Commissioner of Customs (General) vs H.P. Joshi and Co.

This appeal by the Revenue u/s 130 of the Customs Act, 1962 (the Act) against the order of the Customs, Excise & Service Tax Appellate Tribunal (the Tribunal) dated 2 July 2012 [ 2012 (284) E.L.T. 358 (Tri.-Mum.)]. The Revenue has raised the following questions of law for our consideration:

(i) Whether the CESTAT is right in law in holding that the charges under Regulation 13(a) of the CHALR, 2004 stand not proved, even after noting that during the course of investigation it was found that the authorization was fraudulently obtained.

(ii) Whether the CESTAT is right in law in holding that the remaining charges stand not proved, as the Respondents were not put to notice by the Commissioner, that he proposed to disagree with the Inquiry Report?

(iii) Whether the CESTAT is right in law in holding that as per the decision of this Honourable Court, in the case of Delta Logistics, the Commissioner had not given notice to the Respondents, that he disagreed with the Inquiry Report, and the reasons therefor?

(iv) Whether, the CESTAT has ignored the fact that the Commissioner had discharged the requirement of natural justice as per the findings of this Honourable Court in the case of Delta Logistics by giving a personal hearing to the Respondents, and recording the latter''s oral and written submissions on various articles of charges along with his dissent from the Inquiry Officer''s Report.

As the issues arising in this appeal fall in a narrow compass and it has to do with the livelihood of respondent, at the request of the parties, the appeal itself is being disposed of at the stage of admission.

(a) So far as question (i) is concerned, the respondent CHA (Customs House Agent) had imported goods on behalf of a person on the basis of a fraudulent authorisation i.e. on the basis of authorisation letter attested by the Bank. In this view of the matter the proceedings were commenced against the respondent under the Customs House Agents Licensing Regulations, 2004 (CHALR). The Enquiry Officer held that the CHA had failed to obtain the requisite authorisation from the importer and it was not disputed before the Enquiry Officer that the respondent did not verify the original IEC certificate issued by the DGFT before acting for the person. In the above circumstances the Enquiry Officer in his report concluded that the CHA had violated Regulation 13(a) of the CHALR. The report of the Enquiry Officer with regard to the above charge was confirmed by the Commissioner of Customs. Besides other charges, which were dropped by the Enquiry Officer were confirmed by the Commissioner of Customs by his order dated 20 April 2011 and the CHA license was revoked.

(b) Being aggrieved by the order of Commissioner of Customs the respondent filed an appeal to the Tribunal. By order dated 2 July 2012 the Tribunal allowed the appeal holding that the authorisation was fraudulently obtained came to the knowledge only during the course of investigation and, therefore, at the time of clearance of the goods the respondent was under a bona fide plea that the authorisation was genuine. Further in support reliance was placed upon the decision of this Court in the matter of The Commissioner of Customs (General) Vs. S.S. Clearing and Forwarding Agency Pvt. Ltd., for allowing the respondent''s appeal.

(c) The grievance of the Revenue is that the Tribunal completely ignored the fact that the Revenue realised the fraudulent authorisation only during the investigation, but the fact that the authorisation was genuine would have been in the knowledge of the respondent or in any case if the respondent had made the necessary enquiry of verifying the original certificate of IEC Number issued by the DGFT depicting the photograph of the proprietor then in such a case the fact that the person seeking to import the goods was not a genuine importer would have come to the knowledge of the CHA at the time of the import. This obligation was cast upon the importer in terms of Regulation 13(a) of the CHALR, 2004. In view of the aforesaid facts the decision relied upon by the Tribunal in the matter of S.S. Clearing & Forwarding Agency (supra) is distinguishable as in that case there was no question of having fraudulently obtained any authorisation. This Court in the case of S.S. Clearing and Forwarding Agency (supra) had held that it was the duty of the Customs Officer to check authorisation in favour of the CHA before allowing him to act as CHA for the importer. Thus there is a contributory default on the part of the both. While in this case the Enquiry Officer as well as the Commissioner of Customs had come to a specific finding that the respondent had not done necessary verification which he was obliged to do while acting as CHA which led to a forged authorisation being used for the import of the goods. Thus allowing an importer to import goods.

(d) As against the above, respondent--CHA submits that the importer was Mr. Mishra who had given them the Bank authorisation. The misunderstanding took place only in view of the fact that Mr. Mishra''s signature on the authorisation did not tally with the record in the Bank. Further it is his case that IEC Code number would establish that the person who authorised the import viz. Mr. Mishra was an authorised importer.

(e) We have considered the submissions and we are of the view that the order of the Tribunal as well as the Commissioner of Customs needs to be set aside and the matter be remanded to the Commissioner of Customs for a fresh determination. This is so particularly in view of the fact that the verification of the IEC Code and explanation of the Banker may be necessary to establish that the respondent--CHA acted for an unauthorised person.

(f) In view of the matter being remanded, it is not necessary to answer Question (I). This is so as the same will be determined afresh by the Commissioner of Customs after following the principles of natural justice.

4.(a) So far as Questions (ii), (iii) and (iv) are concerned, they relate to the other charges which were dropped by the Enquiry Officer, but confirmed by the Commissioner of Customs. This was done without having given any notice of the grounds on which the Enquiry Officer''s report is not acceptable to the Commissioner of Customs. This Court in M/s. Delta Logistics v. Union of India (Writ Petition No. 7122 of 2011) rendered on 21 August 2012 on similar facts wherein the Enquiry Officer dropped the charges against the CHA and the Commissioner of Customs disagreed with the finding of the Enquiry Officer and confirmed the charges against the CHA, it was held that such confirmation of charges by the Commissioner of Customs is violative of principles of natural justice in the absence of notice being given to the respondent of the grounds on which he does not accept the Enquiry Officer''s conclusion with regard to the dropping of the charges. In the above case, our Court has while setting aside the order of the Commissioner of Customs directed the Commissioner of Customs to issue notice to the CHA setting out the reasons why he does not accept the Enquiry Officer''s report and thereafter pass an order after following the principles of natural justice.

(b) In view of the decision of this Court in the matter of Delta Logistics (supra) Questions (ii), (iii) and (iv) also need not be answered by us as we are setting aside the order of the Tribunal as well as the Commissioner of Customs and remanding the matter to the Commissioner of Customs. The Commissioner of Customs would decide the matter afresh after giving the respondent notice setting out the reasons why he does not accept the conclusions of the Enquiry Officer and pass a fresh order after giving personal hearing to the respondent CHA.

The Commissioner of Customs should dispose of the issues raised in this Appeal before him at the earliest preferably within a period of three months from today. As we set aside not only the order of the Tribunal but also of the Commissioner of Customs and restored the matter to Commissioner of Customs for fresh adjudication and also to reconsider the issue of quantum of punishment. The earlier cancellation of license by the Commissioner of Customs may have been influenced by the fact that the respondent was held guilty of violating Regulation 13(a), (d), (e) and (n) of the CHALR. We have held that confirmation of guilt on grounds in Regulation 13(d), (e) and (n) of the CHALR is not legal in the absence of a notice by the Commissioner of Customs. Therefore, we direct that the CHA license is made available to the respondent till such time as the Commissioner of Customs decides the issue.