2011 (3) TMI 816 - HC - Customs

Penalty - Mere suspension of license, in the facts of the present case, would be wholly unjustified. Ordinarily, matters of discipline lie in the realm of the competent authority i.e., the Commissioner of Customs who is best placed to understand the importance of the CHA in a customs area, and the trust and confidence reposed on him by the customs department. - he punishment imposed on the respondent, by the Commissioner of Customs, of revocation of their license, when viewed in the light of the grave and serious acts of misconduct held established, is justified. The punishment imposed is not one which can be said to shock the conscience of courts/Tribunals. The order passed by the CESTAT on mere surmises and conjectures and their interference, with the punishment imposed by the Commissioner, on grounds of misplaced sympathy is in excess of their jurisdiction, and gives rise to a substantial question of law necessitating interference by this Court under Section 130 of the Customs Act. The order of CESTAT is, therefore, set aside, and the order of the Commissioner, revoking the license of the respondent CHA, is affirmed. The appeal is, accordingly, allowed. However, in the circumstances, without costs.

Issues Involved:
1. Legality of revocation of the Customs House Agent (CHA) license.
2. Adequacy of the penalty imposed on the CHA.
3. Role of the CHA in the fraudulent export attempt.
4. Proportionality of the punishment imposed.

Detailed Analysis:

1. Legality of Revocation of the Customs House Agent (CHA) License:
The respondent was authorized to act as a Customs House Agent (CHA) and had submitted four shipping bills for export of goods declared as "Ladies Nightwear" which were found to be misdeclared. The CHA admitted to signing blank shipping bills and selling them to M/s. Trans-Asia Shipping for a service charge. This act was in violation of Regulation 13 of the Custom House Agent Licensing Regulations, 2004 (CHALR). The Commissioner of Customs revoked the CHA license under Regulation 20 of the CHALR, citing failure to comply with the obligations and reckless behavior in the discharge of duties.

2. Adequacy of the Penalty Imposed on the CHA:
The Commissioner imposed a penalty of Rs. 25,000 on the CHA for their role in the fraudulent export attempt. The CESTAT, however, vacated the revocation of the CHA license, noting the CHA's unblemished record and the fact that the CHA had already been penalized. The High Court, however, found that the penalty imposed was insufficient given the gravity of the misconduct, which included not just negligence but also an act of corruption.

3. Role of the CHA in the Fraudulent Export Attempt:
The CHA admitted to signing and selling blank shipping bills, which were used in an attempt to export rags and cheap clothes misdeclared as "Ladies Nightwear" to fraudulently claim DEPB credit. The High Court noted that the CHA's actions facilitated the fraudulent export, and but for the vigilance of the Revenue Intelligence, the misdeclared goods would have left Indian shores, enabling the fraudulent exporter to claim DEPB credit.

4. Proportionality of the Punishment Imposed:
The High Court emphasized the principle of proportionality in disciplinary matters, noting that the punishment must be commensurate with the gravity of the misconduct. The court found that signing blank shipping bills for a consideration was an act of corruption and warranted the maximum penalty of license revocation. The High Court cited several precedents to support the view that acts of corruption necessitate severe punishment to maintain the integrity of the customs process.

Conclusion:
The High Court set aside the CESTAT's order vacating the revocation of the CHA license and affirmed the Commissioner of Customs' decision to revoke the license. The court held that the CHA's actions constituted serious misconduct and corruption, justifying the maximum penalty of license revocation. The appeal was allowed, and the order of the Commissioner was reinstated.

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