1987 (4) TMI 86 - HC - Customs

Summary

Issues Involved:

1. Misconduct and revocation of customs house agent's license.
2. Obligation to account for funds received for customs duty.
3. Relationship and contract between the petitioner and N.L.C.
4. Validity of charges framed against the petitioner.
5. Legal accountability and privity of contract.
6. Misappropriation and non-submission of accounts.

Issue-wise Detailed Analysis:

1. Misconduct and Revocation of Customs House Agent's License:
The petitioner's customs house agent's license was revoked by the respondent under Regulation 21 of the Customs House Agents Licensing Regulation, citing misconduct. The specific misconduct alleged was the failure to account for funds received for customs duty, as required under Regulation 14(g).

2. Obligation to Account for Funds Received for Customs Duty:
The petitioner, a private limited company operating as a customs house clearing agent since 1921, was accused of not promptly accounting for funds received for customs duty. The petitioner received funds from N.L.C. through the local representative of the foreign supplier to clear imported goods. The process involved the petitioner crediting the funds into a customs account in the name of N.L.C. and using these funds to pay customs duty.

3. Relationship and Contract between the Petitioner and N.L.C.:
The court noted that there was no direct contract between the petitioner and N.L.C. for clearing the goods. The responsibility for customs clearance lay with the foreign supplier, who appointed the petitioner as their agent. The petitioner's contractual obligations were with the foreign supplier and their local representative, not with N.L.C.

4. Validity of Charges Framed Against the Petitioner:
The charges against the petitioner included failing to remit a cheque for Rs. 1,96,55,075 into N.L.C.'s Deposit Account and retaining a cheque for Rs. 32,50,000 for 20 days before depositing it. The second charge and part of the third charge were dropped, leaving the main charge of not accounting for funds satisfactorily.

5. Legal Accountability and Privity of Contract:
The court found that the petitioner was not legally accountable to N.L.C. for the funds received. The petitioner's obligation was to the foreign supplier's representative, from whom they received the funds. The court emphasized that there was no privity of contract between the petitioner and N.L.C., and the petitioner acted on behalf of the foreign supplier.

6. Misappropriation and Non-submission of Accounts:
The court concluded that the petitioner did not misappropriate funds or fail to submit accounts to N.L.C. The petitioner had credited Rs. 1,44,40,548 for customs duty and accounted for the remaining funds as per instructions from the foreign supplier's representative. The court noted that the petitioner had a long-standing record as a customs house clearing agent and no criminal intent was evident in their actions.

Conclusion:
The court set aside the order of the Collector of Customs, finding the charges of misconduct and misappropriation against the petitioner unsustainable. The court ruled that the petitioner was not obligated to account to N.L.C. and that Regulation 14(g) was incorrectly applied. The writ petition was allowed, and the revocation of the license was quashed.