The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that no penalty is imposable under Regulation 18 of Customs Broker Licensing Regulation ( CBLR ) when two operative Customs House Agent ( CHA ) licenses on one person obtained due to failure in completing formalities.
The appellants, M/s. Asia Shipping Services and Shri Harendra M Karia against the imposition of a penalty of Rs. 50,000/-. Two appeals have also been filed by Revenue, one against Asia Shipping and the other against Shri. Harendra M Karia.
It was pointed out that the proceedings initiated under CBLR for revocation of license against M/s Asia Shipping Services and Shri Harendra M Karia were dropped. However, the penalty of Rs. 50,000/- was imposed on Asia Shipping/ Shri Harendra M Karia under Regulation 18 of the Customs Broker Licensing Regulation.
The appellant operated as a Customs House Agent under Regulation 8 of Customs House Agent Licensing Regulation, 1984 and Shri Harendra M Karia was working as an authorized Executive/Clerk and was engaged in the work as a Customs House Agent. Shri Harendra M Karia qualified for examination of Custom Broker Agent under Regulation 9 of Custom House Agents Licensing Regulations ( CHALR ), 1984.
Shri Harendra M Karia also passed the examination of Customs House Agent under Regulation 9 of CHALR 1984 and based on the qualification of Shri Harendra M Karia and M/s Asia Shipping Services had applied for the regular license in the form under Regulation 10 (1) of CHLAR 1984.
It was declared that Shri Harendra M Karia will engaged in the work of Customs House Agent. Further, Shri Anil Karia proprietor of M/s Asia Shipping Services executed a power of attorney in fact and at law for and on behalf of the firm which was accepted by the Customs Authorities. Accordingly, an identity card was issued to Shri Harendra M Karia as power of attorney of M/s Asia Shipping Services Gandhidham which was valid until it was to be revoked. The identity card was never revoked nor surrender by Shri Harendra M Karia.
The Custom House Agent License was granted in the year 1993 to M/s Asia Shipping Services under Regulation 10(1) of CHALR, which authorized the said firm to engage in Custom Clearances work to be transected through Shir Harendra M Karia.
Meanwhile, Shir Anil Karia Proprietor of M/s Asia Shipping Service also qualified for the exam of customs house agent under Regulation 9 of CHALR 1984. He requested for inclusion of his name in the CHA license, in terms of Provision of Regulation 18 (2) of the CHALR, 1984. No person other than the one who is qualified in the examination referred to in Regulation 9 was allowed to work in a customs station as a newly authorized employee on behalf of that firm or company. His application was however not considered and the original license was returned to them. No appeal was filed against the said return of license and non-inclusion of the name of Anil Karia in the said license.
The two-member bench comprising of Mr Ramesh Nair, Member ( Judicial ) and Mr Raju, Member ( Technical ) through two operative licenses on the strength of qualification of one person i.e. Shri Harendra M Karia was obtained due to failure to complete the formalities for deletion of the name of Shri Harendra M Karia from CB license of M/s Asia shipping service and inclusion of name Shri Anil Karia therein. The impugned order concludes that this happened due to confusion and presumptions. The impugned order also holds that there is no mala fide intention of conspiracy.
It was observed that the Commissioner has admitted that it was a procedural lapse. Shri Harendra M Karia and M/s Asia Shipping had acted bona fide by applying for substitution and thereafter it was the responsibility of Revenue to allow the substitute in the license of M/s Asia Shipping.
The Tribunal held that the imposition of penalty under Regulation 18 even though there was technical violation is not justified. The CESTAT set aside the penalties imposed and allowed the appeal.
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