S.M. DAVE Vs. COMMISSIONER OF CUSTOMS, KANDLA

JUDGEMENT

(1.) M /s. Prime Forwarders is a CHA and is a proprietory firm owned by Shri Sanjay Dave, the appellant in this case and holds the licence issued by the Commissioner of Customs, Kandla. The CHA filed 5 Bills of Entry for clearance of Zinc Ingots and Copper Wire Rods during the period April and May, 2001 for clearance and the importer was M/s. Al Falah Brass, Moradabad. After investigation and adjudication process, in the impugned order, the Commissioner held that Zinc Ingots and Copper Wire Rods were liable for confiscation since they were not utilized for the purpose of export as required under the Notification, benefit of which was availed by them and instead of using the same for export, they had diverted the goods to the local market. In addition to confiscation of the goods penalty was imposed on various parties and Shri Sanjay Dave, the appellant in this case is one of the persons on whom a penalty of Rs. 50,000/ - has been imposed under Section 112 of the Customs Act, 1962.

(2.) SHRI J.C. Patel, learned Advocate on behalf of the appellant submits that the Commissioner in his order for imposition of penalty has himself observed that the investigation failed to establish that Shri Dave was in position of the knowledge that the goods have been diverted to Delhi. He has imposed penalty for not fulfilling the obligation of CHA and he submits that this is contrary to the provisions of Section 112, which requires that the person should have rendered to goods liable for confiscation or abetted the person who has rendered the goods liable for confiscation. Shri Samir Chitkara, learned SDR on behalf of the Revenue submits that the CHA has arranged transport and simply he has handed over the documents to the importer and that CHA was aware of benefit of advance licence and he has knowingly allowed the goods to be transported and diverted and, therefore, the penalty imposed is justified and needs no interference.

(3.) WE have considered the submissions made by both sides and the record. We find that Section 112 requires the person to render the goods liable to confiscation or abet such action which would render the goods liable for confiscation for liability of penalty under Section 112. Under Section 112(b), the penalty is provided for persons who deal with the goods knowing that or having reason to believe that they are liable for confiscation. Therefore what was required for confiscation was whether the CHA Shri Sanjay Dave had abetted the importer in rendering the goods liable for confiscation or he was aware that the goods are liable for confiscation. The Commissioners findings regarding the role of Shri Sanjay Dave can be better appreciated by reproducing the same : - Further, in this regard, it is noticed that as required under regulation 14(d), 14(e) and 14(f) of the Customs House Agents Licensing Regulation, 1984, the CHA is required to disclose the full information relating to clearance of the imported cargo not only to the Department but also to his client. According to these regulations, it is obligatory on the part of the CHA to advise his client to comply with the provisions of Customs Act and in case of non -compliance; he (CHA) will bring the matter to the notice of the Assistant Commissioner or Deputy Commissioner of Customs. Further, it is obligatory to exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of the cargo. Shri Sanjay Dave has mentioned in their defence reply dated 31 -12 -2003 that he categorically informed to the officers of DRI in his statement dated 8 -6 -2001 that the cargo pertaining to Bills of Entry No. 2531 and No. 2532 both dated 29 -5 -2001 is lying in the docks. In this regard, I find that he (Dave) simply mentioned in the said statement that the delivery of the goods in respect of these two Bills of Entry had not yet been given at that time. Also, Shri Dave has not informed to the officers of the appraising group, Custom House, Kandla, where he filed both the Bills of Entries, even when he was knowing that officers of DRI recorded his statement in connection with the alleged diversion of the goods covered under these Bills of Entry and same Advance Licence. Therefore, I find that the claim of Shri Dave that he informed the DRI that the goods is lying in the docks is not correct. Further, as it is obligatory on CHA to take due diligence to ascertain the correctness in the work relating to clearance of the imported goods. The above mentioned regulations, particularly regulation 14(e), specifically requires to exercise proper care in this regard. Simply to handover the papers to the transporter and not to examine as to where the cargo goes, is nothing but a type of carelessness and lack of diligence. The CHA has a vital role to play with the imported goods even after clearance from the Customs in as much as it is his obligation to assist the Department that the concessional benefits (particularly the end use bond related benefits) are correctly availed of by the importer or not. The cargo intended for end use purpose must fulfil the terms and conditions prescribed in this regard. Even if the CHA comes to notice that the cargo has been diverted on route, it is obligatory on his part to impart such knowledge to the Customs House from where it is cleared cut of charge. I find that in this case the CHA has not properly executed his job and instead left on the hands of the transporter and importer to defraud the government by diverting the goods at Delhi, but just putting the papers such as Bills of Entry and Gate Passes in the hands of the transporter. At the same time, I also find that the investigation has failed to establish that Shri Dave was in possession of the knowledge that the goods are being diverted to Delhi. For showing lack of fulfilling the obligations, I find that since Shri Dave, being a CHA was concerned with the imported materials, a token penalty is imposable on his under the provisions of Section 112(b) of the Customs Act, 1962.