2023 (6) TMI 1016 - AT - Customs

Revocation of CHA license - forfeiture of security deposit - penalty - Availment of ineligible duty drawback without realization of any export proceeds - misuse of Import Export Code (IEC) of various exporters for fraudulent exports of low quality shoe uppers, etc. - HELD THAT - Admittedly, there are two inquiry / investigation reports on record - one as early as in 2010 by the DRI authorities, based on which the licence of the appellant was kept under suspension. If this is considered as the inquiry report, then, the order of revocation vide impugned Order-in-Original which was passed in 2013 is clearly beyond the time-limit prescribed under the statute - If the second / other inquiry report by the Assistant Commissioner is considered, which is in November 2012, then, again, the revocation order vide impugned Order-in-Original in March 2013 is also beyond the prescribed ninety-day time limit, which is against the principles underlying the statute. The sole basis for the revocation is stemming out of the second inquiry report wherein, apparently, only statements are relied upon, which are no doubt uncorroborated. No other incriminating documentary evidence is made available on record nor has the outcome of investigation been placed on record by the Revenue to implicate or even suggest the active role of the appellant. Further, the Assistant Commissioner-Inquiry Officer has applied the Regulations and alleged violation of the same based on the statements per se - thus, the impugned order has been passed beyond the time period allowed under the Regulations and therefore, the order as well as the consequential revocation is held to be not in accordance with law, for which reason the impugned order insofar as it relates to the revocation stands set aside. The forfeiture of entire security deposit is disproportionate, also since there is no specific allegation as to the involvement of the appellant; rather, the culprits have clearly been identified as Mr. M. Vijay Anand and Mr. B. Mohan, who, admittedly, having misused the fake IECs, it is they who are actually liable for any penalty - It is deemed fit that a nominal amount of Rs.10,000/- could be forfeited out of the security deposit, but not the entire amount of Rs.75,000/- - appeal is allowed insofar as the revocation of CHA licence is concerned - appeal partly allowed insofar as forfeiture of security deposit is concerned.

Summary

Issues involved:
The case involves allegations of misuse of Import Export Code (IEC) for fraudulent exports of low-quality shoe uppers, resulting in ineligible duty drawback without realization of export proceeds. The appellant was accused of violating various regulations of the CHALR, 2004, leading to the suspension and subsequent revocation of their CHA Licence, along with forfeiture of the security deposit.

Summary:
1. The investigation revealed that the appellant's IEC was misused for fraudulent exports by individuals, leading to the suspicion of violations of CHALR regulations.
2. Statements of involved parties indicated misuse of IECs for ineligible duty drawbacks, with specific details of the fraudulent activities.
3. The Show Cause Notice alleged infringements of CHALR regulations, resulting in suspension and proposed revocation of the CHA Licence.
4. The appellant responded to the allegations, denying direct involvement in the fraudulent activities and requesting leniency.
5. The Commissioner of Customs ordered the revocation of the CHA Licence and forfeiture of the security deposit, prompting the appeal.
6. Arguments were presented regarding the timing of the revocation order and the impact on the appellant's long-standing license.
7. The Assistant Commissioner highlighted the loss to the exchequer due to fraudulent exports and the serious nature of the violations.
8. The Tribunal considered the gravity of the infringements, the mandatory nature of CHALR regulations, and the time limits for actions against CHAs.
9. The revocation order was found to be beyond the prescribed time limits, rendering it non est in the eye of the law.
10. The lack of corroborating evidence and reliance solely on uncorroborated statements led to the revocation being set aside.
11. The forfeiture of the entire security deposit was deemed disproportionate, and a nominal amount was ordered to be forfeited instead.
12. The appeal was allowed regarding the revocation of the CHA licence and partly allowed concerning the forfeiture of the security deposit.