2012 (8) TMI 136 - AT - Customs

Evading customs duty - revoking the CHA licence - Held that - From the records of the case, it is seen that mis-declaration of the weight and consequently the value of the export consignments has been clearly established int his case as can be seen from the panchanama proceedings - Since the logistics support was provided by the CHA firm, they should have been aware of the full details of the consignments under export and the mis-declaration made with regard to the weight, number of pieces, FOB value of exports As the partner of the CHA firm and two of their employees have clearly admitted to aiding and abetting the fraudulent exports, there is nothing that needs to be proved in the instant case - The entire export transactions were a sham and everyone, the exporter, the CHA the logistics firm and the shipping agent colluded and connived with each other so as to defraud the exchequer as they had retracted their statements, the same was not done immediately or at the first available opportunity but only in reply to the show cause notice issued under the Customs Act - Thus more than 6 months had elapsed between the deposition of the statement and the retraction. It is a well settled legal position that such belated retraction has no sanctity in the eyes of law and has to be treated as pure afterthought - the case against the appellant is built on the statements recorded from their own. When the cargo was LCL, the CHA directed the shipping line to book it as FCL and also collected FCL charges form the exporter as a consideration for their help and support in committing the fraud. Further in his statement has admitted that he had not obtained copies of the transport document from the transporter/trucker who brought in the export goods for examination and stuffing. Therefore, violation of regulation 13(k) is also established - As it is not a case of minor infractions of the provisions of CHALR but a major active involvement in aiding and abetting fraudulent exports leading to substantial loss of revenue to the exchequer the maximum punishment prescribed in the CHALR is clearly attracted - aginst assessee.

Issues Involved:
1. Violation of Regulation 13(d) of Custom House Agents Licensing Regulations, 2004 (CHALR).
2. Violation of Regulation 13(a) of CHALR.
3. Violation of Regulation 19(8) of CHALR.
4. Violation of Regulation 13(k) of CHALR.
5. Violation of Regulation 13(n) of CHALR.

Issue-wise Detailed Analysis:

1. Violation of Regulation 13(d) of Custom House Agents Licensing Regulations, 2004 (CHALR):
The Directorate of Revenue Intelligence (DRI) uncovered fraudulent export activities by two companies, M/s. Aditya Recycling P. Ltd. and M/s. Khaitan Textiles Mills Ltd., involving mis-declaration of the weight of copper and brass ingots. The appellant, a Custom House Agent (CHA), was found to have aided and abetted these fraudulent exports. The investigation revealed that the appellant's firm, including its Managing Partner and employees, knowingly presented falsified documents to Customs authorities and facilitated the fraudulent shipments. The CHA's involvement in the fraudulent exports was established through detailed statements recorded under Section 108 of the Customs Act, 1962, which were supported by corroborative evidence. The Tribunal concluded that the CHA had violated Regulation 13(d) by failing to advise their clients to comply with Customs provisions and not bringing non-compliance to the notice of Customs authorities.

2. Violation of Regulation 13(a) of CHALR:
The charge under Regulation 13(a) was for not obtaining authorization from the exporter for each transaction. While the Inquiry Officer found most charges proved, the Tribunal did not find sufficient evidence to establish a violation of Regulation 13(a) beyond doubt. Therefore, this specific charge was not upheld.

3. Violation of Regulation 19(8) of CHALR:
The Tribunal found that the CHA failed to exercise necessary supervision over its employees, which is a requirement under Regulation 19(8). The involvement of the partner and employees in the fraudulent activities indicated a lack of proper oversight. Statements from the CHA's employees confirmed that they were aware of the discrepancies in the export consignments and proceeded with the shipments under instructions from their superior, Mr. Sudhakar More. This lack of supervision and control over employees' conduct was deemed a clear violation of Regulation 19(8).

4. Violation of Regulation 13(k) of CHALR:
The CHA was also charged with non-maintenance of records and accounts related to the fraudulent exports, violating Regulation 13(k). The investigation showed that the CHA did not obtain copies of transport documents from the transporter, indicating a failure to maintain proper records. This was corroborated by statements from the employees involved, who admitted that they did not follow proper documentation procedures. The Tribunal concluded that the CHA's failure to maintain accurate records and accounts was a violation of Regulation 13(k).

5. Violation of Regulation 13(n) of CHALR:
Lastly, the charge of not discharging duties with utmost speed and efficiency under Regulation 13(n) was established. The CHA's active participation in the fraudulent exports, including directing the shipping line to book LCL cargo as FCL and collecting FCL charges from the exporter, demonstrated a lack of efficiency and integrity in their duties. The Tribunal noted that the CHA's actions were not only inefficient but also fraudulent, leading to a significant loss of revenue for the exchequer.

Conclusion:
The Tribunal, after considering all the evidence and arguments, concluded that the charges of violating Regulations 13(d), 13(k), 13(n), and 19(8) were clearly established. The appeal was dismissed, and the revocation of the CHA licence was upheld as the maximum punishment prescribed under the CHALR for such serious violations. The Tribunal emphasized that the CHA's actions constituted a major fraud, justifying the severe penalty imposed.

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