Full Judgment Text
* HIGH COURT OF DELHI : NEW DELHI
+ CUS.A.C. 3/2007
th
% Judgment reserved on: 19 January, 2007
Date of Decision : 24th January, 2007
SATISH GUPTA ..... Petitioner
Through:Mr.Jayant Bhushan, Sr.Advocate
with Mr.Rohit P.Ranjan, Adv.
versus
UOI & ORS. ..... Respondent
Through
Coram:
HON'BLE MR. JUSTICE MADAN B. LOKUR
HON'BLE MR. JUSTICE V.B. GUPTA
1. Whether the Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
V.B. GUPTA, J.
Present appeal has been filed under Section 130 of the
Custom Act by the Appellant for setting aside the impugned
st
order dated 21 November, 2005 passed by Custom, Excise and
Service Tax Appellate Tribunal, Principal Bench, Court No.II,
New Delhi (herein after referred to as Tribunal).
2. Brief facts of this case are that five firms namely M/s
Sharanpur Handicrafts, M/s Deepshikha Overseas, M/s Himgiri
CUS.A.C. 3/2007 Page 1 of 5
Overseas, M/s Stitch & Style and M/s R.S. & Co. approached M/s
Sharp Cargo Movers a Custom House Agent Company (for short
CHA) of which the appellant was Director for handling their
export of ready made garments, under the Duty Draw Back
Scheme. These firms filed 100 shipping bills for export of ready
made garments. The export of ready made garments entitles
the exporters to claim duty draw back at the rate prescribed
under the schedule. Out of 36 containers, in respect of 100
shipping bills filed by the above mentioned exporting firms, 12
containers were detained at Mumbai port and another 10
containers were detained at Nahva Sheva Port before their
placement on board on vessels bound for Dubai. The four
containers which were already sailed from Mumbai Port to Dubai
were called back. The contents of these containers were re-
examined by the custom officers and it was found that
description of the goods was not as per the declaration filed in
the shipping bills. As per the shipping bills, the description of
the goods were “Ready Made Garments” whereas infact the
goods were old and used garments. These goods were seized
and it was also found that these goods were overvalued to claim
the higher rate of drawback.
3. Show cause notices were issued for confiscation of the
CUS.A.C. 3/2007 Page 2 of 5
seized goods and for disallowing the draw back already
sanctioned to the exporter and the demand for draw back was
also made. In the show cause notice, proposal for imposition of
penalty was also made and thereafter the adjudicating authority
confiscated the garments valued at Rs. 31,39,72,656.77 declared
by the exporter under Section 113 of the Custom Act and
allowed the same on payment of by redemption fine of Rs.65
lacs. The adjudicating authority also ordered that no draw back
shall be allowed in respect of these goods. Insofar as the
Appellant is concerned, the adjudicating authority imposed a
penalty of Rs.1 lac.
4. Appeal filed by the Appellant against the adjudication order
th
dated 19 August, 2003 has been dismissed by the Tribunal vide
the impugned order.
5. It has been contended by the learned counsel for the
Appellant that the role of CHA in any export is only limited to
submission of export documents with the Custom Department
and it is the legal duty of the Department to verify the facts
mentioned in those documents and examine the goods before
granting the certificate of export. The Appellant has neither
submitted any documents nor signed any documents and there is
nothing on record to show the involvement of the Appellant is
CUS.A.C. 3/2007 Page 3 of 5
there in the said export. The CHA Company of which the
Appellant was an employee, had complied with all the
requirements and obligations caused upon the CHA Company as
per the Custom House Agent Licensing Regulations.
6. For the disposal of the present appeal, relevant clauses of
Custom House Agent Licensing Regulation, 1984 are 14(e) and
(l) which read as under:-
14.Obligations of Custom House Agent:-
A Custom House Agent shall:
..........
(e) 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 cargo or
baggage;
.........
(l) ensure that all documents prepared or
presented by him or on his behalf are
strictly in accordance with orders relating
thereto;
.........
7. According to these regulations, the agent is duty bound to
exercise due diligence to ascertain the correctness of
information which he imparts to his client with regard to work
relating to clearance of cargo and shall also ensure that all
documents prepared or presented by agent on behalf of his client
are strictly in accordance with the export orders relating
therein.
8. As per finding of the Tribunal, the Appellant was well
CUS.A.C. 3/2007 Page 4 of 5
aware of the fact that the goods were overvalued and were not
as per the declaration made in the shipping bill. The Appellant
has admitted in his statement dated 12th February, 1999 that,
exporter disclosed to him that the goods are being exported to
claim fraudulent drawback by mis-declaring the value of the
goods. This statement is said to have been retracted, but the
fact remains that the Appellant has not taken any precaution and
filed the shipping bills regarding which on re-examination the
goods were found “ not as per the declaration”.
9. These are finding of facts and we do not find any reason to
disagree with these findings of the Tribunal, which are not
perverse.
10. Since, very beginning the Appellant knew that the goods
were mis-declared by the exporter and higher value was also
mentioned to draw higher rate of duty drawback, we find no
merit in this appeal and accordingly the present appeal is,
hereby, dismissed.
(V. B. GUPTA)
JUDGE
(MADAN B. LOKUR)
JANUARY 24, 2007 JUDGE
sb
CUS.A.C. 3/2007 Page 5 of 5
+ CUS.A.C. 3/2007
th
% Judgment reserved on: 19 January, 2007
Date of Decision : 24th January, 2007
SATISH GUPTA ..... Petitioner
Through:Mr.Jayant Bhushan, Sr.Advocate
with Mr.Rohit P.Ranjan, Adv.
versus
UOI & ORS. ..... Respondent
Through
Coram:
HON'BLE MR. JUSTICE MADAN B. LOKUR
HON'BLE MR. JUSTICE V.B. GUPTA
1. Whether the Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
V.B. GUPTA, J.
Present appeal has been filed under Section 130 of the
Custom Act by the Appellant for setting aside the impugned
st
order dated 21 November, 2005 passed by Custom, Excise and
Service Tax Appellate Tribunal, Principal Bench, Court No.II,
New Delhi (herein after referred to as Tribunal).
2. Brief facts of this case are that five firms namely M/s
Sharanpur Handicrafts, M/s Deepshikha Overseas, M/s Himgiri
CUS.A.C. 3/2007 Page 1 of 5
Overseas, M/s Stitch & Style and M/s R.S. & Co. approached M/s
Sharp Cargo Movers a Custom House Agent Company (for short
CHA) of which the appellant was Director for handling their
export of ready made garments, under the Duty Draw Back
Scheme. These firms filed 100 shipping bills for export of ready
made garments. The export of ready made garments entitles
the exporters to claim duty draw back at the rate prescribed
under the schedule. Out of 36 containers, in respect of 100
shipping bills filed by the above mentioned exporting firms, 12
containers were detained at Mumbai port and another 10
containers were detained at Nahva Sheva Port before their
placement on board on vessels bound for Dubai. The four
containers which were already sailed from Mumbai Port to Dubai
were called back. The contents of these containers were re-
examined by the custom officers and it was found that
description of the goods was not as per the declaration filed in
the shipping bills. As per the shipping bills, the description of
the goods were “Ready Made Garments” whereas infact the
goods were old and used garments. These goods were seized
and it was also found that these goods were overvalued to claim
the higher rate of drawback.
3. Show cause notices were issued for confiscation of the
CUS.A.C. 3/2007 Page 2 of 5
seized goods and for disallowing the draw back already
sanctioned to the exporter and the demand for draw back was
also made. In the show cause notice, proposal for imposition of
penalty was also made and thereafter the adjudicating authority
confiscated the garments valued at Rs. 31,39,72,656.77 declared
by the exporter under Section 113 of the Custom Act and
allowed the same on payment of by redemption fine of Rs.65
lacs. The adjudicating authority also ordered that no draw back
shall be allowed in respect of these goods. Insofar as the
Appellant is concerned, the adjudicating authority imposed a
penalty of Rs.1 lac.
4. Appeal filed by the Appellant against the adjudication order
th
dated 19 August, 2003 has been dismissed by the Tribunal vide
the impugned order.
5. It has been contended by the learned counsel for the
Appellant that the role of CHA in any export is only limited to
submission of export documents with the Custom Department
and it is the legal duty of the Department to verify the facts
mentioned in those documents and examine the goods before
granting the certificate of export. The Appellant has neither
submitted any documents nor signed any documents and there is
nothing on record to show the involvement of the Appellant is
CUS.A.C. 3/2007 Page 3 of 5
there in the said export. The CHA Company of which the
Appellant was an employee, had complied with all the
requirements and obligations caused upon the CHA Company as
per the Custom House Agent Licensing Regulations.
6. For the disposal of the present appeal, relevant clauses of
Custom House Agent Licensing Regulation, 1984 are 14(e) and
(l) which read as under:-
14.Obligations of Custom House Agent:-
A Custom House Agent shall:
..........
(e) 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 cargo or
baggage;
.........
(l) ensure that all documents prepared or
presented by him or on his behalf are
strictly in accordance with orders relating
thereto;
.........
7. According to these regulations, the agent is duty bound to
exercise due diligence to ascertain the correctness of
information which he imparts to his client with regard to work
relating to clearance of cargo and shall also ensure that all
documents prepared or presented by agent on behalf of his client
are strictly in accordance with the export orders relating
therein.
8. As per finding of the Tribunal, the Appellant was well
CUS.A.C. 3/2007 Page 4 of 5
aware of the fact that the goods were overvalued and were not
as per the declaration made in the shipping bill. The Appellant
has admitted in his statement dated 12th February, 1999 that,
exporter disclosed to him that the goods are being exported to
claim fraudulent drawback by mis-declaring the value of the
goods. This statement is said to have been retracted, but the
fact remains that the Appellant has not taken any precaution and
filed the shipping bills regarding which on re-examination the
goods were found “ not as per the declaration”.
9. These are finding of facts and we do not find any reason to
disagree with these findings of the Tribunal, which are not
perverse.
10. Since, very beginning the Appellant knew that the goods
were mis-declared by the exporter and higher value was also
mentioned to draw higher rate of duty drawback, we find no
merit in this appeal and accordingly the present appeal is,
hereby, dismissed.
(V. B. GUPTA)
JUDGE
(MADAN B. LOKUR)
JANUARY 24, 2007 JUDGE
sb
CUS.A.C. 3/2007 Page 5 of 5