2016 (8) TMI 1324 - AT - Customs

Forfeiture of security deposit of CHA - Regulation 13(o) of the CHALR, 2004 - Held that - Regulation 13(o) which require the CHA to know his client and to verify the correctness of the exporter so as to fulfil the condition introduced in the said Regulation with effect from 8-4-2010. As such, the forfeiture of security amount for the contravention of regulation which was not even on the statute book during the relevant period cannot be appreciated and upheld - forfeiture of security amount not forfeited - appeal allowed.

Summary

Issues:
Challenge to forfeiture of security deposit by Commissioner of Customs for alleged violation of regulations by a Customs House Agent (CHA).

Analysis:
The appeal in this case challenges the decision of the Commissioner of Customs to forfeit a security deposit of ?75,000 by a CHA, despite the revocation proposal for the CHA license being dropped. The appellant had filed a shipping bill declaring goods as machinery parts, but discrepancies were found during examination as the consignment contained red sanders wood. The proceedings were initiated against the CHA for violating specific regulations. The inquiry officer appointed concluded that the CHA did not contravene certain provisions of the Customs House Agents Licensing Regulations, 2004. The Commissioner accepted this report, dropped the revocation proceedings, but still forfeited the security deposit.

Upon review, the Commissioner observed that while the CHA did not contravene certain regulations, there was a lack of due diligence in verifying the exporter's credibility independently. The Commissioner also noted that a specific regulation introduced after the filing of the shipping bill could not justify the lack of diligence. However, the inquiry officer had also exonerated the CHA, highlighting that the regulation requiring the CHA to verify the exporter's correctness was introduced after the relevant period. The appellate tribunal found that forfeiting the security amount for a regulation not in force during the relevant period was unjustified and set aside the impugned order, allowing the appeal in this regard.

In conclusion, the appellate tribunal overturned the decision to forfeit the security deposit, emphasizing that penalizing the CHA for a regulation that was not in effect during the relevant period was unwarranted. The tribunal highlighted the importance of due diligence but clarified that the lack of a specific regulation at the time of the incident could not be a basis for forfeiture.