Case Law Details
Mishra & Mishra (Agency) Enterprises Vs Commissioner of Customs (Airport & Admn.) (CESTAT Kolkata)
Introduction: In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Kolkata addressed the case of Mishra & Mishra (Agency) Enterprises versus the Commissioner of Customs (Airport & Admn.). The case revolved around the revocation of a Customs House Agents (CHA) license and the forfeiture of the security deposit. The appellant, Mishra & Mishra (Agency) Enterprises, a Licensed Customs Broker, challenged the suspension and subsequent revocation of their CHA license by customs authorities.
Detailed Analysis: The case stemmed from a complaint lodged by M/s Starke International, which raised concerns about the misuse of an Importer Exporter (IE) Code. Subsequent investigations revealed that 20 packets of Sodium Benzoate were imported by an individual, Shri Deepak Soni, using the IE Code of M/s Starke International. The appellant, Mishra & Mishra (Agency) Enterprises, faced implications in this matter for having filed the Bill of Entry as a Customs Broker based on the import documents received from the importer.
In response to these allegations, an Order-in-Original was issued by the Additional Commissioner. The order not only confiscated the imported goods but also imposed a penalty of Rs. 1.00 lakh on the appellant under Section 117 of the Customs Act, 1962.
However, the Commissioner (Appeals) later set aside the Order-in-Original and exonerated Mishra & Mishra (Agency) Enterprises. This decision was based on a comprehensive review of the facts, leading to the firm’s exoneration.
While these proceedings were underway, the Customs authorities initiated separate action against the appellant under the Customs House Agents Licensing Regulations (CHALR), 2004. They suspended the appellant’s CHA license for alleged violations of CHALR provisions.
A subsequent Order-in-Original dated July 1, 2015, revoked the suspension of the CHA license but simultaneously ordered the forfeiture of the full security deposit made by Mishra & Mishra (Agency) Enterprises. This order was challenged before CESTAT Kolkata.
The Tribunal observed that the Order-in-Appeal by the Commissioner (Appeals) had exonerated the appellant, and the department did not challenge this decision. As such, it had attained finality.
The CESTAT ruling emphasized that there was no evidence to support the accusation of sub-letting the license by the appellant. Furthermore, the fact that the appellant was already engaged in import business and had already transacted with the involved party meant that requesting Know Your Customer (KYC) documents each time was not necessary.
The Tribunal emphasized that there was no evidence of active connivance on the part of the appellant to promote or push the import of prohibited goods. It noted that without direct involvement or mens rea, imposing the penalty of forfeiting the security deposit was too harsh.
CESTAT also referred to its earlier decisions in similar cases, such as Sun Clearing & Forwarding Services (P) Limited versus Commissioner of Customs (General), Mumbai, and M/s Aman Cargo Private Limited versus Commissioner of Customs, New Delhi. In those cases, the revocation of CHA licenses was set aside due to a lack of direct involvement.
Conclusion: The CESTAT Kolkata’s decision in the case of Mishra & Mishra (Agency) Enterprises highlights that CHA licenses cannot be revoked or subjected to penal consequences without evidence of direct involvement or mens rea. The ruling underscores the importance of procedural fairness and the principle of res judicata when dealing with similar allegations that have already been adjudicated and accepted in previous proceedings. The decision serves as a significant precedent in Customs House Agents’ licensing cases.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The impugned appeal has been filed by the appellant, M/s Mishra & Mishra (Agency) Enterprises, a Licensed Customs Broker against the Order-in-Original No. Kol/Cus/Airport/Admn/24/2015 dated 01.07.2015, whereby, the suspension of the Customs Broker License has been revoked. However, at the same time, forfeiture of full amount of security deposit made by the appellant, has also been ordered.
2. To summarize the factual position, it is pointed out that in pursuance of the complaint lodged by M/s Starke International regarding mis-use of IE Code, the departmental authorities undertook certain investigations whereby it was revealed that 20 packets of Sodium Benzoate were shipped in the name of M/s Starke International from Hong Kong. The said import was made by one Shri Deepak Soni, the proprietor of M/s Vin Corporation by mis-using the IE Code of the complainant. The appellants were implicated in the said matter on account of having filed the Bill of Entry as a Customs Broker based on the import documents received from the importer. Thus, in pursuance of the show-cause notice, an Order-in-Original No.77/2013/CPG/ADC/SIIB/I & G dated 03.06.2013, was issued by the
Addl. Commissioner, which besides confiscating the imported goods, imposed a penalty of Rs.1.00 lakh on the appellant under Section 117 of the Customs Act, 1962.
3.1 In appeal filed against the aforesaid order, the Commissioner (Appeals) vide Order-in-Appeal No.CC(A)/Cus/334-335/2014 dated 21.02.2014, set aside the Order-in-Original with a categorical finding “The firm M/s Mishra & Mishra is exonerated”. The relevant portion of the impugned order reads as under :
3.2 In the meanwhile, the Department proceeded against the appellant and show-cause notice dated 24.02.2014 was issued to them under the provisions of Customs House Agents Licensing Regulations (CHALR), 2004.
3.3 The Customs House Agents Licence of the appellant was initially suspended by the ld. Commissioner (Airport & Admn.) for violation of Regulations under 13 (a), 13 (d), 13 (o) and 19 (8) of CHALR, 2004, which was later confirmed vide order dated 03.09.20 13.
3.4 In pursuance to the enquiry proceedings initiated by the Department, the impugned Order-in-Original dated 01.07.2015 has come up to be issued and is under challenge before us.
4. We note that the impugned Order-in-Appeal has been passed without cognizance or any reference to the impugned order of the Commissioner (Appeals), who categorically laid down, while analyzing the proposition as were also imputed in the show-cause notice issued under CHALR, 2004.
5. We also note that the two equivalent authorities having passed the orders at variance (though under separate provisions of law), but without considering even referring to the findings of the authority, who had initially passed the order and had already taken note of the stance and the factual position in the matter while arriving at his conclusion exonerating the appellant. We also note that there is no shred of evidence to hold the sub-letting of the licence by the appellant.
6. In view of the above, we feel that the ld. Commissioner of Customs (Airport & Admn.), has also thinly traversed on the principle of res judicata. We also note that the suspension of the appellant was, however, revoked by the ld. Commissioner (Airport & Admn.) as also pre-stated the department did not challenge the finding of the ld. Commissioner (Appeals), thereby implying its acceptance.
7. This order of the ld. Commissioner (Appeals) has not been challenged by the department, thereby leading to the inevitable conclusion about it attaining finality. Also this order of Commissioner (Appeals) predates the order of the jurisdictional Commissioner, under challenge before us.
8. The fact that the appellant was already engaged in transacting import business of one Shri J. K. Arora, it was not required for the appellant to seek KYC documents afresh each time, particularly when there is no change. This being the third in the series of business
dealings/transactions. Furthermore, there is nothing in the order of the Commissioner to impute active connivance on the part of the appellant to promote/push the said import of prohibited goods. As there is no direct involvement of the CHA and for merely having filed the import documents as per the instructions of the importer, forfeiture of the security deposit is indeed too harsh a punishment that indeed is not called for in the given circumstances. We are of the considered view that the appellant cannot be subjected to penal liabilities at a drop of a hat without expressly bringing to fore their direct involvement/mensrea.
9. In this regard, reliance is also placed on the Tribunal’s decisions in the cases of Sun Clearing & Forwarding Services (P) Limited Vs. Commissioner of Customs (General), Mumbai reported in 2014 (307) ELT 729 & M/s Aman Cargo Private Limited Vs. Commissioner of Customs, New Delhi reported in 2013 (205) ELT 52 (Tri.-Delhi), setting aside the revocation of the CHA Licence in the absence of any direct involvement of the CHA and under the circumstances not subjecting the CHA to any penal consequence. Further, in view of the findings of the ld. Commissioner (Appeals), having attained a finality, we hold that the implication of the appellant under Regulation 19 (8) is also a futile exercise. Therefore, we find no reason for implicating the appellant. We, therefore, set aside the impugned order under challenge before us to the extent of directing forfeiture of full amount of security deposit paid by M/s Mishra & Mishra (Agencies) Enterprises.
10. Ordered accordingly.
(Operative part of the order was pronounced in the open court)
