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Judgment
Judgment pronounced by F.M. Ibrahim Kalifulla, J.—The questions that have posed for our consideration are,
In C/Ref/13/97:-
(a) Whether in the facts and circumstances of the case, the order of the Tribunal upholding cancellation of CHA licence made by the Department is
legal and proper?
(b) Whether the Tribunal is justified in confirming the order of forfeituring deposit of Rs.25,000 made by the appellant?
(c) Whether in the facts and circumstances of the case, the Tribunal is correct in ordering that the appellant should conduct the business by himself
and not through any power of attorney holder and whether the same is contrary to the Licensing Regulations (9) of CHLR, 1984?
In C/Ref/28/97:
Whether in the facts and circumstances of the case, the order of the Tribunal to the effect that on further deposit of Rs.25,000 the licence of the
respondent shall stand renewed with effect from 1.1.1997 is legal and proper?
The Applicant was a holder of Regular Customs House Agent Licence herein called ""CHAL"" issued by Madras Customs under Regulation
10(2) of Customs House Agents Licensing Regulation (CHALR) 1984, herein after called as ''Regulations''. The applicant was issued with the
licence on 7.9.1992. The validity of the said licence was for three years from the date of its issue. As per the condition of the licence, the Customs
Agent work should be transacted only through the Proprietor of the Applicant namely Thiru K. Natarajan. The specimen signature of Thiru K.
Natarajan was also obtained in the very licence itself. The CHA licence was issued under Regulation 10 and the period of the validity of regulation
licence issued u/s 10 which was originally three years was subsequently amended in the year 1994 and the period was extended to five years.
On a search conducted by the Officers of the Directorate of Revenue Intelligence, Madras in the premises of M/s. G.D. Enterprises, Madras,
M/s. Rekha Overseas and M/s. Trendy Moods, Madras, voluminous incriminating documents were recovered revealing an evasion of duty by the
above said three firms to the tune of Rs.80 lakhs. In all the three cases, the documents were filed by the Applicant Sri Kamakshi Agency,
represented by its Proprietor Thiru Natarajan and was operated through his Power of Attorney Sri D. Sukumaran. On an enquiry held by the
Directorate of Revenue Intelligence, Madras, Sri. Natarajan deposed to the effect that he signed the bills by getting a remuneration of Rs.50 per
bill and had also taken a caution deposit of Rs.75,000 from his Power of Attorney Holder allegedly to safe guard himself from any misuse of CHA
licence by his Power Agent.
Immediately on coming to know of the above said incident, the CHA licence of the Applicant was suspended on 3.10.1994 and a show cause
notice was issued on 23.8.1995. The Applicant filed his provisional reply dated 29.5.1995 and full fledged replies dated 25.5.1995 and 7.8.1995
along with certain annexures. An enquiry was held by the Assistant Commissioner of Customs on 10.10.1995. The Applicant appeared before the
Enquiry Officer and also made bis submissions. The Enquiry Officer submitted his report dated nil holding that the CHA grossly violated the
obligations cast upon it under Regulations 14(a), (d), (e), (1) and 20(7) of CHALR, 1984 and thereby the charges leveled against him in the Show
Cause Notice was fully sustainable. The Report of the Enquiry Officer was furnished to the Applicant on 19.12.1995 and the applicant submitted
his reply on 4.1.1996. After considering the reply of the Applicant, the respondent herein passed orders on 25.1.1996 confirming the suspension
and also ordered revocation of CHA licence No.R359/CHA issued to the Applicant. The respondent also ordered forfeiture of the security
deposit of Rs.25,000.
As against the orders of the respondent dated 21.5.1996, the applicant preferred an appeal before the Customs, Excise and Gold (Control)
Appellate Tribunal. By order dated 1.11.1996 in Appeal No.1776 of 1996, the Tribunal found that though there was no evidence to show that the
Proprietor of the applicant was directly involved in the transactions it was established that he failed to exercise due diligence to verify the
correctness of the informations contained in the documents. The Tribunal also found that the Proprietor of the applicant did not obtain the
authorisation from the exporters as contemplated under Regulation 14(e) of the Regulations. The statement of Sri Sukumaran who was the Power
of Attorney of the applicant-Proprietor disclose that the evasion of the customs duty was with his connivance and the applicant had no part in the
same. The Tribunal after upholding the finding of the adjudicating authority, however taking into account the deposit of Rs.75,000 taken by the
applicant from Power of Attorney Agent Sri Sukumaran in anticipation of any personal misuse and also the subsequent termination of service of the
said Sukumaran as well as the fact that in the last thirty years, the CHA, has not committed any omission and also the fact that his daughter has
passed necessary examination qualifying to be a Customs House Agent on sympathetic consideration of the position of the Proprietor of the
Applicant, while confirming the forfeiture security deposit of Rs.25,000 held that the suspension order of licence No.R-359/CHA to be restricted
upto 1.1.1997 and on depositing further sum of Rs.25,000, the licence would stand renewed with effect from 1.1.1997. The Tribunal also directed
that the applicant should conduct the business personally in future and not to appoint any Power of Attorney Holder and that he should comply
with the Act more scrupulously. With the above modifications of the order of the respondent, the appeal was disposed of by the Tribunal.
Subsequent to the order of the Tribunal, the Applicant forwarded the Original Term Deposit Receipt dated 20.12.1996 for a sum of Rs.25,000
drawn on Indian Overseas Bank, Muthialpet Branch, Chennai-1 in favour of the respondent. The validity of which was for a period of 63 months.
Thereafter both the Applicant as well as the respondents filed Reference Applications in C/Ref/13/97 and C/Ref/28/97 respectively and by a
common order dated 17.4.1997, the questions earlier mentioned above have been referred for our consideration.
A reading of Regulations 13 and 14 of CHALR 1984 disclose that under Regulation 13, ""Every licence granted or renewed under the Regulations
should be deemed to have been granted in favour of the licensee and no licence should be sold or otherwise transferred."" The various sub-clauses
under Regulation 14 disclose that ""Custom House Agent should obtain an authorization from each of the companies, firms or individuals by whom
he is for the time being employed as Custom House Agent and produce such authorization whenever required by an Assistant Collector of
Customs; that he should transact business in the customs station either personally or through an employee duly approved by the Assistant Collector
of Customs, designated by the Collector; that he should advise his client to comply with the Provisions of the Act and in case of non-compliance,
shall bring the matter to the notice of the Assistant Collector of Customs; that he should exercise due diligence to ascertain the correctness of any
information which he imparts to a client with reference to any work related to clearance of cargo or baggage; that he should not refuse access to,
conceal, remove or destroy the whole or any pan of any book, paper or other record, relating to His transactions as a Custom House Agent which
is sought or may be sought by the Collector; that he should ensure that all documents prepared or presented by him or on his behalf are strictly in
accordance with orders relating thereto.
Under Regulation 20, it was permissible for a licensee having regard to the volume of business transacted by him, to employ one or more
persons to assist him in his work as Custom House Agent. In such circumstances, whenever the Custom House Agent authorise any person
employed by him to sign the documents relating to the business of such agent on his behalf, he should file with the Assistant Commissioner of
Customs, a written authority in his behalf and give prompt notice in writing, if such authorization was modified, or withdrawn. It is further stipulated
under Regulation 20(7), the Custom House Agent should exercise such supervision as may be necessary to ensure the proper conduct of any such
employees in the transaction of business as agent and be held responsible for all acts or omissions of his employees in regard to their employment.
On a perusal of the report of the Enquiry Officer as well as the orders of the respondents and the Tribunal, it is beyond doubt that the applicant
committed gross violation of the Regulation while acting as Customs House Agent. In fact, the applicant has admitted, the malpractices found out
by the Directorate of Revenue Intelligence which resulted in an evasion of duty to the tune of Rs.80 lakhs. The only stand of the Applicant was that
because of the wrong committed by his Power of Attorney, Sri Sukumaran, the various lapses discovered by the Directorate Revenue Intelligence
had taken place. He only contended that by way of caution, he had taken a deposit of Rs.75,000 from the Power of Attorney to safe guard himself
from any misuse. It only disclose that the Applicant instead of discharging his functions as a Custom House Agent in accordance with the
Regulations, in flagrant violation of those Regulations went to the extent of encashing the facilities made available to him as a CHA by selling it for a
price which action of the Applicant can never be condoned. The very purpose of granting a licence to a person to act as Custom House Agent is
for transacting any business relating to the entry or departure of conveyance or the import or export of goods at any customs station. For that
purpose, under Regulation 9 necessary examination is conducted to test the capability of the person in the matter of preparation of various
documents determination of value procedures for assessment and payment of duty, the extent to which he is conversant with the provisions of
certain enactments etc. Therefore the grant of licence to act as a Custom House Agent has got a definite purpose and intent. On a reading of the
Regulations relating to the grant of licence to act as Custom House Agent, it is seen that while Custom House Agent should be in a position to act
as agent for the transaction of any business relating to the entry or departure of conveyance or the import or export of goods at any customs
station, he should also ensure that he does not act as an Agent for carrying on certain illegal activities of any of the persons who avail his services as
Custom House Agent. In such circumstances, the person playing the role of Custom House Agent has got greater responsibility. The very
prescription that one should be conversant with the various procedures including the offences under the Customs Act to act as a Custom House
Agent would show that while acting as Custom House Agent, he should not be a cause for violation of those provisions. A CHA cannot be
permitted to misuse his position as a CHA by taking advantage of his access to the Department. The grant of licence to a person to act as Custom
House Agent is to some extent to assist the Department with the various procedures such as scrutinizing the various documents to be presented in
the course of transaction of business for entry and exit of conveyances or the import or export of the goods. In such circumstances, great
confidence is reposed in a Custom House Agent. Any misuse of such position by the Custom House Agent will have far reaching consequences in
the transaction of business by the Custom House Officials. Therefore when the applicant who had thirty years of experience as Custom House
Agent, when he paved the way for his Power of Attorney to indulge in serious malpractices which ultimately resulted in loss of revenue to the
Custom House to the extent of more than SO lakhs, there is every justification in the respondents in treating the action of the applicant as
detrimental to the interest of the nation and pass the final order of revoking his licence. As far as the allegations leveled against the applicant are
concerned, it has been found established that the Proprietor of the Applicant Thiru Natarajan had signed on certain blank documents such as Bs/F
and S/Bs without knowing the importers/exporters and the nature of goods imported/exported inspite of being in the clearing line over thirty years.
It is also admitted that Sri D. Sukumaran, Manager cum Power of Attorney of the Custom House Agent concerned, had actively involved in the
fraudulent act in connivance with the importers and others and that as per the Power of Attorney Bond executed by Sri K. Natarajan, all acts,
deeds and things done by Sri D. Sukumaran were to be construed as if they were done by himself. Therefore virtually all the fraudulent activities
carried out by the Power of Attorney of Thiru Natarajan were to be treated as having been carried out by Thiru K. Natarajan himself. Even
assuming that the role played by Thiru D. Sukumaran is to be construed as that of an employee of the applicant, the same would not in any way
alter the situation since that had resulted in a serious loss to the respondent. The fact remains that the respondent sustained a loss of duty by the
reckless and irresponsible behavior of the applicant in the course of discharge of his functions as Custom House Agent licensee. The respondent
therefore rightly revoked the Custom House Agent licence of the applicant. In the circumstances, while answering the questions now referred by
the Tribunal in C/Ref/13/97 in favour of the respondent holding that the order of the Tribunal to the effect that on further deposit of Rs.25,000, the
licence of the applicant should stand renewed with effect from 1.1.1997 is wholly illegal and improper, the various questions referred in
C/Ref/13/97 are answered against the applicant. The Reference Case is disposed of accordingly.