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2020 (6) TMI 397 - AT - CustomsRejection of renewal of CHA licence - misdeclaration of imported goods - Smuggling - white fine powdery chemical, containing a whitish colored coarse chemical, concealed in between the bags of Sodium Sulphate - HELD THAT - The appellant is not required to fulfil under Regulation 5 of CBLR, 2013, inasmuch as the appellant is not new applicant . We further find that the Regulations 4, 5 and 7 is applicable to an applicant, who applies and undertakes examination conducted by Directorate General of Inspection of Customs Central Excise, by inviting application by publication of notice in two leading national daily newspapers in English and Hindi and, subsequently grants licence to successful applicant(s). Further, the said affidavit has been filed in haste, as is evident from the fact that when Regulation 5 is not applicable to the appellant, there was no requirement to file any affidavit by the appellant. This gets further supported from the first letter dated 1-1-2017 filed by the appellant, to the department, wherein they have prayed to extend the validity of licence for five years i.e. for the period which was lost from the date of suspension i.e. 15-12-2010 till the date of original validity i.e. 15-12-2015. The license stands restored for the period of 10 years w.e.f. the date of this order - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the Department's appeal against the order dropping proceedings against the CHA is sustainable. 2. Whether the refusal to renew the CHA's license based on prior penalty is justified. Issue-wise Detailed Analysis: 1. Department's Appeal Against Dropping Proceedings: The Department's appeal C/632/2008 was filed against the Commissioner of Customs' order dated 15/07/2008, which dropped proceedings against the CHA initiated via a show-cause notice dated 19/10/2006. The case arose when M/s. Lakshmi Traders filed a Bill of Entry for importing Sodium Sulphate from China, but upon inspection, the consignment was found to contain undeclared Cartap Hydrochloride, a pesticide. The CHA was accused of negligence in verifying the import details. The Deputy Commissioner’s inquiry report concluded that the CHA's lapses were due to negligence rather than deliberate involvement, recommending minor punishment rather than revocation of the license. The Commissioner found no evidence of negligence by the CHA and dropped the proceedings. The Department appealed, contending that the CHA was guilty of misdeclaration and undervaluation, and that the order was premature as the CHA's appeal against a penalty was pending before the Tribunal. The Tribunal upheld the Commissioner’s decision, noting that the Department failed to prove negligence and only raised a technical ground regarding the pending appeal. The Tribunal found no infirmity in the Commissioner’s order and dismissed the Department’s appeal as devoid of merits. 2. Refusal to Renew CHA's License: In appeal C/22876/2014, the CHA challenged the Commissioner’s order dated 11/07/2014, which rejected the renewal of their license. The CHA had applied for renewal on 06/06/2014, but it was refused based on a penalty of ?75,000 imposed under Section 112(a) and (b) of the Customs Act, which had attained finality after the CHA withdrew their appeal before the High Court. The Commissioner cited Regulation 5(e) of CBLR 2013, which bars issuing a new license due to misconduct. However, the CHA argued that the penalty under Section 112 did not amount to misconduct and that their license had been renewed multiple times post-penalty. They also contended that Regulation 5(e) was not applicable to existing license holders, referencing the Tribunal’s decision in Prashun Jain Vs. CC, New Delhi. The Tribunal found that the Commissioner’s reliance on Regulation 5(e) of CBLR 2013 was misplaced, as the CHA’s case was governed by CHALR 2004, which did not have a corresponding provision. The Tribunal noted that the CHA’s license had been renewed multiple times after the penalty, and there was no evidence of misconduct. Consequently, the Tribunal set aside the Commissioner’s order and allowed the CHA’s appeal, directing the renewal of the license. Conclusion: The Tribunal dismissed the Department’s appeal (C/632/2008) and allowed the CHA’s appeal (C/22876/2014), finding no evidence of negligence or misconduct by the CHA and ruling that the refusal to renew the license was not legally tenable. The orders were pronounced on 16/06/2020.
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