M/s. Buhariwala Logistics vs C.C. (I & G), New Delhi

Appeals have been filed against the respective Orders- in-Original passed by C.C. (l&G), New Delhi in terms of which penalty of Rs.2 lakhs was

imposed on the appellant vide the respective orders-in-original.

The facts of the case are that ORI booked a case of import of high end luxury cars from foreign suppliers by mis-declaring them as new, although

they were old and registered in the country of export prior to their import into India and thus were second hand cars. It was also found that the cars

were under invoiced. These cars were being imported by one Shri Sumit Walia. In this case, the appellant was the CHA on whom penalty has been

imposed on the ground of facilitating the said illegal imports in violation of the provisions of the Customs House Agents Licensing Regulation, 2004.

The appellant has contended that (i) it was not concerned with the activities of Shri Sumit Walia and his associates and the fraudulent activities

attributed to it were undertaken by Shri G.S. Prince (who was its employee and G card holder) in his personal capacity and without its knowledge. (ii)

In another case involving identical/similar facts, the appeal has been allowed vide CEST AT Final Order Nos.55023-55024, dated 17.12.2014

essentially on the ground that the appellant was unaware of the activities of its G card-holder Mr. G.S. Prince, who was acting in his personal capacity

for his personal benefit. (iii) The appellant's statement was never recorded. (iv) There is no evidence that the appellant was aware of the activities of

Mr. G.S. Prince.

Ld. Departmental Representative, on the other hand, stated that (i) Mr. G.S. Prince was a 'G' card-holder of the appellant and therefore, the

appellant cannot escape its responsibility regarding the action of Mr. G.S. Prince. (ii) It has been held by the High Court of Delhi in the case ofJ asjeet

Singh Marwaha Vs. Union of India [2009 (239) ELT 407 (Del.) ]that in the circumstances penalty on the CHA can be imposed and that similar view

has been held by Karnataka High Court in the case of Clear Fast Services Pvt. Ltd. Vs. JCC, Bangalore [2011 (272) ELT 58 (Kar.)].

We have considered the contentions of both sides. In this regard, we find that Mr. G.S. Prince admitted in his statement that he acted in his

personal capacity and the appellant. CHA was not aware his activities in this regard. It is also seen that the appellant's statement was never recorded

and there is no evidence to suggest that the appellant was aware of the activities of Mr. G.S. Prince. In this regard, we find that in respect of Appeal

Nos. C/58871 & 60232/2013-Cus(DB), the CESTAT allowed the appellant's appeal vide Final Order No.55023-55024 dated 17.12.2014 and set aside

the penalties imposed upon it on similar grounds and on the basis of similar evidence. GEST AT in that order came to a finding that there was no

evidence to prove the involvement of the appellant, that its employee had suo motu acted for his personal greed and beyond the scope of duty and

therefore the employer (i.e. the appellant) cannot be penalised. Para 12 of the said order is reproduced below:-

We find that in the case of Appellant No.1, no statement of the appellant was recorded. Moreover, during the course of hearing, the

appellant has submitted that Shri G. S. Prince is a G card holder and has acted in his own capacity to get the monetary benefits from the

business dealings with Shri Sumit Wa/ia and the appellant was not having any knowledge of such importation. We further find that in

subsequent proceedings on the same investigation in other imports of car by the same persons on the request of the appellant, Shri G.S.

Prince was made the party to the Show Cause Notice and tn those cases, the adjudicating authority has observed as under:-

(F) Coming on the question of penalty on noticee No. (vi) M/s. Buhariwala Logistics I observe that in the show cause notice MN/s.

Buhariwala Logistics have been charged through their G-Card Holder G. S. Prince that by virtue of their action of facilitating the

fraudulent imports in violations of the provisions of CHALR, 2004 they have made themselves liable for Penalty under Section 112 and

Section 117 of the Customs Act, 1962 as applicable.

I find that in this case the show cause notice dated 24-04-2012 was earlier issued to M/s. Buhariwala Logistics through their G-Card

Holder G.S. Prince. Subsequently through Addendum I Corrigendum to the Show Cause Notice dated 08-10-2013 Shri G.S. Prince, G-card

holder of the CHA, M/s. Buhariwala Logistics was specifically put to notice as to why penalty should not be imposed on him for various acts

of omission and commission for facilitating Sh. Sumit Walia in fraudulent import of Aston Martin Rapide car in the name of Commercial

Attache of the Embassy of Vietnam and mis-declaration/ suppression of proper value of the said car.

I have gone through the written & oral submissions of M/s. Buhariwala Logistics that they were not involved in the said violation since,

actually it was Shri G. S. Prince who facilitated and handled the clearance of the imported vehicle without the knowledge of the CHA M/s.

Buhariwala Logistics. Even during the investigation stage, none of the persons involved had made any inculpatory statement regarding the

role of M/s. Buhariwala Logistics. However, since Sh. G. S. Prince was acting on behalf of M/s. Buhariwala Logistics. Therefore, it appears

that M/s. Buhariwala Logistics failed to perform their duty obligations under the CHALR, 2004 for which proceedings can be initiated

under the said Rules. As far as violations under the Customs Act, 1962 are concerned, I do not find any role of M/s. Buhariwala Logistics in

the present matter. In view of this fact, I refrain from imposing any penalty on M/s. Buhariwala Logistics in the present case.

Thereafter the penalty on the appellant has been dropped but the penalty on Shri G. S. Prince was imposed. Further we find that in the case of CC

Vs. Vaz Forwarding Ltd. (supra), wherein the penalty was dropped on the CHA in absence of evidence of the knowledge of the CHA. Further, in the

case of S. Y Ranade (supra), it was held that there is no evidence to prove the involvement of the CHA and an employee has suo moto acted for his

personal greed and beyond the scope of his duty, therefore the employer, i.e., CHA cannot be penalised. In this case also, it is not in the knowledge of

the appellant that Shri G. S. Prince is involved in illegal importer and Shri G. S. Prince acted in his personal capacity for monetary gains. We also find

that in subsequent proceedings Shri G. S. Prince no penalty has been imposed on the appellant. Therefore, we hold that no penalty is imposable on the

appellant consequently, we set aside the penalty imposed on the appellant.

As regards the judgement of Karnataka High Court cited by Id. Departmental Representative in the case of Clear Fast Services Pvt. Ltd. Vs. JGC,

Bangalore (supra), we find that in that case the High Court merely held that there was no substantial question of law which arose for its examination.

Thus, the judgement would not adversely hit the CESTAT Final Order cited above. As regards the judgement of Delhi High Court in the case of

Jasjeet Singh Marwaha Vs. Union of India (supra), we find that in para 6.2, the High Court observed as under:-

6.2 Furthermore, if the owner or importer of goods acts through an agent, then, under Section 147, the owner or the importer shall be

deemed to have not only knowledge but also presumed to have given his consent to any such thing done by an agent unless the contrary is

proved for the purposes of proceeding under the Act, thus making the owner or importer being liable for any infraction of law the agent

who is authorized, impliedly or expressly by the owner of exporter shall also be liable. Under the proviso to sub-section (3) of Section 147

as noticed hereinabove, in so far as, it is a case of duty not levied or short-levied or erroneously refunded then except where the such an

eventuality had occurred on account of any wilful act, negligence or default of the agent it is provided that the duty shall not be recovered

from the agents unless the concerned authority as indicated under the provision comes to the conclusion that the duty cannot be recovered

from the owner or the importer.

As may be observed, the judgement stated that where the agent was authorised expressely or impliedly by the owner, the owner shall also be liable for

the actions of agent. In the present case, no evidence has come on record that the appellant authorised Mr. G.S. Prince expressly or impliedly.

In view of the foregoing and following the precedent in the appellant's own case vide GEST AT Final Order dated 17.12.2014, we set aside the

penalties imposed on the appellant and allow the appeals.