Gujarat High Court
Sss Sai Shipping Services Pvt Ltd & vs Union Of India & on 23 July, 2015
Bench: A.J.Desai, A.G.Uraizee
C/SCA/7072/2015 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 7072 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE A.J.DESAI
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
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1 Whether Reporters of Local Papers may be allowed to see the
judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment
?
4 Whether this case involves a substantial question of law as to the
interpretation of the Constitution of India or any order made
thereunder ?
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SSS SAI SHIPPING SERVICES PVT LTD & 1....Petitioner(s)
Versus
UNION OF INDIA & 1....Respondent(s)
=============================================
Appearance:
MR PARESH M DAVE, ADVOCATE for the Petitioner(s) No. 1 2
MR YN RAVANI, ADVOCATE for the Respondent(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE A.J.DESAI
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
Date : 23/07/2015
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE A.J.DESAI)
1. Rule. Mr.Y.N.Ravani, learned advocate waives service of notice of Rule on behalf of respondent No. 2.
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2. With the consent of the parties, the matter is taken up for final hearing.
3. By way of the present petition under Articles 14, 19(1)(g) and 226 of the Constitution of India, petitioner No. 1 a registered and licensed Customs House Agent and petitioner No. 2 being a Director of petitioner No.1 have prayed as under:
[A] That Your Lordships may be pleased to issue a writ of certiorari or any other appropriate writ order or direction quashing and setting aside order F.No.VIII/1308/CusT/CB/201415 dated 28.02.2015 9read with Corrigendum dated 11.03.2015) (Annexure - 'F') with consequential reliefs and benefits to the petitioner company;
[B] That Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, direction or order thereby directing the Commissioner of Customs (Preventive), Jamnagar, his servant and agents to allow the petitioner Company to work as a Customs House Agent at Customs House, Pipavav and to allow the Petitioner Company to use all identity cards issued in their favour for allowing them to work as a CHA at Customs House, Pipavav.
[C] Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the Respondents, their servants agents to allow the petitioner Company to work as a CHA at Customs House, Pipavav thereby staying implementation and execution of order F.No.VIII/1308/CusT/CB/2014 15 dated 28.02.2015 9read with Corrigendum dated 11.03.2015) (Annexure - 'F') [D] An exparte adinterim relief in terms of Para 17(C) above may kindly be granted."
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4. Pursuant to notice issued by this Court, respondent No. 2 has filed two affidavits in reply dated 06.05.2015 and 14.07.2015 opposing grant of any relief prayed by the petitioner.
5. Brief facts arise from the record are as under:
5.1. That one M/s. Fourcee Infrastructure Equipment Pvt. Ltd.
(herein after referred to as 'the importer' for short) imported several containers, which are exempted from the payment of customs duty as per the notification No. 104/94Cus. dated 16 Mar1994. As per the said notification, the importer had executed a bond and had agreed to reexport the said containers within a period of six months from the date of importation.
5.2. On 16.05.2013, the said importer requested the respondent authority i.e. Assistant Commissioner of Customs, Pipavav for clearance of the containers on payment of duty since the said importer wanted the containers to be sold in domestic market instead of reexporting as per his undertaking (bond). It was requested that the company be permitted to allow to sell those containers in domestic market on payment of duty and the clearance be made against the payment of custom duty. It was further clarified that petitioner No. 1, who is Customs House Agent a registered licence holder appointed for completing the required procedure on its behalf.
5.3. The goods were cleared, however, the importer had not paid duty and therefore, respondent No. 2 issued show cause notice dated 29.01.2015 to the importer as well as Custom House Agent (petitioner) and called upon both the noticees to reply the same. The action, which was contemplated in the notice, was to take action against the present petitioner under the provisions of Page 3 of 15 C/SCA/7072/2015 JUDGMENT Section 114A of the Customs Act, 1962 (herein after referred to as 'the Customs Act' for short) and under the provisions of Customs House Agents Licensing Regulations, 2004 (herein after referred to as 'the Regulations, 2004' for short) and particularly, for the violation of Regulation 13(e) of the Regulations, 2004. Noticee were called upon to file their reply within a period of 30 days from the date of receipt of the said notice. As far as the petitioner is concerned, the corrigendum dated 19.02.2015 was issued passed modifying certain paragraphs of the notice and the petitioner was called upon to reply with regard to violation of the regulation 13(d) of the Regulations, 2004 also in addition to alleged breach under the provision of Section 114 of the Customs Act as well as under regulation of 13(e) of the Regulations, 2004.
5.4. On 28.02.2015, the petitioner received an order issued by respondent No.2, by which the petitioner was prohibited to work as Customs House Agent at Customs House, Pipavav under regulation 21 of the Regulations, 2004. Hence, this petition.
6. Mr. Paresh M. Dave, learned advocate for the petitioner would submit that the petitioner has acted, as far as the import of the containers in the present case is concerned, only when the importer had requested the authority and shown his willingness to pay the duty since he wanted to sell the goods in the domestic market. He would submit that he has worked as the agent for filing of bill of entry with regard to the case, which was already imported by the said importer. He would further submit that the showcause notice has been issued on 29.01.2015, by which the noticees were granted 30 days time to file reply and by corrigendum dated 19.02.2015, the petitioner alone was called upon to file the reply to the addition of the certain alleged Page 4 of 15 C/SCA/7072/2015 JUDGMENT violation of the Regulations, 2004. However, the order of prohibition has been passed before expiry of 30 days even if the same is calculated from 29.01.2015 and therefore, the order impugned is bad in law. He would further submit that the respondent authority has not given an opportunity of hearing to the petitioner before passing of the order and the petitioner had no option to plead his case before the authority. He would further submit that the petitioner has been issued licence under the Regulations 3 and 4 of the Regulations, 2004 by Customs Office situated at Mumbai and therefore, the authority only has power to take action against the present petitioner for suspension / revocation of licence. He would further submit that it is alleged in the said notice as well as the order impugned that the petitioner has committed breach of regulation 13(d) and 13(e) of the Regulations, 2004, however, Mumbai office has yet not initiated any proceedings for socalled breach of obligation.
7. Learned advocate for the petitioner would further submit that the respondent authority itself has made it clear in the affidavit inreply that such powers can be exercised only by the Mumbai authority. He would further submit that the order impugned is passed under regulation 21 of the Regulations, 2004 prohibiting the petitioner to work as Customs Agent. However, before passing the order impugned, the petitioner has not been called for or heard and there was no occasion for the petitioner to put forward his case before the authority. He would further submit that the order dated 28.02.2015 has been passed under Regulation 21 of the Regulations, 2004 on ground of breach of Regulations 13(d) and 13(e) of the Regulations, 2004 subsequent to issuance of show cause notice dated 29.01.2015. He would further submit that impugned prohibition order is of a Page 5 of 15 C/SCA/7072/2015 JUDGMENT permanent nature and has permanently restrained the petitioner from working as Custom House Agent, and therefore, he would submit that even if it is expected that the proceedings are of independent nature, other than notice issued in the month of January, 2015, such order should have been passed only after giving an opportunity of hearing to the petitioner. He would further submit that even the order is passed in the month of February, 2015 neither Jamnagar authority, who has issued notice in the month of January, 2015 to the petitioner, has proceeded with the case nor the Mumbai authority has initiated any proceedings under Regulation 20 of the Regulations, 2004 therefore, the petitioner is facing serious difficulties and the order impugned, which is of a permanent nature, comes in the way of the petitioner in carrying out his business activities as Customs Agent in Pipavav area, in absence of any other allegations except nonpayment of customs duty by the importer. Therefore, he would submit that the order impugned is required to be quashed and set aside.
8. On the other hand, Mr.Y.N.Ravani, learned advocate for respondent No. 2 would submit that show cause notice dated 29.01.2015 and the order impugned are independent proceedings. He would further submit that Regulation 20 of the Regulations, 2004 empowers the Commissioner to suspend / revoke the licence prescribed under the provision of Regulation 22 of the Regulations, 2004. However, prohibiting from carrying out any activities as the Custom House Agent, there is no procedure prescribed and therefore, the order, which has been passed with a view to take immediate steps against the Agent, who has not followed the obligations referred in Regulations, 2013, the order has been passed. He would further submit that Page 6 of 15 C/SCA/7072/2015 JUDGMENT by the impugned order dated 28.02.2015, the authority had dealt with the case in detail and prohibited the petitioner from carrying out business activity as an Agent and therefore, there is no need to interfere with the order. By taking us through the affidavitsinreply filed by the respondent No. 2 and the order impugned, he would further submit that the petitioner has not fulfilled the obligation of Regulation 13(d) and 13(e) of the Regulations, 2004.
9. We have heard learned advocates for the respective parties and perused the documents produced by the petitioner and notice as well as order impugned.
10. It is an undisputed fact that the containers, which were to be re exported by the importer, were exempted from the payment of duty under the notification dated 16.03.1994. Since the petitioner did not reexport the same within a period of six months, he requested the respondent authority to permit him to sell the same in the domestic market on payment of duty. A letter dated 16.05.2013 makes it very clear that the importer had shown readiness and willingness to pay the duty or selling the containers in domestic market. It is true that the petitioner was appointed as an Agent for filing the manual bill of entry and to complete the customs procedure.
The first show cause notice dated 29.01.2015 as well corrigendum dated 19.02.2015 are concerned, the same have been issued to the importer as well as the petitioner. The petitioner were called upon to reply the show cause notice. Para 16 of the the show cause notice reads as under:
"16. Now, therefore, M/s. Fourcee Infrastructure Page 7 of 15 C/SCA/7072/2015 JUDGMENT Equipment Pvt. Ltd., having their office at Laxmi Mall, Laxmi Indstrial Estate, New Link Road, Andheri (W), Mumbai, Shri Rajesh Vihalka, Chairman of the said party and CHA M/s. SSS Sai Shipping Pvt. Ltd., are hereby called upon to show cause notice to the Commissioner of Customs (Preventive), Jamnagar having her office at Sharda House, Opp. Panchavati, Bedi Bunder Road, Jamnagar, within 30 days from the date of receipt of this show cause notice as to why:
[i] 100 containers covered under Bills of Entry No. F002/1314 dated 12.06.2013 valued Rs.14,35,17,541/ involving Customs duty of Rs.4,14,07,451/ should not be confiscated under Section 111(O) of the Customs Act, 1962;
[ii] Customs duty of Rs.4,14,07,451/ (Rupees Four Crore Fourteen Lakh Seven Thousand Four Hundred Fifty One Only) should not be confirmed and demanded under Section 18(2) of the Customs Act, 1962 / the bond executed during the provisional assessment, read with proviso to Section 28(4) of the Customs Act, 1962 read with Section 12 ibid in respect of 100 containers seized as CWC, Kalamboli, from M/s. Fourcee Infrastructure Equipment Pvt. Ltd., for the goods imported under Notification No. 104/1994, and for misusing the said Notification;
[iii] the interest of the aforesaid Customs Duty should not be demanded under Section 28AA of the Customs Act, 1962;
[iv] penalty should not be imposed on M/s.
Fourcee Infrastructure Equipment Pvt. Ltd., under Section 112(a) as well as Section 114A of Customs Act, 1962;Page 8 of 15
C/SCA/7072/2015 JUDGMENT
[v] penalty should not be imposed on Shri
Rajesh Vihala, Chairman of M/s. Fourcee Infrastructure Equipment Pvt. Ltd., under Section 112(a) of the Customs Act, 1962; and [vi] penalty should not be imposed on the Customs house agent, M/s. SSS Sai Shipping lines, under Section 114A of the Customs Act, 1962 and separate action for violating Regulation 13(e) of Customs House Agents Licensing Regulations, 2004 should not be initiated."
11. So far as Para - 16 of the notice is concerned, the present petitioner was called upon to reply for alleged breach of regulation 13(e) of the Regulations, 2004. The petitioner was also asked to reply for not imposing penalty under the provision of Section 114 of the Customs Act.
12. The corrigendum dated 09.02.2015 reads as under :
CORRIGENDUM Sub : Show Cause Notice No.VIII/10240/Commnr/O&A/2014 dated 29.01.2015 issued to M/s Fourcee Infrastructure Equipments Pvt. Ltd, Laxmi Mall Industrial Estate, New Link Road, Andheri(W) Mumbai - 400053 and others.
(i) In Paragraph 15 of the Show Cause Notice No.VIII/10240/Commnr/O&A/2014 dated 29.01.2015 issued by the Commissioner, Customs, Jamnagar for the words "Further, M/s. SSS Sai Shipping Lines, CHA, engaged in the customs work failed to advice M/s. Fourcee Infrastructure Equipments Ltd., about the provisions of the Notification No. 104/94. Later on when the party filed the Bills Page 9 of 15 C/SCA/7072/2015 JUDGMENT of entry, CHA, failed to impress upon the party to pay the Customs duty due on them within the stipulated time along with interest. As per the Regulation 13(2) of Customs House Agents Licensing Regulations, 2004, a Custom House Agent shall exercise due deligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage. As mentioned above, the CHA failed to guide the party to pay up the Customs duty within the stipulated time period of filing the Bills of entry, which resulted in loss of revenue to the extent of Rs.4,14,07,451/. For the acts omission and commission on the part of CHA, they rendered themselves liable for penalty under Section 114A of the Customs Act, 1962.
Also separate action against the CHA, M/s SSS Sai Shipping Lines, should be initiated for violating Regulation 13(e) of Customs House Agents Licensing Regulations, 2004"
The following shall be substituted "Further, M/s SSS Sai Shipping Lines, CHA, engaged in the customs work failed to advice M/s. Fourcee Infrastructure Equipments Ltd., about the provisions of the Notification No. 104/94. Later on when the party filed the Bills of entry, CHA, failed to impress upon the party to pay the Customs duty due on them within the stipulated time along with interest. Also CHA failed to advise noticeeto comply with the provisions of the Act. In case of noncompliance, the CHA shall bring the matter to the notice of the department. As per the Regulation 13(d) and 13(e) of the Customs House Agents Licensing Regulations, 2004, a Custom House Agent shall advise his client to comply with the provisions of the Act and in case of non compliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Page 10 of 15 C/SCA/7072/2015 JUDGMENT Assistant Commissioner of Customs and he shall exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage. As mentioned above, the CHA failed not only to guide the party to pay up the Customs duty within the stipulated time period of filing the Bills of entry but also failed to bring the matter to the notice of the department, which resulted in loss of revenue to the extent of Rs.4,14,07,451/. For the Acts ommission and commissioner on the part of CHA, they rendered themselves liable for penalty under Section 114A of the Customs Act, 1962. Also separate action against the CHA, M/s. SSS Sai Shipping Lines, should be initiated for violating Regulation 13(d) and 13(e) of the Customs House Agents Licensing Regulations, 2004 (now Regulation 11(d) and 11(e) of the Customs Brokers Licensing Regulations, 2013)."
(ii) In Paragraph 16(iv) of Show Cause Notice No.VIII/10240/Commnr/O&A/2014 dated 29.01.2015 issued by the Commissioner, Customs, Jamnagar for the words "(vi) penalty should not be imposed on the Customs house agent, M/s. SSS Sai Shipping lines, under Section 114A of the Customs Act, 1962 and separate action for violating Regulation 13(e) of the Customs House Agents Licensing Regulations, 2004 should not be initiated;"
The following shall be substituted "(vi) penalty should not be imposed on the Customs House Agent, M/s. SSS Sai Shipping Lines under Section 114A of the Customs Act, 1962 and separate action for violating Regulation 13 (d) and 13(e) of the Customs House Agents Licensing Regulations, 2004 (now Page 11 of 15 C/SCA/7072/2015 JUDGMENT Regulation 11(d) and 11(e) of the Customs Brokers Licensing Regulations, 2013), should not be initiated;"
13. Though the arguments have been advanced by Mr. Paresh M. Dave, learned advocate with regard to applicability of penalty under Section 114A of the Customs Act to the petitioner, who is an Agent, we would not like to deal with the same since the same is pending before the authority for adjudication. The impugned order, by which, the petitioner has been prohibited to work as a Custom House Agent in Pipavav area, the authority has considered the provisions of Regulations 13(d) and 13(e) of the Regulations, 2004, which are in Paras - 13 and 14 of the order impugned, which read as under:
"13. Further, M/s. SSS Sai Shipping Lines, CHA engaged in the customs work failed to advice M/s. Fourcee Infrastructure Equipments Ltd., about the provisions of the Notification No. 104/94. Later on when the party filed the Bills of entry, CHA failed to impress upon the party to pay the Customs duty due on them within the stipulated time along with interest. As per the Regulation 13(d) and 13(e) of Customs House Agents Licensing Regulations, 2004, a Custom House Agent (Custom Broker) shall advise his client to comply with the provisions of the Act and in case of noncompliance, shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner Customs and he shall exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage. As mentioned above, the CHA failed not only to guide the party to pay up the Customs duty within the stipulated time period of filing the Bills of entry but also failed to bring the matter to the notice of the department, which resulted in loss of revenue to the extent of Rs.4,14,07,451/. In view of the Page 12 of 15 C/SCA/7072/2015 JUDGMENT above, the said CHA has failed to fulfill the obligation under Regulation 13(d) and 13(e) of the CHALR, 2004 and thereby rendered themselves liable for action under the provisions of CHALR, 2004.
14. In view of the above, I hold htat the intimation of M/s. SSS Sai Shipping Pvt. Ltd.A304, Classique Centre, Plot No. 26, Mahal Industrial Estate, Off Mahakali Cross Road, Andheri(E), Mumbai based on their Regular CHA Licence No. 11/1830 valid upto 17.12.2022 issued by the Commissioner of Customs (General), Mumbai, registered under Regulation 7(2) of CBLAR, 2013 (Regulation 9(2) of CHALR, 2004) to work as CHA at Customs House Pipavav is liable to be quashed and the said CHA is required to be prohibited to work at the Customs House Pipavav in terms of Regulation 21 of the CHALR, 2004."
14. If the regulation 13(d) and 13(e) of the Regulations, 2004 are perused, the question with regard to the alleged breach of obligations by the petitioner is pending before the authority pursuant to show cause notice dated 29.01.2015 and relying the same ground, which is yet not been finalized, the impugned order has been passed and the petitioner has been prohibited to work as Customs House Agent. The operative part of the order, which reads as under:
"1 I prohibit M/s. SSS Sai Shipping Pvt. Ltd, A304, Calassique Centre, Plot No. 26 Mahal Industrial Estate, Off Mahakali Cross Road, Andheri (E) Mumbai to work as the CHA at Customs House Pipavav under Regulation 21 of CHALR 2004.
2. Pursuant to para 1 above, all Identity Cards issued to the CHA, their directors, partners, employees etc. shall be surrendered to the HQ office, Jamnagar immediately."Page 13 of 15
C/SCA/7072/2015 JUDGMENT
15. It is pertinent to note that the Mumbai office, who has issued licence and who is empowered to take action under the provision of Regulation 20 of the Regulations, 2004, has not initiated any proceedings against the petitioner. The respondent authority, who has issued notice to the petitioner in January, 2015 and corrigendum in February, 2015 has passed order impugned after about 28 days from the date of issuance of first notice. The notices which have been issued in the month of January, 2015 are yet not decided and if the order is perused, the same is of permanent nature, which would in our opinion affects the fundamental rights of a citizen to carry out business in accordance with law. The proceedings are lingering before the authority on the same ground and therefore, even if the arguments advanced by Mr. Y.N.Ravani, learned advocate, the both the proceedings are different in nature are accepted, it is expected from the authority that before passing of such type of orders, a citizen should be heard even if there is no specific provisions under the Regulations. A citizen cannot be denied his rights to carry out his business for indefinite period on those grounds and on the same set of facts when proceedings are going on before the same authority.
16. Hence, we are of the opinion that the present petition is required to be allowed and accordingly, is allowed. The order impugned dated 28.02.2015 in this petition is hereby quash and set aside. Rule made absolute. No order as to costs. Direct service is permitted.
(A.J.DESAI, J.)
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C/SCA/7072/2015 JUDGMENT
(A.G.URAIZEE,J)
*Kazi...
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