By TIOL News Service

NEW DELHI, DEC 15, 2015: THE appellant CHA had filed two Shipping Bills in the name of M/s HM. Impex for readymade garments involving drawback claim of about Rs.34 lakhs. However, on examination of the goods declared in the shipping bills, the goods were found to be rags like low quality garments which were of uneven and irregular size of very inferior quality. The net weight of the consignment was also found to be only about 3,820 Kgs as against declared net weight of 10,200 Kgs. Thus the goods were grossly mis-declared in respect of quantity, quality, value and weight etc. and the intention was obviously to defraud the Government by availing of inadmissible drawback amount of over Rs. 34 lakhs. The investigations revealed that M/s H.M. Impex, was fictitious and did not exist at the given address. It also came out during investigation that Shri Lalit Kumar Katoch, employee of the CHA attended the work relating to filing of papers and examination of goods etc. The Commissioner found the conduct of the appellant CHA was in gross violation of the CHALR, 2004 and revoked its CHA license and forfeited the security deposit. The CHA is in appeal before the CESTAT.

After hearing both sides, the Tribunal held:

++ It is a fact that the shipping bills were filed in the name of a non-existent firm namely M/s H.M. Impex. It is also an admitted fact that the proprietor of the said firm as mentioned in the IE Code never approached the appellant for filing the said shipping bills. The person who approached the appellant for filing the shipping bills was not connected in any manner with the firm even on paper. It was not a small or small value consignment and the drawback involved itself worked out to more than Rs. 34 Lakhs. Such high value consignments would alert any CHA with regard to the need for due diligence and compliance with know-your-customer (KYC) norms because a CHA as per CHALR, 2004 is in effect required to make proper enquiries about the genuineness of the exporter. Further, it is seen that apart from goods being mis-declared in description and value, even the weight was much less than the weight declared.

++ The appellant CHA had not obtained any authorization from the firm which was non-existent at the address given in the IE Code and whose proprietor (as mentioned in the IE Code) never contacted the appellant. The appellant filed documents in the name of a nonexistent firm without any verification whatsoever. The documents filed by CHA are treated with a certain degree of trust by the Customs and such trust was completely violated in the present case. Nothing can possibly be a graver mis-conduct on the part of a CHA than to file Shipping Bills of such high value in the name of a non-existent firm without making even preliminary enquiries about the genuineness of firm/company in the name of which the documents were filed. Such dereliction of duty on the part of a CHA, can potentially have even graver financial/security consequences. Thus the appellant totally failed to discharge its duties as CHA with utmost speed and efficiency and thereby grossly violated Rule 13 of CHALR, 2004. Such serious violation on the part of the CHA can hardly deserve any condonation or leniency. Thus the appellant is clearly guilty of abetment of attempt to export the impugned goods with a view to fraudulently availing of inadmissible drawback of more than Rs. 34 Lakhs and the impugned goods have been held to be liable to confiscation and consequently the penalty on the appellant under Section 114 is clearly attracted. Therefore, the impugned order suffers from no infirmity warranting interference. The appeal is hence rejected.

(See 2015-TIOL-2673-CESTAT-DEL)