Immediate suspension of custodian license is justified where serious lapses found in safety of goods

Brief of the Case

Madras High Court held In the case of M/s. Chandra CFS and Terminal Operators Pvt. Ltd. vs. Commissioner of Customs that as per Regulation 11(2) the Commissioner of Customs may in appropriate cases where immediate action is necessary, suspend the approval granted to a Customs Cargo Service provider where an enquiry against such Customs Cargo Service provider is pending or contemplated. In the present case, the Commissioner of Customs already issued SCN where the appellant is a co-noticee for contravention under the Customs Act. We also noticed the appellant had outsourced the security CFS to other persons without approval/permission from competent authorities. The above repeated instances of smuggling of goods in the appellant CFS confirms that there are serious lapses on the part of custodian and this cannot be overlooked or treated as isolated incident as claimed by the appellant. In the interest of Government revenue and safety and security of Customs goods, the Department has the right to take immediate action under Regulation 11(2) of HCCAR, 2009.

Facts of the Case

The appellant, as a custodian, is bound to be diligent enough in discharging their duties   and obligations under the prevailing customs laws and Handling of Cargo in Customs Area Regulations (HCCAR regulations). In so far as the present case is concerned, the container bearing No.SEGU 1697558 containing Red Sander logs   weighing 9430 kgs was sized by the Directorate of Revenue Intelligence Unit (DIU) under a mahazar, dated 6.3.2014 and entrusted with the appellant for safe and secured custody.

On 19.12.2004, the said container was removed un-authorisedly from the custody of the appellant by using forged documents. Prima facie, it appeared that the alleged removal of seized goods was due to the gross negligence and utter failure on the part of the appellant for not ensuring safety and security of the seized goods which were kept under their custody. Since the nature of offence was very serious and caused a reasonable doubt on the bona fides of the appellant, the first respondent viz., the Commissioner of Customs, Chennai, by exercising the powers vested under Regulation 11(2) of HCCAR, 2009, had passed an order on 23.12.2014 suspending the custodianship of the appellant.

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