2019 (2) TMI 1381 - AT - Customs

Revocation of CHA License - penalty u/s 117 of the Customs Act, 1962 - cancellation of registration to operate as shipping line agent - misconduct of stealing and modifying the custom seal and also forgery of signatures of the Custom Officers - manipulation of the seals and signatures - Board Circular No.30/2004-Cus. dated 16.4.2004 - Held that - A show-cause notice under Section 124 is adjudicated as per Section 125 of the Customs Act. Section 125 of the Customs Act provide for confiscation of the goods and for redemption of the same on payment of redemption fine invoked. A proceeding under Section 124 could have led to the cancellation of the registration issued to the appellant for undertaking various activities in the Port. Section 34 provides that no goods should be loaded or unloaded on a vessel except under supervision of a Customs Officer. In his order, Commissioner has not shown in how and what manner the provisions of these Sections has been contravened in the present case. Secondly, how appellants were responsible for such contravention - Similarly, how provisions of Section 42(2) have been contravened is not clear. It is not the case of the Commissioner in adjudication order that vessel MV Varda V 0004E had sailed without written permission from the Custom officer. The case of the department is to the effect that certain documents on the basis of which crew has been cleared were manipulated at the initiation stage, but were presented to the custom officers for the clearance of crew. The crew was in fact cleared on the said documents after proper and physical examination - In the cross-examination, the officers had admitted that no person has boarded or de-boarded the vessel nor any cargo loaded or unloaded without actual physical verification and explicit approval of the Customs Department. It is settled principle in law that procedures prescribed for performance of duties assigned under the law or the rules/ regulations made under the law should be respected and followed. Any person who has been assigned the duty under provisions of law and found manipulating the same is liable to punishment. However the punishment should be proportionate to the offence committed. Whether the appellants should be held vicariously liable for the act of manipulation of the documents by their employees? - Held that - Because of Master Servant relationship such vicarious liability shall follow - Various High Courts have held that punishment for the offences should be proportionate to the gravity of offence - In the present, it is not found that appellants were in any way responsible for forging the documents themselves but are vicariously responsible for the acts of their employees. We also find that no attempt in the present case was made to contravene the provisions of Customs Act leading to confiscation of any goods for the reason that they were prohibited/ restricted or were sought to be cleared without payment of appropriate duty. The contraventions were only in the manner of facilitation of clearance of crew. The fact is also noted that for last four year, appellants have been awarded best Steamer Agent in Cochin Port. Copy of such awards given to them have been placed at page 27, 28, 29 and 30 of the Paper Book. Looking into the past records of the Department itself appreciating the performance of the appellants, we are of the view that act of cancellation of registration is highly disproportionate to the offence alleged. Penalty under Section 117 which have been imposed is necessary to deter appellants or for that matter anybody else to indulge into such activities in future. Section 117 of the Customs Act provided for penalties for contravention not expressively mentioned - a penalty under Section 117 would suffice to deter the happening of similar incidence in future. The appeal filed to the extent of cancellation of registration of the appellants is allowed - penalties upheld - appeal allowed in part.

Issues Involved:
1. Cancellation of registration of M/s. MBK Logistix Pvt. Ltd.
2. Imposition of penalties under Section 117 of the Customs Act, 1962.
3. Vicarious liability of the appellant for the actions of its employees.
4. Proportionality of the punishment in relation to the offence committed.

Detailed Analysis:

1. Cancellation of Registration of M/s. MBK Logistix Pvt. Ltd.:
The Commissioner of Customs, Cochin, cancelled the registration of M/s. MBK Logistix Pvt. Ltd. to operate as Steamer Agent, Console Agent, and Shipping Line Agent due to violations of the Customs Act, 1962. The appellant argued that the cancellation was disproportionate to the offence committed by its employees, who were found guilty of stealing and manipulating the Customs seal and forging documents. The Tribunal noted that the Commissioner failed to demonstrate how the company benefited from the forged documents and did not provide clear evidence of contraventions of Sections 34, 42, and 98 of the Customs Act by the appellant. The Tribunal found that the cancellation of registration was highly disproportionate to the alleged offence and thus allowed the appeal to the extent of reinstating the registration.

2. Imposition of Penalties under Section 117 of the Customs Act, 1962:
The Commissioner imposed penalties of ?50,000 on M/s. MBK Logistix Pvt. Ltd. and on Shri Joakim Yesudasan, and ?25,000 on Shri Antony Sijo under Section 117 of the Customs Act, 1962. The Tribunal upheld these penalties, emphasizing that they were necessary to deter future misconduct. Section 117 provides for penalties for contraventions not expressly mentioned in the Act. The Tribunal concluded that the penalties were appropriate to prevent similar incidents in the future.

3. Vicarious Liability of the Appellant for the Actions of Its Employees:
The Tribunal acknowledged the principle of vicarious liability, which holds employers responsible for the actions of their employees conducted in the course of employment. The Tribunal cited the Madras High Court's judgment in Chandra CFS Terminal Operators P Ltd, which supported the view that employers are vicariously liable for their employees' actions. The Tribunal found that although the appellant was not directly involved in the forgery, it was vicariously liable for the acts of its employees.

4. Proportionality of the Punishment in Relation to the Offence Committed:
The Tribunal emphasized the importance of proportionality in punishment, referencing several High Court judgments, including Falcon Air Cargo and Travels (P) Ltd and Ashiana Cargo Services, which highlighted that penalties should be commensurate with the gravity of the offence. The Tribunal noted that the Commissioner did not establish any aggravating factors that would justify the severe penalty of cancellation of registration. The Tribunal found that the punishment was disproportionate, especially considering the absence of any findings that the crew carried prohibited goods or that the company benefited from the forgery. The Tribunal concluded that the cancellation of registration was excessive and reinstated the appellant's registration.

Conclusion:
The Tribunal allowed the appeal to the extent of reinstating the registration of M/s. MBK Logistix Pvt. Ltd. while upholding the penalties imposed under Section 117 of the Customs Act, 1962. The Tribunal emphasized the importance of proportionality in punishment and the principle of vicarious liability, concluding that the cancellation of registration was disproportionate to the offence committed by the appellant's employees.

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