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TMI Blog2015 (8) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... er documents submitted to the Customs Department. He was enabled to do all the forgeries and derive the benefit thereof only because of his employment under the appellant and obviously on account of the failure of the appellant in effectively supervising the activities of his employees to ensure that they conduct themselves properly in the transaction of his business as a Customs House Agent. Therefore, the appellant cannot be absolved of his lapse of supervision attracting Clause 19 of the Regulations warranting action against him under Regulation 20. Even though the appellant functioned as a Customs Office of Agent on the basis of the license that was issued under the Regulations and was liable to be proceeded against under Clauses 19 and 20 of the Regulations penalty to be levied on the appellant should certainly be proportionate to the gravity of the breach proved to have been committed by him. While examining this issue, the fact that the appellant did not have any role in what was done by Sri.Vipin Kumar and his team and that the lapse found is supervisory lapse assumes importance the absence of any previous misconduct on the part of the appellant has also to be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revealed that the signature of the proprietor of the appellant was forged in the Bill of Entry by Sri.Vipin Kumar. Enquiry also revealed that Sri.Vipin Kumar had submitted forged application for 'H' card and 'G' card in the Customs Office and on the basis of these applications, cards were obtained in the name of two persons by name Kannan and Anil Kumar Alex. 5. Alleging that these actions of Vipin Kumar, the employee of the appellant, amounted to irregularities in terms of the provisions contained in the Regulations 2004, the license issued to the appellant was suspended by Annexure A1 order dated 18.1.2012. Subsequently, Annexure A2 order was issued by the Commissioner ordering continuance of suspension of the licence. 6. Thereafter, Annexure A3 show cause notice dated 19.11.2012 was issued to the appellant requiring it to show cause why the Custom House Agents License issued to it should not be revoked and security deposited not forfeited. On receipt of the notice, the appellant submitted Annexure A4 reply. Finally, the second respondent issued Annexure A8 order revoking the licence and forfeiting the security deposit. The conclusions on the basis of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsure proper conduct of its employee in the transaction of business as CHA and had thereby violated Regulation 19(8) of CHALR, 2004. 18. The fact that the endorsement of the Port Health Officer on Bill of Entry No.7690810/17.8.2012 that the item ie., vigor power energy drink, monster energy drink, power plus energy drink, kratingdaeng Redbull, does not conforms to FSSAI specification was forged by Shri.L.Kannan, 'H' card holder of the CHA on instigation of another employee and 'G' card holder Shri.Vipin Kumar, to read as the item, vigor power energy drink, monster energy drink, power plus energy drink, kratingdaeng Redbull conforms to FSSAI specification so as to clear the goods from customs stands admitted. It is also admitted that said Shri.Vipin Kumar had forged the signature f Shri.Anil Kumar, Proprietor on various documents submitted to the Customs, including the above said Bill of Entry, the applications for issue of H card and G card for Shri.L.Kannan and Anil Kumar Alex respectively. I also find that during the investigation Shri.Vipin Kumar had deposed that he had been indulging in forging of the signature of the proprietor in several Bills of Entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pin Kumar, without his knowledge and in a clandestine manner outside their office. In fact the negligence from his part and lack of proper scrutiny of the activities of his employees had encouraged Shri.Vipin Kumar and his associates to indulge in such nefarious activities. Thus the observation made by the Inquiry Officer that the principles of vicarious liability of a master would apply in this case merits acceptance. The principles of vicarious liability states that an employer can incur liability for the acts and omissions of an employee, if committed by the employee in the course of employment and if the employer has the right to control the way in which the employee carries out his or her duties. In the instant case, by the provisions of the CHALR, 2004, employer is required to exercise control over the way in which his employee carries out his or her duties. The question regarding applicability of the principles of vicarious liability of the CHA for the actions of his employee, has been decided by the Hon'ble High Court of Bombay in the case of Commissioner of Customs (General) vs. Worldwide Cargo Movers [2010 (253) ELT 190 (Bom)], where in the Hon'ble High Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation. Accordingly I pass the following order: ORDER (i) I order revocation the Custom House Agents License No.236 (ABGPA1333F) issued to M/S A.B. Agencies under Regulation 20 (1) of the CHALR, 2004. (ii) I order forfeiture of security ₹ 50,000/- (Rupees fifty thousand only) deposited by M/s A.B.Agencies under Regulation 20 (1) of the CHALR, 2004. 7. This order was confirmed by the Tribunal by Annexure A9 order, in which the Tribunal has placed reliance on the decision of the Bombay High Court in CC v. Worldwide Cargo Movers [2010 (253) ELT 190 (Bom,)]. It is in this background, this appeal is filed. 8. Learned senior counsel for the appellant contended that the irregularities which are relied on by the Department to cancel the licence of the appellant were the fraudulent activities of Sri.Vipin Kumar. It is argued that in the impugned order there is no finding that the appellant was either a party to that fraudulent activities of Sri.Vipin Kumar nor is there any finding that the appellant was even aware of his fraudulent activities. Therefore, it is contended that the acts committed by Sri.Vipin Kumar were outside the scope of his employment and that, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction of his business as a Customs House Agent. Therefore, the appellant cannot be absolved of his lapse of supervision attracting Clause 19 of the Regulations warranting action against him under Regulation 20. 12. The remaining issue to be considered is whether in the facts of the case the extreme penalty of revocation of license and forfeiture of security was warranted. 13. We have already referred to the Annexure A8 order passed by the Commissioner. The relevant findings of the Commissioner, which are extracted herein above, shows that the entire misconducts have been committed by Sri.Vipin Kumar, the employee of the appellant, and Sri.Kannan and Anilkumar Alex who were employed by Sri.Vipin Kumar, on the strength of the 'H' and 'G' cards obtained on the strength of the documents fabricated by Sri.Vipin Kumar himself. This order does not anywhere show that the appellant was even remotely connected with the misconducts of Sri.Vipin Kumar and his team or that the appellant was even aware of what was being done by Sri.Vipin Kumar and two others mentioned above. Department does not also have a case that on any previous occasion, the appellant was proceeded ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 years, and thus been penalized in this manner. This is not to say that the trust operating between the Customs Authorities and the CHA is to be taken lightly, or that violations of the CHA Regulations should not be dealt with sternly. A penalty must be imposed. At the same time, the penalty must - as in any ordered system - be proportional to the violation. Just as the law abhors impunity for infractions, it cautions against a disproportionate penalty. Neither extreme is to be encouraged. In this case, in view of the absence of any mens rea, the violation concerns the provision of G cards to two individuals and that alone. A penalty of revocation of license for this contravention of the CHA Regulations unjustly restricts the appellant's ability to engage in the business of the CHA for his entire lifetime. As importantly, it skews the proportionality doctrine, substantially lowering the bar for revocation as a permissible penalty, especially given the dire civil consequences that follow. On the other hand, the minority opinion of the CESTAT,delivered by the Judicial Member, correctly appreciates the balance of relevant factors, i.e. Knowledge/mens rea, gravity of the infract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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