Custom, Excise & Service Tax Tribunal
Eltece Associates vs Commissioner Of Customs (Port-Import) on 25 June, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal Nos.C/40446/2013 & C/40447/2013
[Arising out of Order-in-Original No.20286/2013 dt. 15.2.2013 and Order in F.No.R-289/CH dt. 21.1.2013 passed by the Commissioner of Customs (Seaport-Import) Chennai]
For approval and signature :
Honble Shri P.K. Das, Judicial Member
Honble Shri R. Periasami, 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 ? :
Eltece Associates Appellant
Versus
Commissioner of Customs (Port-Import)
Chennai Respondent
Appearance:
Shri A.K. Jayaraj, Advocate For the Appellant Shri C. Dhanasekaran, Commissioner (AR)For the Respondent CORAM : Honble Shri P.K. Das, Judicial Member Honble Shri R. Periasami, Technical Member Date of Hearing : 25-06-2014 Date of Decision : 25-06-2014 FINAL ORDER No.40533-40534/2014 Per P.K. Das
1. Common issue involved in these appeals and therefore both are taken up together for disposal.
2. The appellant is a holder of Regular Custom House Agents License issued under the provisions of Custom House Agents Licensing Regulations (CHALR), 2004. By order dt. 21.1.2013, the Commissioner of Customs (Imports), Chennai in exercise of powers conferred under the provisions of Regulation 20 (2) of CHALR 2004 suspended the CHA license with immediate effect until further orders. Thereafter by order dt.15.2.2013, the Commissioner of Customs (Imports) in exercise of powers conferred under the provisions of Regulation 20 (3) of CHALR 2004 ordered continuation of suspension of license of the CHA. The appellants filed the present appeals against both the orders.
3. The Ld. Advocate on behalf of the appellant submits that offence report was furnished to the appellant on 20.12.2012. The order under Regulation 20 (2) was issued on 21.1.2013 and the order under Regulation 20 (3) was issued on 15.2.2013 for continuation of suspension order. Thereafter, the appellant received a copy of letter dt. 14.3.2013 forwarded to them by the Asst. Commissioner of Customs(CHA) informing that the Deputy Commissioner of Customs (Group-4) was nominated as Enquiry Officer. He submits that no show cause notice was issued as required under Regulation 20 (2) of the said Regulation, 2004. After one year, by letter dt.29.3.2014, the Enquiry Officer informed that the suspension order may be treated as show cause notice. He submits that suspension order cannot be treated as show cause notice and there is a clear violation of Regulation 22. So suspension order should be set aside on this ground alone. He further submits that suspension order was not issued within 15 days from the date of receipt of the offence report. He further submits that allegations made in the suspension order is a mere technical nature in so far as the CHA had not verified the antecedents and credentials of the importers. He relies upon the decision of the Tribunal in the case of Sharp Logistics Pvt. Ltd. Vs CC (General) Mumbai - 2012 (286) ELT 704 (Tri.-Mumbai). It is contended that Honble Bombay High Court in the case of Sharp Logistics Pvt. Ltd. Vs Union of India - 2013 (290) ELT 321 (Bom.) directed to implement the order of Tribunal. He further submits that this Bench in the case of Manjunatha Shipping Services Vs Commissioner of Customs (Imports), Chennai on the identical issue vide Final Order No.40461 / 2013 dt. 10.10.2013 set aside the suspension order and allowed the appeal of the CHA.
4. On the other hand, Ld. Authorized Representative on behalf of Revenue submits that the Enquiry Officer has already been nominated and the applicants are not attending the enquiry proceedings. So there is no reason for setting aside the suspension order. It is also contended that the Enquiry Officer also informed to the appellant that the suspension order would be treated as show cause notice. There is no requirement of separate show cause notice. He further submits that letter dt. 29.3.2014 of the Enquiry Officer would be treated as due compliance of Regulation 22 (2)of the said Regulation, 2004.
5. After hearing both sides and on perusal of records, we find that the appellant is a Customs House Agent under the CHALR, 2004. They filed Bill of Entry No.5970001 dt. 10.2.2012 on behalf of M/s. Shini Knitwear, Tirupur for clearance of the goods declared as Snap Fasteners, Sliders and Elastic Tapes. It was found that the goods were misdeclared in order to evade anti-dumping duty. It has been alleged that the appellant had filed Bill of Entry in the name of M/s.Shini Knitwear without verifying the antecedents, correctness and identity of their clients. The Commissioner of Customs (Imports) issued the suspension order under Regulation 20 (2) immediately on the basis of SIB report dt. 20.12.2012. Subsequently, by order dt. 15.2.2013 issued under Regulation 20 (3) of the said Regulation, it was ordered for confirmation of suspension order.
6. We find that after the said orders, the appellant received a copy of the letter dt. 14.3.2013 issued by the Asst. Commissioner of Customs (CHA) addressed to the Deputy Commissioner of Customs (Group-4), intimating the nomination of the Enquiry Officer. The relevant portion of the said letter dt. 14.3.2013 is reproduced below :-
" The Commissioner of Customs (Imports) has appointed you as Inquiry Officer in the case of CHA M/s.Eltece Associates.
2. Hence, you are requested to conduct the inquiry in the case under Regulation 22 of the Customs House Agents Licensing Regulations (CHALR), 2004 and submit your report to the Commissioner of Customs (Imports) within 90 days from the date of receipt of the letter.
3. Part file containing copies of relied upon documents of the case (correspondence vide P.No.01 to 98, Note Side P.No.9) is forwarded herewith.
Please acknowledge receipt."
7. For better appreciation of the case, we reproduce below the relation provisions of CHALR, 2004 as under :-
REGULATION 20.?SUSPENSION OR REVOCATION OF LICENCE. (1) The Commissioner of Customs may, subject to the provisions of regulation 22, revoke the licence of a Customs House Agent and order for forfeiture of part or whole of security, or only order forfeiture of part or whole of security, on any of the following grounds, namely :-
(a) failure of the Customs House Agent to comply with any of the conditions of the bond executed by him under regulation 10;
(b) failure of the Customs House Agent to comply with any of the provisions of these regulations, within the jurisdiction of the said Commissioner of Customs or anywhere else;
(c) any misconduct on his part, whether within the jurisdiction of the said Commissioner of Customs or any where else which in the opinion of the Commissioner renders him unfit to transact any business in the Customs Station.
(2)?Notwithstanding anything contained in sub-regulation (1), the Commissioner of Customs may, in appropriate cases where immediate action is necessary, within fifteen days from the date of receipt of a report from investigating authority, suspend the licence of a Customs House Agent where an enquiry against such agent is pending or contemplated.
(3) Where a licence is suspended under sub-regulation (2), notwithstanding the procedure specified under regulation 22, the Commissioner of Customs may, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs House Agent whose licence is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs House Agent. Regulation 22 reads as under :
"REGULATION22.?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.
(4)?The Customs House Agent shall be entitled to cross-examine the persons examined in support of the grounds forming the basis of the proceedings, and where the Deputy Commissioner of Customs or Assistant Commissioner of Customs declines to examine any person on the grounds that his evidence is not relevant or material, he shall record his reasons in writing for so doing.
(5)?At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs shall prepare a report of the inquiry recording [his findings and submit his report within ninety days from the date of issue of a notice under sub-regulation (1).
(6)?The Commissioner of Customs shall furnish to the Customs House Agent a copy of the report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, and shall require the Customs House Agent to submit, within the specified period not being less than [thirty days], any representation that he may wish to make against the findings of the Deputy Commissioner of Customs or Assistant Commissioner of Customs.
(7)?The Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs House Agent, pass such orders [as he deems fit within ninety days from the date of submission of the report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, under sub-regulation (5).
(8)?Any Customs House Agent aggrieved by any decision or order passed under regulation 20 or sub-regulation (7) of regulation 22, may prefer an appeal under section 129A of the Act to the Customs, Central Excise and Service Tax Appellate Tribunal established under sub-section (1) of section 129 of the Act."
8. We find that the Tribunal in the case of Manjunatha Shipping Services (supra), while dealing with the scope of Regulation 20 and 22 of the said Regulation, observed as under :-
"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 persons 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. On a query from the Bench, the Ld. Advocate on behalf of the appellant submits that no show cause notice was issued in terms of Regulation 22 (1) of the said Regulation. He submits that after one year of the suspension order, Enquiry Officer by letter dt. 29.3.2014 informed that the suspension order may be treated as suspension order cum show cause notice which is clear violation of the Regulation 22 (1) of the Regulation. The relevant portion of the letter dt. 29.3.2014 is reproduced below :-
"Please refer to our earlier letter in F.No.R-289/CH dated 11.12.2013, and your reply dated 20.12.2013 wherein you have submitted that you have not received any show cause notice for the allegation. The same was informed to the CBR section wherein they have replied vide their letter dated 27.03.2014 that the Suspension Order may be treated as Suspension order cum Show Cause Notice and the enquiry may be proceeded with the allegations against the Customs Broker.
Therefore, you are requested to reply to the undersigned within 7 days from the receipt of this letter and you may also inform as to whether you wish to be heard in person before finalising the case."
10. The Ld. A.R submits that Regulation 22 (1) would not applicable in the case of suspension of license under Regulation 20 of the said Regulation. It is seen that the Tribunal in the case of Manjunath Shipping Services (supra) had observed that after suspension order under Regulation 20 (2) / 20 (3) of the said Regulation, it would be followed by the enquiry proceeding under Regulation 22 of the said Regulation. We find that Regulation 22 (1) clearly specified the time frame of ninety days to issue show cause notice from the date of receipt of the order by the Commissioner of Customs. It is noticed that after one year of the suspension order, the Enquiry Officer is informing to treat the suspension order as show cause notice, which is clearly contrary to provision of Regulation 22 (1) of the said Regulation. We find that by order/judgment dated 14.03.2014 in WP No. 8409/2013 in the case of Shri R. Sandosh Kumar, the Honble Madras High Court set aside the enquiry proceedings. The relevant portion of the said decision is reproduced below:-
"4. But this Court is unable to persuade itself to accept the submissions placed by the learned counsel for the respondents. The reason is clear and simple. The grievance of the petitioner raised in the present writ petition is unambiguous that while following the procedure for revocation of the custom house agents license issued to the petitioner by the respondents, the first respondent has to follow two pre-conditions. Firstly, the offence report has to be filed after the temporary suspension is effected against the petitioner. Secondly, after the filing of the offence report, the first respondent should have issued a show cause notice within 90 days. In the present case, it is relevant to extract Regulation 22 (1) of the Regulations, which reads as follows:-
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 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.
5. A mere reading of Regulation 22(!) shows that within 90 days from the date of receipt of the offence report, the first respondent should have issued a show cause notice. Therefore, the question as to whether the offence report has been filed in this case has to be taken into account. Admittedly, in the present case, the offence report was filed on 18.10.2012. After the receipt of the offence report, the only course to be adopted by the first respondent is to issue a show cause notice within 90 days to the petitioner. Unfortunately in the present case, although 41 days had lapsed till the filing of the writ petition, the first respondent has not come forward to issue the show case notice to comply with the mandatory conditions adumbrated under Regulation 22(1) of the Regulations. Therefore, in the present case, as rightly indicated by the learned counsel for the petitioner with the help of the order passed by this Court in W.P. (MD) No. 16351 of 2012 dated 4.1.2013, where this Court was inclined to quash a similar proceeding finding fault with the respondent that there was a delay of seven days in issuing the show cause notice, this Court has no hesitation to interfere with the impugned proceedings, for the simple reason that in this case, there was no show cause notice issued till now. Therefore, for the reasons mentioned above, the writ petitioner is entitled to succeed. Accordingly, the impugned proceedings are set aside and the writ petition is allowed. Consequently, M.P.No, 1 & 2 of 2013 are closed. No costs.
11. In the present case, it is apparent from the record that after issue of the suspension order dt. 21.1.2013, under Regulation 20 (2), no show cause notice was issued by the Commissioner of Customs under Regulation 22 (1). In the light of decision of Honble High Court in the aforecited case, we set aside the impugned orders and the appeals filed by the appellants are allowed. After considering the submission of Ld. AR that the Enquiry Officer has already been appointed, we make it clear that this order will not prejudice enquiry to be contemplated or conducted by the Department.
(Dictated and pronounced in open court)
(R. PERIASAMI) (P.K. DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
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