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, India
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.
Qualification 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.

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.
4. 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.
 Multi modal 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.

Regular Licence
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:

1. The applicant must satisfy the norms regarding quantity or value of cargo cleared form
the Custom House. This is determined by the Commissioner.
2. 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.

Records to be maintained by the CHA

CHAs have to maintain detailed, itemized and up to date books of accounts. The accounts should
reflect all financial transactions entered into as a CHA. A copy of all documents such as shipping
bill, bill of entry, transhipment application etc. filed must be maintained by the CHA for at least
five years. These records should be made available for inspection by the officers of the
department.

Duties and Obligations of a CHA

Clearances only against authorization A CHA is required to clear goods for import or export
only against specific authorization from the principal and must produce it whenever required by
the Deputy/Assistant Commissioner.

Method of transacting business The CHA has to either personally clear the goods or clear it
through an employee who is approved by the Deputy/Assistant Commissioner who is designated
for this purpose by the Commissioner. All the documents prepared by him should prominently
bear the CHAs name at the top of the document. The CHA should not attempt to influence the
conduct of Customs officers in matters pending before him or his subordinates. There should be
no threats, false accusations or duress against such officers. No promise of advantage or benefit
or gift should be made or bestowed on such officers. Duty of CHA should be discharged with
utmost speed and avoid delays. He cannot charge for his services in excess of rates approved by
the Commissioner.

Personal interests of CHA If the CHA is a former officer of the department, he cannot represent
any matter before a Customs officer, which he had personally considered as such officer. He
cannot also use facts which came to his knowledge when he was an officer.

Duty to tender correct advise The CHA is duty-bound to advise the client to comply with the
provisions of the Act and the regulations. If there is non-compliance of provisions by any client,
he is required to bring it to the knowledge of the Deputy/Assistant Commissioner. This
regulation requires the CHAs to act as source of information to the department.

The CHA has to exercise diligence and ensure that he passes on correct information to the client,
ensure that all information relevant for clearance or cargo or baggage is passed on to the client if
it is relevant for clearance of cargo or baggage.
Accounting for money received The CHA has a duty to promptly pay to Government all money
received from client for payment of duties and taxes. Similarly, any money received by him from
the client or from the Government should be promptly and fully accounted to the client.

Liability as to information CHA should not attempt to gather information from Government
records if it is not granted by the proper officer. Access to record maintained by him should not
be denied, nor removed or concealed when sought by the Commissioner. There is a duty to
maintain records and accounts as directed by the Deputy/Assistant Commissioner and produce
them before that officer for inspection. All documents have to be prepared strictly in accordance
with the rules and orders.

If the licence granted to a CHA is lost, it should be promptly reported to the Commissioner.

If there is failure in complying with obligations under Regulation 14, the Commissioner may
prohibit a person from acting as a CHA within his jurisdiction.

Changes in Constitution of Firms,

Companies, Concerns
Any change in the partners or directors should be informed to the Commissioner [Regulation
15].

If there is any change in the constitution of the firm or company, an application for grant of
temporary and regular licence should be made within 30 days of such change. If there is nothing
adverse against the firm or company, the Commissioner will grant licence of the category held
by the firm or company earlier. In the meantime, the concern may be allowed to continue its
business as a CHA if an application to that effect is made to the Commissioner.

If the concern is not a firm or company, in case of any change in the constitution of the concern,
permission will be granted to continue the business as CHA by the Commissioner, If the change
occurs due to death of person who was licenced to act as a CHA, his legal heir who was assisting
him in his work as CHA under Regulation 20 may be granted licence if there is nothing adverse
against that person and he also passes the examination.

If there is any change of qualified person acting on behalf of the firm or company, such
information should be immediately given to the Deputy/Assistant Commissioner.
Customs House Agents and Information
Technology
NIC (National Informatic Center)developed RES for Indian Customs, a basic software for
creating and filing Shipping bill(Customs Document)on Indian Customs Website- ICEGATE.
The software is free to download from Indian Customs website but to use this software, one need
to register at website as a registered user with ICEGATE. This software is Internet Browser
depended. One need to install and configure Netscape Navigator and Netscape Communicator
first.

There are some private sector companies, which also provide software packages for online
preparing SB(Shipping Bill) and BE(Bill of Entry) and filing it to Indian Customs gateway,
ICEGATE.

iCAFFE(Customs and Freight forwarding Expert)is one of the available option, shares a good
market ratio of Customs House Agents and Freight Forwarding Companies. It is complete and
integrated solution to manage all activities associated with Customs Clearance and Freight
Forwarding activity in India with online connectivity of various offices. The Software has been
developed, with the feedback from persons having years of experience in Cargo trade and an
aptitude for processing of data and managing activities electronically in order to achieve smooth
functioning of an agency broadly covering the all important functional areas. The Software is
also available in SAAS model. User just need to pay for the usage.

These Software packages are very much helpful in following manners

 Minimize the data entry operations and to reduce human errors, to being almost non-
existent, which occur during the entry of the information in the Customs Annexure.
 Increases efficiency.
 Customized MIS Reports for Top and Middle Management.
 Keep track of SB and BE filed with ICEGATE.
 Integrated Customer Relationship Management.
 Multi User, Multi Branch working.