part of the son Mehul, the father should not be punished with such consequences as would deprive him of only source of livelihood. The son is no longer associated with the business of the respondent. The son has separated from the father and is self-employed inasmuch carrying on independent activity of freight booking and forwarding agent. In such circumstances, it is prayed that without examining any wider controversy, the appeal can be disposed of and on the undertaking given by the respondent - original appellant before us.

It is at this juncture we orally directed Mr. Jetly to take instructions. Mr. Jetly submits that since larger questions are involved and the issue may crop up in several matters, the Court may decide the appeal on merits.

Mr. Jetly reiterates the substantial questions of law and which have been formulated by the Revenue in this Appeal.

What we have noted from reading of the detailed order passed by the Tribunal is that the Tribunal relied upon the earlier view taken by this Court that the Commissioner has no power to take a contrary view. The Commissioner could not have disagreed with the findings of the Enquiry Officer, however, that earlier view of this Court has now been disapproved by a Larger Bench and Mr. Jetly has placed reliance upon the said decision, copy of which is at Annexure ''K'' of the paper-book.

We have heard Mr. Jetly and Mr. Hakani at some length. What we have found is that the Tribunal has relied upon a view taken by this Court earlier and which has now been expressly overruled. Therefore, it was open for the Commissioner to have disagreed with the Enquiry Officer. All that he has to comply with are the principles of natural justice and before taking any view, he should have heard the Customs House Agent. He should have given him an opportunity to substantiate and prove his defence. It is not therefore the correct proposition of law that the Commissioner was not empowered to disagree with the Enquiry Officer. Ordinarily therefore the Tribunal''s order would be required to be set aside and the matter relegated to the Commissioner from the stage at which he received the enquiry report. The Commissioner, having disagreed with the findings and conclusions in the enquiry report, should have been permitted to issue show cause notice calling upon the respondent to show cause as to why Enquiry Officer''s report should not be rejected and the charges held not to be proved. The Commissioner could have then also called upon the respondent to furnish his explanation on the proposed punishment. While therefore holding that the Tribunal''s order is not in accordance with law laid down in the Larger Bench decision of this Court but finding that the incident is very old, no useful purpose will be served by permitting the Commissioner to reopen the enquiry and proceed from the stage noted above. Having found that the only lapse was forwarding a certificate in relation to graduation of the son of the partner of the respondent, we are of the opinion that the chapter be closed, particularly when the licence was suspended for about 20 months. The father of Mehul Boda had not assisted the son in proving and submitting an alleged bogus Certificate. The allegations are against the son, who was an employee of the respondent. The son having been disassociated completely now from the business of the respondent firm, so also the partner of the respondent giving an undertaking to this Court which is accepted in the facts and circumstances peculiar to this case, while allowing the appeal, quashing and setting aside the order of the Tribunal instead of restoring the matter back to the Commissioner, we direct as above. We therefore direct that there shall be no penalty save and except suspending of the licence which was already so suspended for 20 months, but now stands restored in the light of the order of the Tribunal. In addition, we direct that the security deposit which was furnished earlier will stand forfeited. The respondent shall furnish fresh security deposit in terms of the applicable Regulations. It shall be furnished within four weeks from the date of receipt of this order. The security deposit is forfeited does not mean that the respondent''s licence is not in force and on the strength of the licence it can carry on all operations at the subject port or station. In June, 2012 the licence has been restored. The respondent has been carrying on the activities as Customs House Agent in terms of the Regulations. There is no violation nor any noncompliance with the regulations after the licence was restored as above. Therefore, in the facts peculiar to this case and without in any manner treating this order as a precedent in all such cases, we direct that the proceedings be dropped. The licence having been restored to the respondent, no further directions are necessary. We once again clarify that this course is adopted by us only for the purpose of disposal of this appeal and in the facts and circumstances of this case. This order shall not be treated as precedent in any other case. Appeal disposed of in the above terms. No costs.