2009 (3) TMI 107 - AT - Customs

CHA Duty Drawback Fraud - The appellant is not disputing that the consignment sought to exported was of sub-standard quality and therefore, the value was inflated. However, it was claimed that the appellant was not aware of the poor quality of the consignment which was sought to be exported. No show cause notice has been issued to the appellant under the Customs Act alleging any connivance with the exporter. We find that the appellant has taken some precautions to ascertain the genuineness of the exporter but perhaps, the same was not sufficient enough to know that the actual address of the exporter or mischief, if any, planned by the exporter as he is not traceable. No mala fide can be attributed to the appellant for this omission. There is also no such allegation or finding of mala fide against the appellants. - held that revocation of licence may not be justified and the same would be a very harsh penalty.

Summary

Issues: Revocation of license of Custom House Agent (CHA) for alleged involvement in export of sub-standard quality goods with inflated value to avail excess drawback.

Analysis:
1. Early Hearing Application: The application for early hearing was allowed due to the appellant's revoked license, causing hardship to them and their employees. The Tribunal heard both sides on the appeal after granting the early hearing request.

2. Facts of the Case: The appellant, a Custom House Agent since 1994, filed shipping bills for export of readymade garments on behalf of an exporter. The Department suspected sub-standard quality and inflated value to claim excess drawback. The Commissioner, after an enquiry, revoked the appellant's license under Regulation 20(1) of CHALR, 2004, and ordered forfeiture of security.

3. Appellant's Defense: The appellant argued that they took reasonable precautions, verified necessary documents, and were unaware of the poor quality of the consignment. They emphasized their financial and other hardships faced for the past two years.

4. Revenue's Position: The Revenue contended that the CHA failed to ascertain the genuineness of the exporter and the export documents, dealing only through a mediator. They cited precedents to support their argument.

5. Tribunal's Decision: The Tribunal noted that while the consignment was of sub-standard quality, there was no evidence that the appellant knew about it to claim ineligible drawback. No connivance with the exporter was alleged under the Customs Act. The Tribunal found the precautions taken by the appellant insufficient to ascertain the exporter's genuineness, but no malafide intent was established. Notably, no drawback was paid in this case.

6. Relevance of Precedents: The Tribunal distinguished the cited precedents, stating they were not applicable to the present case. The decisions involved suspension of CHA or failure to supervise employees leading to fraudulent activities, unlike the current situation.

7. Decision: The Tribunal concluded that revoking the license was unjustified and a harsh penalty. Therefore, they set aside the Commissioner's order and allowed the appeal with consequential relief, indicating that no malafide intent was found on the part of the appellant.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, the Tribunal's assessment of the case, and the final decision reached by the Tribunal.