Custom, Excise & Service Tax Tribunal
Manjunatha Shipping Services vs Commissioner Of Customs (Imports) on 10 October, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI Appeal Nos. C/279/2011 [Arising out of Order-in-Original No.17253/2011 dt. 2.9.2011 passed by the Commissioner of Customs (Imports), 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 : Manjunatha Shipping Services Appellant Versus Commissioner of Customs (Imports), Chennai Respondent
Appearance:
Shri S. Krishnandh, Advocate Shri B.Satish Sundar, Advocate For the Appellant Shri K.S.V.V. Prasad, JC (AR) For the Respondent CORAM :
Honble Shri P.K. Das, Judicial Member Honble Shri Mathew John, Technical Member Date of Hearing :18-6-2013 Date of Pronouncement: 10-10-2013 FINAL ORDER No.40461/2013 Per Mathew John:
1. The appellant is a Customs House Agent (CHA for short) licensed under Custom House Agents Licensing Regulations, 2004 (CHLAR for short) by Custom House, Chennai. The appellant had filed three Bills of Entry on behalf of M/s Ravi Enterprises, Surat for import of Mulberry Raw Silk Yarn, under Advance License Scheme in Customs Freight Stations (CFS) in Chennai. Certain investigations were conducted by Directorate of Revenue Intelligence, Surat in respect of such imports. It was found that the importer had obtained Advance Licenses from DGFT by giving false declaration regarding the factory premises and the importer was not having any machinery or manufacturing facility to process Raw Mulberry Silk Yarn that was being imported. The imported goods were being sent to Bangalore for sale to other parties who were not concerned with export obligations of the goods imported under the Advance Licenses. Since the DGFT licences were subject to actual user condition for manufacture of specified products, Revenue made out a case against the importer for having contravened the provisions of Export Import Laws and provisions of Customs Act,1962 with regard to post import conditions in respect of goods imported without payment of duty and proceeded against the importer. During investigation, it was seen that while filing such Bills of Entry the appellant had not obtained any authorization from the importer for whom the imports were facilitated by them; not verified the antecedents and credentials of the importers; not personally interacted with the importers at the time of import and after the Customs Clearance of the consignment; not verified the signatures of the authorized person of both the High Seas Seller and buyer firms (importers) on the High Sea Sale agreement; not taken instructions at any point of time from the importers regarding the booking of imported cargo after Customs Clearance, but had taken such instructions from the High Seas Sellers for booking the imported cargo to Bangalore instead of sending the same to the premises of the license holder at Surat/Ankleshwar; not intimated the Customs Authorities at Chennai about the diversion of the goods imported under Advance authorization Scheme to Bangalore.
2. The above failures on behalf of the appellant were considered to be contravention of Regulation 13 (a), (d) and (m) for CHALR. The licensing authority received a report from the investigating agency in this regard on 08-06-2011. The licensing authority was of the view that continuation of the permission to the appellant to operate as CHA was detrimental to the interests of Revenue. Therefore, Commissioner of Customs initially suspended the license without any notice to the appellant vide order dated 23-06-2011. After that a post decisional hearing was offered on 10-07-2011 as envisaged in CBEC Circular9/2010-Cus dated 08-04-2010. However, the appellant challenged the suspension order before the Hon. High Court of Madras on various grounds including delay in issuing such suspension order. After further opportunities for hearing as per the order of the Hon. High Court when the case was fixed for hearing on 18-08-2011, the appellant submitted written submissions and the impugned order is passed as per Regulation 20(3), after considering such written submissions. By the impugned order dated 02-09-2011, the suspension already ordered was ordered to be continued. Aggrieved by this order of 02/09/2011, the appellant has filed this appeal before the Tribunal.
3. The Ld. Advocate for the appellant initially pointed out that concerned Bills of Entry were field on 19-03-2010 and DRI submitted its report to the licensing authority only some time near 24-05-2011 and therefore from the pace at which the matter was investigated and reported, it is clear that this was not the case where immediate suspension without following the procedure, of issuing notice and conducting enquiry laid down under Regulation 22 (1), was justified. However, this argument was notpressed apparently because the appellant had agitated the same issue before the Honble High Court in WP No.16180/2011, but the Hon. Court did not find favour with this argument. However, the appellant points out that the Hon. Court had given liberty to raise all issues raised in the Writ Petition before the Commissioner.
4. The Ld. Counsel for appellant submits that suspension under Regulation 20(2) is warranted only when an enquiry is pending or contemplated against a license holder. The impugned order nowhere mentions that any inquiry is pending or contemplated against the appellant. So he submits that the order is not maintainable. He relies on the decision of the Tribunal in Ganesh Shipping Agency Vs. CC -2008 (222) ELT 536 (Tri-Chennai) as affirmed by Hon. Madras High Court in the case of CC Vs. Ganesh Shipping Agency-2009 (245) ELT 120 (Mad) in this regard.
5. Further, he points out no show cause notice as envisaged in Regulation 22(1) has been issued so far for conducting such enquiry. The advocate pleads that the license of the appellant has been suspended in June 2011 and for last two years, appellant has been prohibited from carrying on his profession to earn his livelihood without giving him an opportunity to prove his innocence which is causing serious injury to the appellant. Therefore, in the circumstances, he prayed that impugned order of suspension may be set aside. He further points out that CBEC in its circular 9/2010-Cus dated 08-04-2010 prescribed a time limit of nine months from the date of offence report to passing of final order. In this case 22 months have lapsed after issue of suspension order but even the Show Cause Notice has not been issued for enquiry as envisaged under regulation 22(1).
6. Opposing the prayer, Ld. AR for Revenue submits that though the express words an enquiry is pending or contemplated is not used in the impugned order, an enquiry is contemplated and it is still pending. He submits that an enquiry officer has been appointed and the enquiry officer has been issuing letters to the appellant to appear before him but the appellant has not been responding to such letters. He further argues that in cases where suspension is ordered under Regulation 20 (2), there is no need to follow procedure as laid down in Regulation 22 (1) and that is the reason why the show cause notice has not been issued. He further submits that CBEC Circular 9/2010-Cus dated 08-04-2010 in para 7.1 and 7.2 deals completion of suspension proceedings and not completion of proceedings for revocation of license. Now the procedure for suspension is complete and it is within the scope of regulation 20(2) and hence a valid order and the challenge to such an order in this proceeding is not maintainable. He submits that enquiry will be completed expeditiously if the appellant co-operates and final show cause notice for revocation of licence will be issued, if found necessary.
7. We have considered the submissions of both sides. Regulation 20 of CHALR 04 is reproduced below:-
REGULATION20.?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.
8. 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.
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.
12. However, considering the submission of the learned AR on behalf of the Revenue that the enquiry officer is appointed, we make it clear, that this order should not cause any prejudice to the mind of enquiry officer and shall not be a bar for revocation of license in accordance with law.
(Pronounced in open court on 10-10-2013)
(MATHEW JOHN) (P.K.DAS)
TECHNICAL MEMBER JUDICIAL MEMBER
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