Customs, Excise and Gold Tribunal - Delhi
Poonam Cargo Services vs Collector Of Customs on 15 December, 1998
Equivalent citations: 1999(110)ELT696(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. By the impugned order dated 31-8-1998, the Commissioner of Customs, Delhi has held as under :
Whereas an enquiry against M/s. Poonam Cargo Services, E-147, 2nd floor, Lajpat Nagar-I, New Delhi-110024 holder of regular CHA licence No. 35/87 valid upto 5-5-2001 of Delhi Custom House is contemplated with regard to clearances of I.V. Cannula valued at Rs. 1,22,60,000/- for misclas-sification, misdeclaratfon as "Disposable and non disposable cannula for aorta, Vene Cause and similar veins and blood vessels" in terms of G.E. No. 121 notification No. 23/98-Cus. with a view to wrongly avail benefit of exemption notification and clear goods at Nil rate of duty on the Bill of Entries No. 218025 dated 21-8-1998,110737 dated 29-7-1998 and 215634 dated 1-8-1998.
Over and .above this, the statement of Shri Sunil Nanda and Sh. Rajeev Malik was recorded under Section 108 of the Customs Act, 1962, in which they admitted the facts of misclassification; misdeclaration on the said Bill of Entries filed by him on behalf of the importer.
Thus; while doing so, the CHA - M/s. Poonam Cargo Services, E-147, 2nd floor, Lajpat Nagar-I, New Delhi-110024 has contravened the provisions of Regulations (14) (d)(e) and (1) of CHALR' 1984.
Now, therefore, I, Vijay Zutshi, Commissioner of Customs (General), New Delhi in exercise of powers conferred upon me under Regulation 21(2) of CHLR' 84 hereby suspend CHA Licence No. 35/87 of Delhi Custom House, of the said CHA - M/s. Poonam Cargo Services, E-147,2nd floor, Lajpat Nagar-I, New Delhi-110024 with immediate effect and until further orders.
This order is issued without prejudice to any other action being taken/proposed to be taken against the said CHA/their employees under the provisions of Customs Act, 1962 or any other law for the time being in force.
2. Learned Counsel for the appellants, Shri L.P. Asthana submits that the power under Regulation 21(2) of the Customs House Agents Licencing Regulations, 1984 is of an exceptional nature and is to be exercised only where immediate action is considered necessary; that the order must state grounds for immediate action and since the impugned order does not state any grounds for exercise of this power, it requires to be set aside. He submits that the issue as to whether there has been any wrong availment of benefit of exemption under Notification 23/98 is a question for consideration after issue of show cause notice and reply thereto and it is not possible at this stage to hold that the goods covered by the 3 Bills of Entry enumerated in the impugned order do not fall within the description contained therein or have been misclassified or misdeclared and in any event, passing of an order under Regulation 21(2) is not justified. He relies upon the decision of the Calcutta High Court in the case of N.C Singha & Sons v. Union of India reported in 1998 (104) E.L.T. 11 (Cal.), Madras High Court decision in the case of East West Freight Carrier P. Ltd. reported in 1995 (77) E.L.T. 79 (Mad.) and the decisions of the Tribunal reported in 1993 (68) E.L.T. 419 in the case of Eagle Shipping (India) Services, 1994 (50) ECR 319 in the case of Trinity Shipping and Allied Services and 1998 (98) E.L.T. 275 in the case of Vikas Shipping Agency v. Collector of Customs, Bombay in support of his arguments and prays that the impugned order may be set aside and the appeal allowed. Opposing the prayer, learned DR, Shri Nayyar contends that the order discloses the reason for immediate action viz. misclas-sification and misdeclaration on the Bills of Entry filed by the appellants on behalf of the importer, resulting in contravention of the provisions of Regulation 14(d), (e) and (1) of Custom House Agents Licencing Regulations and cites the decision of the Hon'ble Calcutta High Court in the case of Collector of Customs v. Jeena and Company reported in 1990 (45) E.L.T. 72 (Cal.) to support his case. He, therefore, pleads that the order of suspension of CHA Licence may be sustained and the appeal rejected.
3. We have carefully considered the submissions of both sides. The suspension of a CHA Licence is not sustainable unless the suspension order indicates application of mind by the Commissioner to the aspect whether immediate action was necessary pursuant to contravention by the Clearing Agent, as held by the Hon'ble Madras High Court in the case of East West Freight Carriers P. Ltd reported in 1995 (77) E.L.T. 79 (Mad.). In this case the CHA's contention that the order passed under Regulation 21(2) of the CHALR 1984 was bad in law in the sense it did not indicate that the Collector had found opinion to state that immediate action was necessary to suspend the Licence to the petitioner pending enquiry contemplated for contraventions, was accepted by the High Court which held that the power to suspend the Licence is to be exercised where immediate action is necessary, and quashed the order of suspension as a plain reading of the same did not show that the Collector had applied his mind to consider whether immediate action was necessary in the case. The same view has been taken by the Hon'ble Calcutta High Court in the case of N.C. Singha and Sons v. Union of India reported in 1998 (104) E.L.T. 11 (Cal.) wherein the Court has held that:
'Undoubtedly a plain reading of the Regulation 21(2) clearly stipulates that the requirement to take immediate action is a sini qua non to the suspension of a licence under Regulation 21(2) because such suspension is not by way of any punishment, as is contemplated by Regulation 21(2), but is required to cater to a situation warranting immediate action. The purpose of resorting to immediate suspension of a licence because of some immediate action is to immediately stop the activities of the clearing agent so as to disable him from taki..,' any further action in the matter since, under a particular situation and under some given set of circumstances, the requirement of immediate action may demand that the clearing agent may be immediately required to be prevented from working any further. The minimum that required by the Commissioner to enable him to exercise such power is the spelling out of the circumstances in the order warranting the need to take such immediate action and to actually say that immediate action is indeed required in the matter. What we see from the impugned order dated 9th June, 1998 is that the expression "immediate action" itself is missing. That apart, what we find from the preamble, recitals and facts stated in the order is that the circumstances did not warrant the taking of immediate action in terms of Regulation 21(2) of the 1984 Regulation.' 3.1 The Tribunal has also been taking the same view as seen from its orders in the case of Eagle Shipping (India) Services v. Collector of Customs, Bombay reported in 1993 (68) E.L.T. 419 which has been followed in the case of Trinity Shipping and Allied Services P. Ltd. v. Collector of Customs, Kandla reported in 1994 (50) ECR 319.
4. Applying the ratio of the above judgments and orders to the present case, we do not find any indication of the necessity for immediate action and the alleged contravention of Regulation 14 is the subject matter for enquiry under Regulation 23 and does not by itself constitute the requirement of immediate action under Regulation 21(2).
4.1 The decision of the Hon'ble Calcutta High Court in the case of Collector of Customs v. Jeena and Company reported in 1990 (45) E.L.T. 72 (Cal.) relied upon by the learned DR is distinguishable - in that case the suspension order stated as under:
2. Under the circumstances two senior personnel of the writ petitioner No. 1 Sri K.K. Bhattacharji and Janardan Thakur were arrested. The Collector of Customs G. Sarangi issued on 26th August 1986 an order suspending the writ petitioner from further acting as a Customs House Agent pursuant to the licence granted to M/s. Jeena & Co. to act as a Customs House Agent with immediate effect. In the said notice it was stated that a consignment of export cargo (charash) weighing about 230 kg. gross and 193 kg. net valued at approximately 11.50 lacs which is equivalent to one crore and 15 lacs approximately in the international drug had been seized on 21st August 1986 at shed No. 4 Netaji Subhas Dock, Calcutta. It had further been stated in the said order that M/s. Jeena & Co. acting as the agent on behalf of the exporter J. Sale for clearance of the said consignment from the customs had filed a shipping bill dated 18th August 1986 declaring the contents of the consignment as tourist purchases. Upon preliminary enquiry it was indicated in the said order itself that it appeared that M/s. Jeena & Co. were prima facie involved in the admitted export of the said narcotics in the manner as indicated in the said order itself i.e. that M/s. Jeena & Co. were not in possession of any letter of authorisation issued by the exporter as required under Clause (a) of Regulation 14 of the Customs House Agents Licencing Regulation of 1984. They had not forfeited the passport of the exporter before undertaking the goods on his behalf nor any attempt had been made by M/s. Jeena & Co. to verify the address of the customer. Sri K.K. Bhattacharji, senior cargo executive of M/s. Jeena & Co. handled the consignment and had the original certificate prepared in his office and had it signed by one Sri Tapas Krishna Chakrabarty, who was a transport contractor and handled cargo for M/s. Jeena & Co. It was subsequently stated that during search of the premises of M/s. Jeena & Co. and rubber stamp of the supplier at Srinagar had been recovered which according to the Collector of Customs, Sri G. Sarangi, appears to have been used for embossing the country of origin certificate prepared for the clearance of the aforesaid consignment. It had further been stated in the said order that both Mr. J. Thakur of M/s. Jeena & Co. and Mr. K.K. Bhattacharji had been arrested in connection with the said seizure and had been remanded to Jail Custody by the Judicial Magistrate. On that basis the Collector of Customs stated in the order that M/s. Jeena & Co. had failed to discharge their responsibilities as a Customs House Agent in appropriate manner and also aided and abetted the said attempt to export and said consignment of Narcotics and inasmuch as an action to hold an enquiry was being contemplated. In these circumstances he ordered suspensions of the Customs House Agent Licence granted to M/s. Jeena & Co. to act as a Customs House Agent with immediate effect. It had further been mentioned in the said order until further orders in terms of Clause (2) of Regulation 21 of the said Customs House Agents Licencing Regulation of 1984 was passed.
In para 10 of the Order, the Court came to the objective satisfaction that the order itself discloses that the matter could not brook any delay and the ground of immediacy, was also spelt out in the order itself and, therefore, the Court set aside the Single Judge's order quashing the suspension order and allowed the writ appeal of the Revenue. In the case before us, however, we are not satisfied that the suspension order discloses that the matter was so urgent as to warrant action under Regulation 21(2) and the ground of immediacy is also not spelt out therefrom.
5. In the result, following the ratio of the orders of the Hon'ble Madras High Court in the case of East West Freight Carriers and the Hon'ble Calcutta High Court's decision in the case of N.C. Singha & Sons, we set aside the impugned order and allow the appeal. We, however, make it clear that this order does not preclude the Commissioner from exercising her powers under Regulation 21(2) of the CHALR 1984 in accordance with law. Order to be given dasti.