Custom, Excise & Service Tax Tribunal
Master Cargo Services vs Commissioner Of Customs ... on 21 October, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal No.C/142/2012
[Arising out of Order-in-Original No.18899/2012 dt. 6.6.2012 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 ? :
Master Cargo Services Appellant
Versus
Commissioner of Customs (Seaport-Import)
Chennai Respondent
Appearance:
Shri S. Murugappan, Advocate For the Appellant
Ms.Indira Sisupal, AC (AR) For the Respondent
CORAM :
Honble Shri P.K. Das, Judicial Member
Honble Shri R. Periasami, Technical Member
Date of Hearing : 21-10-2014 Date of Decision : 21-10-2014
FINAL ORDER No.40770/2014
Per P.K. Das
1. The relevant facts of the case, in brief, are that the appellant is operating with CHA Licence No.R.227/CHA (PAN ABPFS5547Q) issued under the provisions of Custom House Agents Licensing Regulation, 2004 (CHALR). The appellant filed shipping bill for export of 28,590 sq.ft of Sheep Resin lining finished leather packed in 31 bundles on behalf of exporter M/s. Benign International. After examination of the goods, it was found that 26 bundles were called as semi-finished leather and it attracts export duty.
2. The Commissioner of Customs issued suspension order dt. 11.5.2012 of CHA licence under Regulation 20 (2) of CHALR 2004. Subsequently, by the impugned order dt. 6.6.2012, the Commissioner of Customs (Imports) in exercise of power conferred under the provisions of Regulation 20 (3) of CHALR, 2004 ordered continuation of the suspension of CHA licence, against which the present appeal was filed.
3. The learned advocate on behalf of the appellant submits that the appellant challenged the impugned order before the Hon'ble Madras High Court in W.P.No.16955 of 2012 and M.P.No.1 of 2012. The Hon'ble High Court vide its order dt. 17.7.2012 directed to file appeal before the Tribunal and granted stay of the impugned order till disposal of the appeal by the Tribunal. He submits that till date neither show cause notice was issued nor enquiry officer has been appointed for conducting the enquiry under Regulation 22 of CHALR, 2004. He submits that the Tribunal in several decisions on identical ground set aside the suspension order. He particularly relied upon the decision of the Tribunal in the case of D.Thimmeswara Rao & Others Vs CC (Port-Import) vide Final Order No.40566-40569/2013 dt. 12.11.2013 wherein the suspension orders were set aside. Ld. Advocate submits the above Tribunal's order dt. 12.11.2012 has been upheld by the Hon'ble High Court in C.M.A.No.1422 to 1426 of 2014 dt. 27.6.2014.
4. Ld. AR on behalf of Revenue reiterates the finding of the adjudicating authority.
5. After hearing both the sides and on perusal of the records, we find that the instant case is squarely covered by the decision of the Tribunal in the case of D.Thimmeswara Rao & others (supra). In that case, the Tribunal observed as under :-
"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."
6. It is noted that the Tribunal's Final Order dt. 12.11.2013 (supra) was upheld by the Hon'ble Madras High Court vide C.M.A. No.1422 to 1426 of 2014 by Judgement dt. 27.6.2014. The relevant paras of the order of the Hon'ble High Court are reproduced below :-
"33. As already pointed out in the earlier paragraphs that the initial order of suspension under Regulation 20 (2) and final order under Regulation 20 (3) to continue the order of suspension are to be followed by an enquiry under Section 22 and admittedly, it has not been done so within the time limit prescribed. The orders of suspension passed against the second respondent in these appeals cannot continue and the concerned authority, namely the appellant herein has to take a decision whether to suspend or revoke the licence in terms of Regulation 22 and if he fails to do so, the only result is to set aside the impugned orders of initial suspension and its continuance and in the considered opinion of the Court, the Tribunal has rightly done that exercise by correct appreciation of facts and application of Regulations 20 and 22 of CHALR, 2004.
34. The compliance of procedure under Regulation 20 would not tantamount the compliance of Regulation under 22 and therefore, the substantial question of law raised in these appeals are answered in negative against the appellant in these appeals.
35. In the result, all these Civil Miscellaneous Appeals are dismissed confirming the orders dated 10.10.2013 in Final Order No.40461/2013 and the orders dated 12.11.2013 in Final Order No.40566 to 40569 of 2013 respectively on the file of the Customs, Excise and Service Tax Appellate Tribunal, Chennai Bench, Chennai. No costs. Consequently, the connected miscellaneous petition is closed."
7. We find that Tribunal in the case of Manjunath Shipping Services Vs Commissioner of Customs (Imports), Chennai vide Final Order No.40461/2013 dated 10.10.2013 on the identical situation set aside suspension order, which was upheld by the Hon'ble Madras High Court. In the present case, initial suspension order dated 11.5.2012 was issued under Regulation 20 (2) of CHALR, 2004 and which was continued by the impugned order dt. 6.6.2012 issued under Regulation 20 (3) of CHALR, 2004. It is seen that no proceeding was initiated under Regulation 22 of CHALR, 2004 in so far as no show cause notice was issued to the appellant under Regulation 22 (1) of Regulations 2004, which is required to be issued within 90 days from the date of receipt of offence report.
8. In view of the above discussion and the decision of Hon'ble High Court and the Tribunal, in our opinion, the impugned suspension order cannot be sustained and accordingly, it is set aside. The appeal filed by the appellant is allowed.
(Dictated and pronounced in open court)
(R. PERIASAMI) (P.K. DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
gs
8