2016 (4) TMI 620 - AT - Customs

Revocation of licence and forfeiture of security deposit - Import of tetrahydroxybenzophenone chemical - Appellant did not advice their client that the chemicals are to be properly described/classified and supported by proper documents - Non-fulfilment of obligation of a Custom House Agent required under Regulation 13 of CHALR, 2004 i.e. failed to verify antecedents, identity of their client and functioning of their client at the declared address by using reliable, independent, authentic documents, data or information. Held that - the CHA was found responsible for all acts or omission. It is found that apart from mere reproduction of the wordings of the provisions of CHALR substantial portion of the conclusion in the enquiry report is totally contrary to the finding of the Original Authority. To the extent that the appellant has not complied with the KYC norms with reference to client stands resolved by a clear finding by the Adjudicating Authority. A contrary conclusion drawn in the enquiry report prepared after the said adjudication order is not sustainable. Validity of impugned order - Revocation of licence and forfeiture of security deposit - Import of tetrahydroxybenzophenone chemical - Appellant did not advice their client properly relating to importation of chemicals - Held that - the appellant obtained all the documents and filed the bill of entry based on the documents submitted by the importer. It is only on test by a competent laboratory the actual nature of the chemical could be found. It is found that the appellant followed normal business practice in verifying the client s background like address, IEC Code etc. and filed the bill of entry based on documents submitted by the importer. Therefore, the appellant cannot be put to extreme action, like revocation of licence in the absence of evidence of misdemeanor on their part. - Decided in favour of appellant

Summary

Issues: Allegations against the Customs House Agent (CHA) for failing to fulfill obligations under Custom House Agent Licensing Regulation, 2004; Revocation of CHA license and forfeiture of security deposit based on contravention of licensing regulations.

Analysis:
1. The appellant, a licensed Customs House Agent (CHA), filed a bill of entry for importing chemicals declared as an intermediate chemical for pesticides. The consignment was found to contain a pesticide, requiring a license under the Insecticide Act, 1968. Allegations were made against the appellant for not fulfilling obligations under Regulation 13 of the Custom House Agent Licensing Regulation, 2004, leading to penal action under the Customs Act, 1962. The case was adjudicated by the Additional Commissioner, who found no reason to impose a penalty on the appellant.

2. Despite the Original Adjudicating Authority's findings in favor of the CHA, a show cause notice was issued for the revocation of the CHA license and forfeiture of the security deposit. An enquiry was conducted, resulting in the revocation of the license and forfeiture of the security deposit. The appellant challenged this order.

3. The Tribunal analyzed the impugned order regarding the revocation of the license and forfeiture of the security deposit. The Original Authority concluded that the appellant did not fulfill their duty to advise the client properly regarding the importation of chemicals. However, the Tribunal found the reasoning incoherent and inconsistent, noting that the appellant had followed normal business practices in verifying the client's background and filing the bill of entry based on the documents provided by the importer.

4. The Tribunal observed that the conclusion of active connivance drawn against the appellant lacked basis or evidence. While acknowledging that the appellant could have provided more detailed advice to the client, this omission did not amount to active connivance. The Tribunal found no evidence of misconduct on the appellant's part and set aside the impugned order, allowing the appeal against the revocation of the license and forfeiture of the security deposit.

This detailed analysis highlights the issues of regulatory compliance by a Customs House Agent and the subsequent revocation of their license and forfeiture of the security deposit, emphasizing the Tribunal's assessment of the appellant's actions and the lack of evidence supporting the extreme action taken against them.