Principal Commissioner of Cus. vs Interport Impex P. Ltd.

Heard both sides. Perused the order of the Tribunal impugned in this Appeal by the Revenue. Mr. Jetly, appearing for the Revenue in support of this Appeal would submit that the same raises substantial questions of law. Mr. Jetly would submit that law confers a discretion in the Tribunal to set aside, modify or confirm the order passed by the adjudicating authority. In other words, the power or jurisdiction to confirm, modify or annul the decision appealed against would include and take within its import a power to modify the quantum of penalty/punishment imposed on the Customs House Agent (CHA).

However, that discretion has to be exercised judiciously and consistent with the facts and circumstances of each case. It is commensurate with the guilt of CHA and proven misconduct that the discretion vested in the Tribunal must be exercised.

Mr. Jetly places strong reliance upon a judgment of the Hon''ble Supreme Court of India in the case of Commissioner of Customs (Appellant) v. M/s. K. M. Ganatra and Others (Respondent) in Civil Appeal No. 2940 of 2008 decided on January 14, 2016 [2016 (332) E.L.T. 15 (S.C.)], Mr. Jetly would submit that in the case of serious misconduct as is involved in the present case, including non-verification of the antecedents of the exporters resulting in revenue loss that the order of the Tribunal should be interfered with. It is perverse and vitiated by an error of law apparent on the face of the record.

Upon perusal of the entire file including the annexures to the memo of appeal we are unable to agree. The Tribunal has found that the Respondent Customs House Agent was proceeded against for violation of the Customs Brokers Licensing Regulations, 2013. The Respondent was granted the licence to operate as a CHA under the predecessor enactment. Some information was received from the office of the Commissioner of Customs (Export) at Nava Sheva and particularly the Intelligence Unit that the authorised signatory of the Respondent firm met an impostor along with one of the acquaintance namely Anand Hiranand Kursija. The CHA did not verify the true identity of these persons claiming to be representative of a proprietary firm and agreed to handle the export consignment. The goods which were sought to be brought in were smuggled. The authorizations and other documents were found to be forged. Thus, this was a serious lapse on the part of the importer and it was assisted in that act by the Respondent, is the charge.

That is how, the investigation and enquiry was commenced and the enquiry officer after examining all the materials in support of the charges, charge-wise came to the conclusion that it is not possible to hold the Respondent guilty of violation of the regulations. His report dated 6th January, 2014 was perused by the disciplinary authority. The disciplinary authority disagreed with these conclusions and directed that there should be a penalty imposed for these violations.

Accordingly, he imposed the punishments and which are contained in his order to that effect.

On communication of such an order, the Respondent availed of the appellate remedy. The Tribunal perused the entire record. It came to the conclusion that though on merits the order of the disciplinary authority can be upheld, still insofar as the quantum of punishment goes instead of permanently removing the CHA from the register his licence would stand revoked up to 31st December, 2015. He can operate as a CHA thereafter.

Though, Mr. Jetly would submit that this is a complete arbitrary exercise on the part of the Tribunal and it should not have interfered with that part of the order of the disciplinary authority, what we find is that this case is some-what distinct from K.M. Ganatra (supra). There, the Tribunal on the basis of all the materials placed before it came to the conclusion that the exporters were not bona fide. It found that the licence was misused to such an extent by the CHA that it was established that he was involved in a fraudulent activity affecting the Revenue. The licence was misused. It was also found that it was not the first instance in which K.M. Ganatra (supra) misused the CHA licence. It is in these circumstances that the discretion exercised by the Tribunal was interfered with.

In the present case, the Tribunal found that the majority of the charges levelled and held proved pertain to the discharge of responsibilities as a CHA. There was violation of the regulations to the extent that the CHA did not fulfil his responsibility of verifying the IEC and suitably advising him of his obligation to comply with the Customs Act. Then, he was held guilty of failing to exercise due diligence and ascertaining the correctness of the information which is required to be imparted to the client particularly about the clearance of Cargo. The CHA did not discharge his duty with utmost speed and efficiency and finally he did not comply with the obligation to verify antecedents of the exporters.

While it is true that the person approached the CHA and identified himself as representative of the exporter, the CHA in the present case did not bother to verify the information provided and based on that testing the antecedents of the exporters.

However, in substantive adjudication proceedings against the exporter, the Tribunal found that the present Respondent/Appellant before it cannot be penalized. The penalty imposed in adjudication proceedings was set aside. That was with certain observations. Secondly, this was a case where the Enquiry Officer had exonerated the Respondent from all charges. The disciplinary authority disagreed with them. The charges are not as serious as involving oneself in fraudulent activity. Finally, it was found that the CHA licence was suspended. However, that suspension was revoked after two months. Thereafter, the enquiry ended as above. Till the Commissioner/Disciplinary Authority passed an order in March, 2014, the CHA licence was under operation. Thereafter, from March, 2014 till the Tribunal passed the impugned order and duly communicated to the parties, the licence was revoked. In the facts and circumstances of the present case this was adequate punishment, according to the Tribunal. We do not find the discretion to be exercised either arbitrarily or capriciously. The impugned order cannot be termed as perverse or vitiated by any error of law apparent on the face of the record either. In such circumstances, there are no substantial questions of law arising from the impugned order. The appeal is devoid of merits and is dismissed.

In the light of the dismissal of the Appeal, the above Notice of Motion does not survive and stands disposed of.