Custom, Excise & Service Tax Tribunal
M/S. D. Thimmeswara Rao vs Commissioner Of Customs (Port Import) on 12 November, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
C/40092 to 40095/2013
(Arising out of Order-in-Original No. 18845, 18846, 18847 and 18848/2012 all dated 23.5.2012 passed by the Commissioner of Customs (Seaport Import) Chennai)
For approval and signature:
Honble Shri P.K. Das, Judicial Member
Honble Shri Mathew John, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether order is to be circulated to the Departmental authorities?
1. M/s. D. Thimmeswara Rao
2. M/s. Setwin Shipping Agency
3. M/s. N. Taylor
4. M/s. Lotus International Services Appellant
Vs.
Commissioner of Customs (Port Import) Respondent
Appearance Shri S. Murugappan, Advocate, for Appellants No. 1, 3 & 4 Shri B.R. Tripathi, Advocate for Appellant No. 2 Shri R. Gurunathan, Addl. Commissioner (AR) for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Honble Shri Mathew John, Technical Member Date of Hearing: 26.09.2013 Date of Pronouncement: 12.11.2013 Final Order No. 40566 to 40569/2013 Per P.K. Das A common issue is involved in these appeals and therefore all are taken up together for disposal.
2. All the appellants are Customs House Agents (in short, CHA) under Customs House Agents Licensing Regulations, 2004 (In short, CHALR, 2004) framed under Section 146 of the Customs Act, 1962. By the impugned orders, the Commissioner of Customs (Seaport Import), Chennai ordered continuation of the suspension of the Customs House Licence under Regulation 20(3) of the CHALR, 2004, against which, the appellants have filed these appeals.
3. The learned counsel on behalf of the appellants submits that in all the cases it has been alleged that there is a mis-declaration of baggage of different passengers during the period from June to October 2009. It is submitted that in October 2011, statements of the appellants were recorded. On 25.4.2012, suspension orders were issued under Regulation 20(2) of the CHALR, 2004. Then, by the impugned orders, all dated 23.5.2012, suspension was confirmed under Regulation 20(3) of the CHALR, 2004. He submits that the appellant challenged the suspension orders before the Honble Madras High Court by way of filing writ petition. By judgment dated 2.7.2012, the Honble Single Judge disposed of the writ petition with a direction to the authorities to follow the procedures under Regulation 22(2) of the CHALR, 2004 and the impugned orders shall be kept in abeyance till disposal of the matter. Revenue filed appeal before the Honble Division Bench of the High Court. By judgment dated 4.1.2013, the Honble Division Bench directed the appellants to file appeals before this Tribunal under Section 129A(1) of the Customs Act, 1962 within a period of two weeks from the date of receipt of the order.
3.1 He submits that despite the direction of the Honble Single Judge of the Honble High Court by order dated 2.7.2012 the authorities had not initiated inquiry proceedings under Regulation 22. He further submits that the Honble High Court directed to follow the inquiry under Regulation 22(2) of the CHALR, 2004 which is linked with sub-Regulation (1) of Regulation 22 insofar as requirement of issue of notice in writing to the CHAs within 90 days from the date of receipt of the offence report by the Commissioner of Customs. It is stated that in the present case no notice was issued till date, despite the request of the appellants.
3.2 It is submitted that the adjudicating authority passed the impugned orders without considering the facts of the case in proper manner, insofar as Regulation 20(2) would apply in appropriate cases where immediate action is necessary. In the present appeals, the allegation of mis-declaration of the baggage of different passengers is during the period June to October 2009 and the suspension order was issued on 25.4.2012 and subsequently confirmed by order dated 23.5.2012 after about three years. Thus, there is no need to invoke the special power under Regulation 20(2) of CHALR, 2004.
3.3 He relied upon the decision of the Honble Delhi High Court in the case of Falcon Air Cargo and Travels (P) Ltd. Vs. Union of India 2002 9140) ELT 8 (Del.) He also submitted a synopsis with case laws and documents.
4. The learned AR on behalf of the Revenue submits that the Commissioner directed continuation of the suspension order in exercise of powers under Regulation 20(3) of the CHALR, 2004 after considering the facts of the case and following the procedure stipulated therein insofar as personal hearing was granted on 9.5.2012 and the appellants also filed their written submission. Thus, the order passed under Regulation 20(3) is legal and proper.
4.1 He further submits that the inquiry proceedings were initiated by the inquiry officer but the appellants are not cooperating with the inquiry officer by adopting dilatory tactics.
4.2 He relied upon the following decisions:-
(a) Fast Track International Vs. Commissioner of Customs 2011 (266) ELT 183
(b) Maharaja Cargo Vs. Commissioner of Customs 2012 (284) ELT 409
(c) Commissioner of Customs Vs. H.B. Cargo Services 2011 (268) ELT 448 (AP)
5. After hearing both sides and on perusal of the records, it is seen from the impugned orders that the appellants are CHAs handling UB Bills of different passengers through Chennai Aircargo Complex. It has been alleged that there are some falsifications in the documents produced by the CHA for baggage clearance during the period June to October 2009. The statements were recorded only in October 2011. After receipt of the offence report, the Commissioner immediately issued suspension order under Regulation 20(2) of the CHALR, 2004. The Commissioner after complying with the procedure insofar as personal hearing was granted and the appellants filed representation and thereafter the impugned orders were passed directing continuation of the suspension of the CHAs under Regulation 20(3) of the CHALR, 2004.
5.1 There is no dispute that Regulation 20(2) of the CHALR would apply in respect of suspension of licence of CHA in appropriate cases where immediate action is necessary and where an enquiry against such agent is pending or contemplated. Thereafter, the Commissioner of Customs, in terms of Regulation 20(3) after hearing the CHA may pass such order either revoking the suspension or continuing it. In the present cases, by the impugned orders all dated 23.5.2012 issued under Regulation 20(3), the Commissioner of Customs directed continuation of suspension. The Honble Single Judge of the Madras High Court by judgment dated 2.7.2012 directed the authorities to follow the procedure under Regulation 22(2) of the CHALR, 2004. It appears from the judgment dated 4.1.2013 of the Honble Division Bench of the High Court in Revenues appeal, the learned counsel for the Revenue submitted that as against the impugned order dated 23.5.2012, a statutory alternative remedy of appeal is provided under Section 129A(1) of the Customs Act, 1962. In this context, the Division Bench of the High Court directed the appellants to file appeal before the Tribunal.
6. It is significant to note that both the suspension orders dated 25.4.2012 and 23.5.2012 were issued under Regulation 20(2) and 20(3) respectively in the perspective of an enquiry is pending or contemplated against CHA. The procedure of enquiry is envisaged under Regulation 22 and the relevant provisions of the said Regulation are reproduced below:-
REGULATION 22. PROCEDURE FOR SUSPENDING OR REVOKING LICENCE UNDER REGULATION 20. - (1) The Commissioner of Customs shall issue a notice in writing to the Customs House Agent [within ninety days from the date of receipt of offence report, stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said Customs House Agent to submit within thirty days], to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs House Agent desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs.
Provided that the procedure prescribed in regulation 22 shall not apply in respect of the provisions contained in sub-regulation (2) to regulation 20.
(2) The Commissioner of Customs may, on receipt of the written statement from the Customs House Agent, or where no such statement has been received within the time-limit specified in the notice referred to in sub-regulation (1), direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs to inquire into the grounds which are not admitted by the Customs House Agent.
(3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs shall, in the course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the inquiry in regard to the grounds forming the basis of the proceedings, and he may also put any question to any person tendering evidence for or against the Customs House Agent, for the purpose of ascertaining the correct position.
7. On a plain reading of Regulation 22(2), it is clear that the Commissioner of Customs upon receipt of the reply to notice issued under sub-Regulation (1) of Regulation 22, would direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs to inquire The learned Advocate rightly submitted that sub-Regulation (2) of Regulation 22 is linked with sub-Regulation (1) of Regulation 22. We find that despite the direction of the Honble Single Judge of the High Court vide order dated 2.7.2012 to follow the procedure under Regulation under 22(2), no notice was issued till date.
8. In the case of Fast Track International (supra), as relied upon by the learned Authorized Representative for the Revenue, the Tribunal observed that a show-cause notice under Rule 22 is required to be issued. In a recent decision, this Tribunal in the case of Manjunatha Shipping Services Ltd. Vs. Commissioner of Customs (Import), Chennai vide Final Order No. 40461/2013 dated 10.10.2013 observed that show-cause notice is necessary for the purpose of inquiry under Regulation 22 of the CHALR, 2004. The relevant portion of the order in the case of Manjunatha Shipping Services Ltd. (supra) are reproduced below:-
9. Regulation 22(1) is applicable for issuing both suspension order and revocation order. However Regulation 20(2) authorizes the Commissioner of Customs to suspend the licence of a CHA in emergent situations without following the procedure under Regulation 22(1). It is very obvious that immediate suspension of license is permitted only when an enquiry is pending is contemplated. The non obstante clause Regulation 20(2) makes an exception only in the matter of suspension and not in the matter of revocation. So, it is implied that such inquiry has to be completed, within the time frame prescribed in various sub-regulations of Regulation 22 and a final view in the matter of revocation of license is to be taken.
10. It may be noted that investigation to unearth evidence required to issue SCN and inquiry as envisaged in Regulation 22(1) are two distinct processes. Investigation is to be done by Revenue using its powers to unearth documents and to record statements which process apparently has been done in this case substantially even before the suspension order was passed and investigating authority had given report and on that basis suspension order was passed. Now, the next stage is the enquiry as envisaged in Regulation 22 (1). This can commence only after issue of a Show Cause Notice, as envisaged in Regulation 22(1), which has not been done in this case so far. We are of the view that where the immediate suspension has been ordered under the provisions Regulation 20(2) and thereafter the procedure would follow procedure for enquiry under Regulation 22(1), which starts from the issue of notice, has to be followed. We have already discussed above that such enquiry has to start with the issue of Show Cause Notice and such process is different from investigative process required to unearth evidences.
11. The argument of the appellant that the order does not state that an enquiry is pending or contemplated may not have seriously vitiated the order if the facts proved other-wise and it would depend upon facts and circumstances of each case. In the present case, we find that after two years from the date of suspension not even the show cause notice, is issued for initiation of enquiry which should have been followed in the case of an inquiry pending or contemplated on passing of the suspension order dated 02.09.2011, as required under Regulation 22 (1). At this stage, we cannot accept that such a step is still being contemplated. No person is right to carry on his profession can be stopped for a prolonged period through the means of a suspension order. Such an approach is against provisions in Regulations 20 and 22 of CHLAR. So we are of the view that the impugned order suspending the license of the appellant is no longer sustainable in view of the decision of Hon. Madras High Court in the case of CC Vs. Ganesh Shipping Agency-2009 (245) ELT 120 (Mad). So we set aside the impugned order and allow the appeal.
9. The Honble Delhi High Court in the case of Falcon Air Cargo (supra) observed that suspension would obviously meant that licence would be inoperative for a particular period and the order of revocation would mean that the licence is totally inoperative in future. The Honble High Court further observed that the effect of the action vis-`-vis right to carry on trade or profession in the background of Article 19(I)(g) of the Constitution has to be noted in the case of suspension of licence. We find that the Tribunal in the case of Manjunatha Shipping Services (supra), set aside the suspension order, where no notice was issued even after two years of suspension order. Hence it is depending upon the facts and circumstances of each case. In the present case, suspension orders were issued on 25.4.2012 under Regulation 20(2) and despite the order dated 2.7.2012 of the Honble Single Judge of the High Court, no notice was issued till date. In our considered view, the decision of the Tribunal in the case of Manjunatha Shipping Services (supra) would apply in the facts and circumstances of the present appeals. .
10. The learned AR for Revenue relied upon the decision of the Tribunal in the case of Fast Track International (supra). In that case, the Tribunal observed that there may be cases for interfering with the order of suspension only if there is undue delay in conduct of further investigation and further proceedings and when the delay not been attributable to the appellant. It is further observed that no details are available on further proceedings and the reason or delay, if any. In the present case, we find that the appellants requested to issue of notice as required under Regulation 22(1) of the CHALR, 2004 despite the order of the Honble High Court, no notice was issued till date.
10.1 The decision in Maharaja Cargo (supra) is a single Member decision. In the case of H.B. Cargo (supra), the issue was revocation of licence which would not apply in the present case, as the issue before us is suspension of licence.
11. After considering the facts and circumstances of the case and particularly, despite the order dated 2.7.2012 of the Honble Single Judge of the High Court, the procedure of Regulation 22(2) was not followed insofar as no notice was issued till date as stated above and therefore continuation of suspension orders by the impugned orders dated 23.5.2012 under Regulation 20(3) of the CHALR, 2004 are not justified and the impugned orders are set aside.
12. Considering the submission of the learned AR for the Revenue that enquiry proceeding was initiated, we make it clear that this order would not affect the enquiry proceeding, if any, as provided under the law. Accordingly, all the appeals filed by the appellants are allowed.
(Pronounced in open court on 12.11.2013)
(Mathew John) (P.K. Das)
Technical Member Judicial Member
Rex
10