Madras High Court
M/S.Bharath Marine Co vs The Commissioner Of Customs on 14 February, 2018
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED:14.02.2018
CORAM:
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
Writ Petition Nos.31596 of 2014 & 17196 of 2015
and M.P.Nos.1 & 2 of 2015 and W.M.P.No.1130 of 2017
Orders reserved on
30.01.2018
Orders pronounced on
14.02.2018
W.P.No.31596 of 2014
M/s.Bharath Marine Co.,
rep. by its Partner,
M.B.Govindaraju,
No.2, Jaffer Syrang Lane,
Chennai-600 001. .. Petitioner
Vs.
1.The Commissioner of Customs
(Seaport - Import), Custom House,
No.60, Rajaji Salai, Chennai-600 001.
2.The Assistant Commissioner of Customs
(Group III) and Enquiry Officer,
Office of the Commissioner of Customs
(Seaport Import), Custom House,
No.60, Rajaji Salai, Chennai-600 001. .. Respondents
Petition filed Under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorarified Mandamus, calling for records of the 1st respondent in show cause notice in F.No.R-354/CBS dated 31.10.2014 and quash the same and forbear the respondents from proceeding with any Inquiry pursuant to the show cause notice, as it is partisan, on sided and issued with a closed mind besides being without jurisdiction.
W.P.No.17196 of 2015
M/s.Bharath Marine Co.,
rep. by its Partner,
M.B.Govindaraju,
No.2, Jaffer Syrang Lane,
Chennai-600 001. .. Petitioner
Vs.
The Commissioner of Customs
Chennai VIII Commissionerate,
Custom House,
No.60, Rajaji Salai, Chennai-600 001. .. Respondent
Petition filed Under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorarified Mandamus, calling for records of the respondent in F.No.R-354/CBS dated 02.06.2015 and quash the same as it attempts to over reach, and defy the orders of this Court, direct the said respondent to renew the licence, as this Court has already stayed the II show cause notice and the Inquiry contemplated there under.
For Petitioner
in both Wps. : Mr.B.Satish Sundar
For Respondents
in both WPs. : Mr.V.Sundareswaran, SPC
******
C O M M O N O R D E R
The petitioner in both these writ petitions is M/s.Bharath Marine Company, a partnership concern, who were granted a Custom House Agent Licence in the year 1993, which was periodically renewed and valid up to 27.05.2015.
2. In W.P.No.31596 of 2014, the petitioner has challenged a show cause notice issued under Regulation 20(1) of the Custom Broker Licensing Regulations, 2013 (CBLR for brevity).
3. In W.P.No.17196 of 2015, the petitioner has challenged an order dated 02.06.2015, passed by the respondent rejecting the petitioner's application for renewal of the Custom Broker Licence, which expired on 27.05.2015.
4. The petitioner, as a custom broker, handled the clearance of two firms, viz., M/s.Matrix GSM Network and M/s.Ganesh Agency, who imported various types of table top imitation plated gift articles and other articles from suppliers at Hong Kong. The petitioner would state that after obtaining authorization from them and also making necessary verification as per the KYC (Know Your Customer) norms prescribed under CBLR, the petitioner handled those consignments. The Department of Revenue Intelligence (DRI for brevity) initiated investigation on the allegation of undervaluation. A statement was recorded from the partner of the petitioner Thiru.M.B.Govindaraju, on 24.09.2013, by the officials of the DRI, who stated about clearance of cargo handled for those two importers and stated that they had adhered to the terms and conditions stipulated in the regulation. The respondent issued show cause notice under Sections 28 and 124 of the Customs Act, 1962 to the importers, and the petitioner was one of the co-noticees. After about three months, the petitioner's custom broker licence was suspended by way of an order of interim suspension passed under Regulation 19(1) of the CBLR. The petitioner submitted their objections and sought for revocation of the order of interim suspension. The respondent issued a show cause notice dated 02.07.2014, under Regulation 20 of the CBLR, calling upon the petitioner to show cause as to why their licence should not be revoked and security deposited by them should not be forfeited or penalty should not be imposed under Regulation 318 of CBLR.
5. As mentioned above, the petitioner had sought for revocation of the interim suspension by filing written submissions on 30.06.2014, which were considered by the Commissioner of Customs and by Order-in-Original dated 06.08.2014, the order of interim suspension was revoked, making it clear that enquiry proceedings under Regulation 20(1) of the CBLR will follow (a show cause notice has been issued on 02.07.2014). Subsequently, another show cause notice dated 31.10.2014 was issued under Regulation 20(1) of the CBLR calling upon the petitioner to show cause as to why their licence should not be revoked. This show cause notice was identical to that of the first show cause notice dated 02.07.2014. The petitioner filed a writ petition before this Court in W.P.No.31596 of 2014 challenging the said show cause notice dated 31.10.2014. By order dated 03.12.2014, taking note of the submissions made on behalf of the petitioner that the second show cause notice is verbatim repetition of the earlier notice dated 02.07.2014, this Court granted an order of interim stay.
6. As the petitioner's custom broker licence was to expire on 27.05.2015, the petitioner submitted an application dated 10.02.2015 for renewal of the licence. The respondent by order dated 02.06.2015, rejected the application for renewal of the licence, which is impugned in W.P.No.17196 of 2015. There has been certain subsequent developments, which may be of relevance, that is, the importers approached the Settlement Commission on being issued with a show cause notice dated 03.03.2014, in which one of the partners of the petitioner was a co-noticee. The Settlement Commission by order dated 23.12.2016, settled the case of the importers based on certain conditions. However, the petitioner's partner did not approach the Settlement Commission and therefore, the show cause notice dated 03.03.2014 was adjudicated against the petitioner and a fine of Rs.75,000/- has been levied. To be noted that this show cause notice is under the Customs Act, 1962. The petitioner has filed an appeal before the CESTAT challenging the order imposing penalty and the appeal is pending since June 2017.
7. Mr.B.Satish Sundar, learned counsel for the petitioner submitted that the impugned show cause notice dated 31.10.2014 is liable to be set aside for the simple reason, that is, it is verbatim repetition of the earlier notice dated 02.07.2014, and though the Court while passing the order in W.P.No.21941 of 2014, quashed the show cause notice on the ground that it is pre-meditated and concluded with liberty to the Department to issue fresh show cause notice keeping the object of issuing a show cause notice in mind, the authority once again issued the very same notice with certain cosmetic changes and therefore, it is liable to be quashed.
8. It was further argued that, as the Commissioner of Customs has already adjudicated the show cause notice and passed an order, no useful purpose would be served in responding to the impugned show cause notice and therefore, the continuance of further proceedings pursuant to the impugned show cause notice is meaningless or unsustainable.
9. Further, the learned counsel for the petitioner contended that Regulation 20(1) mandates that show cause notice under CBLR has to be issued within 90 days of the receipt of the offence report and this having not been done in the petitioner's case, the notice is liable to be quashed.
10. So far as the relief sought for in W.P.No.17196 of 2015 is concerned, the learned counsel for the petitioner contended that the order rejecting the petitioner's application for renewal of licence is arbitrary and in violation of principles of natural justice.
11. Further, it is submitted that there is no conclusive adjudicated material to justify that the conduct of the petitioner is not satisfactory and in the absence of such material, the respondent ought to have renewed the petitioner's licence by taking into consideration that the order of interim suspension was revoked by the Commissioner of Customs by order dated 06.08.2014.
12. Mr.V.Sundareswaran, learned Senior Panel Counsel appearing for the respondents submitted that the petitioner instead of appearing before the respondents and submitting their reply to the show cause notice, has filed this writ petition challenging the show cause notice and the same is liable to be dismissed. In support of such contention, reliance was placed on the decision in the case of Abhishek Mudhra Vs. Additional Director General of Revenue Intelligence reported in 2015 (318) E.L.T. 245 (Mad).
13. It is further submitted that the show cause notice as is proper and it accords with the directions issued in W.P.No.21941 of 2014 and therefore, not liable to be set aside. With regard to the ground raised by the petitioner that the proceedings are barred by limitation, is a point to be canvassed before the authority and the matter has to be adjudicated and the same cannot be considered in a writ petition.
14. Further, the allegations against the petitioner are serious in nature and as observed by the Hon'ble Supreme Court in the case of Commissioner of Customs Vs. K.M.Ganatra & Co. reported in 2016 (332) E.L.T. 15 (SC), the role of a Custom House Agent is very important in the Custom House and the Custom House Agent is supposed to safeguard the interests of both the importers and the Customs, and this aspect will be considered, when the show cause notice is adjudicated.
15. Heard the learned counsels for the parties and carefully perused the materials placed on records.
16. The first aspect to be considered is whether the impugned show cause notice dated 31.10.2014 is liable to be set aside on the ground that it still continues to have the inherent defects, which were pointed out by this Court while setting aside the earlier show cause notice dated 02.07.2014, issued on identical grounds.
17. As noticed earlier, the allegations in the impugned show cause notice and the show cause notice dated 02.07.2014, were identical. The petitioner challenged the said notice dated 02.07.2014 in W.P.No.21914 of 2014 contending that it is not a show cause notice, in that sense, in as much as it has concluded that the petitioner has committed lapses and has been issued in a pre-meditated manner with a closed mind. Certain paragraphs of the show cause notice were referred to, to substantiate the said contention. The Revenue resisted the prayer sought for by the petitioner. The Court by order dated 15.09.2014, took note of the categorical assertions in paragraph 14 of the show cause notice dated 02.07.2014, pointed out that, at the stage of show cause notice, the respondent should only have an open mind and if his mind is closed with predetermined conclusions, the requirement of giving an opportunity to show cause becomes nugatory. Accordingly, the writ petition was allowed and the show cause notice was set aside, leaving it open to the respondent to issue fresh show cause notice, keeping the object of issuing show cause notice in mind. In furtherance to the liberty granted, the respondent issued the impugned show cause notice dated 31.10.2014.
18. The argument of the learned counsel for the petitioner is that, the notice is verbatim repetition of the earlier notice dated 02.07.2014, which was set aside and therefore, the impugned notice has to be quashed.
19. What is to be remembered is that, both the show cause notices are issued on the same set of facts and therefore, there is bound to be repetition of the factual averments. Therefore, the petitioner cannot contend that both notices are verbatim repetition of each other. If it is not so, then also the respondent would be faulted. Therefore, I am not inclined to take note of the said submission for upholding that the impugned show cause notice is not sustainable.
20. What is required to be seen is whether the respondent had borne in mind the object for issuing a show cause notice while issuing the impugned show cause notice. The purpose of issuing a show cause notice is to intimate the party, who has to show cause as to what is the allegation against the said noticee, for which he as to respond. Therefore, show cause notice apart from being clear and unambiguous and specific, it should also be issued with an open mind, which should be manifest on reading of the show cause notice.
21. In the earlier round of litigation, the learned Single Bench referring to a decision of the Hon'ble Andhra Pradesh High Court reported in SBQ Steels Ltd., Vs. Commissioner of Customs, Central Excise and Sales Tax, in [2014] 300 ELT 185 (A.P.), took exception even to use of the words it is clear in the show cause notice. However, the Hon'ble Division Bench of the Delhi High Court in the case of R.R.Financial Consultants Ltd. Vs. Union of India reported in 2014 (33) S.T.R. 12 (Del.), considered what would amount to pre-judging and pre-deciding an issue by an authority at the time when show cause notice is issued. After referring to the decision of the Hon'ble Supreme Court in the case of Oryx Fisheries Private Limited Vs. Union of India reported in 2011 (266) E.L.T. 422 (SC), held that the use of the words it appears that is indicative of prima facie opinion and final determination.
22. In Abhishek Mudhra (cited supra), the Court considered the validity of a show cause notice and identical contention was raised stating that the show cause notice was pre-judged and pre-decided the issue and it was pointed out that even though in the impugned show cause notice, the expression admittedly has been issued in more than one place, those words alone cannot be read to interpret the impugned show cause notice as being pre-conceived or pre-meditated and the allegations in the show cause notice have to be read in its entirety.
23. In KVS Cargo Vs. Commissioner of Customs (General) reported in 2016 (343) E.L.T. 24 (Del.), a show cause notice was impugned before the High Court of Delhi on the ground that it was pre-meditated. The matter arose under CBLR and the show cause notice was issued under Regulation 20 of the CBLR. The Court pointed out that paragraph 26 in the said notice is only putting the petitioner to notice in terms of Regulation 20(1) of the CBLR and the notice further shows that complete opportunity is being granted to the petitioner to furnish evidence and an opportunity of personal hearing is also being granted. The Court distinguished the decisions in Oryx Fisheries Pvt. Ltd., (cited supra) and Siemens Ltd. Vs. State of Maharashtra reported in 2007 (207) E.L.T. 168 (SC) as done in Abhishek Mudhra (supra) and refused to entertain the challenge to a show cause notice.
24. In Additional Director General and another Vs. M.Rathakrishnan and another in W.A.Nos.702 and 703 of 2016 dated 18.04.2017, the Hon'ble Division Bench of this Court after noting several decisions of the Hon'ble Supreme Court, rejected the challenge made by the respondents/writ petitioners to the show cause notice and held that, writ is not maintainable against the show cause notice.
25. Bearing the above legal principle in mind, if the impugned show cause notice is perused, I find that the words used therein from the forgoing, it appears, hence it appears and in view of the above are clear indications that, what has been mentioned in the show cause notice is a proposal, whereby, the respondent proposed to take action in accordance with Regulation 20(1) of the CBLR. Thus, the petitioner has adequate opportunity to put forth all their contentions by answering to the show cause notice and on the grounds raised by the petitioner, the impugned show cause notice cannot be interfered with. Consequently, the writ petition is liable to be dismissed.
26. The other writ petition filed by the petitioner, viz., W.P.No.17196 of 2015 is challenging the order rejecting the petitioner's application for renewal of his custom brokers licence. Admittedly, the petitioner applied for renewal of licence on 10.02.2015, much prior to the date of expiry of the licence viz., 27.05.2015. The impugned order dated 02.06.2015 was passed without affording an opportunity to the petitioner. That would be sufficient to hold that the impugned order is in violation of the principles of natural justice.
27. On a cursory perusal of the impugned order, one gets an impression that it is a detailed and speaking order. However, on a closure scrutiny, it is seen that all the respondent has done, is to extract the factual position referred to the relevant Regulation and in fact, extract them and in the last paragraph held that the antecedents of the Custom Broker is not found to be satisfactory with reference to the obligations mentioned in the CBLR.
28. Admittedly, as on the date, when the petitioner's application for renewal of the custom broker licence was rejected, there was no conclusive finding rendered against the petitioner holding that their conduct was not satisfactory with relevant to the obligation mentioned in the CBLR. I said so, because the petitioner's custom brokers licence was suspended by an order of interim suspension dated 25.06.2014 in terms of Regulation 19(1) of the CBLR. The allegations were identical to that of the allegations contained in the show cause notice dated 31.10.2014. The petitioner filed their written submissions and requested for revocation of the order of interim suspension. The respondent by Order-in-Original dated 06.08.2014, revoked the order of interim suspension. The authority has recorded certain reasons of which one of the reasons being, the offence was detected on 02.09.2013 and the licence was suspended on 25.06.2014, which is almost nine months after detection of the offence and the show cause notice has already been issued under Regulation 20(1) and inquiry proceedings have been initiated by appointing an Inquiry Officer to inquire the professional mis-conduct of the petitioner and accordingly, the order of suspension was revoked. Therefore, whether the petitioner had fulfilled his obligations under the Regulation will be tested while show cause notice dated 31.10.2014 is being adjudicated. Thus, as on date, the allegations against the petitioner remain as allegations and as not culminated in a conclusive findings. In such circumstances, the respondent ought to have renewed the petitioner's licence subject to the outcome of the show cause notice dated 31.10.2014. Therefore, I am unable to agree with the conclusion recorded by the respondent while rejecting the application for renewal stating that the conduct of the custom Broker is not found to be satisfactory, with reference to the obligations mentioned in the CBLR. Thus, the petitioner's application for renewal is to be rejected on the ground that it would amount to pre-deciding the issue, which is subject matter of show cause notice dated 31.10.2014. Therefore, the order rejecting the petitioner's application for renewal of custom brokers licence has to be set aside.
29. In the result,
(i) W.P.No.31596 of 2014 is dismissed and the petitioner is granted thirty days time from the date of receipt of a copy of this order to file their reply to the show cause notice. After which, the respondent shall afford an opportunity of personal hearing and adjudicate the show cause notice in accordance with law.
(ii) W.P.No.17196 of 2015 is allowed, the impugned order is quashed and the respondent is directed to renew the petitioner's custom brokers licence for a period of one year from the date of receipt of a copy of this order and such renewal will be subject to the outcome of the adjudication process of the show cause notice dated 31.10.2014. No costs. Consequently, connected miscellaneous petitions are closed.
14.02.2018 abr Index : Yes/No Speaking/Non speaking order To
1.The Commissioner of Customs (Seaport - Import), Custom House, No.60, Rajaji Salai, Chennai-600 001.
2.The Assistant Commissioner of Customs (Group III) and Enquiry Officer, Office of the Commissioner of Customs (Seaport Import), Custom House, No.60, Rajaji Salai, Chennai-600 001.
3.The Commissioner of Customs Chennai VIII Commissionerate, Custom House, No.60, Rajaji Salai, Chennai-600 001.
T.S.SIVAGNANAM, J.
abr Pre-delivery orders made in W.P.No.31596 of 2014 & W.P.No.17196 of 2015 14.02.2018