2017 (10) TMI 473 - AT - Customs

Revocation of CHA license - forfeiture of security deposit - liability of principal for the acts of his agents - Principle of Vicarious Responsibility - alleged role played by the appellant in fraudulent exports carried-out under claim of undue export benefits - Held that - it is evident that the shipping bills for the fraudulent export consignments were filed by the appellant-CHA which helped the unscrupulous persons to play the fraud on the exchequer. It is also evident that the appellant has never met and was not aware about the actual IEC holders whose number was used by Sh. Krishnan Kumar Garg in filing the documents. Sh. Garg has further admitted that he signed the documents without verifying the credentials of exporter. Without any authorization by the firms involved in the export, the appellant-CHA has filed the export documents resulting in undue claim for drawback/DEPB. It is further on record that export documents were obtained through the export facilitators/kingpins in the fraud rather than the actual IEC holder. As per the Principle of Vicarious Responsibility, a Principal is liable for all acts and omissions of his agent. In the present case, we note that Sh. Krishnan Kumar Garg was a G.card holder and employee of the appellant during the period when the shipping bills for the fraudulent exports were made. Sh. Garg was an authorized signatory of the appellant, hence the signatures appended by him on the export documents will necessarily have to be held as affixed by him in the course of normal business and on behalf of appellant. After having authorized Shri Garg to sign the documents on behalf of the appellant, the appellant cannot escape the vicarious responsibility for the acts and omissions of Sh. Garg. Reliance placed in the case of Rajendra Purohit Vs Union of India 2011 (11) TMI 333 - Gujarat High Court , where it was held that Regulation 19 (8) prescribes that CHA should exercise such control/supervision as may be necessary to ensure proper conduct of such employees in transaction of business as CHA and he be held responsible for all acts or omissions of his employees in regard to their employment. The contraventions of various regulations stand established against the appellant - appeal dismissed - decided against appellant.

Summary

Issues:
Revocation of CHA license and forfeiture of security deposit based on alleged involvement in fraudulent exports.

Analysis:
The appeal challenged the revocation of the CHA license and forfeiture of the security deposit due to the appellant's alleged role in fraudulent exports. The appellant, a Customs Broker, was accused of contravening various provisions of the Customs House Agents' Licensing Regulations, 2004 (CHALR, 2004) by facilitating fraudulent exports. The investigation revealed that the appellant's employee filed shipping bills for fraudulent exports without the appellant's knowledge, resulting in the undue claim of export benefits. The appellant was implicated for violations such as undertaking customs clearance transactions without proper authorization, failure to exercise due diligence, and not verifying the antecedents of clients, among others.

The Tribunal considered the Principle of Vicarious Responsibility, holding the appellant liable for the acts and omissions of its agent who facilitated the fraudulent exports. The Tribunal cited the judgment of the High Court emphasizing the CHA's responsibility for its employees' actions. The Tribunal also referenced a previous case where the revocation of a CHA license was upheld in similar circumstances. Additionally, the Tribunal highlighted a Bombay High Court case reinforcing the CHA's liability for its employees' acts, emphasizing the disciplinary authority's role in maintaining discipline in the Customs area.

The adjudicating authority's detailed discussion in the enquiry report established the contraventions of various CHALR regulations by the appellant. Ultimately, the Tribunal upheld the impugned order, rejecting the appeal and maintaining the revocation of the CHA license and forfeiture of the security deposit. The decision was based on the appellant's vicarious responsibility for the fraudulent exports facilitated by its employee, in line with the regulatory framework and legal precedents cited during the proceedings.