Delhi High Court
Falcon Air Cargo & Travels (P) Ltd. vs Union Of India on 13 August, 2001
Equivalent citations: 93(2001)DLT843, 2001(60)DRJ618, 2001(78)ECC596, 2002(140)ELT8(DEL)
Author: Arijit Pasayat
Bench: Arijit Pasayat, D.K. Jain
ORDER Arijit Pasayat,C.J.
1. Change in this writ petition is to the order passed by Commissioner of Customs dated 13.7.2000 and order of the Central Excise and Gold (Control) Appellate Tribunal (in short, 'CEGAT') dated 30.10.2000, upholding the first noted order. By the said order there was revocation of petitioner's license to function as Customs House Agent.
2. Factual background in a nutshell is as follows:
Petitioner was holding a Customs House Agent's license issued in terms of the Customs House Agent license Regulations 1984 (in short the Regulations). Such Regulations have been issued in exercise of powers under Section 146(2) of the Customs Act, 1962 (in short, the Act). license issued to the petitioner was valid up to 13.1.2000. Renewal thereof was denied on the ground that enquiries were pending against the petitioner for alleged misconduct for which two separate show cause notices were issued on 8.11.95 and 28.-8-1999 respectively. Reliance was placed on Regulation 12(2) which envisages that renewal of the license can be considered only in the absence of any complaint of misconduct including non compliance of any obligation specified under Regulation No.14. It is of significance to note that though at some stage authorities noted the proceedings to be in relation to renewal of license, later on the matter was dealt with as if it was one for revocation. The distinction is significant because after 13.1.2000 there was no question of revocation.
So far as the first show cause notice is concerned, it was alleged that an employee of the petitioner, Kanshi Ram Rana, appeared in an examination under. Regulation 20 held on 8.9.1995 on the strength of a photo copy of his identity card No. 222/91 after chanign the validity period on the photo copy from 1/95 to 1/96 whereas the said identity card, which was valid only up to 1/95, had already been surrendered to the department. Kanshi Ram Rana admitted that he had in fact changed the validity period of the identify card from 1/95 to 1/96 so that he could appear in the examination and also gain entry into the International Airport. He also admitted that the petitioner was aware that he was not in possession of a valid H-identity card up to January, 1996 and notwithstanding this knowledge his application was forwarded by the petitioner to the concerned authorities.
So far as the second show cause notice is concerned, allegations were that the petitioner had committed serious irregularities. Firstly, it had given business to unauthorized party m/S Pinks Cargo Agency, New Delhi in violation of Regulation 13 and connived to obtain false declarations. The aforesaid agency used to conduct business under the authority of the petitioner. Goods were presented by the representative of Pinkis Cargo Agency for examination, whereas the documents were signed by the representative of the petitioner, in connivance with each other to deceive the department so as to obtain untenable drawback amounts far in excess of the entitled amounts. Secondly, the petitioner did not advise its clients properly as was obligatory on its part in terms of Regulation 14(d) and the petitioner ought to have brought the matter of any irregularity to the notice of the Assistant Commissioner of Customs but if failed to do so while clearing consignments. Thirdly, it did not exercise due diligence to ascertain correctness of any information, which it was required to impart to this clients with reference to any work related to clearance of cargo. It certified correctness of the documents which was obligatory on its part but the certificates were false and therefore it failed to comply with the provisions of Regulation 14(3) of the Regulation.
Inquiry officer nominated by the Commissioner of Customs to investigate the matter. Inquiry officer concluded that allegations in the first show cause notice were not proved and the petitioner had not failed to comply with the mandatory regulation 20(7). So far as second case is concerned, the inquiry officer held that the petitioner cannot be squarely blamed for non compliance with the provisions of the Act and it was not at fault in term of Regulation 14(e) for exercising due diligence to ascertain the correctness of information which he was required to impart to his clients with reference to clearance of cargo. Inquiry officer observed that adjudicating authority may take into consideration the penalty imposed on the exporter, representative of M/s Pinks Cargo Agency by the Commissioner of Customs ICD since the same reflected the complicity and the extent of abatement and connivance.
Personal hearing was given to the petitioner and after hearing the parties, the Commissioner came to hold that in respect of the first show cause notice there was violation of Regulation 20. Even if Rana took examination without the petitioner's consent it shows that there was luck of supervision and proper control on the part of the petitioner over its employees and it cannot absolve itself of the responsibility on this count on account of ignorance. So far as second charge is concerned it was concluded that the petitioner was reasonable for correctness of information as was required under Regulation 14(e) which it failed to do. There was clear violation of Regulation 13 which prohibits the transfer of license to any other unauthorized person to transact business of customs clearance whether the latter isa sub agent or broker or otherwise. In view of the observations the following order came to be passed:
The CHA M/s. Falcon Air Cargo & Travels Pvt Ltd had not only sublet their license to their sub agent in clear violation of regulation 13 of CHALIR' 84 but also did not take due care concerning the correct value in terms of invoice to be indicated in the S/Bill at the time of filing the same to the Customs Department which resulted in the claim of drawback being in excess of the entitlement as per the rules either due to carelessness or by way of deliberate action.
3. Petitioner filed appeal before the CEGAT. Various arguments were advanced before it by the parties. After nothing the contentions raised by the parties the Tribunal concluded as follows:
"We have heard the submissions made by the learned counsel for the appellant as also the learned Dr. We have also perused the case law cited by the appellant. We note in the instant case that the Customs House Agent had helped in appearing in the examination his employee, we find that the original H card was submitted to the customs authorities by the Customs House Agent and only a zerox copy was available. Thus recommending his application when the employee was not eligible to appear in the examination clearly shows the mind of the Customs House Agent. We find that in the second case no document regarding value was given by the exporter. It was necessary for the Customs House Agent to ensure that value which is an important aspect in the export of goods is correctly indicated. In the instant case, we find that Customs House Agent did not care to note and thus directly had supported claim of higher amount of drawback and other benefits etc. We find that in the case cited and relied upon by the appellants the role of the Customs House Agent was not of direct application but was that of an ignorant person whereas the role in the instant case of the Customs House Agent is a direct ones. Thus the two are distinguishable. Moreover, in the two cases cited by the appellants it is the principle of equity which has been followed and is not a legal precedent binding on us. Thus we find that learned Commissioner has correctly analysed the evidence. We do not see any necessity to interfere with the impugned order. In the circumstances the impugned order is upheld and the appeal is rejected."
4. In support of the writ petition learned counsel for petitioner submitted that this was a case of non-application of mind by the authorities and CEGAT. Neither the Commissioner, nor the Tribunal noted that Inquiry Officer had exonerated the petitioner of the charges contained in the first show cause notice. So far as charges contained in the second show cause notice are concerned, the factual and legal position have not been properly analysed by the authorities. No authority has come to any definite finding that the petitioner not only permitted wrong figures to be quoted but also did so deliberately or with any motive. It is also submitted that the exporter has been subjected to only penalty by the Customs Authority. Similar was the situation so far as Pinks Cargo Agency is concerned. Petitioner is virtually made to suffer civil death on account of non-continuance of the license. It has functioned for a quarter of a century without any blemish. Factual position would go to show that Pinks Cargo Agency did paper work. At the most it can be said that though the petitioner had acted in good faith, it signed documents without proper verification, for which stringent action like revocation of license should not have been directed. The punishment is highly disproportionate to the alleged violation. In response, counsel for respondent submitted that this is a case where allegations are of very serious nature. Huge sums of money were being drained out of the exchequer by submitting fabricated documents. Role of the petitioner is quite clear. It cannot take shelter of having introduced a sub agent. If such a plea is accepted result would be that every offender would go scot free by introducing a sub agent. As the allegations are of very serious nature, revocation is most appropriate action and it has been rightly taken. It has also been submittedthat this Court while exerxising jurisdiction under Article 226 of Constitution of India, 1950 (in short, the Constitution) should not got into the quantum of punishment unless it shocks the conscience of the Court. It is not a case of that nature.
5. We shall first deal with the question as to whether the Tribunal has dealt with the appeal in proper perspective. As quoted above, the operative portion of the judgment would go to show that the Tribunal has not dealt with the contentions of the petitoner. No definite finding has been recorded. Merely saying that the Commissioner has analysed the evidence correctly cannot do away with the requirement of Tribunal analysing the factual position to deal with the stand of the parties and record reasons. Essentially, the judgment is non reasoned. Duty to give reasons entails a duty to rationalize the decision. Reasons therefore help to structure the exercise of discretion, and the necessity of explaining why a decision is reached. It requires one to address one's mind to the relevant factors, which ought to be taken into account. Further, furnishing reasons affords the affected party to know why a decision was reached. In C.B. Gautam v. Union of India, is was observed that "the obligation to record reasons and convey the same to the party concerned operates as a deterrent against possible arbitrary action by the quasi-judicial or the executive authority invested with judicial powers". Reasons when given provide a glimpse of the decision-making process and assist the forum where the order is assailed to gauze transparency of the process.
6. Giving reasons in support of a decision or action as recorded is hallmark of great administration. In Lord Denning's view, "giving of reasons is one of the fundamentals of good administration". (See Breen v. Amalgamated Engineering Union, 1971 (1) All E.R. 1148) A party appearing before the Tribunal is entitled to know either as expressly stated by the Tribunal; or inferentially stated, what it is, to which the Tribunal is addressing its mind.
7. It is settled law that reasons are harbinger between the mind of the maker to the controversy in question and the decision or the conclusion arrived at. Natural justice demands that decision should be based on some evidence of probative value. The object underlying rules of natural justice is to prevent miscarriage of justice and secure fair play in action. A duty to give reasons entails a duty to rationalize the decision. Reasons therefore, help to structure the exercise of discretion and a necessity of explaining why a decision is reached requires one to address one's mind to the relevant factors which ought to be taken into account. Secondly, furnishing reasons satisfies an important desire on the part of the affected persons to know why a decision was reached. Basic fairness requires that those in authority over others should tell them why they are subject to some liability or have been refused some benefit. Giving of reasons enables Courts and Tribunals to effectively and meaningfully exercise their respective appellate or supervisory power. The most compelling consideration, for instance, for disclosure of reasons in support of an order or decision is that the same ensures proper application of mind, reduces the possibility of casualness and minimizes qualms and caprice and thereby serves to provide legal protection to a person against arbitrary action/conduct. A major judicial concern for recording reasons is that if decision reveals the "inscrutable face of the Sphinx" It can by its silence render it virtually impossible for the Court to perform their appellate function or exercise of power of judicial review in agitating the validity of the decision. Whereas the statute or regulation provides a right of appeal from a decision, reasons are necessary to enable the affected person to exercise that right effectively. A right to reason in this situation is inferred by necessary implication from the provisions of appeal.
8. In Bhagat Raja v UOI AIR 1957 SC 1606, the Supreme Court held that case for giving reasons or for making a speaking order becomes much stronger when a decision can be challenged. In the words of the Supreme Court in Organo Chemical Industries vs UOI, AIR 1979 SC 1803, inscrutable face of Sphinx is ordinarily incongruous with a judicial or quash judicial performance. In re: Poyser and Mills Arbitration 1964 (2) QB 467, it was left with the real grievance that he was not told why the decision had been made. In Collector of Manghyr v. Keshav Prasad Goenka, , Apex Court rejected the contention that omission to give reasons in the impugned order could be made up by State adducing sufficient grounds therefore when validity of the order is challenged.
9. It is to be noted that it is in reality a case of non-renewal of the license. Under Regulation 12, period of validity of a regular license is five years, which may be renewed from time to time in accordance with procedure prescribed in sub-regulation (2) thereof. Said sub-regulation deals with the modalities to be adopted when application for renewal is filed. Renewal is permissible when the performance of the license-holder is satisfactory with reference, inter alia, to the two aspects prescribed.
10 Regulation 10 deals with regular license. Regulation 13 provides that license is not transferable. Obligations of Customs House Agent under Regulation 14, are prescribed as follows:
14. Obligations of Custom house Agent.--A Custom House Agent shall:
a) obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as Custom House Agent and produce such authorisation whenever required by an Assistant Commissioner of Customs.
b) Transact business in the Customs Station either personally or through an employee duly approved by the Assistant Commissioner of Customs, designated by the Commissioner.
c) Not represent a client before an officer of Customs in any matter to which he, as officer of the Department of Customs gave personal consideration, or as to the facts of which he gained knowledge, while in Government service;
d) 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 Assistant Commissioner of Customs;
e) 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;
f) Not withhold information relating to clearance of cargo or baggage issued by the Commissioner of Customs from a client who is entitled to such information;
g) Promptly pay over to the Government, when due, sums received for payment of any duty, tax or other debt or obligations owing to the Government and promptly account to his client for funds received for him from the Government or received from him in excess of Governmental or other charges payable in respect of the clearance of cargo or baggage on behalf of the client.
h) Not procure or attempt to procure directly or indirectly information from the Government records or other Government sources of any kind to which access is not granted by proper officer;
i) Not attempt to influence the conduct of any official of the Customs Station in any matter pending before such official or his subordinates by the use of threat, false accusation, duress or the offer of any special inducement or promise of advantage or by the bestowing of any gift or favor or other thing of value;
j) Not refuse access to, conceal, remove or destroy the whole or any part of any book, paper or other record, relating to his transactions as a Custom House Agent which is sought or may be sought by the Commissioner.
k) Maintain records and accounts in such form and manner as may be directed from time to time by an Assistant Commissioner of Customs and submit them for inspection to the said Assistant Commissioner of Customs or an officer authorised by him whenever required;
l) Ensure that all documents prepared or presented by him or on his behalf are strictly in accordance with others relating thereto;
m) Ensure that all documents such as bills of entry and shipping bills delivered in the Customs Station by him show the name of the importer or exporter as the case may be and the name of Custom House Agent, prominently at the top of such documents;
n) In the event of the license granted to him being lost, immediately report the fact to the Commissioner;
o) Ensure that he discharges his duties as Custom House Agent with utmost speed and efficiency and without avoidable delay; and
p) Not charge for his services as Custom House Agent in excess of the rates approved by the Commissioner from time to time under Regulation 25.
11. Regulation 21 deals with suspension or revocation of license. Procedure for suspension or revocation of license under Regulation 23 as prescribed is as follows:
21. Suspension or revocation of license.-The Commissioner may subject to the provisions of Regulation 23, suspend or revoke the license of a Custom House Agent so far as the jurisdiction of the Commissioner is concerned and also order for forfeiture of security on any of the following grounds:-
a) failure of the Customs House Agent to comply with any of the conditions of the bond executed by him under Regulation 11;
b) failure of the Custom House Agent to comply with any of the provisions of these regulations, whether within the jurisdiction of the paid Commissioner or any where else.
c) Any misconduct on his part whether within the jurisdiction of the said Commissioner or anywhere 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 may, in appropriate cases where immediate action is necessary suspend the license of a Custom House Agent where an enquiry against such agent is pending or contemplated.
23. Procedure for suspending or revoking license under Regulation 21.--(1) The Commissioner shall issue a notice in writing to the Custom House Agent stating the grounds on which it is proposed to suspend or revile the license and requiring the said agent to submit within such time as may be specified in the notice not being less than forty five days to the Assistant Commissioner of Customs nominated by him a written statement of defense and also to specify in the said statement whether the Custom House Agent desires to be heard in person by the said Assistant Commissioner of Customs.
12. Non-renewal and revocation are conceptually and contextually different as the conspectus of the provisions noted above would reveal. "Revocation" means annulling, rescinding, withdrawing (See. Pradip Kumar Das V. State of West Bengal, ) "revoke" means to re-call to take back to repeal, or to withdraw. As observed by the Apex Court in Ibrahim Bachhi v. State of Gujrat , the true meaning of the word "revoke" and its noun signify that "revocation" is a process of recall of what had been there. According to Tomlin Law Dictionary, "revocation" is the calling back of a thing granted or destroying or making void of some deed that had existence, and the act of revocation made it void. On the other hand, renewal of a license means a new license granted by such act. Its effect is to prevent discontinuance or forfeiture. It means a change of something old for something new. Revocation or suspension essentially relate to a stage when a license is in force. On the other hand, renewal comes at a stage when the period of currency of the license is over and its validity is extended.
13. By order dated 15.7.2000, license was revoked. It is not clear how there could be revocation when the license itself was not functional after 13-1-2000. license can be suspended or revoked on any of the grounds as mentioned in Regulation 21. It is, therefore clear that if any of the grounds enumerated existed, two courses are open to the Commissioner. One is to suspend the license and the other is to revoke it. Suspension would obviously mean that license would be for a particular period inoperative. An order of revocation would mean that license is totally inoperative in future, it loses its currency irretrievably. Obviously, suspension/revocation, as the case may be, has to be directed looking to the gravity of the situation in the background of facts. For minor infraction or infraction which are not of very serious nature order of suspension may suffice. On the contrary, when revocation is directed it has to be only in cases where infraction is of a very serious nature warranting exemplary action on the part of the authorities, otherwise two types of actions would not have been provided for. Primarily it is for the Commissioner/Tribunal to decide as to which of the actions would be appropriate but while choosing any of the two modes, the Commissioner/Tribunal has to consider all relevant aspects and has to draw a balance sheet of gravity of infraction and mitigating circumstances. The difference in approach for consideration of cases warranting revocation or suspension or non-renewal has to be borne in mind while dealing with individual cases. In a given case the authorities may be of the view that non-renewal of license for a period of time would be sufficient. That would be in a somewhat similar position to that of suspension of license though it may not be so in all cases. On the other hand, there may be cases where the authorities may be of the view that licensee does not deserve a renewal either. Position would be different there. Though we have not dealt with the question of proportionality, it is to be noted that the authorities while dealing with the consequences of any action which may give rise to action for suspension, revocation or non-renewal have to keep several aspects in mind. Primarily, the effect of the action vis-a-vis right to carry on trade or profession int he background of Article 19(1)(g) of the Constitution has to be noted. It has also to be borne in mind that the proportionality question is of great significance as action is under a fiscal statute and may ultimately lead to a civil death.
14. In the aforesaid premises, we direct the Tribunal to re-hear the matter and decide the issues involved in accordance with law. We make it clear that we have not expressed any opinion on the merits. Writ petition is allowed to the extent indicated above.