2014 (12) TMI 687 - HC - Customs

Revocation of the CHA Licence and forfeiture of the security deposit - Whether on the facts and in the circumstances of the case, the findings of the CESTAT that proceedings under CHALR, 2004 cannot be initiated in respect of High Seas Sales Agreement executed prior to imports, and charge of diversion of goods is not sustainable is based on no evidence or partly relevant or partly irrelevant evidence and is otherwise perverse and arbitrary? - At this stage the petitioner cannot be denied the benefit of the impugned order 2012 (12) TMI 589 - CESTAT MUMBAI passed by CESTAT. Therefore, we do not grant the interim stay as prayed for. However, since our attention is invited to the fact that against the order of adjudication dated 14 December, 2007 passed under the Customs Act an appeal is pending before CESTAT, we make it clear that CESTAT will be at liberty to hear and decide the appeal against the said order dated 14 December, 2007 without in any manner being influenced by the findings and observations made in the impugned order dated 9 October, 2012 - Matter remanded back - Decided in favour of Revenue for remand purposes.

Summary

Issues:
1. Interpretation of violation of Regulations 13(d), 13(e), and 13(n) of CHALR, 2004.
2. Validity of high sea sale agreement in relation to CHALR, 2004.
3. Allegations of abetment in the diversion of goods.
4. Examination of evidence in proceedings under CHALR, 2004.

Interpretation of violation of Regulations 13(d), 13(e), and 13(n) of CHALR, 2004:
The appeal was filed against the CESTAT order revoking the CHA Licence and forfeiting the security deposit. The substantial question of law was whether the charges against the respondents for violating Regulations 13(d), 13(e), and 13(n) of CHALR, 2004 were sustainable. The CESTAT held that the charges were not sustainable, leading to the revocation of the license being set aside. The High Court noted the arguments presented by both parties but decided that a detailed examination was necessary, and the benefit of the CESTAT order could not be denied at that stage.

Validity of high sea sale agreement in relation to CHALR, 2004:
Another substantial question was whether the high sea sale agreement was genuine and executed before import, thus affecting the initiation of proceedings under CHALR, 2004. The CESTAT found that the agreement was not fabricated and had been executed prior to import, which influenced the decision to set aside the revocation of the CHA Licence. The High Court acknowledged the revenue's arguments regarding penalty imposition and fraud allegations but emphasized the need for a detailed examination, allowing the benefit of the CESTAT order to the petitioner.

Allegations of abetment in the diversion of goods:
The CESTAT also considered whether the respondents abetted in the diversion of goods, ultimately delivering them to the importer's representative after arranging transportation. The High Court reviewed the arguments presented by both sides, including statements from involved parties, and concluded that a more detailed examination was required to determine the sustainability of the charges, refraining from granting interim stay based on the information provided.

Examination of evidence in proceedings under CHALR, 2004:
Lastly, the issue revolved around the examination of evidence in the proceedings under CHALR, 2004. The High Court highlighted the distinction between breach of CHA Regulations and the Customs Act, emphasizing the need for a thorough examination, especially considering the pending appeal related to the adjudication order under the Customs Act. The Court clarified that CESTAT could independently decide on the appeal against the Customs Act order without being influenced by the observations in the impugned order related to CHALR, 2004.