2005 (9) TMI 499 - AT - Customs

Summary

Issues Involved:
1. Cancellation of CHA Licence.
2. Confiscation of Security Amount.
3. Failure to exercise supervision over employees.
4. Non-compliance with Regulation 14(d) of CHALR 1984.
5. Submission of false documents and aiding conspiracy.
6. Timeliness and appropriateness of punitive actions.

Detailed Analysis:

1. Cancellation of CHA Licence:
The Commissioner of Customs ordered the cancellation of the CHA Licence of the appellant due to alleged failure to supervise the activities of an employee, Shri T.K. Banerjee, who was involved in fraudulent activities. The Commissioner concluded that the appellant was aware of the misuse of imported material and did not inform the revenue authorities.

2. Confiscation of Security Amount:
Along with the cancellation of the CHA Licence, the Commissioner also ordered the confiscation of a security amount of Rs. 25,000. This was based on the findings that the appellant had failed to comply with the CHA regulations and was involved in the submission of false documents.

3. Failure to Exercise Supervision Over Employees:
The first article of charge against the appellant was the failure to supervise his employee, Shri T.K. Banerjee, who was found to be the principal architect in the submission of false documents. The Commissioner relied on the inquiry officer's report to hold the appellant responsible for not exercising control over Banerjee.

4. Non-compliance with Regulation 14(d) of CHALR 1984:
The second charge was that the appellant did not inform the customs department that the goods were delivered to a local warehouse instead of being sent to Jaipur. The appellant argued that the CHA's responsibility ends upon the delivery of goods as directed by the importer and that there was no obligation to ensure the goods reached the factory in Jaipur.

5. Submission of False Documents and Aiding Conspiracy:
The third charge involved the appellant's alleged participation in the submission of false documents such as OGL declarations and end-use certificates. The Commissioner held that the appellant aided and abetted the conspiracy by not informing the customs department of the fraudulent activities.

6. Timeliness and Appropriateness of Punitive Actions:
The Tribunal noted that the imports in question occurred in 1982-83, and the action against the appellant was initiated in 1997 but was kept in abeyance until 2003. During this period, the appellant's CHA licence was renewed multiple times without any adverse remarks. The Tribunal found that revocation of the licence after such a long period was harsh and not commensurate with the alleged misconduct.

Separate Judgments:

Majority Judgment:
The majority opinion, delivered by Member (Judicial) and supported by Member (Technical) S.S. Sekhon, concluded that the charges against the appellant were not substantiated by valid evidence. They found that the mere introduction of Banerjee to Patel could not be the basis for holding the CHA responsible for the fraudulent activities. The Tribunal also noted that the CHA could not be expected to verify the end-use of the imported goods and that the responsibility of the CHA ends upon the delivery of goods as directed by the importer. Consequently, the majority set aside the Commissioner's order, allowing the appeal with consequential relief.

Dissenting Judgment:
Member (Technical) C. Satapathy, in his dissenting opinion, agreed with the findings of the lower authority regarding the charges of contravention of CHA regulations. However, he found the cancellation of the CHA licence to be harsh and suggested that only the forfeiture of the security amount of Rs. 25,000 should be upheld.

Final Order:
In view of the majority order, the appeal was allowed with consequential relief, setting aside the cancellation of the CHA licence and the confiscation of the security amount.