2015 (2) TMI 339 - AT - Customs

Revocation of CHA License - forgery and fraud - Forfeiture of security deposit - Contravention of the provisions of Regulations 12, 13(a), 13(b) and 13(d) of CHALR, 2004 - Non examination of witnesses - Held that - If the appellant CHA never met the importer, he could not have tendered any advice to the importer to comply with the provisions of the Customs Act. Therefore, once violation of regulation 13(a) is established, contravention of regulation 13(d) is also established, for compliance to 13(d), the CHA should know and meet the importer, which is not the position in the present case. Thus when the partners of the appellant CHA firm themselves have admitted to not knowing the importer, there is no need to prove the case by the department as the settled legal position is that admitted facts need not be proved. - Therefore, it cannot be said that the appellant s interests were prejudicially affected by non-examination of Shri Bhavesh Mehta or Shri Prashant Popat. Shri Bhavesh Mehta, in his statement recorded under Section 108 of the Customs 1962 has clearly admitted that he has merely signed the documents on behalf of the M/s. D/M. Mehta & Bros. and all the work relating to documentation, examination and clearance of the imported goods were undertaken by Shri Prashant Popat. There is no reason to disbelieve the statements of Shri Bhavesh Mehta even though he had subsequently retracted the same. Further, this retraction was done by means of an affidavit before a Notary and not addressed to the officer who had recorded the statement. There is no evidence brought before us that the said retraction was ever made known to the department at all. Therefore, the so called retraction of Shri Bhavesh Mehta is clearly an after-thought as it has not been informed to the department that the statement is being retracted. Retraction made is not valid and the facts recorded in the statements have been corroborated by others involved in the transaction, the said statements can be taken as a valid piece of evidence in a proceeding under CHALR also and we hold accordingly. CHA did not know the importers. The CHA allowed Shri Prashant Popat to do the clearance work relating to the imported goods. The CHA did not verify the re-warehousing certificates and Shri Bhavesh Mehta, Power of Attorney holder of the appellant-CHA firm was fully aware that the re-warehousing certificates were fake and bogus and the entire transactions were undertaken for monetary consideration. The CHA is vicariously liable for the action of its employees. Thus, the contravention of Regulation 12, 13(a), 13(b) and 13(d) stand clearly proved against the appellant. There were some minor procedural irregularities in the inquiry proceedings conducted, that by itself does not vitiate the conclusions/findings of the inquiry and the adjudicating authority. In the present case, the infractions and the contraventions of CHALR have taken place over a period of time in respect of 82 consignments involving a huge revenue of more than ₹ 8 crore and these contraventions have taken place with the full knowledge and connivance of the appellant-CHA. The gravity of the offence committed is quite serious as it involved forgery and fraud to which the appellant and its officials were a party. No reason to interfere with the decision of the adjudicating authority - Following decision of Commissioner of Customs vs. Worldwide Cargo Movers 2006 (11) TMI 281 - BOMBAY HIGH COURT - Decided against the appellant.

Issues Involved:
1. Revocation of CHA license and forfeiture of security deposit.
2. Reliance on statements recorded under Section 108 of the Customs Act, 1962.
3. Opportunity for cross-examination.
4. Alleged sale or transfer of CHA license.
5. Validity of re-warehousing certificates.
6. Proportionality of the penalty imposed.

Issue-wise Detailed Analysis:

1. Revocation of CHA License and Forfeiture of Security Deposit:
The appeal was directed against the order revoking the CHA license of M/s. D.M. Mehta & Bros. and forfeiting the entire security deposit. The adjudicating authority found that the appellant-CHA had contravened the provisions of Regulations 12, 13(a), 13(b), and 13(d) of CHALR, 2004. The appellant challenged this decision, seeking to set aside the impugned order.

2. Reliance on Statements Recorded under Section 108 of the Customs Act, 1962:
The appellant argued that the adjudicating authority improperly relied on statements recorded under Section 108 of the Customs Act, 1962, without allowing cross-examination. The appellant cited previous Tribunal decisions to support their claim that such reliance was inappropriate without cross-examination. The Tribunal, however, noted that the statements were corroborated by other evidence and that the retractions were not communicated to the department, thus maintaining their evidentiary value.

3. Opportunity for Cross-examination:
The appellant contended that the failure to examine and allow cross-examination of key witnesses, such as Shri Bhavesh Mehta and Shri Prashant Popat, rendered the inquiry proceedings null and void. The Tribunal found that the appellant could have called these individuals as defense witnesses but did not. Additionally, repeated summonses to these witnesses were ignored, and thus, the inquiry proceeded without their examination.

4. Alleged Sale or Transfer of CHA License:
The appellant denied selling or transferring their CHA license to Shri Prashant Popat, arguing that accepting work from him in good faith did not constitute a transfer. The Tribunal found that the appellant-CHA allowed Shri Prashant Popat to handle clearance work without verifying the importers or their documents, thus violating Regulation 13(a). The Tribunal upheld the adjudicating authority's findings that the appellant-CHA had effectively sub-let their license.

5. Validity of Re-warehousing Certificates:
The appellant claimed ignorance regarding the alleged fake re-warehousing certificates. The Tribunal noted that the appellant-CHA did not verify the authenticity of the certificates and was aware that they were fake. The Tribunal found that the appellant-CHA's actions facilitated the misuse of their license and involved fraudulent activities.

6. Proportionality of the Penalty Imposed:
The appellant argued that the revocation of the license was disproportionate to the gravity of the offense. The Tribunal, however, emphasized the seriousness of the infractions, which involved significant revenue loss and fraudulent activities. The Tribunal referenced previous High Court decisions that upheld strict penalties for similar violations, affirming that the revocation of the CHA license was justified.

Conclusion:
The Tribunal concluded that the appellant-CHA had violated multiple regulations and that the infractions were serious, involving fraud and forgery. Despite some procedural irregularities, the Tribunal found no reason to interfere with the adjudicating authority's decision. The appeal was dismissed as devoid of merits.

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