By TIOL News Service

MUMBAI, JULY 21, 2016: ON the conclusion that there has been a dereliction of duty, the licence of the CHA was suspended and a charge sheet was issued and inquiry was conducted for failure to discharge obligation of CHA under Regulation no. 13(a), 13(d), 13(e), 13(n) and 13 (o) of CHALR, 2004.

Adjudicating Authority after following due process of law revoked the CHA licence and also forfeited the security deposit.

The CHA has challenged the order before the CESTAT and while rebutting the grounds the AR submitted that the appellant was very well aware of the fact that imports were undertaken by person who was not the holder of IEC; that the appellant has not conducted any background checks before undertaking the clearance work; that due to such negligence there is a loss to exchequer which was noticed due to alertness of the Departmental authorities.

The Bench, after considering the elaborate submissions, extracted the findings of the Adjudicating Authority in the matter of the regulations allegedly contravened by the appellant & observed thus -

Regulation 13(a) of CHALR 2004

+ During examination and cross examination Shri Zeeshan Anwar, it was clearly recorded that he had presented the proprietor of Apex Enterprises and Riya Enterprises and another before the CHA in the office of CHA, while giving papers for clearance of consignment, it is also recorded that CHA advised him to give all proper papers and enquired about genuineness of the consignment and the payment. During cross examination by the presenting officer, Shri Zeeshan Anwar has admitted he was responsible for all the faults in importation of consignments. This would indicate that main appellant herein was not at fault. It is also to be noted that the authorization etc. were produced before the authorities at the time of clearance of goods and was accepted and goods were cleared, would mean that main appellant could not have contravened the provisions of Regulations 13(a) of CHALR, 2004.

Regulation 13(d) of CHALR 2004

+ Adjudicating Authority has not recorded any specific violations except that CHA was aware that there was misuse of IEC. We fail to understand how these findings can be arrived against CHA, as it is on record that all these information was alleged after the goods were cleared; and in examination and cross examination nothing is brought on record that CHA was aware of misdeclaration. The findings recorded by Adjudicating Authority in this case is based on surmises and assumptions.

Regulation 13(e) of CHALR 2004

+ It is to be seen that the CHA went by documents of imported consignment, and the power of attorney given to Zeeshan Anwar. It is also undisputed that IEC numbers were genuine as is verified by the CHA in KYC norms maintained. On this point, we find that inquiry officer was correct in coming to a conclusion that the contravention of this Regulation 13(e) was beyond the scope of and not supported by any evidence, as even the findings of Adjudicating Authority are assumptions and presumptions, as he expects the CHA to get alerted by the Shop and Establishment Act licences.

Regulation 13(n) of CHALR 2004

+ It seems that purpose of this regulation is not understood by the lower authorities in its true sense. To our mind this Regulation expects the CHA to assist the customs authorities for clearance of the goods, and cannot be held against the appellant for not coming for recording of the statements.

Regulation 13(o) of CHALR 2004

+ The Regulation mandates the CHA to verify antecedent, correction of IEC identity of client and functioning of his client at the declared address. It is on record that appellant CHA has verified the same by filling up of the KYC form, verifying the details of IEC from the DGFT website, MSEDCL electricity bill is in the name of IEC holder, ration card, pan card, licence issued under shop and establishment Act, 1948 and above all authentication of bank account by the bank. We find that CHA has verified these documents in respect of all the three IEC holders. In our considered view nothing more can be expected out of a CHA to verify the antecedents of a client coming to him with a business proposal for clearance of imported consignment.

Concluding that there is no violation of CHALR established against the appellant nor is there any finding that appellant had advised importers to undervalue the goods, the impugned orders were set aside.

The Commissioner of Customs (Gen), Mumbai was directed to restore the CHA licence forthwith &also restore the forfeited security deposit.

(See 2016-TIOL-1801-CESTAT-MUM)