2006 (4) TMI 313 - AT - Customs

Customs House Agent s licence - Revocation of the licence - undervaluation mis-declaration and contravention of EXIM Policy - HELD THAT - In the instant case only after the violations were detected by the Customs authorities the Appellant came to know about the same. Any action against the employee by the Appellant is neither prescribed under Customs Act 1962 nor under CHALR 2004. Therefore any delay in the same cannot be held as a reason to hold that Regulation 13(n) was violated. The CHA licence was the only means of earning livelihood by the Appellant and its other employees. The livelihood of the Appellant and its other employees is in total jeopardy. They having already been subjected to severe punishment and hardship on account of the same. In view of the settled position of law in the case of Nanda International v. Commissioner of Customs 2004 (6) TMI 175 - CESTAT CHENNAI which settles the position of law that CHA licence once cancelled may be revived on considerations such as prejudice to the livelihood of the CHA and its employees hardship already suffered period for which the licence was inoperative. This revocation is required to be set aside and the licence restored on fresh security and obtaining a competent Rule 8 employee s service. Thus the appeal is to be allowed.

Summary

Issues Involved:
1. Vicarious liability of the CHA firm for the conduct of its employee.
2. Compliance with various regulations under the Custom House Agents Licensing Regulations, 2004 (CHALR, 2004).
3. Adequacy of actions taken by the CHA firm against the employee involved in violations.
4. Appropriateness of the revocation of the CHA license.

Issue-Wise Detailed Analysis:

1. Vicarious Liability of the CHA Firm for the Conduct of its Employee:
The crux of the case revolves around whether the CHA firm can be held vicariously liable for the alleged misconduct of its employee, Shri Rehman Iqbal Shaikh. The Tribunal found that the firm was not issued any Show Cause Notice for the alleged clearance of the Volkswagen car and only became aware of the incident after receiving the adjudication order on 18-7-2005. Similarly, the firm learned about the Mercedes car smuggling incident only upon the employee's arrest. The firm subsequently dismissed the employee. The Tribunal concluded that the firm cannot be held liable for the employee's acts, as these were not performed within the scope of his employment or with the firm's knowledge or connivance.

2. Compliance with Various Regulations under CHALR, 2004:
The Tribunal examined the firm's compliance with several regulations under CHALR, 2004:
- Regulation 13(d): The firm was not found liable for advising the client or reporting non-compliance, as it was not aware of the importer's fraudulent activities.
- Regulation 13(e): The firm could not be held responsible for verifying the authenticity of the value on invoices submitted to Customs.
- Regulation 13(1): The bill of entry was filed in the routine course without any suspicion, and the firm was unaware of the importer's relationship with the employee.
- Regulation 19(8): The Tribunal found that the employee's misdeeds were beyond the scope of his employment with the firm.
- Regulation 13(n): The firm took action against the employee upon learning of the violations, and any delay in reporting was not considered a violation of this regulation.
- Regulation 20(1)(c): The firm was not found to have engaged in any misconduct that would render it unfit to transact business at the Customs Station.

3. Adequacy of Actions Taken by the CHA Firm Against the Employee Involved in Violations:
The Tribunal noted that the firm dismissed the employee upon learning of his unauthorized activities and surrendered his Customs pass. The firm argued that it was unaware of the employee's misconduct until the Customs authorities detected the violations. The Tribunal found that the firm's actions were adequate and that it could not be held responsible for the employee's individual acts of criminal and quasi-criminal nature.

4. Appropriateness of the Revocation of the CHA License:
The Tribunal concluded that the revocation of the CHA license was not commensurate with the nature of the offenses, if any. The firm's livelihood and that of its other employees were in jeopardy due to the revocation. Citing the case of Nanda International v. Commissioner of Customs, Chennai, the Tribunal emphasized that the CHA license could be revived considering the prejudice to the firm's livelihood, the hardship already suffered, and the period for which the license was inoperative.

Conclusion:
The Tribunal ordered the appeal to be allowed, setting aside the revocation of the CHA license and restoring it upon fresh security and obtaining a competent Rule 8 employee's service. The Tribunal emphasized that the firm could not be held vicariously liable for the employee's misconduct and that the firm's actions were adequate and in compliance with the regulations under CHALR, 2004. The decision was pronounced in court on 4-4-2006.