Suresh Saini vs Commissioner Of Customs (Airport And General), New Delhi

This appeal is filed by the appellant - Customs Broker who had cleared the written exam and interview during the year 2015-2016 and became

eligible for FCard. Vide the impugned order-in-original, the appellants have been imposed penalty of Rs.50,000/- under Regulation 18 of the Customs

Brokers Licensing Regulation, 2018 and have been further directed to surrender the F-Card No. 145/2016 (issued to him) immediately.

The brief facts are that the appellant Shri Suresh Saini son of Shri Roshan Lal Saini is F-Card holder who qualified under Regulation 6 of CBLR,

2018 and is holder of F-Card No. 145/2016 residing at Room No.14, A-8/C, Vishwakarma Colony, Mehrauli, Badarpur Road, New Delhi-44 and a

permanent resident of Mohalla Koth Kalan, Shikarpur, Dist. Bulandshehar, U.P., the appellant is a qualified B. Tech (IT) and also MBA. He joined

M/s S. Satyam Aviation Pvt. Ltd. in November, 2014 as Director. The company is owned and controlled by his uncle Shri Mukesh Kumar Saini and is

engaged in the business of freight forwarding. After passing of the Customs Broker exam in 2016, he was persuaded by Shri Raj Singh Saini and

Mukesh Kumar Saini to get the ‘Customs Broker license’ in the name of the company â€" M/s S. Satyam Aviations Pvt. Ltd. Accordingly, he

agreed and an application was made and CB License No. R71/DEL/CUS/2016 was issued, valid till 5 September, 2026. That during his tenure with

the said company, the appellant neither received salary and only received remuneration of Rs. 2000/- per container in cash for filing of the documents

with the customs authority, doing the clearance work for which he was authorized by the Board Resolution. The said company had three bank

accounts out of which two accounts were operated by Shri Mukesh Kumar Saini and one account was operated by this appellant for clearance

purpose only. The payments from the client were directly received in the account of the company controlled by Shri Mukesh Kumar Saini. Most of the

clients of the said company were introduced by either Shri Mukesh Kumar Saini or Shri Raj Singh Saini while a few of the clients were introduced by

the appellant.

In the course of normal business activity this appellant received instructions from Shri Raj Singh Saini on 8 November, 2018 requesting him to

process some export consignment. The appellant rejected the proposal due to lack of proper antecedent of the exporter and lack of genuine

documents. However, Shri Raj Singh Saini filed 32 shipping bills under the CB license of one M/s Global Links, before Diwali of 2018 at ACC

(Export). The said consignments had been detained by SIIB, ACC (Export). This led to bitterness between the appellant and Shri Raj Singh Saini.

Shri Mukesh Kumar Saini and Shri Raj Singh Saini with intention to harm the appellant, behind his back filed a complaint before the licensing

authority on 20 November, 2018 on the letter head of the company under the signature of Shri Mukesh Kumar Saini, the Managing Director. It was

alleged that this appellant had filed the bills of entry in the name of CB company illegally, in spite of the fact that he had resigned from the said

company with effect from 22 August, 2018. It was also stated that intimation of resignation and acceptance by the Board has been given to the ROC

in Form DIR-12, in the said complaint letter. It was prayed that the F-Card No. 145/2016 (issued to this appellant) be suspended immediately.

On getting the complaint, the AC of Customs (Policy) vide letter/notice dated 26 November, 2018, addressed to the said company â€" M/s S.

Satyam Aviations Pvt. Ltd. directed to surrender the F-Card No. 145/2016, issued to the appellant, immediately to this office for further necessary

action. Vide subsequent letter/notice dated 30 November, 2018 the ACC (Policy) further directed the said company to submit the original resignation

letter of this appellant â€" F-Card holder and ‘Board resolution’ regarding of ouster of the appellant from the company. None of the

aforementioned communications from the said company and/on the ACC (Policy) were marked to this appellant.

Upon receiving the aforementioned two notices from ACC (Policy), the Managing Director - Shri Mukesh Kumar Saini and Shri Raj Singh Saini

filed a complaint on 1 December, 2018, against this appellant, before the SHO - Police Station, Paharganj, alleging that this appellant have been falsely

representing himself as Director of the said company, (after registration) and filed about 700 shipping bills for various exporters by using the F-Card in

the name of the company, and have received the clearance charges, which he has siphoned from the separate bank account in the name of the said

company. It was further alleged that F-Card in the name of this appellant is the property of the company.

Thereafter, the said Shri Mukesh Kumar Saini to cover up his nefarious activities and particularly to avoid the filing of original copy of resignation

letter, sent a notice dated 3 December, 2018 through their Counsel to the ACC (Policy), in the form of reminder, again reiterating the request to the

department that the CB License No. R-71/2016 should be cancelled and F-Card No. 145/2016 should be blocked with immediate effect, and the FDR

furnished at the time of grant of CB license may be released to the Managing Director of M/s S. Satyam Aviations Pvt. Ltd.

That on 4 December, 2018, the appellant received a phone call from the office of the Commissioner of Customs (Import & General) and the Supdt.

informed him about the resignation made by him from the directorship of company and thus requested to surrender both the CHA license as well as

the F-Card. On getting the communication from the department, the appellant immediately approached the department and personally inspected the

letter submitted by the said company and Shri Mukesh Kumar Saini, and after examination immediately informed the Policy Division that his

resignation from the said company is false and the other Directors have committed forgery and fraud, and are misleading the department. This

appellant also submitted a letter to the Commissioner of Customs (General) on 10 December, 2018 categorically mentioning that he has never resigned

from the said Customs Broker company and the said Shri Raj Singh Saini and Shri Mukesh Kumar Saini have committed fraud and forgery with mala

fide intention to ruin him. It was further requested that the Commissioner of Customs (General) may kindly look into the matter and take necessary

action against them. Thereafter, the appellant received summons dated 13 December, 2018 for appearing in the office of the Commissioner of

Customs (Airport & General) to appear for giving evidence and recording of his statement. Accordingly, the appellant appeared before the concerned

authority on 14 December, 2018, his statement recorded wherein he inter alia stated that Shri Raj Singh Saini is an exporter and also engaged in

customs clearance work (although is not a Customs Broker). That after completing the CB examination, on persuasion of his uncles Shri Raj Singh

Saini and Shri Mukesh Kumar Saini, he joined them and applied for CB license in the name of M/s S. Satyam Aviations Pvt. Ltd. The other Directors

of the said company were Shri Mukesh Kumar Saini and Shri Atul kale. That there was no agreement regarding his share in the Customs Broker

license. Although on record, the appellant was shown as a Director, but in fact he was treated as a regular employee, nor he held any shares in the

company. The appellant was paid Rs.2000/- in cash per container for clearance work, and all the accounting and operation of Bank account was by

the Managing Director Shri Mukesh Kumar Saini, never any board meeting was held. It was categorically stated that he has not resigned from the

directorship of the said company till date, and as per the Customs Broker license he is authorized signatory to sign all necessary documents in respect

of clearing work. He has not received any verbal communication of his alleged removal from the said company. On being shown the copy of

resignation letter dated 22 August, 2018, purportedly signed by the appellant, the appellant vehemently denied that the said resignation letter is neither

written by him nor signed, and he further stated that he has come to know about the alleged resignation only on 4 December, 2018. The appellant

further informed that he was not aware of any Board Resolution dated 22 August, 2018, accepting his alleged resignation. The appellant also denied

any knowledge about admitting as Directors of Shri Sanket Mahesh Patil on 18 June, 2018 and Shri Harshit Saini on 16 September, 2018 respectively.

He further stated that he never met the two persons. He also expressed surprise as to how a stranger namely- Shri Sanket Mahesh Patil could be

inducted as a Director on 18 June, 2018, without his knowledge, as Shri Mukesh Kumar Saini and Shri Atul Kale (other Director) and he were the

Directors of the said company till 22 August, 2018. Thus, this shows the act of forgery on the part of Shri Mukesh Kumar Saini and other Director.

It was also stated in the deposition that all the shipping bills were received through office e mail of the company, which was operated by Shri

Mukesh Kumar Saini and hence everything was in his knowledge, as far as shipping bills etc. are concerned. He was the authorized signatory of the

company during the period for the purpose of transacting Customs Broker business, as is evident from his role on ICEGATE (official website of the

department for filing of documents etc. by Customs Broker). He also stated that it is wrongly alleged that 700 shipping bills are filed, he has filed

approximately 300 shipping bills. That there were no adverse objection by the department. Shri Raj Singh Saini requested him on telephonically on 8

November, 2018 for clearance of some export consignments, which he refused for lack of bona fide of the exporter. It is further stated that Shri Raj

Singh Saini is trying to harm/spoil his career by getting the CB license closed. This license have been granted on the strength of his qualification as a

Customs Broker.

The appellant on 19 December, 2018 submitted details of shipping bills which had been filed by him from the alleged date of resignation i.e. 22

August, 2018, till the date of providing information i.e. 19 December, 2018. Such number of shipping bills are about 300 including bills of entry filed.

Thereafter the respondent â€" Commissioner (General) issued show cause notice dated 18 March, 2019 to the said CB company - M/s S. Satyam

Aviations Pvt. Ltd. to show cause as to why the CB company should not be held responsible for contravention of 2nd proviso to Regulation 7(2)(b) of

CBLR, 2018 and also to show cause why the CB license should not be revoked and security submitted should not be forfeited, in terms of Regulation

18 of CBLR, 2018. With further proposal to impose penalty under Regulation 18. The said show cause notice was adjudicated vide order in original

dated 3 September, 2019 whereby the learned Commissioner concurring with the enquiry report, held that the said M/s S. Satyam Aviations Pvt. Ltd.

have failed in complying with the obligation as per the provisions of Regulation 7(2)(b) of CBLR, 2018 and accordingly, revoked the CB License No.

R71/DEL/CVS/2016 valid till 5 September, 2026 issued to M/s S. Satyam Aviations Pvt. Ltd., New Delhi and further penalty of Rs. 50,000/- was

imposed under the Regulation 18. It was further directed that the said company immediately surrender the CB license along with all F, G & H Cards

issued thereunder. It was further observed that the revocation of license is independent and without prejudice. This appellant was neither a conoticee

nor party to these proceedings.

Meanwhile the appellant had filed request letter dated 12 March, 2019 for issue of fresh CB license stating his eligibility and enclosing necessary

documents including license fee of Rs.50,000/- etc. as proprietor of ‘S.S. Logistics’. In response thereto, this appellant received communication

dated 27 September, 2019 from the ACC (Policy), informing that Show Cause Notice No. 22/MK/Policy/2019 dated 6 September, 2019 has been

issued on him under Regulation 14 and 18 read with Regulation 17 of CBLR, 2018 alleging mis-conduct and non-compliance of the regulations of

CBLR, and in view of order in original on the CB companies, and as such his request for issue of CB license cannot be considered, until the

proceedings are completed. The said show cause notice dated 6.9.2019 required the appellant to show cause as to why he be held not responsible for

contravention of the provisions of Regulation 14 of CBLR, 2018 and further why not penalty be imposed in terms of Regulation 18 of CBLR, 2018.

The said show cause notice is based on the enquiry report dated 11 July, 2019 (in case of the CB company) which is as follows:

“This issue appears to be personal disputes among the directors of the Customs Broker firm, however, in case of Pvt. Ltd. Firm, any

change of director by way of appointment/resignation, the date from ROC website is required to be considered/believed. In this case,

resignation of Shri Suresh Saini has been confirmed with the company master data submitted by the Customs Broker, wherein it is seen that

Sh. Suresh Saini resigned the Customs Broker firm on 26.8.2018 being a qualified person under CBLR, Sh. Suresh Saini, F-Card holder of

the Customs Broker firm, was required to know his status in the Customs Broker firm and hence he was no more related with the Customs

Broker firm w.e.f. 26.8.2018 (as per ROC website), he should not have worked for any customs clearance for the said firm. Hence I am of

opinion that Customs Broker have themselves requested to surrender the Customs Broker license once it was learnt that Sh. Suresh Saini

filed the shipping bills having no position in the Customs Broker firm. Therefore, Customs Broker license is not required to be revoked as

the Customs Broker has already requested to surrender of the same. However Customs Broker has failed to intimate about change of

directorship in the Customs Broker firm within 30 days as prescribed under the provision of Regulation 7(2)(b) of CBLR, 2018 and Sh.

Suresh Saini, F-Card holder filed the shipping bills on the behalf of Customs Broker having no status in the Customs Broker firm, therefore,

Customs Broker and F-Card holder rendered themselves to be penalized under the provisions of CBLR.â€​

The said show cause notice dated 6.9.2019 was issued and certain documents (relied upon) like letter dated 22 November, 2018 of the said

company - M/s S. Satyam Aviations Pvt. Ltd., dated 26.11.2018 and 30.11.2018 from the department to the CB company, letter dated 3 December,

2018 of the CB company, alleged resignation letter dated 22.8.2018, copy of police complaint by the CB company, which were referred to in the show

cause notice were not supplied to the appellant. Further, neither the order in original nor copy of enquiry report passed in the case of said company

were supplied to the appellant for making an effective representation. The appellant vide letter dated 28 September, 2019 requested for copy of these

documents from the department. The department vide letter dated 4 October, 2019 supplied the documents. Further the appellant was informed that

the hearing was fixed before the enquiry officer on 4 October, 2019 at 11.00 AM through notice dated 19 September, 2019.

That the appellant due to difficulty of his authorized representative requested for adjournment and further date was fixed on 8 November, 2019.

The appellant filed replies/submissions to the show cause notice dated 6 September, 2019 disputing the allegations against him in the show cause

notice, inter alia stated that the show cause notice is based on the earlier enquiry report in the case of the said CB company wherein the same officer

- Shri Rex Hungyo, AC, who is in the enquiry officer in the instant proceedings, thus there is violation of the provisions of natural justice. It was also

submitted that the show cause notice is time barred as the alleged offence report which was in the form of letter dated 3 December, 2018, submitted

by the said company and the show cause notice have been issued much after 90 days as required under Regulation 17(1) of CBLR, 2018. Thus the

limitation for issue of show cause notice expired on 3 March, 2019. He also stated that there is no violation under Regulation 17 and prayed for

dropping of the proceedings.

That the enquiry officer of Shri Rex Hungyo in the enquiry report was of the view that the appellant, holder of F-Card have failed to comply with

the provisions of Regulation 14 of CBLR, 2018 and is thus liable for penalty under Regulation 18 of CBLR.

The appellant appeared before the adjudicating authority and filed written submissions dated 24 December, 2019 disputing the enquiry report and

stating that the present enquiry officer Shri Rex Hungyo is biased against the petitioner, as he has already in the earlier enquiry report conducted in the

matter of show cause notice to the CB company observed that the present appellant have rendered himself liable to be penalized under Regulation 18

of CBLR, 2018 and he is of the opinion that the appellant F-Card holder has violated the provisions and committed misconduct in the enquiry report

dated 11 June, 2019. It was further urged that the present show cause notice is time barred as the alleged offence report being the letter dated 3

December, 2018, filed by the other Director of the Company, the show cause notice dated 6.9.2019 is clearly beyond the period of 90 days in violation

of the Regulation 17(1) of CBLR, 2018. It was also contended that the enquiry officer Shri Rex Hungyo was already holding an opinion against this

appellant, and hence the enquiry report suffers from the violation of principles of natural justice. Further, the enquiry report in the present case is more

or less repetition of the earlier enquiry report. The enquiry officer has failed to conduct a fair enquiry as required under Regulation 17 of CBLR, 2018.

He has not made proper enquiries nor examined the concerned persons nor inspected the relied upon documents, thus rendering the enquiry report

vitiated. It was also contended that the present show cause notice is more or less on the same facts contained in the earlier show cause notice dated

18 March, 2019 issued to the Customs Broker company, wherein this appellant was not made a party and hence the present show cause notice is by

way of change of opinion, and clearly time barred. That the enquiry officer have not even examined the original alleged letter of resignation dated 22

August, 2018, rendering the enquiry report not reliable and fit to be rejected.

That vide the impugned order in original dated 6 February, 2020, the learned Commissioner accepting the enquiry report and rejecting the

contentions of the appellant, have been pleased to impose penalty of Rs.50,000/- on the appellant under Regulation 18 of CBLR, 2018 and further

directed to surrender the F-Card No. 145/2016 issued to him.

Being aggrieved, the appellant is in appeal before this Tribunal inter alia on the grounds that the impugned order is non-speaking and passed in a

mechanical manner, without application of mind. The alleged original resignation letter dated 20 August, 2018 has neither been examined by the

enquiry officer nor by the learned Commissioner, although it goes to the root of the matter. Since this appellant have disputed the said resignation

letter, never made and signed by him and have alleged fraud against the other Directors. Further there is no examination report of an expert with

regard to alleged resignation letter of this appellant. It is further pointed out that reliance placed by the enquiry officer on the ‘company master

data’ from the website of the Ministry of Company Affairs, Government of India, the last date of AGM shown is 30 September, 2017 and the date

of balance sheet considered in the meeting is 31 March, 2017, and in the details of Directors the name of this appellant does not appear and the names

appearing for Directors are - Shri Mukesh Kumar Saini, Shri Atul Kale, Shri Sanket Mahesh Patil and Shri Harshit Saini. Thus, there is clear error on

the part of the enquiry officer and the learned Commissioner in understanding the ‘company master data’ as this appellant was admittedly

Director in the said company - M/s S. Satyam Aviations Pvt. Ltd. on the date of AGM being 30 September, 2017 and also thereafter till 20 August,

2018, as is alleged and is evident from the record. No enquiry report was conducted with respect to the affairs of the company and the change in

directorship, nor any enquiry report was called for from the concerned Registrar of Companies. It is further urged that no proper enquiry has been

made either by the enquiry officer or by the adjudicating authority in respect of allegation and counter allegations of forgery and fraud, which goes to

the root of the matter. Thus the whole proceedings are vitiated and the impugned order is fit to be set aside. It is further urged that with respect to

allegation of filing of the shipping bills and bill of entry by this appellant, no adverse report was received from any Custom House and admittedly there

is no revenue loss to the department, nor any contravention of the provisions of the Customs Act. Accordingly, the learned Counsel prays for allowing

the appeal and setting aside of the impugned order with consequential benefits.

The learned Authorized Representative for Revenue Shri Yashvir Singh relies on the impugned order.

Having considered the rival contentions, I find that there is no proper enquiry into the allegation of forgery made by this appellant against the other

Directors. I further find that the department have blindly relied upon the contentions of the other Directors without even examining the original

resignation letter dated 22 August, 2018, thus vitiating the proceedings. I find that no explanation was called from the other alleging Directors as to

why Form DIR-12, for bringing on record the resignation from the directorship of this appellant was filed only on 19 November, 2018, i.e. after about

three months and during all this time why they permitted the appellant F-Card holder and Director to use the Customs Broker license of the company.

I further find that there is no explanation obtained by the court below as to the reason for failure on the part of the other Directors to intimate the

Custom department of change in the Constitution of the Directors of the company holding CB license. Further the contentions of this appellant as to

the forgery and fraud being committed by the other Directors, particularly Shri Mukesh Kumar Saini have not been found to be untrue but have been

summarily rejected without any reason recorded. As the Customs Broker account of the custom broking company can be deactivated itself on

ICEGATE, still the same was not done by the other alleging Directors till 18 December, 2018, for which there is no explanation. The appellant gave a

cogent explanation in the very first instance when his statement was recorded by the Supdt. on 14 December, 2018 and stated that one Shri Raj Singh

Saini brother of the other Director Shri Mukesh Kumar Saini had requested him to clear some consignments, which this appellant after going through

the documents and the antecedents of the exporter refused to do, which led to animosity and dispute. For refusal by this appellant who was the F-Card

holder, Shri Raj Singh Saini attempted to get the export consignment cleared through another CHA firm - M/s Global Links and thereafter all the 32

consignments were found to be irregular and detained by SIIB. Such serious allegation against the other Directors have not been found to be untrue

and without making proper enquiry in the matter, the proceedings against this appellant are found to be bad and vitiated. I further find that the enquiry

officer was prejudiced against this appellant, as he had already made adverse observations against him in the previous enquiry report with respect to

the CB company dated 11 June 2019, prior to initiation of the present proceedings. I further find that the present proceedings suffer from the vice of

biasness as well as are in violation of the principles of natural justice. I also find that the show cause notice issued to this appellant is time barred and

bad. I further find that the present proceedings are by way of repetition of the allegations in the earlier show cause notice issued to the CB company,

wherein there is no specific allegation against this appellant and he was not even a party, nor any penalty was proposed against them.

Accordingly, in view of my findings, I allow this appeal and set aside the impugned order. I further hold that the F-Card No. 145/2016 issued to the

appellant is valid. Further the pending application for CB license by the appellant is directed to be considered by the respondent authority in

accordance with law.

Thus, the appeal is allowed.

(Pronounced in Court on 17.12.2020)