w w w . L a w y e r S e r v i c e s . i n



Shiva Logistics Ltd V/S CC, New Delhi

    Appeal No. C/50303/2016 (Arising out of Order-in-Original No. 131/SM/Policy/2015 dated 11.12.2015 passed by Commissioner of Customs(Gen), NCH, New Delhi) and Final Order No. 56481/2017

    Decided On, 11 September 2017

    At, Customs Excise Service Tax Appellate Tribunal New Delhi

    By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA
    By, (PRESIDENT) AND THE HONORABLE JUSTICE: V. PADMANABHAN
    By, MEMBER

    For Petitioner: Turan Garg, Advocate And For Respondents: R.K. Manjhi, DR



Judgment Text


1. The appeal is filed against the Order-in-Original No. 131/15 dated 11.12.2015. The appellant was licensed to operate as a Customs Broker by the Commissioner of Customs, New Delhi. The appellant was also registered and permitted to operate in Bombay Customs. The appellant was issued a SCN dated 16.06.2015 by the Commissioner of Customs, New Delhi alleging contraventions of various provisions of the Customs House Agents' Licensing Regulations, 2004 (CHALR, 2004). Further, the Commissioner (Customs) also appointed an Enquiry Officer to enquire into the alleged violation of CHALR, 2004. After receipt of the Enquiry Report, the Commissioner (Customs) passed the impugned order after the adjudication proceedings in which the CHA license of the appellant was revoked and the security deposit of Rs. 50,000/- was forfeited. Aggrieved by the impugned order, the present appeal has been filed.

2. The brief facts of the case are that the Directorate of Revenue Intelligence (DRI) investigated into the cases of fraudulent export of fabrics and readymade garments of inferior quality through Hind Terminal CFS and Ameya CPS of JNPT, Nhava Sheva, by grossly inflating value of their export goods by certain unscrupulous operators/exporters. Export of fabrics and readymade garments of inferior quality was done by grossly inflating value of these goods to avail undue and otherwise inadmissible export incentives like DEPB and DBK. Most of the Import Export Codes operated by Surat based operators like Tejas Desai, Sunil Muniyal, K.K. Nankani etc were obtained in the name of persons who were no way connected with the export of fabrics. All these IEC holders, for monetary consideration, had allowed their names and identities to be used by these operators in opening the export firms which were to be used for fraudulent exports. These were essentially proxy/benami exports for cornering undue/illegal export benefits (Drawback or DEPB) by resorting to gross overvaluation. Export of goods using firms registered in the names of non-related persons itself revealed mala fide intention of the exporters and the fact that the exports were not genuine. Analysis of the shipping bills filed during the 2009 by these export firms showed that in almost all the shipping bills, the exported goods were described as '"Dyed and/or Printed Fabrics' made from Polyester filament yarn, Texturised yarn with or without embroidery and/or with or w/o. Metalised Yarn". None of the shipping bills or the relevant export invoices showed actual description of the goods. Scrutiny of the invoices revealed that all these purchase invoices were computer print-outs. Letters to the suppliers for verification at the addresses mentioned in these invoices were returned undelivered by postal authorities which shows that the suppliers mentioned in these invoices were not existing at the address mentioned in these invoices. Admittedly, goods were purchased from the local market on cash basis and apparently it was only after the initiation of investigation by DRI that these exporters presented fabricated purchase invoices, which appears to be an afterthought. Thus, it appears that the goods exported were not the goods described in the export invoices and the exporters had mis-declared actual description and unit price of the goods for availing ineligible export incentives. The persons (facilitators like Khalid Begawala, Amber Mufti, Shailesh Lawate and Mansukh Kataria) who had carted the goods at the CFS also confirmed this fact. Financial investigation of high value transaction from the bank accounts of these export firms shows that all the high value cheques issued from these bank accounts were encashed with the help of cheque discounters and admittedly, the cash amounts were paid back to hawala operators. Thus, it appears that these operators had misused export incentive schemes like DEPB & Duty Draw Back by exporting cheap and inferior quality fabrics and readymade garments at highly inflated price and had obtained DEPB license duty drawback of crores of rupees.

3. The investigation undertaken further reveal that the exports work in connection with the above fraudulent exports were handled by several CHAs in the case against M/s. Varun Impex where goods were exported under DEPB scheme, 20 shipping bills were filed between 07.01.2009 to 17.09.2009 by M/s. Shiva Logistics Ltd. (appellant) as CHA. The investigation by DRI revealed that the export documents were filed by Sh. Krishnan Kumar Garg, 'G' Card holder of the appellant. Sh Garg in his statement before the investigating officers, admitted that he had filed such shipping bills for fraudulent exports in which undue benefit of duty drawback/DEPB schemes were claimed by making use of the name of the appellant, for monetary consideration. Further, it emerged that Sh. Amber Mufti, one of the persons involved in the fraudulent export, in his statement admitted that he had contacted Mr. Parveen Joshi of M/s. Shiva Logistics for facilitating such exports. In the SCN issued to M/s. Varun Impex, the appellant was implicated. In the present proceedings, the appellant was alleged to have violated the following provisions of CHALR, 2004:

(i) Regulation 13(a) for under taking customs clearance transaction without obtaining proper authorization from the client;

(ii) Regulation 13(d) for not advising the client for complying with the provisions of Customs Act;

(iii) Regulation 13(e) for failure to exercise due diligence to ascertain correctness of any information to be given to client.

(iv) Regulation 13(n) for not discharging the duties entrusted to CHA with utmost speed and efficiency.

(v) Regulation 13(o) for failure to verify the antecedent, correctness of IEC code and functioning of a client at the declared address.

(vi) Regulation 19(8) for not exercising proper supervision over the conduct of its employees.

4. The above observations led to the initiation of proceedings under CHALR, 2004 resulting in the revocation of the CHA license of the appellant.

5. With the above background, we heard Sh. Turan Garg, Advocate for the appellant and Sh. R.K. Manjhi, DR for the Revenue.

6. The ld. Counsel for the appellant submitted that the appellant had no role to play in the alleged fraudulent export by M/s. Varun Impex in which duty drawback/DEPB was claimed. He submitted that the shipping bills, in question, were filed by Sh. Krishnan Kumar Garg, making use of the name of the appellant without the knowledge of the appellant. Consequently, the appellant cannot be held liable for the fraud. Hence he submitted that the revocation of CHA license as well as forfeiture of the security deposit may be set-aside.

7. The ld. Counsel for Revenue justified the impugned order. He submitted that the appellant, as a principal, is liable for acts and omissions of his agent. Accordingly, he argued that the revocation of CHA license and forfeiture of deposit has been rightly ordered. He further relied on the decision in the case of PB Nair C & F Pvt. Ltd. vs. Commissioner of Customs (Gen.) Bombay : 2015 (318) ELT 437 (Tri.-Mum.). He further submitted that the above case has been passed in similar facts to the present case.

8. We have heard both the sides and perused the records. The CHA license has been revoked and the security deposit ordered for forfeiture, in connection with the alleged role played by the appellant in fraudulent exports carried-out under claim of undue export benefits. In the case investigated by DRI against M/s. Varun Impex, it is seen that as many as 20 shipping bills have been filed in the name of the appellant-CHA. During interrogation, Sh. Krishnan Kumar Garg, 'G' card holder of the appellant and authorized signatory has filed the shipping bills and signed them on behalf of the appellant-CHA. In his statement, Sh. Garg has admitted that he has filed these export documents to facilitate the fraudulent exports, on the basis of export documents received from Sh. Khalid Mufti, one of the kingpins in the export fraud, in return for Rs. 2000/- per shipping bill. He further admitted that this was done without the knowledge of Sh. Kailash Kumar Gupta, Director of appellant-CHA and that the entries of those shipping bills filed manually were not reflected in the documents maintained with the appellant-CHA. From the above facts, it is evident that the shipping bills for the fraudulent export consignments were filed by the appellant-CHA which helped the unscrupulous persons to play the fraud on the exchequer. It is also evident that the appellant has never met and was not aware about the actual IEC holders whose number was used by Sh. Krishnan Kumar Garg in filing the documents. Sh Garg has further admitted that he signed the documents without verifying the credentials of exporter. Without any authorization by the firms involved in the export, the appellant-CHA has filed the export documents resulting in undue claim for drawback/DEPB. It is further on record that export documents were obtained through the export facilitators/kingpins in the fraud rather than the actual IEC holder.

9. As per the Principle of Vicarious Responsibility, a Principal is liable for all acts and omissions of his agent. In the present case, we note that Sh. Krishnan Kumar Garg was a G. card holder and employee of the appellant during the period when the shipping bills for the fraudulent exports were made. Sh Garg was an authorized signatory of the appellant, hence the signatures appended by him on the export documents will necessarily have to be held as affixed by him in the course of normal business and on behalf of appellant. After having authorized Shri Garg to sign the documents on behalf of the appellant, the appellant cannot escape the vicarious responsibility for the acts and omissions of Sh. Garg. This view finds support in the judgment of the Hon'ble High Court of Gujarat in the case of Rajendra Purohit vs. Union of India (2012(278) ELT 54) where it has been observed:

"when the entire scheme of regulation is examined, it clearly revealed that Regulation 13 read with Regulation 19(8) would make it obligatory on the part of the CHA to be responsible for the action of its employees. Regulation 12 provides that CHA license is not transferable and Regulation 19(8) prescribes that CHA should exercise such control/supervision as may be necessary to ensure proper conduct of such employees in transaction of business as CHA and be held responsible for all acts or omissions of his employees in regard to their employment".
10. We have also considered the decision of Tribunal in the case of P.B. Nair (supra) wherein Tribunal upheld the revoking of the CHA license in similar circumstances to the present case. The findings in this case will be applicable to the present case.

11. Further, we find that in the case of CC (General) vs. Worldwide Cargo Movers: 2010 (253) ELT 190 (Bom), the Bombay High Court apart from upholding the principle of liability of the CHA for the act of its employees went on to observe as under:

"28. In our view, the Tribunal has committed a grave error in interfering with the decision of a domestic authority. In a departmental proceeding one has to see whether the principles of natural justice are followed and the findings are ju

Please Login To View The Full Judgment!

stified from material on record. Once both these aspects are satisfied if an outsider Tribunal interferes its findings and order will be improper and perverse which is what has happened in the present case. Similarly, when one comes to the disciplinary measures, one must not lose sight of the fact that the appellant, Commissioner of Customs is responsible for happenings in the Customs area and for the discipline to be maintained over there. If he takes a decision necessary for that purpose, the Tribunal is not expected to interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or his employees. The decision is best to be left in the disciplinary authority save in exceptional cases where it is shockingly disproportionate or mala fide. That is not the case here. (emphasis added) 10. The adjudicating authority has discussed in detail how contraventions of various regulations of CHALR stands proved in the enquiry report. We are of the view that the contraventions of various regulations stand established against the appellant. 11. In view of above, we find no reasons to interfere with the impugned order which is upheld along with the reasons mentioned therein. The appeal is, therefore, rejected.
O R