2013 (11) TMI 1429 - AT - Customs

Suspension of CHA License - Misutilization of license - Held that - Commissioner himself accepts that there is no evidence to show the involvement of the management of CHA firm and there are also no evidences for the CHA to benefit in any manner. We are unable to agree that the punishment has been given to CHA firm and therefore if the management was involved or not need not be considered. Further we also note that in para 28, the Commissioner himself observed that there are several mitigating facts and circumstances which should be taken note of, namely the suspension of CHA licence of Coimbatore jurisdiction for 6 months in 2005; suspension of CHA licence in Tuticorin jurisdiction for about 2 months; not allowing the CHA firm to operate in Pune from 16.06.2010 onwards in view of the current pending proceedings and the cooperation extended by the appellant in producing copies of fake BRCs of 4 exporters. We find that these observations are correct and we find that handed over copies of fake BRCs of 4 exporters which are necessary for the Revenue and there is no indication that these 4 fake BRCs were recovered in search operation. In such circumstance this shows good intension of the management. Imposition of punishment of suspension for a period of 6 months from 1st June against the CHA firm from operating in all parts of India except Karnataka is harsh. Moreover there was suspension of operation for varying periods outside Karnataka and there is evidence to show that events in Coimbatore were not because of the Branch Manager alone. Further management took action against the Branch Manager and co-operated with investigation by Revenue - punishment of one month suspension from operating the licence in other parts of Karnataka would meet the ends of justice. Accordingly we modify the order of the Commissioner (Appeals) and direct that suspension will run from 1st June to 30th June 2013 - Decided partly in favour of assessee.

Summary

Issues: License suspension, Alleged malpractices, Violations of regulations, Management involvement, Punishment imposition

License Suspension:
The judgment involves the suspension of a license issued to a Customs House Agent (CHA) firm due to alleged malpractices involving overvalued exports and serious malpractices by the branch manager in collusion with others. The suspension of the license was initially revoked but later a show-cause notice was issued proposing to revoke the license again. The Inquiry Officer established violations of various regulations by the CHA firm.

Alleged Malpractices:
The CHA firm was accused of misutilizing the license, engaging in overvalued exports, and serious malpractices like creating export documents for non-existent companies, forgery of Bills of Lading, and fabrication of certificates. The branch manager and staff were allegedly involved in these malpractices, resulting in a loss to the exchequer. The firm admitted to the malpractices, leading to the suspension of the license.

Violations of Regulations:
The show-cause notice highlighted violations of specific regulations by the CHA firm, which were established by the Inquiry Officer in her report. The violations included breaches of Regulations 13(a), 13(d), 13(e), and 19(8) of the Customs House Agents Licensing Regulations, 2004.

Management Involvement:
The judgment deliberated on the involvement of the management of the CHA firm in the malpractices. The Commissioner acknowledged that there was no evidence implicating the management in the malpractices. The defense argued that the malpractices were carried out by the branch manager independently, and the management did not benefit from his actions. The termination of the branch manager's employment post-incident was also highlighted.

Punishment Imposition:
The decision addressed the imposition of a six-month suspension of the license for the CHA firm from operating outside Karnataka. The defense contended that the punishment was harsh as the management was not involved, and the firm had already undergone suspension. The judgment modified the punishment, reducing the suspension period to one month from operating the license outside Karnataka, considering mitigating factors and cooperation with the investigation.

This detailed analysis of the judgment covers the issues of license suspension, alleged malpractices, violations of regulations, management involvement, and the imposition of punishment, providing a comprehensive overview of the legal proceedings and decisions made by the Appellate Tribunal CESTAT Bangalore.