2016 (10) TMI 664 - AT - Customs

Restoration of CHA licence - evasion of customs duty - imported goods polyester woven dyed fabrics/viscose polyester blended fabrics or viscose polyester blended fabric - Inquiry under regulation 22 of the Regulation - compliance of statutory procedure - Held that - Customs House Agent are required to be proficient in the customs operation and procedure and to ensure that importer/exporter posses appropriate bona fides and act in conformity with the Customs Act, 1962. The said consignments cleared through appellant, as agent, were violative of the declaratory provisions under the Customs Act, 1962. There is, however, no evidence on record to show that appellant was aware of the intent or modus adopted by the customer. Nor is there any allegation that appellant had contributed in deceiving the customs authorities - The need to advice a client would arise only if the agent was aware of any intent to misdeclare. We note that there is no evidence or finding that the appellant was aware of such an intent on the part of the client. There was, therefore, be no reason for the appellant to believe that the client was in need to advice the client to desert from their proposed action. As to subletting, we find that the impugned order has merely proceeded on the concatenation of the request for withdrawal of G certificate and the fact of employment elsewhere subsequently as evidence that such individual was not an employee when the bills were filed. The time-line, as seen from the application for G certificate furnished by the Learned Counsel for appellant, would evidence otherwise. It appears that Shri Momayya has not been established to be a former employee of the appellant-agent. Consequently the charge of sub-letting/transfer, as well as failure to handle the consignment through an authorised employee or personally, fails. An authority letter was indeed obtained from the ostensible importer and its existence has been acknowledged as such by the Settlement Commission. The Regulations do not require that each and every authorisation should be acknowledged by a customs officer. As long as authority letter is in possession of the agent, compliance with the Regulation cannot be disputed. It must also be noted that no evidence has been brought on record to demonstrate that the acts of commission and omission on the part of the importer is attributable to the appellant - no fault on the part of appellant established - licence to be restored - decided in favor of appellant.

Summary

Issues:
1. Revocation of customs license under Customs House Agents Licensing Regulations, 1984.
2. Alleged violations by the customs agent leading to evasion of duties.
3. Compliance with regulations and procedural requirements by the customs agent.
4. Applicability of penalty and revocation in cases of regulatory violations by customs agents.

Issue 1: Revocation of customs license under Customs House Agents Licensing Regulations, 1984
The appeal was filed against the revocation of the license of M/s Bajaj Enterprises by the Commissioner of Customs (General), Mumbai. The license was suspended and subsequently revoked following an inquiry that found the licensee guilty of various charges under the Regulations. The appellant challenged the revocation and forfeiture of the security deposit under regulations 20 and 22 of the Customs House Agents Licence Regulation 2004 before the Appellate Tribunal CESTAT Mumbai.

Issue 2: Alleged violations by the customs agent leading to evasion of duties
The investigation revealed that the customs agent, M/s Bajaj Enterprises, was involved in facilitating the import of fabrics at undervalued rates, leading to an evasion of customs duties amounting to &8377; 1.20 crores. The agent was found to have allowed the misuse of the license by another individual, leading to unauthorized transactions and non-compliance with the Customs Act, 1962. The inquiry established multiple violations by the agent, including transferring the license, failing to obtain authorization from the client, and not advising the client on compliance with customs regulations.

Issue 3: Compliance with regulations and procedural requirements by the customs agent
The appellant argued that there was no evidence to suggest their awareness of the violations committed by the importer, and no proof of their involvement in deceiving customs authorities. The appellant contended that they had obtained proper authorization from the importer and had not sublet the work to an unauthorized individual. The appellant also highlighted the absence of any finding of mala fide intent on their part and emphasized the importance of proportionality in imposing penalties for regulatory violations by customs agents.

Issue 4: Applicability of penalty and revocation in cases of regulatory violations by customs agents
The Tribunal considered the arguments presented by both parties and analyzed the gravity of the offenses committed by the customs agent. The Tribunal found that the inquiry report and the impugned order lacked sufficient evidence to establish the culpability of the appellant in the violations. The Tribunal set aside the revocation of the license and restored it to the appellant, citing the absence of mens rea and the failure to prove the agent's active involvement in the regulatory breaches.

In conclusion, the Tribunal quashed the revocation of the license of M/s Bajaj Enterprises, emphasizing the need for proportionality in imposing penalties for regulatory violations by customs agents and highlighting the importance of evidence to establish culpability in such cases.