By TIOL News Service

CHENNAI, DEC 18, 2015: THE appellant, Chandra Container Freight Station (CFS) and Terminal Operators Private Ltd., was appointed by the first respondent as the custodian for the import and export goods as per Section 45 of the Customs Act, 1962. A container bearing No.SEGU 1697558 containing Red Sander logs weighing 9430 kgs was sized by the Directorate of Revenue Intelligence Unit (DIU) and entrusted with the appellant for safe and secured custody. On 19.12.2004, the said container was removed unauthorisedly from the custody of the appellant by using forged documents.

Since the nature of offence was very serious and caused a reasonable doubt on the bona fides of the appellant, the first respondent viz., the Commissioner of Customs, Chennai, by exercising the powers vested under Regulation 11(2) of HCCAR, 2009, had passed an order on 23.12.2014 suspending the custodianship of the appellant.

Challenging the order of suspension of the custodianship, the appellant had preferred an appeal before the CESTAT, South Zonal Bench, Chennai and that appeal was dismissed on 29.06.2015 on the ground that, "the bonafide and credibility of conduct of custodian - appellant raised a serious doubt and the investigation by customs and police authorities was still pending and yet to be completed and if the appellants were allowed to continue as custodian, it would certainly cause jeopardy and hamper the process of investigation."

Alleging that the principles of natural justice has been violated in their case, the appellant has preferred the present appeal.

After hearing both sides, the High Court held:

+ The finding of the CESTAT is that the appellant being the custodian of the seized container, viz., SEGU 1697558 containing red sanders had violated the Regulations enshrined in 6(1)(a), 6(1)(f), 6(1)( i ), 6(1)(k) and 6(1)(q) of HCCAR, 2009.

+ Regulation 11(2) envisages that the Commissioner of Customs may in appropriate cases where immediate action is necessary, suspend the approval granted to a Customs Cargo Service provider where an enquiry against such Customs Cargo Service provider is pending or contemplated.

+ Where immediate action is necessary, the Commissioner of Customs can suspend the approval granted to a Customs Cargo Service provider.

+ The earlier showcause notice, dated 12.9.2014 reveals the previous antecedents of the appellant. On three occasions, the appellant had violated the Regulations of HCCAR, 2009 and in one case, the appellant was also penalized with penalty.

+ The appellant had not complied with the Regulation 6(k) and that was why the showcause notice, dated 5.2.2015 was issued to showcause as to why the seized container should not be confiscated and penalty should not be imposed on the appellant.

+ There was laxity in the supervision on the part of the appellant and no surprise checks were conducted during night hours to ensure that the staffs were on night duty would remain vigilant.

+ Apart from the violation of Regulation 6(k), the appellant had also violated Regulation 6(2) of HCCAR, 2009 by outsourcing the security functions without obtaining permission from the Commissioner of Customs as stipulated in Regulation 6(2) of HCCAR, 2009.

+ The action of the Commissioner of Customs was fully justified in invoking the provisions of Regulation 11(2) of HCCAR, 2009.

+ It is trite law that the employer is vicariously liable for the acts of its employee acting in the course of his employment. There are grounds to believe that the alleged act was done in the course of the employment by their employees and therefore, the appellant must be ready to take the responsibility.

+ In appropriate cases, where immediate action is necessary, the Commissioner of Customs may suspend the approval granted to a Customs Cargo Service provider. This principle is laid down in sub-regulation (2) of Regulation 11 of HCCAR, 2009.

+ The finding of the Tribunal does not require interference.

(See 2015-TIOL-2835-HC-MAD-CUS)