2014 (12) TMI 531 - AT - Customs

Revocation of CHA License - Fraudulent exports under claim of export incentives - forfeiture of security deposit - Failure to obtain an authorization from his client for the job of clearance of import and export cargo and to ensure proper conduct of his employee in the transaction of business as Agent - Violation of Regulation 20 of CHALR, 2004 - Held that - CHA is required to obtain an authorization from his client for the job of clearance of import and export cargo and that he is also required to ensure proper conduct of his employee in the transaction of business as Agent. As against this, the CHA failed to observe the above condition and therefore, is liable for the action under Regulation 20 of CHALR, 2004 - Export documents were not signed by the exporter. The invoice list and the packing list on the basis of which shipping bills were filed, were not received by the CHA from the exporter but from a third person, namely, Shri Arup Kumar Mukherjee. As no authorization could be produced by the Appellant CHA from the exporter, we hold that the charges of violation of Regulation 13 (a) are proved. Employee has been doing the job of clearance on instructions from the exporter during the course of his employment and therefore, keeping in mind the ratio laid down in case of Worldwide Cargo (2006 (11) TMI 281 - BOMBAY HIGH COURT), we are of the view that the principles of vicarious liability of the master will certainly apply. Accordingly, the charges of violation of Regulation 19 (8) are also proved. Act provides for two types of action i.e. (i) for imposition of aiding and abetting the importer/exporter in smuggling of the goods, (ii) and the other action is contemplated under CHALR. As such merely on the ground that the ld. Commissioner set aside the penalty, is not a ground alone for quashing the order or revocation when the CHA has been found to indulge in gross misconduct and contravening the various provisions of Regulation under CHALR, 2004. Commissioner has rightly revoked the CHA licence and forfeiture of their security deposit. The said decision having been arrived at by the ld.Commissioner after taking into consideration all relevant materials and the said Regulation and after following the due process of law, it could not be said that the said decision of the revocation of licence was unreasonable or the punishment dehors the doctrine of proportionality. The Appellant has failed to point out any perversity or unreasonableness of the part of the Adjudicating Authority, and therefore, we do not find any merit in the present appeal - Decided against applicant.

Issues Involved:
1. Revocation of CHA License
2. Forfeiture of Security Deposit
3. Authorization and Compliance under CHALR, 2004
4. Supervision of Employees
5. Doctrine of Proportionality
6. Procedural Fairness and Natural Justice

Issue-wise Detailed Analysis:

1. Revocation of CHA License:
The appeal challenges the order of the Commissioner of Customs (Admn. & Airport), Kolkata, which revoked the CHA License of the appellant, M/s S. C. Ghosh & Company (India) Pvt. Ltd., and forfeited their security deposit. The revocation was based on findings of gross misconduct and failure to comply with the Customs House Agents Licensing Regulations (CHALR), 2004. The CHA was found to have facilitated fraudulent exports by mis-declaring the value and quantity of goods.

2. Forfeiture of Security Deposit:
The security deposit of the CHA was forfeited as part of the punitive measures for their involvement in the fraudulent export activities. The Commissioner found that the CHA had violated Regulation 13(a) and Regulation 19(8) of CHALR, 2004, justifying the forfeiture.

3. Authorization and Compliance under CHALR, 2004:
Regulation 13(a) requires a CHA to obtain authorization from their clients. The CHA failed to obtain proper authorization from the exporter, M/s Brij Spinners, and allowed unauthorized persons to use their stamp for monetary considerations. This was deemed a serious violation of CHALR, 2004. The appellant's argument that invoices and packing lists signed by the exporter amounted to authorization was rejected, as the documents were not directly received from the exporter but through a third party.

4. Supervision of Employees:
Regulation 19(8) mandates that CHAs supervise their employees' conduct. The CHA failed to supervise their employee, Shri Jaladhar Bose, who tampered with the ARE-1 document. The principle of vicarious liability was applied, holding the CHA responsible for the misconduct of their employee. The CHA's argument that they should not be liable for the employee's actions without their knowledge was dismissed, citing the CHA's responsibility under Regulation 19(8).

5. Doctrine of Proportionality:
The appellant argued that the punishment of revocation was disproportionate and cited various case laws where lesser penalties were imposed. However, the Tribunal found that the doctrine of proportionality was appropriately considered. The CHA's actions, including subletting their license and failing to obtain proper authorization, were serious infractions justifying the revocation. The Tribunal referred to several judgments supporting the view that severe penalties are warranted in cases of gross misconduct.

6. Procedural Fairness and Natural Justice:
The appellant contended that the suspension of their license was not in compliance with the principles of natural justice, as no post-decisional hearing was granted. The Tribunal noted that the suspension was followed by a due inquiry and adjudication process. The Tribunal referenced case laws indicating that immediate suspension pending inquiry does not necessarily require a prior hearing if immediate action is deemed necessary. The Tribunal found that the procedural requirements were met, and the revocation was justified.

Conclusion:
The Tribunal upheld the revocation of the CHA license and the forfeiture of the security deposit, concluding that the CHA had committed serious violations under CHALR, 2004. The appeal was dismissed, affirming the Commissioner's decision as reasonable and proportionate to the misconduct involved.

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