2015 (12) TMI 1387 - AT - Customs

Revocation of CHA License - Misdeclaration of goods - goods were grossly mis-declared in respect of quantity, quality, value and weight etc. and the intention was obviously to defraud the Government by availing of inadmissible drawback amount - Held that - Apart from goods being mis-declared in description and value, even the weight was much less than the weight declared. In respect of one Shipping Bill, the actual weight was only about 3800 kgs. while the declare weight was more than 10000 kgs. CHAs are required to follow the provisions of CHALR, 2004, in terms of which (Regulation No. 13) the Custom House Agent is inter alia required to obtain authorisation from each of the companies/firms by whom he was being employed, ensure that all documents, such as bills of entry and shipping bills delivered in the Customs Station by him show the name of the importer or exporter, as the case may be, and also ensure that he discharges his duties as Customs House Agent with utmost speed and efficiency and without avoidable delay. In the present case, it is evident that the appellant had not obtained any authorisation from M/s H.M. Impex, a firm which was non-existent at the address given in the IE Code and whose proprietor (as mentioned in the IE Code) never contacted the appellant. The appellant filed documents in the name of a nonexistent firm without any verification whatsoever. The documents filed by CHA are treated with a certain degree of trust by the Customs and such trust was completely violated in the present case. The documents filed by CHA are treated with a certain degree of trust by the Customs and such trust was completely violated in the present case. Nothing can possibly be a graver mis-conduct on the part of a CHA than to file Shipping Bills of such high value in the name of a non-existent firm without making even preliminary enquiries about the genuineness of firm/company in the name of which the documents were filed. Such dereliction of duty on the part of a CHA, can potentially have even graver financial/security consequences. Thus the appellant totally failed to discharge its duties as CHA with utmost speed and efficiency and thereby grossly violated Rule 13 of CHALR, 2004. Such serious violation on the part of the CHA can hardly deserve any condonation or leniency. CESTAT judgement in the case of Pranil Shipping cited by the appellant is hardly applicable to the present case because in that case the importer was not non-existent. - Impugned order is upheld - Decided against Appellant.

Issues:
1. Revocation of CHA license and forfeiture of security amount under CHALR, 2004.
2. Mis-declaration in shipping bills leading to attempted fraud.
3. Contention of lack of knowledge by CHA proprietor.
4. Legal arguments regarding due diligence and liability of CHA.
5. Analysis of the evidence and application of CHALR, 2004 provisions.
6. Abetment of attempt to export goods fraudulently under Section 114.

Issue 1: Revocation of CHA license and forfeiture of security amount under CHALR, 2004
The case involved an appeal against the revocation of a Customs House Agent (CHA) license and the forfeiture of a security amount under the Customs House Agents Licensing Regulations, 2004. The Commissioner of Customs took this action based on serious mis-declaration in shipping bills, attempting to defraud the government by availing inadmissible drawback amount. The appellant CHA was found to have filed shipping bills for non-existent firms with gross violations of CHALR, 2004, leading to the revocation of the license and forfeiture of the security deposit.

Issue 2: Mis-declaration in shipping bills leading to attempted fraud
The appellant CHA filed shipping bills for non-existent firms, mis-declaring goods in terms of quantity, quality, value, and weight, with the intention to defraud the government by claiming inadmissible drawback amounts. Investigations revealed the fictitious nature of the firms and the lack of due diligence in verifying the authenticity of the exporters. The mis-declaration was significant, involving high-value consignments, justifying the revocation of the license and forfeiture of the security deposit.

Issue 3: Contention of lack of knowledge by CHA proprietor
The appellant contended that its proprietor was unaware of the mis-declaration and fraudulent activities, claiming absence during the filing of shipping bills. However, the lack of knowledge defense was deemed insufficient given the serious nature of the violations and the duty of a CHA to exercise due diligence in verifying information provided for customs declarations.

Issue 4: Legal arguments regarding due diligence and liability of CHA
The legal arguments focused on the CHA's obligation to exercise due diligence, especially in verifying the authenticity of exporters and the accuracy of customs declarations. The appellant's failure to conduct proper inquiries and comply with KYC norms, as required by CHALR, 2004, was highlighted to establish the seriousness of the violations and the justification for the revocation of the license.

Issue 5: Analysis of the evidence and application of CHALR, 2004 provisions
The analysis considered the evidence of mis-declaration, lack of verification, and the failure to obtain authorization from non-existent firms, emphasizing the breach of CHALR, 2004 regulations. The judgment underscored the CHA's responsibility to ensure the accuracy and authenticity of customs documents, with a particular focus on the need for due diligence in high-value consignments to prevent fraud and maintain customs integrity.

Issue 6: Abetment of attempt to export goods fraudulently under Section 114
In a related appeal, the appellant was found guilty of abetting the attempt to export goods fraudulently under Section 114, resulting in the imposition of a penalty. The appellant's involvement in filing shipping bills for non-existent firms with the intent to avail inadmissible drawbacks further solidified the abetment charge, leading to the rejection of the appeal and upholding of the penalty imposed under Section 114.

In conclusion, the judgment upheld the revocation of the CHA license and forfeiture of the security amount, emphasizing the CHA's duty to exercise due diligence, comply with regulations, and prevent fraudulent activities in customs declarations. The legal arguments, evidence analysis, and application of CHALR, 2004 provisions collectively supported the decision, highlighting the serious consequences of mis-declaration and lack of verification in customs processes.

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