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TMI Blog2015 (9) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... ected. This was done after a report was received from Commissioner, Kolkata. According to the report, Kolkata branch office of the applicant had provided services to an exporter, M/s Sun Granite Exports Ltd. (SGE Ltd.) in respect of Shipping Bill filed on 19.2.2009 and the container in which granite slabs were to be exported by SGE Ltd. was found to contain Red Sanders, a prohibited item for export; Proceedings were initiated against the appellant for imposition of penalty under Customs Act, 1962 by the Commissioner of Customs by issue of show-cause notice on 20/2/2010; Simultaneously, the matter was referred to CBI who after detailed investigation filed a charge sheet in which the appellant's firm as well as an employee Shri Pulak Dey were accused. On the basis of report received from Kolkata Customs and after observing the principles of natural justice, the Commissioner of Customs, Bangalore took a view that the appellant's licence cannot be renewed and accordingly, rejected their application for renewal. An appeal was filed by the appellant against this order before this Tribunal and this Tribunal vide Final Order No. 20928/2014 dated 23.5.2014, allowed the appeal and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withdrawn when the Hon'ble High Court observed that it will not intervene in the matter of show-cause notice (according to the appellant). He also submitted that the present order of revoking the licence has been issued relying on the same grounds which were taken into account for refusal to renewal of the licence. These submissions have not been disputed by the other side. 7. Before we proceed further, it would be necessary to bring out the facts emerging from the records and from the submissions. 8. Shri Hitendra Kumar Mohanty was the Managing Director during the relevant period of Sun Granite Export Ltd. Shri Saif Ahmed is proprietor of M/s. Zaara Logistics and M/s. Roshini Enterprise. Shri Mustaq Quim is a business associate of Shri Saif Ahmed. Shri Javed is Munshi (Clerk) of Shri Saif Ahmed. Shri Pulak Dey is the Assistant Manager of the appellant and Shri Shatrudhan Das, Shri Akhil Rajowar and Shri Dipak Das are drivers/ cleaner. 9. It is the case of the CBI that SGE Ltd. with Saif Ahmed, Javed, Mustaq Quim, the appellant broker, Shri Pulak Dey, manager of the broker and the other three drivers/khalasi entered into a criminal conspiracy for export of Red sanders under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the drivers, Shri Pulak Dey, Assistant Manager had liaisoned with Shri Shatrudhan Das and handed over the dock permit to Shri Shatrudhan Das. 14. On the basis of the investigations and the facts mentioned above, CBI filed a charge sheet for prosecution of all the persons concerned which includes the appellant firm and Shri Pulak Dey. 15. We are concerned only with the role of appellant firm and Shri Pulak Dey and the question before us is whether revocation of licence of the customs broker, the appellant is correct considering the role of the appellant broker in clandestine export of Red sanders. Therefore we are not going into details of all the facts. 16. The Commissioner in the impugned order has considered and dealt with the submission of the appellant broker that according to principles of res judicata , the proceedings could not have been initiated and further the submission that the present show-cause notice and proceedings would be in contempt of Hon'ble High Court of Karnataka. Further he has also come to the conclusion that the three charges against the appellant which have been found to have been proved by the enquiry officer have been proved in his opinion also. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the suit in question whether or not it was instituted prior thereto. Explanation II - For the purposes of this section, the competence of a Court shall be determined irrespective of any provisions as to a right of appeal from the decision of such Court. Explanation III - The matter above referred to must in the former suit have been alleged by one party and either denied or admitted, expressly or impliedly, by the other. Explanation IV - Any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit. Explanation V - Any relief claimed in the plaint, which is not expressly granted by the decree, shall, for the purposes of this section, be deemed to have been refused. Explanation VI - Where persons litigate bona fide in respect of public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the purposes of this Section, be deemed to claim under the persons so litigating. Explanation VII - The provisions of this section shall apply to a proceeding for the execution of a decree and reference i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Hon'ble High Court would provide an unrestricted licence to the CB to act as per their whims and fancies. Finally he has also observed that since the appellants had withdrawn the writ petition filed challenging the proceedings and also have put across their case on merits he has preceded with further adjudication. Unfortunately no decision which deals with similar facts namely renewal of licence and revocation of licence have been dealt with earlier and we do not have the benefit of any precedent decisions of any forum. We do not find the observation of the commissioner that if it is held that principle of res judicata is applicable, it would result in a situation where in the broker can act according to his whims and fancies is correct. The broker has been able to raise the issue only because the ground for non renewal and revocation are one and the same. However, if we consider a situation where in the commissioner had renewed the licence, we could not have said that renewed licence cannot be revoked. Therefore we find some force in the observations of the Commissioner relating to res judicata . Regulation 9 which relates to renewal of a licence, provides tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner has taken note of the facts on merits. The allegations, the contraventions of provisions of Regulation 11 (d) and 17 (9) of Customs Broker Licensing Regulations (CBLR) and those of gross miss-conduct have been found proved by Inquiry Officer. He also observed that this was done on the basis of three grounds. The conclusions reached by the Commissioner based on his observations are sustainable is the question. 21. Before we proceed, it would be appropriate to reproduce Regulations 11(d) and 17(9) of CBLR relevant to these proceedings. Regulation 11 (d) provides - "The Customs Broker shall advise his client to comply with the provisions of Act and in case of non-compliance, shall bring the matter to the notice of the Deputy Commissioner or the Assistant Commissioner of the Customs as the case may be." Regulation 17(9) provides- "The Customs Broker shall exercise such supervision as may be necessary to ensure the conduct of his employees in the transaction of business and he shall be held responsible for all acts or omissions of his employees during their employment". 22. Circular No. 736/52/2003-CX dated 11.8.2003 explained the facility of self sealing and self certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso did not contend or show any evidence that they had informed Assistant Commissioner/Deputy Commissioner. Therefore it can be said that the appellants have not fulfilled the obligation cast on them under Regulation 11(d) of CBLR. 26. The second ground considered and relied upon by the Inquiry officer and by the Commissioner is that three Dock permits were issued for the same lorry number in the name of non-existence transporter M/s Pankaj Transport. The defence of the CHA is that they had obtained the same as per the instructions of their client. The Commissioner also observed that three Dock permits were issued because of changes in arrival time of the cargo in the docks. He observed that no explanation has been given as to how dock permits got issued in the name of M/s East India Carriers whereas these were actually applied for in the name of M/s Pankaj Transport as per the instructions of their clients. The defence of the appellant was that in this case, they did not arrange the transportation and freight forwarding but were asked to obtain dock permit which could only be on the basis of information provided by the exporter. It is their submission that since it is not under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act. There is no indication in the order of the Commissioner that dock permit is a document, a copy of which is handed over to the Customs officers and verified by the Customs officers and required to be submitted to the Customs as per Customs Act or any other rules, regulations or instructions etc. It is to be noted that if the officers at gate are vigilant, the vehicle itself should not have entered the dock because the chassis number and engine number were wrong. It is also not coming out clearly as to whether in the gate of the dock, the information as to whether the vehicle is a truck or tanker would be available or not. This is very important. If the display of the details of the vehicle showed the nature of the vehicle as truck, tanker, trailer etc. (information available in the data base) to the gate officer, vehicle could not have entered the docks. In any case, Customs is concerned mainly with the container and the contents of the container. Even though it can be said that the Customs Broker could have checked up as to why the name of the carrier is given differently with the exporter, question is, is it necessary as per the Regulations or as per the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise or Customs officer, the declaration relating to the seal and the packages are signed by the supervising officer and the seal no. is also mentioned by the supervising officer. Invariably the seal is also issued by the Central Excise or Customs office and affixed. These extra precautions are taken only because in the case of containers sealed by Central Excise or Customs officer, only seal is examined to see whether it is intact or tampered or not. According to the Board's instruction there is no restriction on obtaining of bottle seal or source of bottle seal. Just because a person obtains an extra bottle seal, can it be said that it was obtained with a malafide intention is the question. There is absolutely no evidence to show that in obtaining another bottle seal by the manager of the appellants, either the exporter or the transporter was involved. No circular has been cited by the learned Commissioner to show that when the container is opened, the seal has to be affixed by the Customs officer and no other seal can be affixed. In the absence of any prohibition to affix a seal which is not issued by Customs in the docks or in the absence of any reference to suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his order that appellants have experts in all areas and there is an officer called Docks Sircar. In the absence of any statutory provisions or specific instructions to the contrary, coming to the conclusion that there was a malafide intention in obtaining the second bottle seal in our opinion is not warranted. The role of Docks Sircar and what he did in this case are also not forthcoming. 34. The issue can be looked at in another manner also. In the absence of the declaration of container no. in the ARE-1, the chances are that the container will be taken up for examination because the seal no. is not mentioned even if it is not selected for examination by the system. This can be done by the officer in the docks who is the person who looks at the documents and once he sees that there is no declaration of seal no., the container is bound to be taken up for examination. Therefore even if the customs broker was aware that the seal no. has not been declared in the ARE-1, he can safely assume that container will be taken up for examination and therefore he had obtained a second bottle seal in case of requirement. Therefore we do not find any basis in coming to the conclusion that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the client that this could create a problem and they would have changed the transporter or the truck or found some other way. There is no evidence of collusion at the port gate. The fact that they simply obtained the dock permits, in our opinion, cannot mean that it shows malafide intention. It can also be said that there is some substance in the submission that it was an additional service rendered by the appellant to the exporter, since their services asked for related to clearance of cargo and related activities and transportation work was not entrusted to them. 37. The fact that appellant obtained the second bottle seal shows that they expected that the container will be examined and therefore they should keep a bottle seal ready. If they were aware or if they were facilitating smuggling of red sanders they would not have obtained the second bottle seal because expectation would be that the container will not be examined. If the container is examined and if the appellant was aware of that it would contain red sanders, naturally the container would not have been allowed to leave the country. In such a situation the second bottle seal would not be required at all. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amine is whether by these omissions, the appellants have rendered themselves unfit to transact any business in the customs station. This aspect has not been discussed in detail at all. According to the submissions made by the appellants, they are operating in 12 custom houses, have 40 permanent employees plus 200 contract employees. They have processed on an average 12000 shipping bills and 12000 bills of entry. In the present case, for the same exporter 4 containers had been exported earlier and therefore it cannot be said that appellants did not know the exporter and there is no allegation that KYC norms in respect of exporter have not been fulfilled. Further as submitted by the appellant this is the only case against the appellant for a number of years during which they were operating. We have to accept the fact that many of the conclusions of the learned Commissioner are based on the practice in the port or procedure followed by customs in actual practice within his own knowledge and are not based on evidence or circulars/instructions or statutory provisions and also the assumption on the part of the Commissioner that appellants have expert employees and therefore these omissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no specific provision of law has been quoted under which the circular has been issued. Similar is the case in Circular No. 01/2006. We have also observed that the omission on the part of the customs broker cannot be said to be facilitating smuggling of red sanders. Therefore it cannot be said that the infraction of the broker in this case is very serious in nature where exemplary action of revocation is needed. Proportionality of the punishment/penalty to the nature of the offence is an important aspect and in this case the appellant has already been prevented from functioning as a customs broker for more than 4 months in the first instance because of non-renewal and again has not been able to function as a customs broker because the licence was renewed only for 6 months and after 25.02.2015 it has not been renewed. Therefore the appellant has not been able to function as a customs broker for more than 6 months which is another aspect to be taken into account while determining the quantum of punishment. 44. Another aspect which was submitted is the fact that the omission took place 5 years back and action could not have been taken with so much delay. Here the Commissioner has reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the memo the order-in-original passed by the Commissioner on 20.02.2015 was placed on record. On 18.03.2015 the Hon'ble High Court heard the case and on 19.03.2015 passed an order which was placed before us. In this order the Hon'ble High Court took note of the admission by the Revenue that renewal of the licence only for a period of 6 months was a mistake when the Hon'ble High Court had directed renewal of licence till the appeal was decided. The counsel for the appellant (Revenue) argued that in view of the order of the Commissioner dated 20.02.2015, which has already been challenged before the Tribunal, the appeal filed by the Revenue becomes in fructuous since there is no licence to be renewed. This was done after admitting that renewal of licence for only six months was a mistake. The Hon'ble High Court finally observed as follows: "Before passing any order on the appeal filed by the appellant on merits, we would first want to have a response from the appellant as to under which provision, and under what circumstance, the renewal of the license was granted for a period of only six months when the Regulation provides for such renewal for a period of ten yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Hon'ble High Court licence was renewed only up to 25.02.2015 and revoked on 20.02.2015 and when the appeal filed by the Revenue is rejected, the licence would have to be renewed for the normal period and this renewal cannot take place because the licence has been revoked. Therefore the decision of the Hon'ble High Court will be rendered un-implementable. Therefore the impugned order of the learned Commissioner renders or has the capacity to render the decision of the Tribunal or the decision of the Hon'ble High Court un-implementable as the case may be. 50. In view of the discussions above, we have come to the conclusion that the punishment of revocation of licence is disproportionate to the offence committed and therefore cannot be sustained. We also consider that forfeiture of entire security amount is also not warranted. We consider that for the violation of regulation relating to advising the clients (11d), a penalty of Rs. 10,000/- (Rupees Ten Thousand only) would meet the ends of justice. In view of the above, the order revoking the licence is set aside, with immediate effect, forfeiture of security is set aside and penalty of Rs. 50,000/- (Rupees Fift ..... X X X X Extracts X X X X X X X X Extracts X X X X
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