East West Freight Carriers Pvt. Ltd. vs Commr. of Cus. (Export)

The argument concluded yesterday i.e. 20th March, 2014 and because of paucity of time, the matter was posted today for passing of orders. The appeal is filed u/s 129B of the Customs Act, 1962. It is directed against the order passed by the Customs, Excise and Service Tax Appellate Tribunal dated 7th May, 2012 in Appeal No. C-754/2004-Mumbai 2014 (303) ELT 454

It is the case of the appellant that, it is carrying on business as Customs House Agent. It is engaged in clearance of imported and exported goods through Customs. The appellant submits that this work is being carried out for years together.

The grievance is that, 15 bills of entry were lodged/filed on 19th August, 1999 and on 15th December, 1999 for clearance of 1137 bearings on behalf of the importers whose names have been mentioned in Paragraph 7 of the memo of appeal.

It is stated that, all the imported goods were said to be cleared against a Duplicate Advance License that was filed along with bills of entry. The license was issued in the name of M/s. Amrut Laxmi Machine Works and later on transferred by the Directorate General of Foreign Trade in the name of the importers.

The Bills of Entry were duly processed by the Customs authorities and customs formalities were completed. The goods were duly handed over to the representative of the importers.

Later on some information was received by the Department of Revenue Intelligence (for short D.R.I.), Mumbai Zonal Unit that duplicate license was obtained on misstatement and fraud. The D.R.I. launched investigation and thereupon effected seizure.

The statements of various persons were recorded including the Director of the appellant Shri S.A.K. Colombowalla. The investigation concluded and show cause notice was issued to the various firms, so also the appellant and its Director. Insofar as the appellant is concerned, the show cause notice was issued with regard to the imposition of penalty on the appellant and its Director. A reply was given to the show cause notice denying the allegations therein. The Commissioner of Customs (Export), the adjudicating authority, passed an order on 31st May, 2004 imposing penalty of Rs. 50,000/- on the appellant and also imposed penalty in the equal amount on its Director.

The appeal against such an order was dismissed by the Tribunal. That is how the present appeal.

It is submitted that there are substantial questions of law and particularly the Tribunal ignored its own order dated 20th March, 2007 based on similar facts and circumstances. Secondly, the Tribunal ignored the fact that the advance license was duly transferred in the name of the importers. That is how they were entitled to present Bills of Entry. The documents for clearance were filed and in such circumstances this was not a case fit for imposition of penalty. A penalty can be imposed only if there is some deliberate or intentional act and if there is a clear case of collusion or connivance with the importers. In the present case, the appellant who is a Customs House Agent cannot be accused of having colluded with the authorities or the importers. In these circumstances, the impugned order deserves to be set aside. The appeal therefore raised a substantial question of law and should be admitted.

Based on the above stand, we have heard the learned counsel for the appellant and Mr. A.S. Rao, learned counsel appearing on behalf of the respondent. With their assistance, we have perused the impugned orders. We have also perused the memo of appeal and the relevant annexures. We are of the opinion that the appeal does not raise any substantial question of law. The Tribunal as also the Adjudicating Authority concluded that it is the appellant who had filed the Bills of Entry in respect of the importers. The importers were transferees of the license. The Customs House Agent has to advise the client and particularly assist in complying with the provisions of the Customs Act and other import regulations/prohibitions. When there was no valid license in the name of the importers, then the Customs House Agent should have cautioned him. Further, the term of license was to expire on 21st November, 1999, yet the Bills of Entry were filed in December, 1999 claiming the benefit of duty exemption under advance licensing scheme. Thus, when no valid license existed in the name of the importers, the benefit could not have been derived and which has been derived with the assistance of the Customs House Agent. Thus the role of the Customs House Agent in this case has been dealt with extensively by both the adjudicating authority and the Tribunal. They have rendered concurrent finding of fact that the Customs House Agent in this case cannot be said to be innocent. If the importers had misused the facility by obtaining a duplicate license by misrepresentation and fraud, so also, manipulation of documents and with a view to avoid customs duty, then, it cannot be said that the Customs House Agent and its Director were totally innocent or unaware of these acts. We have no doubt in our mind that the findings of fact which have been justified completely are consistent with the legal principles. The penalty has been imposed after finding that there is a definite role played by the Customs House Agent. He could not have feigned ignorance. In such circumstances and after knowing fully well the procedure and the formalities required to be complied with, that the penalty has been imposed on the appellant and its Director. We are of the opinion that, such an order of the adjudicating authority and confirmed by the Appellate Tribunal, does not raise any substantial question of law. The appeal is, therefore, devoid of any merits. It is accordingly dismissed.