Honble Dr. Chittaranjan Satapathy, Technical Member

1. Heard both sides. Shri Hari Radhakrishnan, learned advocate appearing for the appellants has submitted as under :-

(1) M/s. Maharaja Cargo, is licensed CHA, having CHA licence No. R277/CHA, which is valid upto 21/6/2015. The Commissioner has, vide his order dated 17/10/2011, suspended the CHA licence of M/s. Maharaja Cargo under Regulation 20 (2) of the CHALR, 2004. The reason for suspension as stated in the order is that M/s, Lubecon Petroproducts, whose bills of entry were filed by M/s. Maharaja Cargo were found to be misdeclared. Against the declared goods fuel oil and rubber processing oil, the imported goods on chemical analysis were alleged to be base oil and kerosene oil admixed with low boiling petroleum hydrocarbon solvent. A case has been registered by the DRI who conducted investigation in the matter. It is stated in the impugned order that M/s. Maharaja Cargo failed to obtain statutory authorization from the actual importers; did not check the antecedents of the actual importer including his address and failed to advise the importers to comply with the provisions of the Customs Act, 1962, and the rules and regulations made thereunder. The order further states that for non-compliance of the above provisions as contained in Regulation 13 (a) (d) and (o) the CHA is liable to be punished by revocation of licence. The Commissioner further observes in his order that he has found prima-facie case against the appellant and that if they are-allowed to continue to operate it would be detrimental to the interest of the Revenue and therefore it was necessary to take immediate action against the CHA to prevent them from misuse of CHA licence.

(2) The imports mentioned in the impugned order relate to the bills of entry: Nos. 665811 dated 21/10/2010, 665812 dated 21/10/2010, 687673, 687671, 687672 all dated 13/11/2010 and 691593 dated 18/11/2010. All the above bills of entry were filed by M/s. Lubecon Petroproducts Pvt Ltd. The first five bills of entry mentioned above were filed to import rubber processing and extender oil. The officers of the DRI took samples of the oil and on chemical analysis it was alleged to be base oil. As regards the last bill of entry 691593 dated 18/11/2010, it is to be stated that this bill of entry also was filed by M/s. Lubecon Petroproducts to import fuel oil in seven containers. The officers of DRI took samples and on chemical analysis of the cargo it was found to be kerosene oil admixed with low boiling petroleum hydrocarbon solvent and mineral turpentine oil. The samples were drawn by the officers of the DRI in March 2011 and the analysis report also was received on 24/3/2011 and 11/5/2011. The misdeclaration of the petroleum products was within the knowledge of the Department well before May 2011. The order of suspension of the CHA s licence has been passed nearly after six months from the alleged occurrence of import of misdeclared cargo. It is stated in para 9 of the order dated 17.10.201 1 that as per the provisions of Regulation 20 (2) of the CHALR, 2004, notwithstanding anything contained in sub-regulation 1, the Commissioner of Customs may in appropriate cases where an immediate action is necessary suspend the licence of CHA. The fact that the Department has kept quiet for all these six months and the CHA was functioning as a licenced CHA without any default in discharging their duties makes it clear that it was not in the mind of the Department to prevent the Petitioner from functioning as licenced CHA. Had it been necessary to take immediate action it should have been done at the latest in May/June of 2011. The fact that no such action was taken renders the order of suspension now passed invalid and contrary to the provisions.

(3) The Division Bench of the High Court of Bombay in the case of Babaji Shivram Clearing & Carriers Pvt. Ltd. Vs. Union of India, reported in : 2011(269) ELT 222 (Born.), [Page 70 of the appeal memorandum] in a case involving similar facts, has held as follows:

9. Apart from the above suspension of a CHA licence under Regulation 2 0(2) of the 2004 Regulation can be ordered where immediate action is necessary. In the present case, the customs authorities in the middle of January, 2011 were aware of the fact that the documents submitted by the petitioners were fabricated, however the impugned order has been passed belatedly on 28-3-2011.

11. In these circumstances, in our opinion, it is a fit case to revoke the suspension of licence and permit the customs authorities to take appropriate action as deemed fit after the completion of investigation.

(4) The Central Board of Excise & Customs, vide circular No. 9/2010 Cus dt.08.04.2010 [Page 1 of the Additional Paper Book] has fixed certain time limits in cases warranting immediate suspension under Regulation 20(2). The Board has clarified that the investigating authority has to furnish his report to the Commissioner within 30 days of the detection of the offence. This has not been done in the present case. Relying upon the said Board circular, the Honble CESTAT, New Delhi in the case of Kunal Travels Vs. CC New Delhi [2011 TIOL 473 CESTAT DELI (Page 102 of the main appeal memorandum) has quashed the order of the suspension of CHA licence on the ground that the investigating authority had sent the investigating report only after three months and had not followed the time frames prescribed by the Board. It is humbly submitted that the ratio of the decision is squarely applicable on the facts and circumstances of the present case. In the instant case, the licence of the Appellant was suspended six months after the detection of the offence.

(5) Though the Board s Circular is not binding on this Honble Tribunal the same is binding on the Department. The Board has clarified the expression immediate action by stating in the Circular No. 9/2010-Cus dt.08.04.2010 that the investigating authority has to furnish his report to the Commissioner within 30 days of the detection of the offence and thereafter, the Commissioner has to suspend the licence within 15 days of the receipt of the investigation report. This has not been done in the instant case. The time limit prescribed by the Board has also been followed by the Delhi Bench of this Honble Tribunal while quashing an order of suspension under Regulation 20(2) of CHALR, 2004.

(6) There was no urgency in the instant case for the Commissioner to suspend the appellant s licence under Regulation 20(2). The following case laws which have been enclosed in the appeal memorandum which support the appellant s contention:

(i) Jeena & Co Vs Collector of Customs as reported in 1987 (28) ELT 223 Cal In this case the suspension of licence was struck down in the absence of anything shown that without such immediate action very serious consequences would have followed.

(ii) P.S. Bedi & Co Vs Collector of Customs as reported in : 1992 (59) ELT 293 Tribunal - the Tribunal quoted the Law Lexicon by Justice T.P. Mukherjee as follows:

The words forthwith and immediately have the same meaning. They are stronger than the expression within a reasonable time , and imply prompt, vigorous action without any delay, and whether there has been any such action is a question of fact having regard to the circumstances of the particular case. A similar meaning has been given in Wharton s Law Lexicon .

(iii) Venus Shipping Agencies Vs Commissioner of Customs, Chennai, as reported in 2009 (237) ELT 549 In this case the licence was suspended after nearly three months form the date of filing of second shipping bill. No SCN for suspending or revoking the licence was issued to the CHA. The Chennai Bench held that licence issued to the CHA could be suspended only in cases where immediate action was necessary.

(7) The appellant has also a strong case on merits. The appellant has not violated any of the provisions of Regulation 13 of CHALR, 2004. The appellant s submissions on the merits of the case have been put forth at paragraphs G, H, I, J, K and L of the grounds of the appeal memorandum. The Hon ble Tribunal may be pleased to take the same submissions into considerations.

(8) He prays that the Honble Tribunal may be pleased to set aside the impugned order of suspension and thus render justice.

Shri T.H. Rao, ld. SDR submits as follows :-

(1) M/s. Maharaja Cargo, CHA filed Six Bills of Entry covering 59 Containers for the clearance of goods declared as Rubber Processing Oil and Extender oil. Based on Intelligence the officers of DRI examined the imported goods in 59 containers imported by M/s. Lubecon Petro Products covered under six bills of entry. On detailed examination of goods lying in 52 containers, covered under 5 bills of entry, the said goods were found to the Base oil against the declared description of Rubber Processing and Extender Oil. On examination of goods covered under one bill of entry in 5 containers it were found to be kerosene oil admixed with low boiling petroleum hydro carbon solvent and 2 containers were found to be mineral turpentine oil as against the declared description of fuel oil by resorting to concealment.

(2) Shri. Jayagopal Partner and Power of Attorney holder of CHA in his statement dated 17.01.2011 had stated that they do only CHA operations and they used to do business for the clients namely M/s. Quality Lube Products, M/s. Lubecon Petro Products Pvt Ltd, M/s. RK International, New Delhi, M/s. Bharat Lubricants, Bangalore, etc; that they also do business for M/s. Neha Shipping Services; that M/s. Neha Shipping Services, do not posses any CHA License but possess International Air Transport Association (IATA) recognition; that Shri. M. Zahoorul Huq, Manager of M/s. Maharaja Cargo, is the partner of M/s. Neha Shipping Services; that he and his manager, Shri. M. Zahoorul Huq used to contact clients and also do marketing and meeting of clients; that normally they used to verify client address, IE Code Number and genuineness of the documents given by the importers before doing business, however, with regard to the consignments detained by DRI they have not verified the genuineness of the IEC code numbers of the above except few, all the related documents were given by one Shri. Sadhasivam who used to claim as the transport holders for the said IEC holders and that he accepted the documents given by Shri. Sadhasivam, on good faith and admitted the irregularities that happened in this regard; that he accepted that the goods imported are not Rubber Processing Oil and extender Oil, but are actually Base Oil and Kerosene Oil; that his manager Shri. Zahoorul Haq introduced Shri.Sadhasivam who used to represent the importers M/s. Quality Lube Products Pvt Ltd, M/s. Lubecon Products Pvt Ltd, M/s. RK International, M/s. Red Sun Lubricants, M/s. Five Star Lubs, etc., that he and his manager and also the partner of M/s. Neha Shipping Services, used to share the profit mutually in the business of M/s. Neha Shipping Services and M/s. Maharaja Cargo; that he did not possess any authorization from the above said importers; that on good faith he had accepted the documents received from Shri.Zahoorul Haq and process for Customs Clearance. They have also agreed that as CHA they were not aware of exact import consignment of the importer.

(3) The authorization produced during the hearing is obtained by the CHA subsequent to the initiation of the investigations, as the same were not produced by them when called for during the recording of the statement of Shri. S. Jayagopal, Power of Attorney and Managing Partner of the CHA. Clearly this is an afterthought to cover up the admitted lapse on part of the CHA for not taking due authorization from the importer in the instant case.

(4) Hence, as per their own admissions, the CHA has not verified the antecedents, correctness of IEC number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents data or information etc., as required under the provisions of Regulations 13 (o) of the CHALR, 2004 and has thereby contravened the same.

(5) The very fact of involvement of manager of the CHA in the forgery of import documents proves their involvement in violation of Customs Act, 1962 beyond doubt.

(6) In the case of Sri Kamakshi Agencies Vs Commissioner of Customs, Madras reported in : 2001 (129) ELT 129 Mad which maintained in Supreme Court 2002 (142) ELT A87 has held that the very purpose of granting a licence to a person to act as Custom House Agent is for transacting any business relating to the entry or departure of conveyance or the import or export of goods at any customs station. For that purpose, under Regulation 9 necessary examination is conducted to test the capability of the person in the matter of preparation of various documents determination of value procedures for assessment and payment of duty, the extent to which he is conversant with the provisions of certain enactments etc. Therefore, the grant of licence to act as a Custom House Agent has got a definite purpose and intent. On a reading of the Regulations relating to the grant of licence to act as Custom House Agent, it is seen that while Custom House Agent should be in a position to act as agent for the transaction of any business relating to the entry or departure of conveyance or the import or export of goods at any customs station, he should also ensure that he does not act as an Agent for carrying on certain illegal activities of any of the persons who avail his services as Custom House Agent. In such circumstances, the person playing the role of Custom House Agent has not greater responsibility. The very prescription that one should be conversant with the various procedures including the offences under the Customs Act to act as a Custom House Agent would show that while acting as Custom House Agent, he should not be a cause for violation of those provisions.

(7) In this case also CHA have undertaken clearance work without proper authorization from importers and without verifying the correctness of IEC number identity of his client and genuineness of clients address. Hence the above cited case law squarely applicable to this case also.

(8) In the case of CC&C.EX, Hyderabad Vs HB Cargo Services reported in : 2011 (268) ELT 448 (AP) Honble Andhra Pradesh High Court also relied upon the above citation in the case of CHA involvement in export fraud and held that CHA was liable to maximum penalty of revocation of their licence. Accordingly, Honble Andhra Pradesh High Court allowed department appeal and set aside Tribunal order passed by Bangalore Bench.

(9) DRI report dated 28.09.2011 which was received in Chennai, Custom House on 03.10.2011is also filed herewith.

(10) Based on specific Intelligence DRI had investigated the import of Kerosene-admixed with low boiling petroleum Hydrocarbon solvent & Mineral Turpentine Oil in the guise of Fuel oil. The last statement from Shri. Mohamed Azam Director of M/s. Al Zaharo Petro Chemicals LLC UAE was recorded by DRI on 24.08.2011. After completion of investigation DRI has issued show cause notice to the importers and various other parties involved in this case including CHA on 16.09.2011. On completion of full investigation and issue of SCN DRI has sent its report dated 28.09.2011 to Commissioner of Customs, Chennai on CHA involvement and for taking action under CHA licensing regulation. DRI report was received by Commissioner on 03.10.2011 and CHA suspension order was issued on 17.10.2011 ie., within 15 days from the date of receipt of DRI report.

(11) Commissioner in Para 16.1 & 17 of his findings in OIO has already held that the case laws cited in para 3 of written submissions are not applicable to the facts of the present case.

2. I have considered the submissions from both sides as well as the case records. The appeal is against the suspension of the CHA licence of the appellants under Regulation 20 (2) of the CHALR, 2004. The said Regulation allows the jurisdictional Commissioner to suspend the CHA licence where an immediate action is necessary. The time limit specified in the said Regulation is 15 days from the date of receipt of the investigation report. The appellants have challenged, in this case, the impugned suspension order on the ground that the department was aware of the offence much earlier as the DRI authorities had issued the SCN on 16.9.2011 whereas the suspension has been ordered on 17.10.2011 which is beyond the 15 days period. During the course of hearing, ld. SDR was directed to verify and intimate as to when the report of investigating agency was received by the Commissioner who has issued the suspension order. The ld. SDR has, after verification, submitted that the investigating authority, in this case, was the Zonal Unit of the DRI in Chennai and that the Additional Director, DRI had submitted the investigation report dt. 28.9.2011 to the Commissioner of Customs. He has, further, verified and stated that this report was received in the Commissioner s office on 3.10.2011. As such, I find that the suspension order which has been issued on 17.10.2011 is within the time limit of 15 days prescribed in the Regulation. The ld. Advocate has referred to the Board s circular dt. 18.4.2010 which is to the effect that the investigating authority has to furnish his report to the Commissioner within 30 days of the detection of the offence. This appears to be an internal guideline issued by the Board. I am of the considered view that this instruction contained in the circular is not part of the Regulation made by the Board. The statute has authorized the Board to make Regulations and the Regulations so made have statutory force. The instructions issued over and above the Regulations cannot be put on the same footing as statutory regulations nor would it be proper for the Tribunal to grant relief treating the instructions to be statutory Regulations which they are not.

3. As such, when the impugned suspension order has been issued within the time limit of 15 days prescribed under the Regulation, the required post-decisional hearing has also been granted by the Commissioner on 28.10.2011, and necessary order for continuing the order of suspension has been passed on 11.11.2011, it is not legally possible nor it is desirable for the Tribunal to set aside the impugned suspension order. Besides, the action to suspend the CHA licence is only a preliminary and interim measure. Subsequently, the authorities are required to hold an enquiry and decide whether any action is required to be taken against the appellants. This is not a stage for the Tribunal to pre-judge the issue and influence the enquiry and subsequent proceedings. Once the final order is passed, the appellants will have ample opportunity to approach the Tribunal, if they are aggrieved by the said order. They would also have ample opportunity before the enquiring authority as well as the adjudicating Commissioner to put forth their submissions. Since prima facie I find nothing irregular about the suspension order in terms of the CHALR under which the same has been issued, I see no reason to interfere with the same. Consequently, the appeal is dismissed. However, the Customs authorities are directed to complete the enquiry and subsequent proceedings within a short time since the ld. advocate for the appellants expresses apprehensions that the concerned Commissioner is holding additional charge and that the entire proceedings may get delayed. Suspension of a CHA licence brings to halt the work of the persons employed by the CHA as well as hampers the work of import and export handled by the CHA. Therefore, even if the concerned Commissioner is holding additional charge, he should deal with the case of the appellants on a priority. The Board should also ensure that important charges, such as, posts of Commissioner of Customs in a major port are not kept vacant for a long period particularly when there are so many eligible officers waiting for their promotion.

(Pronounced in open court on 30.4.2012)