2016 (3) TMI 217 - AT - Customs

Charges under Regulation 13(d), (e), (i) & (n) of CHALR, 2004 - Revokation of CHA licence - Department contended that appellant is a CHA and was involved in gross irregularities such as misdeclaration in description, quantity as well as undervaluation and was was aware about the actual description as well as actual quantity of goods imported which is evident from the original copy of Bill of Lading bearing the details of the actual description and quantity, as the appellant on the backside of Bill of Entry had appended the same by putting signature and rubber stamp. However, the appellant-CHA had filed Bills of Entry with wrong description as well as less quantity of the imported goods and had facilitated and connived with the importer in the fraud to put loss to the Govt. exchequer - Held that importers have resorted to giving forged and fabricated documents through fax to the appellant-CHA for filing the Bill of Entry by making minor alteration in the quantity or description or value, which cannot be noticed by a man of ordinary prudence. No facts are coming on record to indicate that the appellant-CHA have aided and abetted the importers in evasion of customs duty. However, evidences which have come on record indicate that the importers have misled successfully the CHA, Revenue and Bank by fabrication and forgery of documents being minor manipulation, which is not easily made out unless one compares the documents with the investigative eyes. The original and forged documents look all the same at the first glimpse. Only on careful scrutiny the difference and/or manipulation committed could be noticed. Therefore, in absence of any finding of aiding and abetting, the charges can not be hold under Regulations 13(d) & (e). The act of forgery of official documents or signatures were committed by the importer. Therefore, it cannot ipso facto form the ground for charging CHA under CHALR, 2004 for violation of Regulation 13(i). Some inadvertence or lack of efficiency took place on part of the CHA and that is because of a regular dealing with the said importers and not because of gross negligence or misconduct in discharge of duty. Therefore, the appellant needs to be visited with some penal action in view of violation of Regulation 13(n). The period of revocation restricts up to 30-11-2015 and also the amount of forfeiture reduced to 50% of security deposit. - Partly decided in favour of appellant with consequential relief

Summary

Issues Involved:
1. Revocation of CHA License under CHALR Regulations
2. Alleged Misdeclaration and Forgery by Importers
3. Compliance with Regulations 13(d), 13(e), 13(i), and 13(n) of CHALR
4. Principles of Natural Justice and Fair Inquiry
5. Adequacy of Evidence and Burden of Proof
6. Role and Responsibility of CHA in Detecting Fraud
7. Proportionality of Penalty Imposed

Issue-wise Detailed Analysis:

1. Revocation of CHA License under CHALR Regulations:
The appellant, a Customs House Agent (CHA), had their license revoked by an Order-in-Original dated 2-12-2013. The revocation was based on allegations of misdeclaration and forgery by importers, which the CHA was purportedly aware of and failed to report.

2. Alleged Misdeclaration and Forgery by Importers:
The importers, referred to as the Jaldhara group, were found to have misdeclared the description, quantity, and value of imported goods, leading to evasion of customs duty. The CHA was accused of facilitating this by filing Bills of Entry with incorrect information, despite having access to the original documents that showed the correct details.

3. Compliance with Regulations 13(d), 13(e), 13(i), and 13(n) of CHALR:
- Regulation 13(d): The CHA is required to advise clients to comply with the law and report non-compliance to customs authorities. The Commissioner found that the CHA failed to compare the original Bill of Lading with the fax copies, leading to incorrect filings.
- Regulation 13(e): The CHA must exercise due diligence to ensure the correctness of information. The Commissioner held that the CHA colluded with the importers by not detecting discrepancies in the documents.
- Regulation 13(i): This regulation prohibits CHAs from influencing customs officials through improper means. The charge was found unsustainable as there was no evidence of the CHA attempting to influence officials.
- Regulation 13(n): The CHA is required to perform duties with speed and efficiency. The Commissioner found that the CHA failed to detect discrepancies due to lack of diligence, leading to the conclusion that the CHA was complicit in the importers' fraud.

4. Principles of Natural Justice and Fair Inquiry:
The CHA argued that the inquiry was conducted in violation of natural justice principles, as only unauthenticated photocopies of documents were provided, and not all relevant documents were made available. The CHA also claimed that the discrepancies were minor and not easily detectable by a person of ordinary prudence.

5. Adequacy of Evidence and Burden of Proof:
The CHA contended that the charges were based on assumptions and lacked concrete evidence of complicity. The Commissioner relied heavily on the statement of the CHA's director, which the CHA argued was dictated and not voluntary.

6. Role and Responsibility of CHA in Detecting Fraud:
The CHA maintained that they were misled by the importers and that the minor differences in documents were not easily noticeable. The Tribunal found that the importers successfully misled the CHA, customs, and banks through minor manipulations that were not easily detectable.

7. Proportionality of Penalty Imposed:
The Tribunal concluded that while there was some inadvertence or lack of efficiency on the part of the CHA, there was no evidence of gross negligence or misconduct. The Tribunal set aside the charges under Regulations 13(d) and 13(e) but upheld a partial violation of Regulation 13(n). The period of revocation was reduced, and the amount of forfeiture was halved.

Conclusion:
The appeal was allowed in part, with the Tribunal ordering the restoration of the CHA license from 1-12-2015 and reducing the forfeiture of the security deposit to 50%. The Tribunal found that the CHA was misled by the importers and that the discrepancies were not easily detectable, thus mitigating the severity of the penalties imposed.