CUSTOM HOUSE AGENT

LAST DATE 12 TH OCT. TO SEND BY PARDEEP

custom house agent

Customs House Agent (CHA) is a person who is licensed to act as an agent for transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs station.

Liabilities on a CHA
Section 146 of the Customs Act is the enabling provision, which allows agents of importers and exporters to act on behalf of importers and exporters. This is necessitated by the highly involved and technical nature of the work to be done in connection with clearance of imports into and exports out of country. The importers and exporters themselves may have neither time nor the requisite knowledge on their own. Therefore, agents are allowed to act on their behalf. The work of the agents is governed by the Customs House Agents Licensing Regulations, 1984 framed under this section read with Section 157.
There are certain liabilities fastened on the agent of the importer or exporter under Section 147. Some of these liabilities are in the nature of extension of and exceptions to the liability of an agent under the Indian Contracts Act, 1872. Sub-section (1) empowers the agent to do everything that an importer or an exporter can do. Filing a bill of entry, shipping bill, submitting supporting documents therewith, helping in examination of goods, payment of duty on behalf of the principal, warehousing of goods, removal from warehouse and the like. The common law principle that an agent’s actions bind the principal is given the status of a legal presumption. The consequences of all actions of a CHA will bind the importers and exporters on whose behalf they act. An agent who is authorized to act on behalf of the importer or exporter is treated as the owner of imported or exports goods. In respect of that particular transaction, a notice could be given to that agent. This does not normally extend to recovery of duty not paid or short paid by the owner, importer or exporter of goods. As an exception, this is permissible when the Deputy/Assistant Commissioner is of the opinion that such recovery from the owner, importer or exporter of goods is not possible.
Essential features of CHA Licensing Regulations, 1984
1. No ceiling for number of CHAs who can be appointed in a Customs House.
2. Issue of regular licence is preceded by a period of grant of temporary licence.
3. Prescribing criteria of experience and financial soundness for appointment.
4. Grant of regular licence is subject to passing examination, satisfying minimum volume of business and complying with obligations under Regulation No.14.
5. Change in the constitution of partnership or firm not to affect the operations of CHA.
6. Commissioners have been empowered to prescribe fees to prevent excess billing by the CHAs.
Application for licence
Under Regulation 4, every January, the Commissioner of Customs has to notify and advertise and call for applications from persons for acting as CHAs within his jurisdiction. Individuals, firms and companies can act as CHAs. In case of firms and companies, the application has to give the particulars of partner or director who will actually do the work of clearance of goods at the Customs station. Application is made in Form A.
Applications made by the firms or companies should contain full details of the directors or partners.
Qualifications of an applicant
The applicant individual working for a firm or a company should be:
- A graduate from a recognized University.
- Should hold a pass in Form G as employee of the firm / company.
- Should have engaged in Customs clearance work for three years.
- Should possess assets of Rs.1 lakhs or Rs.50,000/- as certified by a scheduled bank.
- Reliability of the applicant and soundness of financial status are very important criteria.
- If there are too many applicants than the licenses that can be granted, the Commissioner has to select persons for licensing by seniority of holding G pass. If there are two persons of same seniority, the older person will be preferred [Regulation 8(3)].
Relaxations, which can be granted by the Commissioner:
An applicant need to possess pass in Form G for one year only if permitted by the Commissioner for reasons to be recorded in writing.

Qualification
Various Custom Houses and Commissionerate prescribe certain volume of business as qualification for considering application for regular licences:
1. 150 documents per year (for ex: shipping bill or bill of entry)
2. Clearance or shipment 1500 packages per year.
3. Clearance or shipment of packages of value not less than Rs.60 lakhs.
A G-Pass holder with one year experience may also appear for examination if permitted by the Commissioner for reasons to be recorded in writing.
Other clarifications as to qualification
1. Diploma in “Customs clearance and freight forwarding” offered by Bombay University is not considered as graduation for the purpose of eligibility.
2. An employee or partner or director of a CHA licensee authorized to take examination under Regulation 9(5) is allowed to take three examinations in a period of two years from the date of application by the licensee for examination.
3. Level of knowledge of local language has to be determined by the Commissioners as the Regulations do not prescribe any requirement. Knowledge of local language by the authorized representative is considered sufficient.
4. A person who passes examination under Regulation 9(5) can apply for independent CHA licence when applications are called for, subject to possessing other qualifications.
5. Persons who were granted CHA licence before the amendment of 1997 prescribing graduation as qualification would continue to qualify for renewal of licence.
Multimodal transport operators as CHAs
Multimodal transport operators (MTOs) are appointed under Multimodal Goods Transportation Act, 1993 by the Ministry of Surface Transport. Their work involves carriage of goods by more than one mode of transport between India and any place abroad. They handle export cargo stuffing and destuffing. This does not automatically confer any right on them to obtain appointment as steamer agents or CHAs unless thy are otherwise qualified for such appointment. Their role is different from that of a CHA or a steamer agent.
Temporary licence
After scrutinizing and accepting the application a temporary licence for a period of one year is granted under Regulation 8 in Form B.
Before receiving the temporary or regular licence, the applicant has to go through another important step. He is required to execute a bond and give a surety or bank guarantee in Forms D and E. For major ports , the surety amount is Rs.25000/- For other ports, it is Rs.10000/- Surety may also be given in the form of National Savings Certificates or postal security. In the last two forms of surety, these should be pledged in the name of the Commissioner. It is important to note that since a regular licence holder is allowed to work in more than one Customs station, separate bond and surety have to be given in respect of each Customs station.
Curriculum
[Regulation 9(3)]
1. Preparation of various kinds of bill of entry and shipping bill.
2. arrival entry and clearance of vessels.
3. Tariff classification and rates of duty.
4. Determination of value for assessment.
5. Conversion of currency.
6. Nature and description of documents to be filed with various kinds of bills of entry and shipping bill.
7. Procedures for assessment and payment of duty.
8. Examination of merchandise at the Customs stations.
9. Provisions of the Trade and Merchandise Marks Act,1958.
10. Prohibitions on imports and exports.
11. Bonding procedure and clearance from bond.
12. Re-importation and conditions for free re-entry.
13. Drawback.
14. Offences under the Act.
15. Provisions of allied Acts including Customs Tariff Act,1975, Foreign Trade (Development and Regulation) Act, 1992,Foreign Exchange Regulation Act,1973, Indian Explosives Act,1884, Arms Act,1959, Opium Act, 1878, Drugs and Cosmetics Act,1940, Destructive Insects and Pests Acts, 1914, Dangerous Drugs Act, 1930 insofar as they relate to the clearance of the goods through Customs.
16. Refund procedures, appeals and revision petitions.
Although not a part of curriculum, the Commissioner has to satisfy himself that the applicant-candidate has good knowledge of English and local language of Customs station. For a person working exclusively in docks, knowledge of English is not compulsory. But, knowledge of Hindi will be considered as advantageous. [Regulation 9(4)].
Examinations
Regulation 8 itself refers to two opportunities to a temporary licence holder for writing and passing the examinations. A third opportunity may be given by the Commissioner if the temporary licence holder has met with the minimum work criteria (number of package, value, tonnage, Duty amount etc). This extension of time is granted for minimum six months and maximum one year.
If this extension of time is refused by the Commissioner, a representation can be made to the Chief Commissioner.
The candidate will have three opportunities to pass the examination within two years. One may take examinations as soon as temporary licence is granted. The examination fee is Rs.500/-per appearance.
There will be two examinations each year. There will be both oral and written examinations. A person who passes written examination but fails in oral examination is treated as failed. But, he need not write examination again.
The reference to applicant or candidate or temporary licence holder or regular licence holder must be correctly understood. Where the applicant is an individual, it is the same person who holds the temporary licence and also writes the examination. On the other hand, if the applicant is a firm or company, the person who writes the examination is an employee of the firm or company. But the temporary or regular licence may be issued in the name of the firm or company. This position is clear from Regulations 5 and 6.
Regulation 9(5) allows a CHA to permit one of the employees, or partners or directors to appear in the examination conducted under Regulation 9. This would be in addition to the person already present and who has passed this examination. The person so permitted to appear for examination must be a graduate. But, he need not be a G pass holder or have experience in the capacity of a G pass holder.

Customs House Agent An application for regular licence can be made by a person who has passed the examinations. Application for regular licence is made in Form C. Form A and Form C are almost identical except that while the first form is issued under Regulation 5, the latter form is issued under Regulation10. Licence fee is Rs.5000/-. Regular licence is granted in Form D. The applicant for regular licence has to satisfy following conditions:
A. The applicant must satisfy the norms regarding quantity or value of cargo cleared form the Custom House. This is determined by the Commissioner.
B. The conduct of the applicant during the period of holding temporary licence must be business like. There should be no delay in clearance of goods or in payment of duty on account of conduct of the applicant. There should be no complaint of misconduct of the applicant. There also should not be any complaint of non-compliance of provision of Regulation 14, which casts some important obligations on the CHAs.
Disqualifications for regular licence
Regulation 10(1) specifies that only a person who qualifies in the examination can apply for a regular licence, Nevertheless, sub-regulation (3) provides that the Commissioner may reject the application of a person who fails to qualify in the examination, It further provides that if performance criteria is not satisfied (regarding quantity and value of clearances or conduct), the application may be rejected. A representation can be made against an order of rejection within 30 days to Chief Commissioner. The Chief Commissioner is also empowered to review the procedure of grant of regular licence within one year.
Regular licence granted to a person cannot be transferred [Regulation 13].
Validity of licence
Under Regualtion12 (1), the validity of licence is for a period of five years.
Extension of licence
An applicant seeking revalidation or extension of licence has to apply before the validity expires, to the Commissioner. It will be renewed for a period of five years either from the date of expiration of licence or from the date of last renewal of licence, A CHA seeking renewal has to satisfy the Commissioner that he has conformed to the norms fixed by the Commissioner regarding minimum quantity and value of cargo clearance and that he is not guilty of misconduct or that he has not been the cause of delayed clearance of goods or delayed payment of duty. There should also be no complaint that he has violated the obligations cast on him under Regulation 14 read with Regulation 12.
The renewal fee payable is Rs.3000/-[Regulation 12(3)]
A person who has passed examination can act on behalf of another firm or company which is holding a regular licence. But, at any time, he can act for only one such firm or company.
A CHA who has been granted licence cannot acquire a right to obtain office accommodation in the Custom House [Regulation 24].