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Noble Agency v. Commissioner Of Customs, Mumbai
Factual and Procedural Background
The appellant, a Customs House Agent (CHA), had their licence suspended on 29-5-1995. Following this, enquiries were conducted and an enquiry report was submitted to the Commissioner of Customs, who ordered the revocation of the CHA licence. This led to the present appeal. The investigation arose from importation of copper ingots by fictitious importers using fraudulent import licences. It was found that certain consignments handled by the appellant involved persons posing as employees who were in fact independent operators paying the appellant’s director a fixed monthly sum for use of the CHA licence. Nine such persons were identified as sub-letting the licence without proper authorisation, and the appellant was found to have not maintained proper accounts.
Legal Issues Presented
- Whether the appellant CHA unlawfully sub-let their licence to independent operators who were not employees, thereby violating the terms of the licence and relevant Customs regulations.
- Whether the appellant failed to maintain proper accounts as required under the Customs regulations.
- Whether the appellant had proper authorisation for clearing consignments of M/s. Vinob Exports Pvt. Ltd.
- Whether the penalty of revocation of licence imposed on the appellant was justified and proportionate to the offences committed.
- Whether the Tribunal has the power to restore the licence despite the findings of contravention.
Arguments of the Parties
Appellant's Arguments
- The appellant’s counsel challenged the Commissioner’s conclusion that the licence was sub-let, referring to depositions of persons who used the licence.
- It was argued that proper authorisation was obtained from the importer and that clearance documents were taken over by investigating agencies, with requests made for inspection.
- The appellant contended that the penalty was disproportionate to the offence committed.
- Alternatively, it was submitted that the punishment already undergone should suffice and that the appellant should be allowed to re-obtain the licence.
- The appellant relied on certain judgments to support the claim for leniency and restoration of licence.
Respondent's (Commissioner of Customs) Arguments
- The Commissioner found that the appellant had sub-let the CHA licence to independent operators for pecuniary benefits, which was a violation of Regulation 13 and 14 of the CHA Licensing Regulations.
- The Commissioner held that the appellant failed to maintain proper accounts, which was not denied.
- The Commissioner observed that the appellant did not peruse the panchanama related to clearance documents and did not raise grievances before the enquiry officer regarding document inspection.
- The Commissioner considered the trust placed in CHAs and the seriousness of deliberate contraventions, justifying revocation of the licence.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| 1996 (84) E.LT. 226 | Case dealing with non-renewal of licence, not suspension. | The court found this precedent irrelevant as the facts differ; the case involved non-renewal, not suspension. |
| A.N. Bhatt v. Collector of Customs [(Tri.)] | Held that absence of knowledge of contravention by CHA warrants restoration of licence. | The court distinguished the facts, noting that the present case involved multiple offences and suspension, making the precedent inapplicable. |
Court's Reasoning and Analysis
The court carefully examined the evidence, including statements recorded under Section 108 of the Customs Act and the testimony of witnesses who admitted using the appellant’s licence in exchange for monthly payments. The court found the Commissioner’s conclusion that the appellant sub-let the licence to be well-founded. The failure to maintain proper accounts was admitted and considered a weak defense. Regarding authorisation for handling imports by M/s. Vinob Exports Pvt. Ltd., the court noted some ambiguity ("grey area") but did not find it sufficient to overturn the findings on sub-letting and account maintenance. The court emphasized the important role of CHAs in Customs procedures, the trust reposed in them, and the strict obligations under Regulations 13 and 14. The deliberate contravention by transferring the licence for pecuniary gain was held to justify serious consequences. The court distinguished the appellant’s reliance on prior judgments, finding them inapplicable due to differing facts and circumstances. Finally, the court stated that the Tribunal lacks statutory power to restore the licence in such circumstances.
Holding and Implications
The court upheld the Commissioner’s order and dismissed the appeal. The direct effect is the continuation of the revocation of the appellant’s CHA licence. The court did not grant leniency or restoration of the licence and clarified that the Tribunal does not have the statutory authority to reinstate a licence in such cases. No new precedent was established beyond affirming the strict application of the CHA Licensing Regulations and the importance of maintaining the integrity of CHA licences.
[Order per : J.H. Joglekar, Member (T)]. - The appellant is a CHA. The licence held by them was suspended on 29-5-1995. Subsequently, enquiries were conducted and the enquiry report was submitted to the competent authority viz. Commissioner of Customs. The Commissioner ordered revocation of the CHA licence resulting in the present appeal being filed.
2. The proceedings commenced with the investigation launched by the appropriate authority in connection with importation of copper ingots by fictitious importers where the import licences were obtained by fraud. Certain consignments imported by one of such fictitious firm viz. M/s. Vinob Exports Pvt. Ltd. were handled by the present appellants. The investigators found that S/Shri Dhirendra Singh and Satyedra Singh who posed themselves as employees of the present appellant were not, in fact, employees, but were independent operators who used to pay Shri Maru, the director of the present appellants, a fixed some of money every month for utilisation of their CHA licence. Enquiry further showed that a total of 9 persons were operating in this manner. They were actually not employees but they were authorised as such, and used to handle clearance of independent imports and exports for which they used to pay a monthly sum to the present appellants. The statements of these persons were recorded under the Section 108 of the Customs Act. On the basis of these statements, it was found that the estimated sum received was over Rs. 25,000/- per month by sub-letting the licence. Investigations also showed that his accounts were not maintained properly. It was alleged that the CHA did not have a valid authorisation from M/s. Vinob Exports Pvt. Ltd. for clearing the imports. The statements of imputation contained the following grounds :
Firstly, that the CHA sub-let the licence to be used by other persons who were not his employees for certain monetary consideration. Another specific claim was also made referring to the imports made by M/s. Vinob Exports P. Ltd. that was that he had failed to take appropriate caution in handling the consignment. The second important allegation was that specific authorisation was not available with CHA for handling imports made by M/s. Vinob Exports Pvt. Ltd. The third charge was that the CHA had not maintained any accounts properly. Although a number of article of charge was labelled, these are the substance of the charges.
3. Shri Shetty, the ld. Counsel attempted to show from the deposition of the persons who had used the licence that the conclusion drawn from them by the ld. Commissioner was not correct.
4. We have very carefully perused the details of Examination-in-Chief of a defence witness viz. Shri Sudesh Mether conducted on 3-1-98. The witness claimed that the company of which he was an employee did not have a CHA licence and that he was using the appellant’s licence for the clearance of goods of the company on payment of monthly sums to the appellants. We find on perusal of this statement and other statements that the belief of the Commissioner that the CHA had allowed his licence to be used by other persons and that amounted to sub-letting of the licence was well founded.
5. As regards the lack of maintenance also what is given by Shri Maru is a weak defence on the ground of illness. The fact that the accounts were not maintained properly has not been denied at all.
6. The ld. Counsel submits that perusal of the order of the Commissioner of Customs (Adj.) dealing with the liability of confiscation of the contraband imported in terms of the fraudulent licences would indicate that the proper authorisation was obtained by Shri Singh from Shri Didwania of the importers and that it must have been filed with B/E as is required. He also made the claim that the clearance documents were taken over by investigating agencies and showed us that request was made for inspection thereof. The Commissioner in the impugned order observed that the CHA had not perused the panchanama under which the documents were taken over. He had also observed that grievance to this effect was not made before the enquiry officer. We thus find a grey area as far as this charge is concerned.
7. We, however, find that the Commissioner’s belief about the factual sub-letting of licence by Maru and failure to maintain the accounts was well founded.
8. Shri Shetty makes a claim that the penalty imposed is disproportionate to the offence committed. In the alternative, he submits that the punishment already undergone by CHA should be sufficient and that he should be permitted to re-obtain the licence. To substantiate his argument, he relies upon certain judgments.
9. In the judgment reproduced in 1996 (84) E.LT. 226, the Tribunal was dealing with a case of non renewal of licence and it was not the case of suspension of licence. The facts in that case have no relevance in the facts before us and that therefore, the ratio does not arise therefrom.
10. We have also seen the Single Member judgment in the case of A.N. Bhatt v. Collector of Customs [ (Tri.)]. We have examined this judgment. In the finding, the ld. Single Member observed that the evidence on record did not warrant any conclusion that there was evidence to the commission of any offence of the CHA. The ld. Single Member held that the CHA did not have any knowledge of the contravention committed by the exporter. On this ground, he allowed the appeal and directed restoration of the licence.
11. We observe that the facts before us in the present proceedings are entirely different from what was before the Tribunal in the cited judgment. The issue before the Tribunal in that case was a case of an isolated offence and was not of a suspended licence of the CHA. Therefore, there is no relevance of that judgment in the present case.
12. The CHA occupies a very important position in the Custom House. The Customs procedures are complicated. The importers have to deal with a multiplicity of agencies viz. carriers, custodians like BPT as well as the Customs. The importer would find it impossible to clear his goods through these agencies without wasting valuable energy and time. The CHA is supposed to safeguard the interests of both the importers and the Customs. A lot of trust is kept in CHA by the importers/exporters as well as by the Government Agencies. To ensure appropriate discharge of such trust, the relevant regulations are framed. Regulation 14 of the CHA Licensing Regulations lists out obligations of the CHA. Any contravention of such obligations even without intent would be sufficient to invite upon the CHA the punishment listed in the Regulations. Any deliberate contravention of the law has to be dealt with most seriously. Regulation 13 makes it very clear that CHA licence cannot be sold or transferred. The proceedings in the case show and establish that by his action Shri Maru had in fact transferred the licence to several people for pecuniary benefits. Such contraventions have to be viewed seriously and hence the order of the Commissioner is correct.
13. As regards the prayer for taking lenient view and directing restoration of the licence, we find ourselves unable to do so. We are conscious of the fact that the Tribunal is a creature of the statute and is not empowered to grant such relief, the power for which does not come out of the parent enactment.
14. We uphold the Commissioner’s order and dismiss the appeal.
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