Revocation of license of authorized courier unjustified in absence of any role in impugned smuggling

UPS Jet Air Express Pvt Ltd Vs Chief Commissioner of Customs (CESTAT Chennai)

CESTAT Chennai held that order of revocation of license as authorized courier unjustified as appellant didn’t played any role the impugned smuggling of gold and other commercial goods.

Facts- DRI received specific intelligence that gold jewellery and other commercial goods are smuggled from Singapore through courier parcels. The officers obtained 58 pieces of courier parcels from the custodian at the courier terminal Chennai Airport. Shri Vijay, who is the custodian, submitted a statement showing the courier wise break up of the 58 pieces. It was found that 34 pieces of courier parcels were booked through the appellant.

Based on the investigation, the present show cause notice was issued to the appellant under Regulation 14 of the Courier Imports and Exports (Clearance) Regulations, 1998 proposing to revoke the registration as authorized courier and also for forfeiture of the security deposit. After due process of law, the original authority ordered for revocation of registration granted to the appellant as authorized courier and also ordered for forfeiture of Rs.10 lakhs being the security deposit made by them for registration.

Conclusion- Held that the appellant has cooperated with the investigation so as to bring out the truth. On appreciation of the evidence, we do not find grounds to hold that the appellant had played any role in the incident. In such circumstances, the order of revocation of the license cannot be sustained and requires to be set aside. In such circumstances, the order of revocation of the license cannot be sustained and requires to be set aside. However, as the appellant has not obtained authorization from the importer, we are of the view that the forfeiture of security deposit would be adequate. Forfeiture of Rs.10 lakhs is on the higher side. We hold that forfeiture of Rs.5,00,000/- would be sufficient.

FULL TEXT OF THE CESTAT CHENNAI ORDER

Brief facts are that the Directorate of Revenue Intelligence, Chennai Unit, on receipt of specific intelligence that gold jewellery and other commercial goods are smuggled from Singapore through Courier parcels booked through M/s.UPS Jet Air Express Pvt. Ltd. (appellant herein) and arriving by Flight on 18.01.2013, arranged for surveillance of the clearance of the courier parcels. The officers obtained 58 pieces of courier parcels from the custodian at the courier terminal Chennai Airport. Shri Vijay, who is the custodian, submitted a statement showing the courier wise break up of the 58 pieces. It was found that 34 pieces of courier parcels were booked through the appellant. The parcels were scanned in the presence of Mr. Naveen Kumar, representative of the appellant. On detailed examination, it was found that the images in the scan did not match with the declarations made. The shipper of two consignments covered by air way bill was found to be M/s.JRG TECH Pte Ltd. Singapore and the consignee in India was shown as Mr. Gauri Nandanam, Tiruvallur Chennai. As per the invoice cum packing list, the cartons were declared to contain 50 nos. of Booklets, 10 nos. of Cables and Accessories and 50 nos. of Printing sheets with a total value of 840 SGD (INR 36800). No specific import documents towards import of the said goods (bill of entry) were filed in respect of the airway bills. On opening and examining the cartons it was fond to contain 10 nos. of Sony High Definition Digital Video Cameras without battery and accessories, 203 nos. of “Titan” branded watches of various models and 10.475 kgs. of 22 carat gold jewellery concealed in one Martine Roland brand audio receiver by removing its inside components. The total value of the impugned goods were arrived at Rs.3,32,51,885/-. Since it appeared that the impugned goods were smuggled into India without any declaration and payment of duty, the officers seized the same under mahazar dt. 18.01.2013. The seized goods were handed over at Customs Airport warehouse for safe custody.

2. On verification of the address of the consignee, Sri Gouri Nandanam, it revealed that no such person is available by the said name in the address. Shri Naveen Kumar, Border clearance officer of the appellant was summoned and his statement was recorded under Section 108 of the Customs Act, 1962. He stated inter alia that he has a friend by name Shri Kannan, whom he knew for the past 8 years; that Shri Kannan used to do customs clearance for M/s.DPEX Courier and he along with Kannan joined M/s.Aviation Star. During January 2013, Shri Kannan approached him and requested to clear courier consignments, which was arriving by appellant firm and contained cameras meant for his friend. Sri Kannan also stated to him that the said consignments would be declared as booklets. Sri Kannan promised to give Rs.5000/- for each consignment cleared and that he has cleared 7 such consignments for Sri Kannan. It was deposed by Naveen Kumar that Kannan used to inform airway bills of the consignment over phone and was responsible for customs clearance; that Naveen Kumar used to download import manifest of the appellant from the server and would remove the airway bills from the manifest. Sri Naveen Kumar would then take the altered manifest to the courier terminal for submission to customs custodian. The packages would be declared as documents and would be cleared as documents so that such packages are not scanned. As per the instructions of Sri Kannan, Shri Naveen Kumar used to give packages to Kannan’s friend waiting outside and Sri Kannan used to pay him for such work. It is stated that Sri Naveen Kumar used to later update the system at the appellant’s office to show that the packages were cleared to an agent; that whenever Sri Kannan’s consignment comes, he would go to the terminal personally to clear the consignment. Sri Naveen Kumar was arrested on 28.01.2013 and remanded to judicial custody. Subsequently, he was released on bail.

3. Statement of I.S. Narayanan, General Manager of the appellant as well as the statement of Sri Kannan and others were recorded. Sri Kannan appeared before the officers and the statement was recorded on 15.05.2013 and various other dates where he stated that he joined DPEX Worldwide in 1999 as field staff and was promoted as Operation In-charge and became Manager in the year 2001. He looked after courier clearances and he jointed Air Bridge Express in 2004. He stated that the consignment booked in the name of Gauri Nandanam was given to him for clearance by one Sri Ganesh and he met Sri Ganesh in October 2012 when he went to purchase a camera mobile for him through one Sri Durai. It is stated that Sri Ganesh is the son-in-law of Sri Durai and he knew Sri Durai for the last 5 years. Sri Durai used to get him electronic goods at cheaper rates and Sri Durai also dealt with second hand cars. Sri Kannan stated that he met Sri Vijay, son of Sri Durai two years back in Singapore for purchase of computers and other electronic goods through one Sri Kabilan, Singapore and that Sri Kabilan is his childhood friend. During October 2012, Ganesh and Durai asked him whether he can do clearance of courier consignments imported by them from Singapore. Sri Ganesh asked him to arrange for customs clearance without detection of Customs. It is stated that Sri Ganesh informed that one Sri Mahadev of M/Jupiter Import Export Pte Ltd., Singapore would be doing the bookings in Singapore and that the consignments will be of 25-30 Kg. each and would be declared as booklets, manuals, wires etc. Sri Kannan told Ganesh that he had a friend in doing import Courier (Naveen Kumar) who could help him in clearing the consignments. It is explained by Kannan that after the consignments are booked from Singapore, Sri Ganesh and Durai would inform the relevant airway bills to Sri Kannan who in turn would inform the same to Naveen Kumar over phone. After the customs clearance, Sri Ganesh or Durai would send Sri Krishnakumar or Kabilan to collect the said consignments from Kannan outside the courier terminal. Sri Kannan would inform Naveen Kumar over phone as to whom the consignments is to be handed over; that Kannan has arranged such clearances through Naveen Kumar since October 2012. Sri Kannan was arrested on 15.05.2013 and remanded to judicial custody. Subsequently, he was enlarged on bail.

4. Based on the above investigations, the present show cause notice dt. 14.10.2013 was issued to the appellant under Regulation 14 of the Courier Imports and Exports (Clearance) Regulations, 1998 proposing to revoke the registration as authorized courier and also for forfeiture of the security deposit. After due process of law, the original authority vide order dt. 28.04.2014 ordered for revocation of registration granted to the appellant as authorized courier and also ordered for forfeiture of Rs.10 lakhs being the security deposit made by them for registration. They then filed representation before Chief Commissioner who then vide order dt. 23.07.2014 upheld the same. Aggrieved, the appellant is now before the Tribunal.

5. Ld. Counsel Sri Raghunathan, Advocate assisted by Ms.Sharanya Vaidhiyanathan, Advocate appeared and argued for the appellant. It is submitted that the appellant is a company incorporated under the Companies Act, 1956 inter alia carrying on business of transportation of consignments/goods worldwide and has over the year garnered tremendous goodwill and reputation owing to the best-in-class services provided by it. It is submitted that the consignments were transported through Air India from Singapore to Chennai on 18.01.2013 by the appellant. In order to ensure clearance of the said import consignments with the customs. Sri Naveen Kumar, the clearance officer, who was then an employee of the appellant during the relevant time, was present at the Chennai courier terminal. The said consignments, 58 in number, had been handed over to him by the fight personnel at the user facility of courier terminal maintained by Esquire Express India Private Ltd., the Custodian. Based on specific intelligence, D.R.I. officers had taken up the parcels and examined it and found to contain undeclared items including gold jewellery. It is submitted that the appellant had no part in the incident. The attempt to identify the consignee of the import consignment, Sri Gouri Nandanam also failed. Ld. Counsel submitted that on 28.01.2013, immediately after the incident, the employee Sri Naveen Kumar appeared before D.R.I and has given statement admitting that he was responsible for preparation of bill of entry and other activities of clearance at the Chennai airport. He also stated that his friend, Sri Kannan had approached him in January 2013 and requested him to clear cameras declared as booklets arriving through appellant courier parcels. Statement of Naveen Kumar was adverted to by the Ld. Counsel to argue that the said person has admitted that he cleared the consignments himself and no other person in the office of appellant was aware of customs clearance of undeclared packages. Upon coming to know about such clandestine activities and manipulation of the appellant’s internal computer system by Sri Naveen Kumar, appellant had terminated him from services. Such manipulation has been done by Naveen Kumar without knowledge of the appellant. It is nowhere stated in the SCN that appellant had any knowledge about the clandestine activities of Sri Naveen Kumar, I.C. Kannan, Ganesh and others.

6. It is submitted by the Ld. Counsel that the courier company during the relevant period (October 2012 to January 2013) had approximately handled over 40,000 pieces / consignments with no issues. The packages in question which have been manipulated as opposed to the said volumes handled by the appellant would clearly indicate the fact that the appellant had no role to play in such manipulation, which had been committed by Mr. Naveen Kumar and his aids. That therefore, the appellant ought not to have been penalized for such deviance.

7. Ld. Counsel adverted to the show cause notice and submitted that the allegation raised is that the appellant has violated Regulation 13 (a) of Courier Imports and Exports (Clearance) Regulations, 1998. The said regulation prescribes the obligations of an Authorized Courier. It is stated that the appellant had an obligation to obtain an authorization, consignee of the import goods for whom such courier has imported goods. In the present case, the only infraction on the part of appellant is that such authorization was not obtained from the consignee. Ld. Counsel submitted that in the present case, the entire manipulation and clandestine clearance of the parcels/consignments was done without the knowledge of the appellant and by an employee of the appellant. In para-17 of the SCN it is alleged that appellant allowed his employee Mr. Naveen Kumar to manipulate their system so as to tamper the import manifest and smuggle high value goods through courier. In fact, the appellant had not allowed or given any instruction to Naveen Kumar to manipulate the system. It is admitted by Sri Naveen Kumar that appellant had no role in the illegal activity committed by him.

8. Ld. Counsel adverted to Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 and attempted to draw a difference between the Regulations of Authorized Courier and CHALR 2004. Ld. Counsel argued that in terms of provisions of Custom House Agent Regulations, 2004, all the employees of the CHA have to be registered with Custom House. There is no such requirement under Authorized Courier Regulations. Appellant had terminated the service of Sri Naveen Kumar and thereafter so far the work of the appellant has been unblemished. It is argued that the order of revoking the license for such minor infraction, that too when appellant had no knowledge about the offence committed by the employee, is too harsh upon the appellant.

9. In this regard, decisions in the case of Lufthansa Cargo India And Ors. Vs CC – 2005 (195) ELT 552 and Gulf Air Vs CC – 2000 (149) ELT 1464 were relied by the Ld. Counsel. The decision of the Hon’ble High Court in the case of Asiana Cargo Services Vs CC – 2014 (302) ELT 161 (Del.) was relied to argue with regard to vicarious liability of the employee. The decision in the case of Chandran Vs The Regional Passport Officer – W.P. (MD) No.15367 of 2015 was relied to argue that punishment should be in proportion with the violation. It is prayed that the appeal may be allowed.

10. Ld. A.R Sri Harendra Singh Pal appeared for the Department. It is pointed out that the appellant had not taken due diligence for import of the consignments. If the appellant had obtained authorization of the consignee such incident would not have happened. Regulation 2 (2) of the Courier Regulations was adverted to by Ld. A.R to argue that ‘Gold’ in any form is not allowed to be imported and cleared through courier. The goods have been imported in violation of Section 111 (d) of Customs Act, 1962 and has been confiscated. So, the appellant was issued with a show cause notice for imposing penalty under Section 112 (a) and vide Order No.721/2015 dt. 27.08.2015, the penalty of Rs.10 lakhs has been imposed upon the appellant under Section 112 (a) of the Customs Act, 1962. The appellant has not filed an appeal against such order and paid the penalty. This is an admission on the part of appellant. Revocation of license is therefore legal and proper. It is prayed that the appeal may be dismissed.

11. Heard both sides.

12. The appellant had been issued a show cause notice proposing to impose penalty under Section 112 (a) of the Customs Act, 1962. The present SCN is issued under the provisions of Courier Imports and Exports (Clearance) Regulations, 1998 (herein referred to as Courier Regulations, 1998). The allegation in the SCN is that the appellant has failed to comply with Regulation 13 of the Courier Regulations. The relevant part of SCN is as under :

“16. From the above it appears that M/s.UPS Jet Air Express Private Limited, 3/26, 10^th Avenue, Ashok Nagar, Chennai 600 083 have failed to comply with Regulation 13 of the Courier Imports and Exports (Clearance)  Regulations, 1998 as amended by the Courier Imports and Exports (Clearance) Amendment Regulations 2010 issued vide Notification No.75/2010 – Customs (N.T) dated 12/08/2010 as detailed below :

a) Obtain an authorization, from each of the consignees of the Import goods for whom such courier has imported such goods or consigners of such export goods which such courier propose to export, to the effect that the Authorized Courier may act as agent of such consignee or consigner, as the case may be for clearance of such import of export goods by the proper officer ;

Provided that for import consignments having a declared value of ten though rupees or les, the authorization may be obtained at the time of delivery of the consignments to consignee

(c) exercise due diligence to ascertain the correctness and completeness of any information which he submits to the proper officer with reference to any work related to the clearance of import goods or of export goods;

(e) not withhold any information relating to assessment and clearance of imported goods or of export goods, from the Assessing Officer;

(g) maintain records and accounts in such form and manner as may be directed from time to time by an Assistant commissioner of Customs or Deputy Commissioner or Customs and submit them for inspection to the Assistant Commissioner of Customs or an officer authorized by him, wherever required.

(i) verify the antecedent, correctness of Importer Exporter Code (IEC) Number, identity of his client and the functioning of his client in the declared address by using reliable, independent, authentic documents data or information.”

13. The allegation therefore is that appellant did not obtain authorization from the consignee for the import of the consignment. The facts have revealed that the appellant had no knowledge about the incident of manipulation of their office system and the clearance of the consignments falsely declared as ‘documents’. Sri Naveen Kumar who was a former employee of the appellant has categorically admitted that he is only responsible for the manipulation committed and that no one in the office of the appellant as well as the appellant is involved in the offence. The SCN also has not alleged any role played by the appellant in the clandestine activity. Apart from alleging that appellant did not obtain any authorization there is no overt act of involvement established against the appellant. It is also seen from the records that Sri Naveen Kumar was terminated from services. Sri T.S. Narayanan, who is the General Manager of the appellant authorized courier has submitted before the officers that all the consignments were booked by M/s.Jupiter Import Export Pte. Ltd., Singapore. The appellant has cooperated with the investigation so as to bring out the truth. On appreciation of the evidence, we do not find grounds to hold that the appellant had played any role in the incident. In such circumstances, the order of revocation of the license cannot be sustained and requires to be set aside. However, as the appellant has not obtained authorization from the importer, we are of the view that the forfeiture of security deposit would be adequate. Forfeiture of Rs.10 lakhs is on the higher side. We hold that forfeiture of Rs.5,00,000/- would be sufficient.

14. In the facts and circumstances of the case, we modify the impugned order to the extent of setting aside the order of revocation of license and order forfeiture of security deposit of Rs.5,00,000/–(Rupees Five lakhs) only. The appeal is partly allowed with consequential reliefs, if any.

(pronounced in court on 21.08.2023)