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2014 (3) TMI 562 - HC - CustomsRevocation of the CHA license - Misuse of G-Cards - Difference in opinion between minority and majority members of CESTAT bench - Held that - the only proved infraction on record is of the issuance of G cards to non-employees, as opposed to the active facilitation of any infraction, or any other violation of the CHA Regulations, whether gross or otherwise. Neither have any such allegations been raised as to the past conduct of the appellant, from the time the license was granted in January, 1996. Equally, it is important to note that the appellant has as of today been unable to work the license for 8 years, and thus been penalized in this manner. This is not to say that the trust operating between the Customs Authorities and the CHA is to be taken lightly, or that violations of the CHA Regulations should not be dealt with sternly. A penalty must be imposed. At the same time, the penalty must as in any ordered system be proportional to the violation. Just as the law abhors impunity for infractions, it cautions against a disproportionate penalty. Neither extreme is to be encouraged. In view of the absence of any mens rea, the violation concerns the provision of G cards to two individuals and that alone. A penalty of revocation of license for this contravention of the CHA Regulations unjustly restricts the appellant s ability to engage in the business of the CHA for his entire lifetime. The minority Opinion of the CESTAT, delivered by the Judicial Member, correctly appreciates the balance of relevant factors, i.e. knowledge/mens rea, gravity of the infraction, the stringency of the penalty of revocation, the fact that the appellant has already been unable to work his license for a period of 6 years (now 8 years), and accordingly sets aside the order of the Commissioner dated 24.01.2005 - The Minority Opinion of the Judicial Member, Ms. Archana Wadhwa, restored, - Decided in favour of appellant.
Issues Involved:
1. Legality of the revocation of the appellant's Custom House Agent (CHA) license. 2. Proportionality of the penalty imposed. 3. Role and responsibility of the CHA in the context of the infraction. 4. Presence or absence of mens rea (guilty mind) in the appellant's actions. Detailed Analysis: 1. Legality of the revocation of the appellant's Custom House Agent (CHA) license: The appellant challenged the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which upheld the revocation of their CHA license under the Custom House Agents Licensing Regulations, 1984. The revocation was based on the misuse of G Cards by employees of M/s. V.K. International to engage in illegal narcotics export. The Commissioner of Customs initially suspended the license, and after an inquiry, revoked it permanently, also forfeiting Rs. 50,000/-. The appellant contested this decision before the CESTAT, where there was a split opinion. The majority upheld the revocation, while the minority deemed it too harsh. 2. Proportionality of the penalty imposed: The central issue before the court was whether the penalty of revocation was proportionate to the infraction. The CHA Regulations prescribe two penalties: suspension and revocation of the license. The court emphasized that the punishment must be proportional to the violation, considering the civil consequences of revocation and the appellant's freedom under Article 19(1)(g) of the Constitution. The court referred to the principle of proportionality as elucidated in various judgments, stressing that the punishment must fit the gravity of the infraction. 3. Role and responsibility of the CHA in the context of the infraction: The CHA is obligated to supervise its employees and ensure compliance with regulations. The appellant admitted to issuing G Cards to non-employees, which violated the CHA Regulations. However, there was no finding that the appellant had knowledge of the illegal exports carried out using these G Cards. The court noted that the appellant's role was limited to issuing the G Cards, without active or passive facilitation of the illegal activities. The court compared this case with others where revocation was upheld due to active facilitation or gross violations, finding that the appellant's infraction was less severe. 4. Presence or absence of mens rea in the appellant's actions: The court found no evidence of mens rea (guilty mind) or mala fide intent on the part of the appellant. The appellant did not have knowledge of the misuse of the G Cards for illegal exports. The court highlighted that in cases where revocation was justified, there was an element of active facilitation or gross violation, which was absent in this case. The court emphasized that the absence of mens rea and the appellant's limited role in the infraction should have been given more weight in determining the penalty. Conclusion: The court concluded that the penalty of revocation was disproportionate to the infraction committed by the appellant. It noted that the appellant had already been unable to work the license for eight years, which itself was a significant penalty. The court set aside the majority opinion of the CESTAT and restored the minority opinion, which had found the revocation too harsh. The revocation of the appellant's license was quashed, and the appellant was allowed to resume their business as a CHA. There was no order as to costs.
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