2015 (11) TMI 1021 - AT - Customs

Revocation of CHA License - Forfeiture of the security deposit - consignments through which cigarettes were smuggled were cleared by the CHA - violation of Regulation 12 & 13 - Held that - Finding of Commissioner that M/s Sea Speed, being a logistics company, should not be aiding in the customs clearance work is unfounded. Even the payment mode by cheque on per container basis cannot and does not lead to the conclusion that the CHA had transferred the license to M/s Sea Speed. Once it is admitted that the CHA got his clients through an intermediary that is M/s M/s.Sea Speed, the violation of regulation 12 is not established beyond doubt. - no bill of entry had been filed by the appellant in respect of the consignment which was found to contain cigarettes. Therefore the violations of Regulation 13 (d), Regulation 13 (e) and Regulation 13 (n) is difficult to sustain. Even if we consider the violation of these regulations in the context of past consignments alleged to have been smuggled, we find that no show cause notice has been issued to the appellant under the Customs Act, in respect of the past consignments. Therefore, the violations are not proved even in respect of the past consignments alleged to have been smuggled by the logistics company/so called dummy IEC holders. Appellant has shown laxity in not verifying the antecedents and functioning of his client at the declared address by using independent information. To this extent there has been a violation of Regulation 13 (o). Once the Commissioner accuses the appellant of abetment in smuggling, the appellant could have been charged under the relevant provisions of the Customs Act. Having not been made a noticee in the show cause notice issued to the logistics company under the Customs Act for the offence of smuggling, we hold that the appellant do not deserve the most stringent punishment, that is permanent revocation of the CHA license. Appellant guilty of violating Regulations 13 (b) and 13 (o) and also guilty of not taking adequate care to check the antecedents of the IEC holder who signed the Authorisation letter. We hold that revocation of the license up to December 2015 would be adequate punishment for these violations of the CHALR. - Decided partly in favour of appellant.

Summary

Issues:
Revocation of Custom House Agent (CHA) license and forfeiture of security deposit based on violations of Custom House Agents Licensing Regulations (CHALR) 2004.

Detailed Analysis:

Violation of Regulation 12 (No license shall be sold or transferred):
- Commissioner found that CHA allowed another company to use the license and receive payments.
- Tribunal held that accepting business through a logistics company is not a violation.
- No evidence that license was sublet or transferred.
- Suspension of license previously set aside by Tribunal.

Violation of Regulation 13 (a) (Obtaining authorization from employer):
- CHA produced an authorization letter during enquiry proceedings.
- Commissioner doubted authenticity due to lack of details, but CHA received import documents for the IEC holder.
- Failure to verify client's antecedents shows laxity.

Violation of Regulation 13 (b) (Transacting business through approved employees):
- Employees of logistics company handled customs clearance work.
- Weak defense by CHA in proving employees were on their payroll.
- Violation established as employees were not transacting business through CHA.

Violation of Regulation 13 (d), 13 (e), and 13 (n) (Duties of CHA):
- No bill of entry filed for seized consignment, making violations hard to prove.
- No show cause notice issued under Customs Act for alleged past smuggling cases.
- Violations not sustained due to lack of evidence.

Violation of Regulation 13 (o) (Verifying client's antecedents):
- CHA failed to verify client's antecedents independently.
- Violation established as CHA did not ensure proper verification.

Commissioner's Conclusion and Punishment:
- Commissioner accused CHA of aiding smuggling but did not implicate under Customs Act.
- Tribunal found accusations serious but noted lack of notice under Customs Act.
- CHA held guilty of violating Regulations 13 (b) and 13 (o), punished with license revocation until December 2015.

Judicial Precedents:
- Compared with previous cases involving direct involvement in smuggling.
- CHA's case distinguished due to lack of direct involvement in seized consignment or past smuggling.
- Punishment limited to license revocation until December 2015, with security deposit forfeiture.

This detailed analysis of the judgment highlights the violations, defenses, Commissioner's findings, and Tribunal's decision regarding the revocation of the CHA license and forfeiture of the security deposit. The analysis covers each issue comprehensively, considering legal regulations, evidence presented, and precedents cited to reach a just conclusion.