2014 (5) TMI 1009 - AT - Customs

Revocation of CHA License Transfer of Licence Recoded statement - Section 108 of Customs Act - Regulation 12 of CHALR, 2004 - Held that - Appellant is one of 10 persons to whom the licence alleged to have been transferred - Thus, department could not establish that the provisions of Regulation 12 of CHALR, 2004 were contravened - The appellant obtained valid and a proper authorization letters from their clients and that Regulation 13(a) of the CHALR, 2004 have been contravened is not established. Entire case of the department is based on the statements recorded u/s 108 - Admittedly the proceedings under CHALR, 2004 are in the nature of domestic Inquiry proceedings and evidence is required to be brought on record during the course of the Inquiry proceedings - The evidence given by witnesses clearly brings out the basic fact that the licence has not been transferred and that it was the employees of the appellant who have been attending to Customs clearance work in Custom house by filing the necessary documents, attending to assessment, examination and clearance of the goods - Evidence given by Shri Sagar Rakshe and Amit Pattani, during the Inquiry has not been taken into consideration only because the said evidences given by the witnesses of the department is against the charges framed by the department. Relying upon M.V. Bijlani v. Union of India and Ors 2006 (4) TMI 455 - SUPREME COURT -Statement recorded vide Section 108 has been given some special status as to its acceptability in relation to proceedings under the Act but there no provision like the one found in Regulation 23(3), exist for the purpose of adjudication under the said Act - Notice u/s 124 has to be served which also includes the statements recorded u/s 108 and the other side has an option to ask for production of such persons for cross-examination - Both recording of evidence and offering the persons for cross-examination has been made mandatory under Regulation 23(4) - Non-examination of these two passengers and non-offering them for cross-examination to the delinquent, therefore, makes their statements recorded in other proceedings not admissible - There is also no allegation that these two passengers have been intentionally kept away by the appellant and only ground for non-examination mentioned is that they did not respond to the summons - It is true that there is no power in such authorities to enforce their attendance, but if their presence cannot be secured, their evidence has to be discarded and cannot be used in any manner - Any use of their statement would directly violate Regulation 23(4) - Impugned order is set aside Decided in favour of appellant.

Summary

Issues Involved:
1. Revocation of CHA license under CHALR, 2004.
2. Alleged transfer of CHA license to unauthorized persons.
3. Compliance with Regulations 12, 13(a), 13(d), 13(n), and 19(8) of CHALR, 2004.
4. Validity and admissibility of statements recorded under Section 108 of the Customs Act, 1962.
5. Procedural compliance under Regulation 22 of CHALR, 2004.

Detailed Analysis:

1. Revocation of CHA License under CHALR, 2004:
The appellant's CHA license was revoked by the Commissioner of Customs under Regulations 22(7) and 20(1) of CHALR, 2004, following allegations of misuse and unauthorized transfer of the license. The appellant contested the revocation, arguing that the charges were based on insufficient and improperly admitted evidence.

2. Alleged Transfer of CHA License to Unauthorized Persons:
The Department of Revenue Intelligence (DRI) alleged that the appellant transferred the CHA license to unauthorized individuals who facilitated fraudulent export activities. The key evidence was the statement of Shri Amit Prabhudas Pattani, who admitted to renting out the CHA license for monetary gains. However, the appellant argued that the statement of Shri Sagar Dattatray Rakshe, a key witness, indicated that the appellant was engaged only for legitimate customs clearance work and followed standard procedures similar to other CHAs. The appellant also highlighted that statements from other individuals were neither referred to nor relied upon, weakening the department's case.

3. Compliance with Regulations 12, 13(a), 13(d), 13(n), and 19(8) of CHALR, 2004:
- Regulation 12: The department's case relied heavily on the statement of Shri Sagar Dattatray Rakshe, who during the inquiry, confirmed that he engaged the appellant for legitimate customs clearance work. The department failed to provide evidence that the license was transferred to unauthorized persons, and the appellant's employees performed the clearance work.
- Regulation 13(a): The department alleged that the appellant did not obtain valid authorization letters from clients. However, evidence from Shri Srinivasan and other witnesses indicated that proper authorization letters were obtained and the appellant followed standard procedures.
- Regulation 13(d) and 13(n): The charges were based on the premise that the appellant did not advise exporters on compliance and failed to discharge duties with utmost speed and efficiency. The inquiry revealed that the appellant's partner advised clients on customs laws, and no complaints of inefficiency were reported.
- Regulation 19(8): The department alleged that the appellant failed to supervise employees, particularly in the case of Shri Sayed Sattar, who allegedly signed customs documents fraudulently. The inquiry found that Shri Sayed Sattar was not examined, and his statements were not brought on record, weakening the department's allegations.

4. Validity and Admissibility of Statements Recorded under Section 108 of the Customs Act, 1962:
The appellant argued that statements recorded under Section 108 of the Customs Act, 1962, are not admissible in CHALR proceedings unless the witnesses are examined and cross-examined during the inquiry. The department relied on these statements, but the tribunal noted that such evidence is not admissible in CHALR proceedings without proper examination and cross-examination, as per the Supreme Court's rulings in M.V. Bijlani v. Union of India and Others and Roop Singh Negi v. Punjab National Bank and Ors.

5. Procedural Compliance under Regulation 22 of CHALR, 2004:
The tribunal emphasized that proceedings under Regulation 22 of CHALR, 2004, are akin to domestic inquiries and must adhere to statutory provisions. The inquiry officer is required to consider only the evidence presented during the inquiry, and statements made during preliminary investigations are not admissible unless the witnesses are examined and cross-examined. The tribunal found that the department failed to comply with these procedural requirements, rendering the evidence inadmissible.

Conclusion:
The tribunal concluded that the department failed to establish the charges against the appellant, as the evidence relied upon was inadmissible and insufficient. The revocation of the CHA license was set aside, and the appeal was allowed. The tribunal highlighted the importance of adhering to procedural requirements in CHALR proceedings and the inadmissibility of statements recorded under Section 108 of the Customs Act, 1962, without proper examination and cross-examination.