Cus - It is not case of Revenue that Courier Co itself was involved in any violation by taking help of employees for duty evasion evade - punishment already suffered by keeping them out of business & imposition of penalty suffices: CESTAT
By TIOL News Service
MUMBAI, JAN 18, 2017: THE Courier licence held by the appellant was revoked by the Commissioner, Customs, Mumbai and, therefore, the appellant is before the CESTAT.
Facts: Hitesh Narayandas Fofandi and Ravi Sahebrao Kadam, employees of the appellant, in connivance with Hemant Badola had organized the entire modus operandi to bring in the silver jewellery into India.
Entire case of the Revenue is that the appellant herein had not exercised due control over their employees.
SCN was issued to the appellant for imposing penalty under Section 114AA and Section 117 of the Customs Act, 1962 and for revocation of Courier Registration under Regulations 10 and 14 of the Courier Imports and Exports (Clearance) Regulations, 1998.
The said Hiten Fofandi admitted to his involvement in the illegal clearance of the consignment and the acts committed by him were out of his own accord to satisfy his greed; that the appellant Company has filed a police complaint; the appellant themselves informed the office of the Commissioner of Customs that they are suspecting three more shipments were imported from Hong Kong and requested the Customs department to verify and do the needful.
The appellant also placed reliance on the Bombay High Court decision in V.B. Bhatia & Co. - 2006-TIOL-140-HC-MUM-CUS dismissing the Revenue appeal and upholding the Majority decision concluding that for the act of employees, the courier agent cannot be penalized. Reliance is also placed on the decisions in H.B. Cargo Services - 2011-TIOL-198-HC-AP-CUS; Ashiana Cargo Services - 2014-TIOL-1042-HC-DEL-CUS to submit that since the licence has been revoked for more than two years; the same should be suffice, appeal be allowed and licence be restored.
The AR justified the impugned order and also raised a preliminary objection in the matter of the jurisdiction of the Tribunal to hear the appeal. It is also submitted that there is a practice of filing representation before Chief Commissioner against order of Commissioner under Courier Regulations, 1998 and referred to the decision in the case of Bombino Express Pvt. Ltd. - 2014-TIOL-1839-HC-DEL-CUS; that in the appellant's own case earlier they had filed representation before Chief Commissioner and thereafter it was challenged before the High Court. Reliance is also placed on the decisions in DHL Express India Pvt. Ltd. - 2014-TIOL-2624-HC-KAR-CUS, Intercontinental Cargo Service - 2012-TIOL-731-CESTAT-DEL-LB; that the contrary view of Tribunal on jurisdiction in matters of Courier Regulation, 1998 in the matter of Bombino Express Pvt. Ltd. vide order dated 23 March, 2016 - 2016-TIOL-3375-CESTAT-MUM was not binding and matter can be referred to Larger Bench as there are contrary decisions on the issue viz. Vodafone India - 2015-TIOL-2098-HC-MUM-ST, Mahindra & Mahindra - 2015-TIOL-53-SC-CX and Kraps Chem Pvt Ltd. - 2015-TIOL-102-SC-CX.
The Bench observed that insofar as maintainability is concerned, the same is squarely covered by its decision in Bombino Express Pvt. Ltd - 2016-TIOL-3375-CESTAT-MUM, wherein appeal against the order of the Commissioner revoking the registration as a Courier was held as maintainable and that this view is a binding one and there is no merit in the request made by the AR for referring the matter to a larger bench.
It was further observed -
+ It is not the case of the department that the appellant courier company itself was actively involved in any violation by taking help of its employees with intent to evade any duty or prohibition or for any personal gains. We find that there is no dispute on the fact that the named employees of the appellant courier have committed gross violations on their own accord to satisfy their own greed without knowledge of the appellant courier.
+ It is also not in dispute that the appellant courier has initiated criminal and disciplinary proceedings against the guilty employees and removed from service. It is seen from the impugned order itself that the employee Hitesh Fofandi was terminated on 19.5.2014 and police compliant against him was filed with Sahar Police Station, Andheri, Mumbai on 29.5.2014 itself. It is not the case of the department that the police investigations revealed any complicity of the appellant courier.
+ The courier license was granted to appellant in 2005. It is not in dispute that since then the appellant courier had unblemished track record. The adjudication order records that the submission of appellant that various internal processes have been rehashed and remedied to ensure that such lapses do not happen in future. The appellant has been proceeded against by alleging the vicarious liability for the acts committed by its employees.
+ It is not the case of the department that the appellant courier was making any payment to the guilty employees for the illegal work done by them. It is also not a case where the employees are doing any illegality at the instance of their employer. The guilty employees were not employed for such illegal acts, which were outside of the scope of their employment. The positive case of the department against the appellant is that there was systemic failure on behalf of the appellant to detect the fraud and lack of supervisory control. It cannot, therefore, be held that the appellant itself has committed any fraud with intent to evade any duty or prohibition. The observations to this effect recorded in the impugned Order are thus erroneous.
+ The Courier License was suspended on 06.06.2014 pending inquiry for revocation. Thereafter the same has been revoked vide the impugned Order without conducting any further inquiry under Courier Regulations, by relying upon the show cause notice issued under Section 28 read with Section 124 of the Act. The Appellant and its employees (other than the guilty employees), who were themselves not involved in any fraud, have already faced much hardship and have been deprived of their livelihood for a considerably long period since June, 2014. The punishment already suffered by keeping them out of business and imposition of penalty of Rs.50,000/- under Section 158(2)(ii) should suffice.
Conclusion:
++ We do not find any reasonable justification to subject the appellant to any further punishment by extending benefit of doubt.
++ In the result, we are allowing the appeal and we set aside the impugned Order to the extent it revoked the Courier Registration and forfeited the amount submitted by the Appellants as security at the time of registration of the Courier License.
The Courier Registration of the Appellant stands restored with security deposit forthwith with consequential relief.
The appeal was partly allowed.
(See 2017-TIOL-156-CESTAT-MUM)
