2019 (8) TMI 1399 - HC - Customs

Cancellation of CHA License - validity of statements recorded under Section 108 of the Customs Act - Whether the CESTAT fell into error in attributing the statements of Rajender Kumar @ Raju to the appellant and whether the finding with respect to the omission and negligence was of such magnitude as to call for revocation of the CHA licence in the circumstances of the case? HELD THAT - There is nothing to show that the appellant, or any of its employees, could be attributed any conscious or deliberate mis-statement on behalf of the importer. In the instant case, there is no corroborative evidence or statement of anybody that the CHA had information, knowledge or has connived in the alleged forgery of invoices, mis-declaration and under-valuations. It has been observed in several decisions of this Court that an element of mens rea, or any direct or indirect involvement attributable to the CHA through active knowledge or connivance is required to be proved in a proceeding for revocation of license of a Customs Housing Agent/ Customs Broker. The Customs Broker/ Customs Housing Agent merely acts as a facilitator or agent for carrying out import operations. Thus, it appears that there is no reason to attribute any negligence to the appellant in the instant case. The CESTAT fell into error in attributing the statement of Rajender @ Raju to the appellant and on that basis, directing cancellation of the CHA license of the Appellant - there is no negligence which would be attributed to the appellant who acted on the basis of the instructions of the importer while filing the documents for clearance of the import - appeal allowed.

Summary

Issues:
Appeal against cancellation of Customs House Agency License upheld by CESTAT.

Analysis:
1. The appellant, a Custom House Agent, filed an appeal under section 130 of the Customs Act, 1962 against the cancellation of their license by the Commissioner of Customs. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the cancellation in an order dated 08.05.2018. The appellant's Rectification Application was also dismissed by CESTAT on 27.07.2018, leading to the present appeal.

2. The case revolved around the appellant's role as a Custom House Agent facilitating importers in clearing goods through customs. Irregularities were observed in the clearance of certain imports, leading to investigations and the issuance of Show Cause Notices (SCNs) to various parties, including the appellant. The appellant was accused of not informing the importer about necessary certifications for importation, resulting in the cancellation of their license.

3. The main question of law framed was whether CESTAT erred in attributing statements to the appellant and whether the findings warranted revocation of the CHA license. The court analyzed the statements of individuals involved in the import process, highlighting discrepancies and lack of direct involvement or knowledge on the part of the appellant.

4. The court examined the statements of Rajender Prasad and Rajender @ Raju, emphasizing the distinct identities and lack of direct relationship between them and the appellant. It was noted that there was no evidence of conscious misstatement or connivance by the appellant in the alleged irregularities.

5. Citing legal precedents, the court emphasized the requirement of mens rea or direct involvement in proving misconduct by a Customs Housing Agent/Customs Broker. The court concluded that there was no negligence attributable to the appellant, who acted based on importer instructions, and set aside the orders cancelling the license.

6. The court held that CESTAT erred in attributing statements to the appellant and directed the reinstatement of the license. The appellant was allowed to seek renewal despite the expiration of the license tenure. Importantly, the order did not affect proceedings against the importer for alleged misdeclarations and misdescriptions.