1992 (9) TMI 245 - AT - Customs

Summary

Issues Involved:
1. Revocation of CHA Licence at Kandla.
2. Revocation of CHA Licence at Bombay.
3. Allegations of failure to advise clients and inform Customs.
4. Allegations of failure to exercise due diligence.
5. Allegations of involvement in smuggling activities.

Detailed Analysis:

1. Revocation of CHA Licence at Kandla:
The appellants held CHA Licences for Kandla and Bombay ports. The cause of action for revoking the Kandla CHA Licence arose due to the alleged improper clearance of Pig Iron imported by M/s. Kajaria Exports Ltd. under the DEEC Scheme. The investigation revealed that the goods were sold in the open market instead of being used for export products as required. The appellants were accused of knowing about this violation and not informing the Customs Authorities. The charges against the appellants included failure to advise their clients properly, failure to exercise due diligence, and involvement in smuggling activities.

2. Revocation of CHA Licence at Bombay:
As a consequence of the revocation of the Kandla licence, the Bombay Customs also initiated proceedings to revoke the CHA Licence at Bombay. The Bombay Customs issued a notice citing the misconduct at Kandla as the reason for revocation under Regulation 21(1)(C) of the CHA Regulations.

3. Allegations of Failure to Advise Clients and Inform Customs:
The appellants were charged with failing to advise their clients, M/s. Kajaria Exports Ltd., about the requirements of the DEEC Scheme and failing to inform the Customs Authorities about the diversion of imported goods. The enquiry officer found that while the appellants had complied with the formalities for assessment and clearance, they were aware of the diversion of goods and failed to inform Customs. The Tribunal held that the appellants should have informed Customs about the violation, thus establishing Charge No. 1.

4. Allegations of Failure to Exercise Due Diligence:
The appellants were also charged with failing to exercise due diligence in ascertaining the correctness of the information related to the clearance of import cargo under the DEEC Scheme. The enquiry officer held that Charges 1 and 2 were not sustainable based on the evidence before him. However, the Tribunal agreed with the Collector that the appellants' prior knowledge of the diversion of goods indicated a failure to exercise due diligence, thus partially establishing Charge No. 3.

5. Allegations of Involvement in Smuggling Activities:
The appellants were accused of being involved in smuggling activities by facilitating the sale of imported Pig Iron in the open market. The Tribunal found no evidence of prior conspiracy or knowledge of the importers' plans to divert the goods. The appellants were engaged only for Customs clearance after import. The Tribunal concluded that while the appellants' actions contributed to the diversion, they did not directly result in smuggling. Therefore, the violation of CHA Regulations was substantiated, but the Tribunal called for leniency in punishment.

Conclusion:
The Tribunal confirmed the revocation of the CHA Licence at Kandla but reduced the period of revocation to end on 31-8-1993, with the licence to be restored on 1-9-1993. The Tribunal also ordered the restoration of the CHA Licence at Bombay, considering the period already lapsed as sufficient punishment, and issued a warning for future conduct. Both appeals were disposed of accordingly.