2012 (12) TMI 589 - AT - Customs

Initiation of proceedings under CHALR 2004 - actively engaged in High Sea Sales and diversion of goods Held that - High Sea Sales agreement at the time of clearance was examined by the officers who cleared the goods and there is no allegation that the said agreement is fabricated one entered by the parties to the contract. Further, the High Sea Sales agreement have been executed prior to imports, therefore, proceedings under CHALR 2004 cannot be initiated for this act of the appellant. Appellant was not in the knowledge of the diversion of goods by the importer. Moreover, the appellant has arranged the transportation of the goods and goods have been handed over to the representative of the importer at Kalamboli Weigh Bridge where the appellant had asked to deliver the goods to the importer. This fact has been confirmed by the transporter during the course of their statement recorded, therefore, the allegation that appellant was actively involved in the diversion of the goods is not sustainable - allegation leveled against the appellant for violation of Regulation 13(d), (e) and (n) of CHALR 2004 is not sustainable - in favour of assessee.

Summary

Issues:
Revocation of CHA license and forfeiture of security deposit based on alleged fraud and diversion of goods.

Analysis:
The appellant, a logistics company, appealed against the revocation of its CHA license and forfeiture of security deposit due to alleged involvement in fraud and diversion of goods. The initial penalty was imposed based on allegations that the appellant and its director were engaged in fraudulent activities related to High Sea Sales and delivery of goods to unauthorized locations. The Central Intelligence Unit reported misuse of advance licenses and diversion of imported goods in the local market. Statements from individuals implicated the appellant in these activities.

The charges against the appellant included failure to comply with regulations, lack of due diligence, and inefficiency in discharging duties as a CHA. After an enquiry, the appellant was found guilty of violating CHALR 2004, leading to the revocation of the CHA license and forfeiture of the security deposit. The appellant challenged this decision, arguing that the allegations were not sustainable. The appellant contended that the High Sea Sales agreement was valid as customs authorities had cleared the goods based on it. Additionally, the appellant claimed innocence regarding the diversion of goods, stating that they had fulfilled their duty by handing over goods to the importer's representative.

The opposing party argued that the appellant was actively involved in High Sea Sales and diversion of goods, breaching CHA duties. However, upon detailed consideration, the Tribunal found that the allegations were not substantiated. The High Sea Sales agreement was deemed valid, and the appellant's lack of knowledge about the subsequent diversion of goods was highlighted. Consequently, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with immediate effect.