The main legal point established in the judgment is the requirement of due diligence for the CHA in ascertaining the correctness of information related to clearance of cargo, and the need for mens rea to attribute guilt to the CHA for defrauding the government.

NAJMI WAZIRI, J.

1. These appeals are directed against the impugned order dated 08.06.2015 of the CESTAT, which upheld the order-in-original dated 01.05.2007 passed by the respondent – Commissioner of Customs revoking the appellant’s Customs House Agent (CHA) license and forfeiting its security deposit of Rs.1 lakh.

2. The said license was granted under the Customs House Agents Licensing Regulations, (CHALR), 2004. The appellant had filed two shipping bills on 17.06.2003 in the name of one M/s H.M. Impex regarding the export of readymade garments entailing a duty drawback claim of about Rs.34 lacs. Upon inspection of the goods by the customs authorities it was found that against the declared weight of 10200 kg, the consignment weighed only 3820 kgs. in respect of one of the bills besides the goods/garments were of low quality and of irregular size. Hence the customs authorities concluded that there was a deliberate mis-declaration apropos the quality, quantity, value and weight of the consignments with the intention to defraud the government and illegitimately claim the benefit of duty-drawback.

3. The investigation apropos the exporter M/s H.M. Impex, at its given address WZ-156, Madipur, New Delhi – 63, of which one Mr. Rajiv Kumar was claimed to be its proprietor, but its Import Export Code (IE Code), revealed that no such entity existed at the said address. An employee of the appellant, Mr. Lalit Katoch, was said to be involved in the filing of the export documentation and inspection of the consignments. The appellant’s proprietor, Mr. Sunil Bhatia had contended that the exporter was introduced to the CHA by Mr. Lalit Katoch who was the appellant’s sales executive, and the latter in turn had been approached by one Mr. Vijay Gupta; the proprietor claimed ignorance of the nature or quantum of the goods in terms of the documents filed by Mr. Lalit Katoch, therefore, no allegation of mis-declaration or fraud could be fastened upon him or upon the appellant. Furthermore, he contended that the revocation of license for the submission of documents by his employee was too harsh an action and it ought to be recalled. He relied upon the judgment of the CESTAT in M/s Pranil Shipping Vs. CC, Jamnagar by Final Order No. A/11432 dated 24.7.2014.

4. The respondent, however, argued that the shipping bills were filed without verifying the identity of the exporter or ascertaining the veracity of the declarations made in the shipping bills for clearance of the goods through customs for export; this was a necessary precaution that the CHA ought to have taken before the documents were filed; this default shows a lack of due diligence and of serious misconduct, hence the respondent’s action was justified. Especially, in view of the judgement of the Bombay High Court in CC (General) Vs Worldwide Cargo Movers, 2010 (253) ELT 190 (Bom.) and the Andhra Pradesh High Court in CC Hyderabad-Il Vs H.B. Cargo Services, 2011 (268) ELT 448 (A.P.).

5. In the impugned order the CESTAT had concluded that the shipping bills were filed in the name of a non-existent entity/exporter viz. M/s H.M. Impex, and there was nothing on record to show that anyone on behalf of the said exporter had ever approached the appellant for filing of the said shipping bills; the consignment was of a large value; the hand-written invoices were typed in the appellant’s office; Mr. Lalit Katoch kept the proprietor involved/informed and the latter gave his consent for filing the documents; the high value of the consignments required due diligence compliance of Know Your Customer (KYC) norms under the CHALR, 2004 so as to ascertain the genuineness of the exporter and the exports. Since there was a gross mis-declaration in the description, value and weight of the consignment, there was non-compliance of the CHAs obligations mandated in Regulation 13 of CHALR, 2004. The CESTAT further opined that the CHA is treated with a certain degree of trust by the customs authorities, this trust