1998 (3) TMI 415 - AT - Customs

Summary

Issues Involved:

1. Jurisdiction of Customs Authorities.
2. Interpretation of Clause 18 of Custom House Agents Regulations.
3. Validity of Show Cause Notice.
4. Allegations and Evidence Against the Appellant.
5. Applicability of Regulation 20.
6. Examination of Antecedents and Character.
7. Relevance of Past Conduct and Statements.

Detailed Analysis:

1. Jurisdiction of Customs Authorities:
The appellant argued that the entire proceedings, including the Order-in-Original (OIO), were without jurisdiction under law. The appellant had qualified in the examination and had been working as an authorized employee under the Custom House Regulations, 1983. The Regulations only provide the power to suspend, revoke, or cancel the CHA license, which was not the issue here. Therefore, the appellant contended that the OIO was without jurisdiction and should be set aside.

2. Interpretation of Clause 18 of Custom House Agents Regulations:
The appellant's consultant argued that Clause 18 of the Regulations provided that a person who has qualified under Regulation 9 could engage in customs clearance work for a licensed firm or company. The only condition was that such a person should not engage with more than one firm or company. The consultant argued that the Customs Authorities had no discretion to refuse the Power of Attorney (PoA) once the appellant had passed the examination.

3. Validity of Show Cause Notice:
The appellant contended that the Show Cause Notice (SCN) dated 14-5-1997 was vague. The Customs authorities had provided three main grounds for the notice: (a) the appellant's statement to the DRI, (b) the statement of Shri K. Natarajan, and (c) observations of the Tribunal in an order dated 1-11-1996. The appellant argued that there was no proof of his involvement in any wrongdoing, and the observations of the Tribunal were not supported by evidence, as the appellant was not a party to those proceedings.

4. Allegations and Evidence Against the Appellant:
The Customs authorities argued that the PoA was denied due to the appellant's questionable activities in the past, particularly in connection with M/s. Kamakshi Agency. A letter dated 3-3-1994 from the appellant's employer to the Collector of Customs, Madras, indicated a lack of trust in the appellant. The Customs authorities stressed that good faith was essential for the proper functioning of a Custom House Agent.

5. Applicability of Regulation 20:
Regulation 20 was highlighted as specific to the issue of employing additional manpower to assist a CHA. It required the approval of the Assistant Collector of Customs, who must consider the antecedents and character of the person. The appellant had passed the examination under Regulation 9, but the issue was whether the refusal of PoA approval was justified based on the appellant's antecedents.

6. Examination of Antecedents and Character:
The Customs authorities were required to consider the antecedents and character of the appellant before granting approval. The words in Regulation 20(2) indicated that any information pertaining to the character of the person should be considered. The Customs authorities argued that the appellant's past conduct, particularly in relation to M/s. Kamakshi Agency, raised concerns about his character and antecedents.

7. Relevance of Past Conduct and Statements:
The Customs authorities referred to statements made by the appellant and his former employer, Shri Natarajan, which implicated the appellant in questionable activities. The appellant's own statement under Section 108 of the Customs Act, 1962, indicated that he had engaged in activities that misused the CHA license of M/s. Kamakshi Agency. This further supported the decision to deny the PoA approval.

Conclusion:
The Tribunal concluded that the Customs authorities were obliged under law to enquire into the antecedents and character of the applicant/employee. Regulation 20 granted the Customs authorities the power to deny approval if the antecedents were found to be questionable. The Commissioner of Customs had not acted arbitrarily or subjectively in concluding that the appellant's antecedents were questionable. Therefore, the appeal was dismissed, and the denial of the PoA approval was upheld.