[Judgment]. - P.C. : In the light of the order that we propose to pass on the Customs Appeal, the Writ Petition would not survive inasmuch as thereafter the parties have to abide by the orders in the Appeal. Hence, by consent we take up the Customs Appeal No. 47 of 2011 for hearing and final disposal.

2. This Customs Appeal challenges the order passed on 3-3-2011 by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai [ (Tri.-Mum.)]. That Tribunal allowed the appeal of the respondent.

3. Mr. Jetly, learned Counsel appearing in support of this appeal for Revenue submits that the four questions proposed at page 5 of the paper book are all substantial questions of law.

4. In his submission, the Customs House Agent Licence No. 11/1030 was granted to the respondent under Regulation 10(1) of the Customs House Agents Licensing Regulations, 1984. The Directorate of Revenue had investigated the case of misuse of advance licence scheme by one Anthony D’Souza in the name of his two proprietory firms M/s. Tony Enterprises and M/s. Ventura Alloys and Electrics (India). The investigation revealed involvement of the respondent and that is how a notice to show cause was issued. That alleged aiding and abetting the importer in the evasion of import duty on import of blank audio and video cassettes by availing duty exemption under Advance Licence.

5. The Commissioner of Customs heard the respondent and thereafter issue a suspension order. That suspension order was passed under Regulation 20(2) of the Customs House Agents Licensing Regulations, 2004. This was pending completion of inquiry. Against the order of suspension dated 4-5-2005, an appeal was preferred before the CESTAT and on 24-6-2005 that appeal was allowed. The order of CESTAT was accepted by the Commissioner of Customs and the licence became operative. That was with effect from 12-8-2005. Later on the inquiry concluded and the Inquiry Officer submitted his report on 30-5-2007 wherein he held that Articles of Charges I, II and IV are not proved and Article of Charge III is proved. The Commissioner disagreed with these findings in the Inquiry Report and, therefore, a disagreement Memo dated 30-7-2007 was issued. The respondent was once again given an opportunity to reply to the specific allegation as to why all the charges should not be held to be proved.

6. It was thereafter the final order dated 20-12-2007 revoking the Customs House Agent Licence was passed. The entire security deposit was forfeited. The appeal preferred by the respondent against this order of the Commissioner has been allowed by the impugned order.

7. Mr. Jetly would submit that the appeal has been allowed erroneously. The punishment of revocation of the licence should not have been interfered with. The Inquiry Officer has exonerated the respondent but the Regulations permit the Commissioner to express his disagreement with these findings in the Inquiry report. Being a Disciplinary Authority, the Commissioner could have disagreed with this report and that is how the disagreement was expressed. When a complete compliance has been made with the principles of natural justice and the charges are grave and serious, then, the order of CESTAT is totally uncalled for and unjustified. Our attention has been invited to the order to submit that the Commissioner has held that there is violation of Customs House Agents Licensing Regulations. Mr. Jetly has taken us through the Memo of charges, the reply or response of the respondent and the findings in the Commissioner’s order. Mr. Jetly submits that as far as Charge No. II is concerned, there is absolutely no authorization in favour of the respondent. The document was produced as afterthought. As far as Charge No. III is concerned, it is apparent that the respondent was found aiding and abetting the importer. The imported goods have been diverted to the domestic and that is how the charge was came to be proved. Mr. Jetly would submit that equally Charge No. IV is serious. If a third party is allowed to operate the licence on commission, then, this is clear violation of the Regulations. Mr. Jetly’s emphasis is on the relationship between the Revenue/Department and the Agent. Mr. Jetly would submit that the department reposes complete faith and trust in the Customs House Agent rather than his/her clients. If the agent has to guide the importers and exporters to ensure compliance with law, then, all the more the approach of the Tribunal cannot be sustained. This appeal, therefore, be allowed.

8. Mr. Shetty, learned Counsel appearing on behalf of the respondent, on the other hand, would submit that there is no merit in this appeal. The appeal has been admitted only on the reframed substantial question of law and that is whether on the facts and in the circumstances of the case and in law, the CESTAT is justified in setting aside the order revoking the agent’s Customs House Agents Licence even after holding two charges levied against the Agent were proved and Regulation 13(a) and (k) of the Regulations have been violated. In that regard Mr. Shetty would submits that the Department or the Revenue cannot indulge in pick and choose. Mr. Shetty relied upon the compilation handed over to us and contended that there were two agents namely Mr. S.P. Pawar & Sons and M.D. Shipping Agency. Similar charges were levelled against them and similar outcome of the inquiry resulted in their licence being revoked. However, the Tribunal found that there is difference between a gross illegality and irregularity. Some of the regulations are capable of substantial compliance and they need not be strictly complied with. Therefore, if there is failure to comply with them, then, the penalty should not be revocation of the licence but as held in their cases the forfeiture of security deposit was enough. Precisely, that has been done by the Tribunal in the present case. Therefore, the appeal deserves to be dismissed.

9. With the assistance of both the learned Counsel, we have perused this Appeal, paper book and all the annexures thereto including the impugned order. A show cause notice was issued under Sections 28(1) and 124 of the Customs Act, 1962 that is because there was a misuse of DEEC scheme by M/s. Tony Enterprises and M/s. Venture Alloys & Electrics (India). The allegations in paragraphs 2 and 3 of the Show Cause Notice pertain to the import and how it was effected. It is alleged as to how M/s. Tony Enterprises were issued 14 advance licences for import of different goods and their values are specified in the notice. Thereafter, a detailed investigation carried out is referred and what has been revealed during the same is then set out. The statements have been recorded of all the concerned persons. As far as the respondent is concerned, what is alleged is that the statement of Mr. Dinesh Prataprao Mehta, Proprietor of Sainath Clearing Agency under whose licence the consignment of Audio and Video Cassettes of Tony Enterprises were cleared, revealed that there were only xerox copies and that violations thereafter have been set out including the employees of the respondent procuring orders and receiving commission. Further statement of Mr. Dinesh P. Mehta and the statement of Mr. Dilip Shah were, then, referred. Based on all these allegations, the show cause notice was issued as to why the Customs House Agents Licence should not be revoked and as to why penalties be not imposed. There are replies given to these show cause notices. The Articles of charge accompanying the show cause notices state that there is violation of Regulation 12 of the Regulations that pertains to prohibition against selling or otherwise transferring the licence. In that regard, a statement of Mr. Dinesh P. Mehta has been referred and that revealed that import clearance was made under the licence of M/s. Sainath Clearing Agency by one Mr. Dilip Shah and who was paid 40% agency charges as commission. As far as Article of Charge II is concerned, what has been alleged is that violation of Regulation 13(a) is revealed. That is that the Customs House Agent shall obtain authorization from each of the companies, firms or individuals by whom he is for the time being employed as Customs House Agent and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs. In that regard what has been alleged is that the employees were operating independently on account of the arrangement between the proprietor of M/s. Sainath Clearing Agency and Mr. Dilip Shah. The authorization was not produced.

10. As far as Article of Charge III is concerned, the basis thereof is that if there is non-compliance with the provisions of the Customs Act, it is the duty and obligation of the Agent to bring the matters to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs. But the violations of the terms and conditions of the advance licence and scheme in that behalf by M/s. Tony Enterprises were not brought to the notice of the Competent/Proper Officer and this also is a gross and serious violation of the Regulations.

11. As far as Article of Charge IV is concerned that pertains to non-maintenance of record and failure to give inspection thereof.

12. The Inquiry officer in the report concluded that Charge No. 1, Charge No. II and Charge No. IV are not proved. The Commissioner disagreed with this conclusion and thereafter, passed the order-in-original. Mr. Jetly has heavily relied upon the order-in-original and to submit that as the Customs House Agent Licence was used by Mr. Dilip Shah and Mr. Shantaram Dongre on rent basis, these are violations which have been proved and from the statement of Mr. Dilip Shah itself. As far as the second charge is concerned, that is also held to be proved because Mr. Dinesh Mehta was unable to give any details pertaining to M/s. Tony Enterprises. He never dealt with this party. Once he has surrendered the licence or allowed a third party to operate it, then, the authorization has never been produced by the Agent. This charge was also to be held to be proved. Equally, non-informing the Competent Officer of the violation of the licence conditions is also a serious lapse according to Mr. Jetly.

13. However, a look at the Tribunal’s order reveals that the Tribunal at the first instance on 24-6-2005 had interfered with the suspension though it was a temporary measure. The Tribunal in paragraph (4) of that order held that Shri Dilip Shah and Shri Shantaram Dongre’s statements must be read completely and they would reveal that they were acting on behalf of the respondent and as his employees. They are not paid any regular monthly salary. They were holding Customs House Pass on behalf of the agent and, therefore, must be considered as the employees of the Agent. This was the finding of the Tribunal at the stage of interfering with the order of suspension. Apart therefrom the Inquiry officer referred to this statement and when there was an admission that these are the employees of the Customs House Agent and that is how they were permitted to used the licence only for clearance of imported goods, then, there cannot be violation of Regulation 12. Merely because the Inquiry Officer could have proceeded independently and without being influenced by the prima facie findings, which is revealed from the Tribunal’s earlier order but its final order is that there are no materials other than these statements. Similarly, with regard to Article of Charge-II, it is clear that no proforma was prescribed for Customs House Agents to obtain authorization from clients and that the signature on the bill of entry is the practice prevailing. Relying on the case of “P.P. Dutta v. Commissioner of Customs, New Delhi, []”, it was urged that the statement of Mr. Dinesh Mehta will not enough to render a conclusive opinion. Mr. Mehta’s statement is that he did not personally deal with any person from M/s. Tony Enterprises and that the business was procured and handled exclusively by his employees. Mr. Dilip Shah and Mr. Shantaram Dongre once again confirmed that they attended the Customs clearance of the consignment. If the said Mr. Dinesh Mehta was not directly involved in the customs clearance, then, to hold that he did not authorise his employees was improper. The Tribunal held that the Regulation may make it obligatory for the agent to obtain authorization from his client and that authorization should be in writing, however, the normal course of importation and clearance of the goods is that the importer would supply import documents such as Import General Manifest, Invoice, Packing List, etc., to his Customs House Agent with a covering letter wherein the agent was authorised to file bill of entry and attend all other requirements for clearance of the goods and also the particulars of the import documents. No such authorization was produced and, therefore, Charge II was held to be proved by the Tribunal.

14. As far as Charge III is concerned, the transportation of the goods diverted by the importer is a matter of post importation. The goods were cleared after completion of Customs formalities. There is nothing which can, then, visit the Customs House Agent, according to the Tribunal, with any consequence once the cleared goods are handed over to the importer. The operations like transportation of goods post clearance as a matter of practice was not done by the Customs House Agent. In the present case, one Mr. Shantaram Dongre who was the employee had arranged for such transportation but, according to the Tribunal, that was not enough to hold that it is the Customs House Agent’s obligations under the Regulations and which have been discharged through the employee. In the circumstances, the act of Mr. Shantaram Dongre should not visit the Customs House Agent with an adverse consequence is the conclusion reached.

15. Thereafter, non-maintenance of the records and accounts in the prescribed manner and not offering them for inspection of Deputy Commissioner of Customs or Assistant Commissioner of Customs or any other person authorised by them whenever required, was the violation alleged. The Customs House employee Mr. Dilip Shah had himself admitted that he has not kept copies of the documents pertaining to the goods imported by M/s. Tony Enterprises. The Tribunal, therefore, held that when the original register of import and pertaining to the specific import was not produced, then, the charge is held to be proved.

16. However, as far as the ultimate penalty is concerned, the Tribunal concluded that the two charges which have been proved are not enough to stop the licence from running through its validity period or prohibiting the Agent from continuing the work in terms of the licence. This is not a case where the Customs House Agent who has suffered revocation of licence for three years, is not a enough punishment. The forfeiture of the security deposit can be sustained and the Tribunal held that the Customs House Agent Licence which has been revoked for three years is enough penalty in peculiar facts and circumstances of the case.

17. We do not see how such a finding and conclusion of the Tribunal can be held to be perverse or based on no material. Mr. Shetty was right in relying upon the dates and events to submit that the inquiry commenced in this case on 24-10-2005. The Inquiry Officer submitted his report on 30-5-2007. The disagreement Memo is dated 30-7-2007, and the order in original is dated 20-12-2007. Therefore, from 20-12-2007 till 3-3-2011, the licence of the respondent was revoked and he could not, therefore, carry on any business. Consequently, from 3-3-2011 till date and despite repeated requests, the licence of the respondent has not been restored. He was, therefore, required to file the Writ Petition.

18. To our mind, the respondent, therefore, has suffered enough punishment and is visited with the sufficient penalties. In the case of two others and who are similarly situated, what the Tribunal found is that all the charges cannot be held to be proved. In that regard, the reliance placed by Mr. Shetty on the orders passed in the case of “S.P. Pawar & Sons” is appropriate. The Counsel brought to our notice the fact that similar violations were committed by ‘Shri Venkatesh Shipping Service Pvt. Ltd.’ This Court in that case passed an order on the basis that if the licence is under revocation from 19-8-2008 till 30-9-2012 and the Customs House Agent is out of business for four years and seven months, then, by forfeiting the security deposit and maintaining the revocation for that period, the licence can be restored. Our attention has also been invited to the order passed in the case of “Commissioner of Customs (General), Mumbai v. M.D. Shipping Agency, [ (Bom.)]”. In the case of “M.D. Shipping” the Division Bench of this Court has not interfered with the Tribunal’s order, by dismissing the Revenue’s appeal. The Revenue had come in the appeal against the order passed on 31-5-2012 by the CESTAT. The CESTAT had taken the view that the Commissioner’s order-in-original was not justified and restored the licence. We find that this Court found that the approach of the Tribunal was not perverse. A reading of the said order which is reported at “” reveals that the charges were more or less identical so also the role of the Agent. This Court in paragraphs 4, 8, 9 has held as under : -

“4. So far as question (a) is concerned, the grievance of the Revenue to the impugned order is that the finding of the Tribunal is perverse and arbitrary as the clerk working for the respondent CHA in his statement stated that he accompanied the consignment of zinc ingots when it was moved from the dock to the address of M/s. South Goods Carriers, Sant Tukaram Road, Mumbai as directed by importer. On enquiry, no such office of M/s. South Goods Carrier was found. Mr. Jetly placed reliance upon the statement of clerk of the respondent CHA as recorded in the Enquiry Officer’s report as well as the order of the Commissioner, which reads as under : -

“He further stated that he had personally supervised the transport to the said address. Thus, it is very much in the knowledge of Girish Churi that no transporter by name M/s. South Goods Carrier existed there.”

In view of the above, the finding recorded by the Commissioner of Customs, the Tribunal’s conclusion was perverse and needs to be set aside.

8. We find that the impugned order has observed that once the goods have been cleared out of customs charge and handed over by the CHA to his client, obligation of the CHA to CHALR comes to an end. It is not the obligation of the CHA to assume that post the clearance of imported goods it would not be taken to the address given in the Advance licence. Moreover, in this particular case, imported zinc ingots had on clearance from the Customs Department taken to the office of the transporter. In these circumstances, there could be no occasion for the CHA to suspect that the imported zinc ingots were not being taken to the destination as declared in the Advance licence namely the factory at Surat in Gujarat. Further under Regulation 13(d) of CHALR the occasion to advice the importer would not arise because there was no occasion for the CHA to know or even suspect that the importer was not complying with the provisions of the Customs Act and/or advance licence under which the goods were cleared. This is more so as delivery to a transporter for carriage of goods at the direction of the importer would not by itself resulted in non-compliance of the Customs Act.

9. In this view of the matter, we do not see any reason to entertain question (b) as it is self evident from the facts found by the Tribunal that there was no occasion to advice the importer as there was no reason to suspect that the importer would not comply with the advance licence issued to him.”

19. As fas as the case of “Shri Venkatesh Shipping Services Pvt. Ltd. v. Union of India, [ (Bom.)]” is concerned, this Court speaking through the Division Bench of Hon’ble Mr. Justice J.P. Devadhar and Hon’ble Mr. Justice R.Y. Ganoo (As Their Lordships as then were) concluded that the Customs House Agent’s involvement and his role has been underlined by the Regulations. True it is that the Department reposes faith and trust in him and he has to, therefore, abide by the Regulations. He has voluntarily accepted to discharge the duties and the obligations in terms of the Regulations. He need not assume that post clearance, the party would commit breach of the provisions of the Act, Rules and regulations. However, what we find is that in matters of such nature, the Division Bench found that the penalty is something which could be depending upon the facts and circumstances of each case, the seriousness of violation committed and the role which is attributed to the agent. In a given case even if the charges are held to be proved, if the gravity and seriousness thereof does not require or warrant permanent revocation of the Customs House Agents Licence, then, it is definitely a relevant aspect. It is that approach which the Division Bench emphasized and equally adopted as is clear from the order passed in that case and reported in “”.

20. As far as the judgment in the case “Manilal Patel Clearing Forwarding P. Ltd. v. C.C. (Gen.), Mumbai, [ (Tri.-Mumbai)]” is concerned, there also the Tribunal ordered withdrawal of revocation of licence subject to forfeiture of security deposit. In this order, the Tribunal referred to its own orders and passed in the cases which are similar. The Tribunal’s order is reported in “[ (Tri.-Mumbai)]”. Paragraphs 10, 11 and 12 thereof are relevant, they read as under : -

“10. Further, we find that the enquiry officer has held in his enquiry report that charges against the appellant are ‘not proved’. In the case Standard Shipping Agency, wherein also the enquiry officer held that the charges have ‘not been proved’ and thereafter the Commissioner of Customs (Gen.) has observed as under : -

“The inquiry Officer in the inquiry report has observed that the two persons who admittedly have been forwarding the documents to the CHA were the regular clients of the CHA since 2003; that more than hundred consignments have been cleared by them, that accordingly the requirement of obtaining an authorization letter for each consignment does not arise and the same can be substituted by the declarations given by the importers for the bills of entry. I do not agree with the observations of the inquiry officer in this regard. I find that the inquiry officer in his inquiry report has rightly held that the CHA has accepted the documents through intermediaries i.e. Shri Jatin M. Shah and Shri Kaushal A. Shah and hence, they have not met the actual importers. The CHA’s contention that it is regular business practice to accept business through middlemen, brokers and commission agents may be good for the trade, however, nothing stops the CHA from interacting directly with the importers thereafter, once the documents are received for clearance. Even for such business/work coming through a middleman, there is nothing in CHALR which exempts CHA from obtaining authorization letters from the concerned importers. For that matter, it has not come on record that CHA has produced even single authorisation from any importer. Even it is assumed that CHA has been doing business with these people for previous many years, still there is no exemption from obtaining authorisation from importer. Nor is the case that CHA has produced even one authorisation from any of the importer even for previous consignment. Declaration on bill of entry cannot and should not substitute authorisation from importer to CHA to handle his work in Custom Houses. Hence, I am of the opinion that the CHA has violated Reg. 13(a) of CHALR, 2004.”

And thereafter he passed the following order : -

“In exercise of the powers conferred under Regulation 22(7) of the CHALR, 2004, I hereby order the forfeiture of entire security amount deposited by the said CHA with the Customs Department under the provisions of CHALR, 2004. The CHA licence be made operative after deposit of fresh Security Deposit as per CHALR, 2004.”

11. In the case of Vipul Pranlal Doshi (supra) this Tribunal has considered the decision in the case of Standard Shipping Agency and thereafter held that as under : -

“In the case of Standard Shipping Agency, wherein the Inquiry Officer has held that charges not proved but the Commissioner of Customs (General) has observed that the charges has been proved and thereafter he ordered for making operative of the CHA licence after forfeiture of the security deposit. It is a discrimination with the appellant in this case and, therefore, relying on the decision of P.P. Dutta (supra) and S.S. Clearing & Forwarding Agency Pvt. Ltd. (supra) and in the case of Standard Shipping Agency, we observe that the punishments suffered by the appellant is sufficient in facts and circumstances of the case.

In the case of M/s. Adarsh Clearing Agency in Appeal No. C/440/10 on 28-11-2011 in similar facts, this Tribunal has ordered for withdrawal of revocation of CHA licence subject to forfeiture of security deposit of Rs. 10,000/-. Accordingly, we order withdrawal of revocation of CHA licence No. 11/745 of the appellant subject to forfeiture of the security amount of Rs. 10,000/-.”

Thereafter, this Tribunal made operative the licence of the CHA on forfeiture of security deposit of Rs. 10,000/-.

12. In view of this observations, we hold that when on similar charge in the case of Standard Shipping Agency wherein the enquiry officer held that charge is ‘not proved’ and Commissioner of Customs (Gen.) considering the report and thereafter, gave a finding that charges are proved and withdrew the order of suspension of CHA licence and made operative the CHA licence on forfeiture of security deposit. The appellant should be placed in similar situation.”

As far as this order is concerned, there is no material to indicate that this order of the Tribunal has in any manner been interfered with by a higher Court.

21. Thereafter, our attention is invited to the order passed in the case of “S.P. Pawar & Sons v. Commr. of Cus. (General), Mumbai-I, [ (Tri.-Mumbai)]”. As far as that case is concerned, what is revealed from the affidavit in reply of the respondent is that the violations alleged against the S.P. Pawar and Sons were identical. That was with regard to allowing one Mr. Ramdas Dhormale to act as authorized signatory without informing the department. Though the violation is termed as serious, the Tribunal held that revocation of licence is not a penalty which is warranted. Equally, transport after delivery arranged by the importer himself cannot lead to the finding that there is aiding and abetting in diversion of goods. This order in the case of “S.P. Pawar & Sons” (supra) was challenged in Customs Appeal No. 52 of 2009. This Court dismissed the said appeal on 8-7-2009 [ (Bom.)]. This Court dismissed the appeal with a reasoned order. The Appellate Tribunal’s order assigning cogent and satisfactory reasons was held to be based on the peculiar facts and appreciation thereof. In the affidavit in reply it has been asserted that a look at the charges against “S.P. Pawar & Sons” would show that similar are the violations alleged to have been committed by the present respondents. Hence, a different treatment is not warranted. We are of the opinion that the case of “S.P. Pawar & Sons” and the present appellant is more or less identical. Though a larger issue of discrimination in the matter of punishment need not be gone into, what we find is that the consistent view of the Tribunal in such cases and in similar circumstances was not found to be perverse or vitiated by any serious error of law apparent on the face of the record.

22. This Court has consistently maintained that it is for the Authorities issuing the licence to inquire into the allegations of violations thereof and equally into the lapses committed during the operation of the licence. However, they have certain amount of discretion in matters of this nature and equally while imposing penalty. That should not be lightly interfered with. However, that does not mean that once the orders of the Authorities like Commissioner are capable of being challenged in further appeal, then, the Appellate Tribunal’s powers are in any way restricted or circumscribed. In order to render substantial justice and if the Tribunal feels that there is a certain period which has gone by during which the agent has been out of business, then, that is sufficient penalty but such a view cannot be taken in all cases and as a matter of rule. However, that having been taken in this case consistent with the material produced and seriousness of the charges, that we are of the view that substantial question of law cannot be answered in favour of the Revenue. It will have to be answered against it and in favour of the respondent. We clarify that the Tribunal’s order in the present case shall be construed as substitution of the penalty imposed, namely of permanent revocation of Respondent’s CHA Licence with partial revocation from 20th December, 2007 till 3rd March, 2011 and forfeiture of entire security deposit. We maintain that accordingly.

23. As a result of the above discussions, this appeal fails. It is accordingly, dismissed but without any order as to costs.