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2022 (5) TMI 211 - HC - CustomsRevocation of CHA License - forfeiture of security deposit - levy of penalty - revocation by solely relying upon statement given by the Managing Director of the petitioner without taking into consideration the other part of the evidence available on record - whether collateral proceeding will not be taken into consideration for adjudicating a case when the background and genus of the offence committed is same in both the cases? - Doctrine of proportionality - HELD THAT - There is no material or any other reference made to support the stand that the Managing Director was forced to give a statement. The statements were recorded on two dates, 18.11.2008 and 27.04.2009. If the stand taken by the appellant were to be true, any prudent person would retract the statement at the earliest point of time. The appellant/ Managing Director did nothing after 18.11.2009 but chose to cooperate in the investigation by responding to another summons and also recording another statement on 27.04.2009. Even, thereafter there is no valid retraction or a whisper about the veracity of the statement. For the first time, after the show-cause notice dated 14.08.2009 was issued, while submitting the reply a faint attempt has been made by the appellant to retract the so called statement. Therefore, we hold that the authority rightly rejected the so called retraction and proceeded to adjudicate the matter taking note of the statement recorded under Section 108 of the Act. The learned Tribunal on its part also examined this aspect and rightly affirmed the view of the Commissioner. Waiver of penalty proceedings initiated under Section 114 of the Act - HELD THAT - The Commissioner did not totally exonerate the appellant from the charge against them but what weighed in the mind of the Commissioner to drop the penalty proceedings was because the appellant themselves stated that mere involvement as a CHA cannot be a ground to take penal action under the Customs Act but at best they can be proceeded under the relevant Regulation. That apart, the Commissioner also found that there is no evidence linking the Customs officers. Therefore, the Commissioner though fit to drop the penalty proceedings. The order nowhere exonerates the appellant from the allegations which were the basis for issuance of the show cause notice. In the opinion of the Commissioner penal action under the Customs Act was not warranted. More so because, the appellant themselves reconciled to the fact that they can be proceeded under the relevant Regulations (CHALR). Therefore, placing reliance the proceedings of the Commissioner dropping the penalty proceedings can in no manner impact the order revoking the license granted to the appellant. The Commissioner on remand has rightly understood the scope of remand and the purport and import of the order-in-original dated 05.01.2012. There is a categorical finding on fact which could not be assailed by the appellant, to the effect that the appellant did not know who the exporter was and the appellant did not directly receive the export order or the consignment from the exporter. This having been admitted, it would clearly show that they have failed to discharge their statutory obligations under Regulation 13 (b) and 19 (8) of the CHALR - the order passed by the tribunal does not suffer from any illegality or perversity for us to interfere and consequently the substantial questions of law have to be answered against the appellant. Doctrine of proportionality - HELD THAT - The appellant has not been completely exonerated by the Commissioner while dropping the penal action under the Customs Act. The admitted fact is that the appellant did not receive the export order from the exporter which is mandatory under the Regulations. Merely by placing reliance on the Let Export Order said to have been given by the Customs authorities at the first instance cannot exonerate the appellant nor can it in any manner waive or dilute the obligations of the appellant as the CHA as specified under the Regulations - the wordings in the letter of authorization dated 07.11.2008 alleged to have been given by the exporter is curiously worded. If the exporter Himalayan Tour and Travels was a genuine exporter, there would be no necessity to give any undertaking that the Cargo does not contain any contraband. The letter does not specify as to from where the cargo has been procured more importantly the exporter claims himself to be a tour operator as well as an importer-exporter. There was nothing placed on record by the exporter to indicate that he was a regular exporter of sponge iron or any other product. The letter given by the exporter dated 07.11.2008 is a document which has been created so as to enable the appellant to wriggle out of the conspiracy which was hatched. Therefore, the adjudicating authority as well as the tribunal rightly did not give any credence to the letter dated 07.11.2008. The revocation of the CHA license granted to the appellant and forfeiture of the security deposit upheld - substantial questions of law are answered against the appellant - appeal dismissed.
Issues Involved:
1. Whether the Tribunal was correct in finding that the petitioner violated the provisions of Regulation 13(b), 13(d), and 19(8) of the Customs House Agents Licensing Regulation, 2004, resulting in the revocation of the license. 2. Whether the Tribunal erred in concluding that findings in a collateral proceeding cannot be considered in adjudicating the present case. Issue-wise Detailed Analysis: 1. Violation of Regulation 13(b), 13(d), and 19(8) of CHALR 2004: The appellant, a licensed Customs House Agent (CHA), was implicated in a case involving the export of red sanders, a contraband item, misdeclared as sponge iron. The CHA license was revoked based on violations of specific regulations: - Regulation 13(a): The appellant failed to obtain proper authorization from the exporter and instead relied on a freight forwarder, Draft Cargoways. This was a clear violation as the CHA is mandated to obtain authorization directly from the exporter. - Regulation 13(b): The CHA did not transact business personally or through an approved employee. The Jetty Sircar, Mithun Ghosh, who handled the clearance, was not an employee of the appellant but of Draft Cargoways, which contravenes the regulation. - Regulation 13(d): The CHA failed to advise the exporter to comply with the Act and did not bring the non-compliance to the notice of Customs authorities. The appellant's reliance on the freight forwarder without verifying the exporter’s credentials was deemed negligent. - Regulation 19(8): The CHA did not exercise proper supervision over the employees involved in the transaction, leading to a breach of their duty to ensure the correct conduct of business. The Tribunal upheld the revocation of the license, emphasizing that the appellant's actions demonstrated a clear disregard for the regulatory framework governing CHAs. 2. Consideration of Collateral Proceedings: The appellant argued that the order dropping penalty proceedings under Section 114 of the Customs Act should influence the decision regarding the revocation of the CHA license. However, the Tribunal and the High Court held that the proceedings under the Customs Act and the CHALR are distinct. - The Customs Act proceedings focused on penal actions for smuggling, while the CHALR proceedings addressed the professional conduct and obligations of a CHA. - The Commissioner’s order dropping the penalty proceedings did not exonerate the appellant from the allegations but indicated that the appellant could be proceeded against under the CHALR. - The High Court affirmed that the findings in the Customs Act proceedings have no bearing on the CHALR proceedings, as the latter specifically governs the duties and responsibilities of CHAs. Proportionality of Punishment: The appellant contended that the revocation of the license was disproportionate. However, the High Court upheld the punishment, noting the serious nature of the violations and the appellant’s failure to adhere to regulatory obligations. The Court emphasized that even a single instance of such a breach could justify the maximum penalty of license revocation due to the potential for significant harm to national interests. Conclusion: The High Court dismissed the appeal, affirming the Tribunal's decision to revoke the CHA license and forfeit the security deposit. The Court held that the appellant's actions constituted a gross violation of the CHALR, justifying the severe penalty imposed. The substantial questions of law were answered against the appellant, and the doctrine of proportionality did not warrant any leniency in this case.
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