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2010 (10) TMI 212 - HC - CustomsCHA licence - merely because the CHA was not joined as a co-noticee cannot be a ground to hold that the enquiry proceeding initiated against the CHA were vitiated - Tribunal has committed an error on this count in recording finding against the Revenue Once the goods are examined and allowed to be cleared the CHA could not have prohibited clearance of the goods. As a fact Tribunal found that the CHA could not be blamed and that it was not at fault. This view of the Tribunal cannot be faulted. It is true that the CHA should not have acted without authorisation on behalf of its client. At the same time it was also duty of the Customs Officer to check the authorisation in favour of the CHA before allowing him to act as CHA for the importer. Thus there is a contributory default on the part of the both. Under these circumstances the CHA alone cannot be blamed and punished. The punishment of cancellation of licence is disproportionate to the act of omission committed by the CHA. In the circumstances the action taken against the CHA cancelling his license is set aside maintaining the order to the extent it forfeits the security deposit in the sum of Rs. 25, 000/-.
Issues:
1. Whether non-joining of the respondent as a co-noticee in the show cause notice under the Customs Act, 1962 vitiates disciplinary proceedings initiated under CHALR, 1984. 2. Whether the action taken against the CHA cancelling his license is justified. Analysis: Issue 1: The appeal challenged an order passed by the Customs, Excise & Service Tax Appellate Tribunal, Mumbai, regarding the non-joining of the respondent as a co-noticee in a show cause notice under the Customs Act, 1962. The factual background involved the importer declaring Sodium Bicarbonate, with subsequent seizure of goods due to misdeclaration. The show cause notice issued did not make any allegations against the Customs House Agent (CHA). The CHA was later served with a Show Cause Notice under CHALR 1984, leading to the cancellation of the CHA license. The Tribunal set aside the cancellation and forfeiture of security, prompting the Revenue to appeal. The Revenue contended that the CHALR 1984 proceedings are independent of the Customs Act proceedings, and the charges against the CHA were not vitiated due to the non-joining in the show cause notice. However, the respondent argued that the CHA's reputation, lack of allegations, and past conduct should prevent disciplinary action. The Court analyzed the CHALR 1984, highlighting that it provides for the suspension or revocation of the CHA license independently of the Customs Act. While joint action could be taken against the CHA and importer in certain cases, the misconduct of the CHA can be addressed under the Regulations without invoking the Act. The Court held that the non-joining of the CHA in the show cause notice did not vitiate the disciplinary action against the CHA. Additionally, the Tribunal's observation regarding the duty of Customs Officers to examine goods properly and the absence of authorization for the CHA were considered. The Court found that the CHA could not be solely blamed and that the punishment of license cancellation was disproportionate to the CHA's actions. The appeal was partly allowed, setting aside the license cancellation but maintaining the forfeiture of the security deposit. Issue 2: The second issue revolved around the justification of the action taken against the CHA cancelling his license. The Court found that while the CHA should not have acted without authorization, the Customs Officer also had a duty to verify the authorization before allowing the CHA to act for the importer. The Court concluded that there was contributory fault on both sides, and the punishment of license cancellation was deemed disproportionate. As a result, the action cancelling the CHA's license was set aside, with the forfeiture of the security deposit being maintained. The appeal was partly allowed, with no order as to costs. In conclusion, the judgment addressed the issues of non-joining of the CHA in the show cause notice and the justification of the action taken against the CHA. The Court upheld the independence of CHALR 1984 proceedings, found the punishment disproportionate, and set aside the license cancellation while maintaining the security deposit forfeiture.
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