Swastik Shipping Agency Pvt. Ltd. vs Union of India

Mohit S. Shah, C.J.—This appeal u/s 130E of the Customs Act, 1962 ("the Act") challenges the final order dated 24 December 2007 [2008 (226) E.L.T. 605 (Tri.-Mum.)] passed by the Customs Excise and Service Tax Appellate Tribunal ("the Tribunal) and order dated 19 September 2008 [2009 (247) E.L.T. 572 (Tri.-Mum.)] passed by the Tribunal on the rectifications, application. By final order dated 24 December 2007 the Tribunal upheld the revocation of the Customs House Agents (CHA) licence of the appellant by order dated 8 October 2007 of the Commissioner of Customs (General). This revocation of CHA licence was under Regulation 22 of the Customs House Agents Licensing Regulation-2004 (CHALR).

Although numerous questions have been formulated in the Memo appeal, at the hearing the appellant presses only question-3 therein which reads as under:

Whether in the facts and circumstances of the case, if a person is detained in the Nashik Central Jail under COFEFOSA and due to which he could neither file proper reply nor appear for personal hearing granted to appellant, can it be said that Shri Niranjan Puthran was given a fair chance of representing the case for appellants since at the material time, Shri Niranjan Puthran was the only person who was conversant with the facts of the whole case and his presence was absolutely necessary at the time of inquiry of the impugned notice?

The appellant is carrying on business as a CHA. The officers of the Director General of Revenue Intelligence (DRI) effected a seizure of 4 lacs pieces of analog watch movements in two consignments imported by Mr. Umesh Shetty in the name and style of M/s. Orbit International and M/s. Drashti Overseas. The above consignments were handled by the appellant as a CHA. Both the above consignments of analog watch movements had been misdeclared as plastic parts of toys in the Bills of Entry dated 20 February 2006 for the purposes of clearance from the Customs.

Consequent to the above seizure, DRI conducted investigation and statements were recorded of various persons involved in seeking clearance of the above two consignments on 20 February 2006. The Director of the appellant, Mr. Niranjan Puthran had admitted in his statement recorded by the DRI that the consignments of analog watch movements had been misdeclared in the import documents as plastic parts of toys. He further admitted that he knew Mr. Umesh Shetty the importer of both the consignments and that he had knowledge of the misdeclaration of the imported goods in the bills of entry Moreover, the Import Export Code (IEC code) required for import was also made available by him to importer Mr. Umesh Shetty after obtaining the same from Mr. Yogesh Merchant for consideration. Further, Mr. Niranjan Puthran also admitted that 11 more consignments had been imported by him in similar manner for Mr. Umesh Shetty and the appellant was paid Rs. 1 lakh per consignment for its above services. The aforesaid fact of misdeclaration was also corroborated by statement of Mr. Umesh Shetty (the importer), Mr. Himanshu Ajmera and Mr. Ketan Popat involved in clearance of misdeclared goods. Although the above statement of Mr. Puthran was retracted by him on 22 February 2006, the retraction itself was withdrawn on 18 July 2006 and he stood by his earlier inculpatory statement to the DRI.

In view of the above statements and the result of the investigation, the Commissioner of Customs was of the prima Jack view that the appellant had violated its obligation under the CHALR. Therefore, on 10 October 2006 a notice was issued to the appellant informing it of the appointment of an Enquiry Officer to hold an enquiry against the appellant under Regulation 22 of the CHALR which provides the procedure for suspension and/or revoking of a CHA licence. Along with the notice appointing the Enquiry Officer, three Articles of Charges for violation of Regulations 13(d), 13(e) and 20(c) of the CHALR was issued to the appellant. In support of the above charges, the appellant was informed of the grounds of imputation. Besides the list of documents and list of witnesses relied upon by the Customs Department was also forwarded to the appellant. It is relevant to note that amongst the list of witnesses relied upon in the notice was also Mr. Niranjan Puthran, a Director of the appellant.

The appellant filed its reply before the enquiry officer and was represented by an Advocate in the enquiry proceeding under Regulation 22 of the CHALR. During the course of the enquiry, the appellant sought cross-examination of all the witnesses relied upon in the notice dated 10 October 2006 save and except the cross-examination of Mr. Niranjan Puthran. Thus the statement of Mr. Niranjan Puthran was not challenged by the appellant.

On 18 June 2007 the Enquiry Officer appointed by notice dated 10 October 2006 submitted his enquiry report with regard to the appellant u/s 22(5) of the CHALR to the Commissioner of Customs. The above enquiry report dated 18 June 2007 after considering the evidence rendered a finding that all the three articles of charges as framed against the appellant stood proved. A copy of the enquiry report dated 18 June 2007 was furnished to the appellant. By its letter dated 27 August 2007 the appellant responded to the notice dated 6 July 2007 issued by the Commissioner of Customs and represented that Enquiry Officer''s report is not just, proper and legal. Therefore, it was prayed that it be declared that the charges against the appellant are not proved. Thereafter, on 5 October 2007, the appellant attended the personal hearing granted by the Commissioner of Customs and filed its written submission seeking that the Enquiry Officer''s report dated 18 June 2007 be not accepted.

However, on 8 October 2007, the Commissioner of Customs (General) by his order upheld the Enquiry Officer''s finding with regard to two out of the three articles of charge i.e. violation of Regulations 13(d) and 13(e) of CHALR. However, the charge made in respect of Regulation 20(c) of CHALR was dropped as it was merely a provision enabling the Commissioner to take disciplinary action against the charged CHA.

Being aggrieved the appellant preferred an appeal to the Tribunal. The Tribunal by its order dated 24 December 2007 dismissed the appellant''s appeal. In its order dated 24 December 2007 the Tribunal inter alia held that there was a violation of Regulation 13(d) of the CHALR as it was the obligation of the appellant as a CHA to bring to the notice of the Customs Department any noncompliance with the provisions of the Act by importer and also advise him to comply with the provisions of the Act. In this case, on the basis of the statement made by Mr. Niranjan Puthran the Director of the appellant and corroborated by other persons such as the importer Mr. Umesh Shetty, the IEC code holder Mr. Yogesh Merchant as well as Mr. Himanshu Ajmera and Mr. Ketan Popat all led to the conclusion that appellant had violated Regulation 13(d) of CHALR by knowingly assisting importer Mr. Umesh Shetty to import analog watch movements by declaring the same as plastic parts of toys. So far as Regulation 13(e) of CHALR was concerned, the order dated 24 December 2007 of the Tribunal inter alia held that in terms of the above regulation it was the responsibility of the CHA to exercise due diligence in imparting correct information to its client in relation to the import of cargo. In this particular case, it was held that appellant had not imparted correct information to its clients thus enabling the import of analog watch movements as plastic parts of toys. The Tribunal in its order dated 24 December 2007 also relied upon the decision of this Court dated 8 August 2007 in Criminal Writ Petition No. 2096 of 2006 filed by the wife of Mr. Niranjan Puthran challenging the detention of Mr. Niranjan Puthran under COFEPOSA. This Court in its order dated 8 August 2007 had held that though Mr. Niranjan Puthran may not be classified as a smuggler, yet he was involved in abetting smuggling of goods i.e. analog watch movements. Thus the Tribunal by its final order dated 24 December 2007 upheld the revocation of the appellant''s CHA licence passed by order dated 8 October 2007 of Commissioner of Customs (General).

However, almost 6 months after the final order dated 24 December 2007 of the Tribunal, the appellant moved an application on 2 June 2008 for rectification of order dated 24 December 2007. The basis of the rectification application was that the final order dated 24 December 2007 inter alia did not deal with the appellant''s case that its Director Mr. Niranjan Puthran was incarcerated during the time of enquiry proceedings against the appellant under the Act, resulting in injustice to the appellant on account of breach of principles of natural justice. The Tribunal by order dated 19 September 2008 dismissed the rectification application on the ground that the issues raised in the rectification application were not raised by the appellant during the proceeding before it, leading to the final order dated 24 December 2007.

The grievance of the appellant to the final order dated 27 December 2007 and the order dated 19 September 2008 on rectification application is that when the Enquiry Officer conducted enquiry, Shri Puthran - Director of the appellant was undergoing COFEPOSA detention i.e. during the period 31 August 2006 to 8 August 2007. The enquiry proceeding commenced on 19 October 2006 and the Enquiry Officer''s report was rendered on 18 June 2007. Therefore, during the entire period when the enquiry officer conducted the enquiry into the appellant''s case its Director Mr. Niranjan Puthran was not able to instruct the appellant''s Advocate and/or make his submission before the Enquiry Officer. Therefore, it is submitted that there was breach of principles of natural justice as the person conversant with the facts of the case was only Mr. Niranjan Puthran though he who was one of the six Directors of the appellant. It is submitted by Mr. Anil Balani learned Advocate for the appellant that breach of natural justice has resulted in gross injustice as the right to livelihood of the appellant''s Director has been affected. Therefore, the appeal be entertained and the question raised be answered in the negative and in favour of the appellant.

As against the above, Mr. Jetly who appears for the respondents submits that the appellant was in clear breach of its obligation as provided in Regulations 13(d) and 13(e) of the CHALR. This is a finding of fact recorded by both Commissioner of Customs (General) in his order dated 8 October 2007 as well as by the Tribunal in its order dated 24 December 2007. Further he submits that breach of natural justice in view of inability of its Director Mr. Puthran was never raised prior to the filing of rectification application and the plea is now taken up before this Court in the formulated question of law is an after-thought. It was submitted that if such new issues are allowed to be raised at the stage of second appeal, there would never be an end to dispute between the parties.

We have considered the submissions. We find that the CHA licence which has been revoked belongs to the appellant. The appellant appeared before the Enquiry Officer through an advocate. At no point of time during the proceeding before the Enquiry Officer or even thereafter till the order of the Tribunal dated 24 December 2007 was passed did the appellant take up the plea that in the absence of its Director Mr. Niranjan Puthran (being in Jail) it was not possible for it to properly represent its case and the same resulted in prejudice to the appellant. It was only in the rectification application filed on 2 June 2008 that the above objection was raised by the appellant for the first time and the Tribunal in its order dated 19 September 2008 passed on rectification has clearly recorded that at no point during the hearing of the appeal by it was this issue raised. It is pertinent to note that Mr. Niranjan Puthran in his statement admits to the breaches/violations by the appellant. This statement of Mr. Niranjan Puthran was relied upon by the Customs Department in its notice dated 10 October 2006. The appellant sought cross-examination of all persons save and except Mr. Niranjan Puthran. Therefore, the statement of Mr. Niranjan Puthran which in this case is against the appellant was accepted by the appellant as the same was never challenged by the appellant. Moreover, the plea that the appellant (which has other Directors also) could not properly represent itself in the absence of its Director Mr. Niranjan Puthran should come from the appellant through its other Directors, which is not so in this case. Moreover, if this was the case, the plea would have been raised at the very beginning of the enquiry proceedings. It is therefore, clear that the issue of breach of natural justice is an after-thought particularly so in views of the fact that the appellant took up this stand only after passing of the final order dated 24 December 2007. It is not the case of the appellant that it was not given proper notice or that it could not appear during the proceeding leading to miscarriage of justice. Moreover, it must be pointed out that even before us the appellant has not indicated how the availability of Mr. Niranjan Puthran would have resulted into the charges against the appellant being dropped. In case parties are allowed to raise fresh plea after conclusion of original and first appellate proceeding, no dispute would even come to an end.

We see no reasons to entertain the proposed question of law as the present proceedings were against the appellant and not against Mr. Niranjan Puthran. In the circumstances he has no independent right to be heard before passing of any order against the appellant which is a private limited company having five more Directors. It is pertinent to note that none of the other Directors have at any time even suggested that the appellant company was prejudiced in the enquiry due to the absence of Mr. Niranjan Puthran. Further, neither has the appellant pointed out how the absence of Mr. Niranjan Puthran during the enquiry proceeding has occasioned failure of justice. In view of the above, the appeal is dismissed. No order as to costs.