2016 (9) TMI 520 - AT - Customs

Restoration of CHA license - forefeiture of security deposit - Regulation 20 of CHALR/2004 - imposition of penalty - Section 117 of the Customs Act, 1962 - CHA licence-holder, firm of Mr. Walia - H Card holder, Shri Gurnani - mureate of potash (MOP) - restriction on export - seizure - violation of provisions of regulations 12, 13 (a) 13 (b), 13 (d) 13 (0), 19 (5) and 19 (8) of CHALR/ 2004 by Mr. Gurnani - Held that - As regards the cross-examination of Mr. Gurnanai, the only possible consequence of denial of his cross examination would be that Shri Gurnanai s statement may not be relied upon as an evidence. However, we find that the statement of Shri Gurcharan Walia is quite in harmony with the statement of Shri Gurnanai, and therefore, to the extent the statement of Shri Gurnani is in harmony with that of Shri Walia himself, it certainly is of corroborative value as Shri Walia in cross-examination could not have questioned those aspects which he himself admitted. The appellant allowed its license to be used and operated by Shri. Gurnani, for whom it sponsored H card even though it claimed he was not its employee (and therefore, sponsoring of H card itself was illegal). The appellant allowed using of its CHA license by Mr. Gurnani not as a one-off but for about 3 years and during this long period did not even take basic precaution to ensure that the license was not misused and that the obligations cast upon the licensee under CHALR 2004 were being fulfilled. The result was that the license got misused for attempted export of MOP which was restricted for export. The CHA licensee is reposed with a great degree of trust by the Customs Authorities and such conduct of the appellant was more than enough to irretrievably breach such trust. Such dereliction of duty on the part of a CHA, can potentially have even graver financial/security consequences. Thus, the appellant gravely failed to discharge its duties as CHA and thereby grossly violated Regulations 13 & 19 of CHALR, 2004 - Such serious violation on the part of the CHA can hardly deserve any condonation or leniency. The case of State of Punjab V. Ex-Constable Ram Singh 1992 (7) TMI 332 - SUPREME COURT is relied upon where it was held that a single act of corruption is sufficient to award the maximum penalty which under the CHALR, is of revocation of the license - revocation of licence and imposition of penalty upheld - appeal dismissed - decided against appellant.

Issues Involved:

1. Violation of principles of natural justice.
2. Authorization and consent for filing shipping bills.
3. Responsibility of CHA for acts committed by its employee.
4. Allegation of subletting the CHA license.
5. Employment status of Shri Gurnani.
6. Non-receipt of payment for the containers.
7. Alleged contravention of CHALR provisions.
8. Proportionality of punishment.

Detailed Analysis:

1. Violation of principles of natural justice:
The appellant contended that the principles of natural justice were violated as cross-examination of Shri Gurnani was not allowed. The Tribunal held that the denial of cross-examination would only imply that Shri Gurnani's statement could not be relied upon as evidence. However, the Tribunal found that Shri Gurnani's statement was corroborated by Shri Walia's statement, thus holding corroborative value.

2. Authorization and consent for filing shipping bills:
The appellant argued that it did not authorize the filing of the impugned shipping bills. The Tribunal found that Shri Walia was informed by Shri Gurnani about the filing of the shipping bills, and Shri Walia did not ensure proper authorization from the exporter, violating Regulation 13(a) of CHALR, 2004.

3. Responsibility of CHA for acts committed by its employee:
The appellant claimed that the CHA license could not be revoked for acts committed by an employee in his personal capacity. The Tribunal referred to the Gujarat High Court's decision in Rajendra Purohit, which held that the CHA is responsible for supervising its employees. The Tribunal concluded that Shri Gurnani was acting as the appellant's H card holder, thus making the appellant responsible for his actions.

4. Allegation of subletting the CHA license:
The appellant denied subletting the license. The Tribunal found that Shri Gurnani was using the CHA license for about three years and was paying the appellant for it, which amounted to subletting, violating CHALR, 2004.

5. Employment status of Shri Gurnani:
The appellant stated that Shri Gurnani was employed temporarily until December 2009 and later worked as an H card holder. The Tribunal found that sponsoring an H card for a non-employee was a violation of CHALR, 2004.

6. Non-receipt of payment for the containers:
The appellant argued that it did not receive any payment for the two containers. The Tribunal found that the appellant was regularly receiving payments from Shri Gurnani for using the CHA license, indicating a financial arrangement.

7. Alleged contravention of CHALR provisions:
The Tribunal found multiple violations of CHALR, 2004, including failure to obtain proper authorization (Regulation 13(a)), failure to advise the client to comply with the Customs Act (Regulation 13(d)), and allowing non-employees to transact business (Regulation 13(b)). The appellant also violated Regulation 19(5) by not filing a written authority with the Deputy Commissioner of Customs.

8. Proportionality of punishment:
The appellant cited Asiana Cargo Service to argue that the punishment should be commensurate with the gravity of the offense. The Tribunal distinguished the present case, noting that the appellant allowed its license to be used for about three years without supervision, leading to the attempted illegal export of MOP. The Tribunal found no reason for leniency, emphasizing the breach of trust reposed by Customs Authorities in the CHA.

Conclusion:
The Tribunal upheld the revocation of the CHA license, forfeiture of the security deposit, and imposition of a penalty, finding the appellant guilty of multiple violations of CHALR, 2004. The appeal was rejected, and the impugned order was sustained.

← Previous Next →