2015 (12) TMI 587 - AT - Customs

Suspension of CHA License - whether appellant has violated the provisions of Regulations 13 (a), 13 (b), 13 (d) & 13 (o) of the CHALR 2004 inviting revocation of their CHA License - Held that - No effort was made by the appellant to check up with the exporter or the freight forwarder whether Shri Sanjoy Singh is their assigned representatives for carrying out the transit of their containers from LCS Jogbani to Dock Kolkata. Regulation 13 (o) of CHALR 2004 clearly provides that CHA, interalia, should verify the identity of his client and functions of his client at the declared address. Shri Amreek Singh and Shri Sanjoy Singh conducted business with the CHA as an agent of M/s. Osia Enterprises and freight forwarder and thus fell into the footsteps of the exporter. No independent efforts were made by the CHA to verify whether the persons dealing with him on behalf of the exporter/freight forwarders are genuine. No confirmation over phone/Mobile was made by the appellant when documents were handed over to the CHA. It is also observed that Shri Dilip Kumar Sharma, Jetty Sircar of the appellant was deputed to attend to the examination of the container when DRI was carrying out the investigation. CHA was out of business for 8 years but Hon ble Court while deciding clearly observed that trust between the CHA and the Customs authorities has to be viewed seriously. It was also held that punishment has to be proportionate to the nature and extent of violation. Based on the existing facts in the present appeal before us we hold that appellant was found wanting in discharging his obligations under Regulation 13 (a), (b) & (o) of the CHALR 2004 and accordingly orders passed by the Adjudicating authority under Regulation 20 (1) of CHALR 2004 are upheld - appellant had no knowledge of the contraband nature of the goods substituted in the containers and in view of the ratio of the relied upon case law, punishment for a life time cannot be imposed upon the appellant. We are of the considered opinion that revocation ordered by the Adjudicating authority should be for a limited period. As there is no irregularity committed by the appellant from the date of offence detected by DRI, the revocation ordered by the Adjudicating authority is made effective upto 31/3/2016 and with effect from 1/4/2016 CHA License of the appellant and forfeiture of Security deposit will be restored. - Decided in favour of Appellant.

Issues Involved:
1. Violation of Regulations 13 (a), 13 (b), 13 (d), and 13 (o) of the Customs House Agents Licensing Regulation (CHALR) 2004.
2. Revocation of CHA License under Regulation 20 (1) of CHALR 2004.
3. Forfeiture of security deposit.
4. Proportionality of the penalty imposed.

Issue-wise Detailed Analysis:

1. Violation of Regulations 13 (a), 13 (b), 13 (d), and 13 (o) of CHALR 2004:
The appellant was accused of violating several provisions of CHALR 2004, specifically Regulations 13 (a), 13 (b), 13 (d), and 13 (o). Regulation 13 (a) mandates obtaining authorization from the client and producing it when required. Regulation 13 (b) requires transacting business either personally or through an approved employee. Regulation 13 (d) involves advising the client to comply with the provisions of the Act and reporting non-compliance. Regulation 13 (o) necessitates verifying the antecedents, correctness of the Importer Exporter Code (IEC) Number, and the identity and functioning of the client at the declared address using reliable, independent, authentic documents, data, or information.

The appellant argued that they were only responsible for the clearance of the export consignment from Kolkata Port and could not be held accountable for any tampering or substitution of goods before the containers reached Kolkata. They claimed that their role started with filing the Custom Transit Declaration (CTD) and other related documents with Kolkata Customs. The appellant also contended that the Enquiry report was submitted beyond the stipulated period of 90 days from the date of issue of notice under CBLR 2013.

However, the Revenue argued that the appellant failed to verify the identity and functioning of their client, as required by Regulation 13 (o). The appellant did not obtain the Know Your Client (KYC) details of the individuals involved and did not verify the correctness of the PAN of Sri Sanjoy Singh or meet him in person. The Revenue also highlighted that the appellant did not check whether Shri Amreek Singh or Shri Sanjoy Singh were authorized representatives of the exporter.

2. Revocation of CHA License under Regulation 20 (1) of CHALR 2004:
The appellant's CHA License was revoked by the adjudicating authority under Regulation 20 (1) of CHALR 2004. The appellant argued that the revocation was not justified as there was no suspension of the license from the date of the DRI interception (29/11/2012) until the license was revoked (27/2/2015). They cited case laws to support their argument that in the absence of any malafide intent, the revocation of the CHA License was not justified.

3. Forfeiture of Security Deposit:
The adjudicating authority also ordered the forfeiture of the appellant's security deposit. The appellant did not specifically contest this aspect in their arguments.

4. Proportionality of the Penalty Imposed:
The Tribunal considered the proportionality of the penalty imposed. The appellant relied on the case law of Ashiana Cargo Services Vs. CC (I & G) [2014 (302) ELT 161 (Del.)], where the Delhi High Court emphasized that the penalty must be proportional to the violation. The Tribunal observed that while the appellant was found wanting in discharging their obligations under Regulations 13 (a), (b), and (o) of CHALR 2004, the punishment of lifetime revocation was too severe.

The Tribunal held that the revocation ordered by the adjudicating authority should be for a limited period. Since there was no irregularity committed by the appellant from the date of the offence detected by DRI, the Tribunal decided to make the revocation effective only up to 31/3/2016. From 1/4/2016, the CHA License of the appellant and the security deposit would be restored.

Conclusion:
The Tribunal upheld the orders passed by the adjudicating authority under Regulation 20 (1) of CHALR 2004, finding that the appellant violated Regulations 13 (a), (b), and (o). However, considering the proportionality of the penalty, the Tribunal modified the revocation period, making it effective only up to 31/3/2016, and ordered the restoration of the CHA License and security deposit from 1/4/2016.

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