Time limit stated under Regulation 17(7) of CBLR, 2018 is mandatory in nature

Shaikh And Pandit Agencies Private Limited Vs Principal Commissioner of Customs (Calcutta High Court)

Calcutta High Court held that timeline prescribed under Regulation 17(7) of Customs Brokers Licensing Regulations, 2018 (CBLR, 2018) relating to completion of the proceedings and passing of the final order within 90 days from the date of receipt of inquiry report is mandatory in nature.

Facts- The petitioner, as a customs broker, had handled cargo on behalf of different exporters in July/August 2020. The main issue involved here is that the time to pass the order under Regulation 17(7) of CBLR, 2018 expired on 4th May, 2022, i.e., 90 days from the date of submission of inquiry report. The impugned order revoking the petitioner’s license was passed on 11th July, 2022 i.e., beyond the period of 90 days prescribed under the aforesaid Regulation 17(7) of CBLR, 2018.

Conclusion- The issues involved in this Writ Petition is a pure question of law with regard to interpretation of Regulation 17(7) of the CBLR, 2018 and as to whether time prescribed under the said Regulation for completion of the proceedings and passing of the final order within 90 days from the date of receipt of inquiry report is directory or mandatory and this Writ Petition on this legal issue should be heard on affidavits by the respondents.

Held that the petitioner has been able to make out a prima facie case for an interim order as the Inquiry Officer himself has given his finding that the allegation of violation of Regulation 10 (m), (n) and (q) of CBLR, 2018 against the petitioner as “not proved”; Division Bench of the Hon’ble Delhi High Court after considering the judgment of the Bombay High Court upon which adjudicating authority has relied on the timeline as prescribed under Regulation 17(7) of the aforesaid regulation has held the same as mandatory; the Tribunal has already set aside the permanent suspension of the petitioner’s license by its order dated 19th August, 2022.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

Heard learned advocates appearing for the parties.

By this writ petition, the petitioner has challenged the impugned order of revocation dated 11t^h July, 2022 passed by the respondent no. 1 revoking the petitioner’s Customs Broker License in exercise of powers under Regulation 17(7) of the Customs Brokers Licensing Regulaions, 2018 (CBLR, 2018), allegedly for violation of Regulation 10(d), (m), (n) and (q) of CBLR, 2018.

Facts in brief relevant to this case are hereunder.

The petitioner, as a customs broker, had handled cargo on behalf of different exporters in July/August, 2020. Based on an allegation that the exporters do not exist, an interim suspension order was passed based on the alleged offence report. A reference was made to a GST Enquiry Report where the Exporters were not found to be in existence at their declared places of business. A final suspension order was passed on 8th November, 2021 which was challenged by the petitioner before the Tribunal. Pursuant to an order passed by the Tribunal, the final order of suspension was considered and set aside.

A show cause notice was issued on 11^th November, 2021 under Regulation 17(1) of the CBLR, 2018 for revocation of the petitioner’s license. The petitioner gave a detailed reply on 10t^h December, 2021. An enquiry was ordered and the appointed Inquiry Officer submitted an inquiry report under Regulation 17(5) of CBLR, 2018 on 4t^h February, 2022. After detailed analysis the Inquiry Officer found the allegations of violation of Regulation 10(m), (n) and (q) of CBLR, 2018 against the petitioner as “Not proved”. Allegation of violation of Regulation 10(d) was partially proved.

The time to pass the order under Regulation 17(7) of CBLR, 2018 expired on 4t^h May, 2022, i.e., 90 days from the date of submission of inquiry report. The impugned order revoking the petitioner’s license was passed on 11t^h July, 2022 i.e., beyond the period of 90 days prescribed under the aforesaid Regulation 17(7) of CBLR, 2018.

Petitioner submits that jurisdiction which has been exercised by the Respondent concerned under Regulation 17(7) of CBLR, 2018 wherein the timeline provided under the CBLR, 2018 and in particular, Regulation 17 for revocation of license has been held to be mandatory.

Petitioner submits that the impugned order of revocation of petitioner’s license having been passed beyond the period of 90 days as mandated under Regulation 17(7) of CBLR, 2018, deserves to be set aside on that ground alone.

Petitioner submits that the issue of timeline being mandatory, was raised by the petitioner and considered by the adjudicating authority and at para 15, page 116 of the Writ Petition being impugned order dated 11t^h July, 2022 the adjudicating authority referred to a judgment of the Hon’ble Bombay High Court in the case of Principal Commissioner of Customs (General), Mumbai Vs Unison Clearing Private Limited where it was held that the timeline under CBLR, 2018 is directory and relying on the said judgment, he proceeded and passed the impugned order and as such, it is evident that the Respondent No. 1 was conscious of the fact that the time prescribed under Regulation 17(7) had expired and the order was being passed beyond the prescribed time by relying on the aforesaid judgment of the Bombay High Court.

Petitioner submits that the judgment of the Hon’ble Bombay High Court was subsequently considered by a Division Bench of the Hon’ble Delhi High Court in an unreported judgment dated 28.07.2022 in the case of Leo Cargo Services Vs Commissioner of Customs, New Delhi, referring to several previous precedents of Hon’ble Delhi High Court and Hon’ble Madras High Court and after considering the aforesaid judgment of the Hon’ble Bombay High Court, the Division Bench of the Hon’ble Delhi High Court came to a specific conclusion that the timelines prescribed under Regulation 17 are mandatory. At paragraph 13.5, referring to the Hon’ble Bombay High Court judgment, it was held that in case adherence to the timeline cannot be ensured, the principles of fairness would require that the delay must be justified by reasons as to why the timeline was not adhered to. The Division Bench of the Hon’ble Delhi High Court differed with the findings of the Bombay High Court for the reasons provided at paragraph 14.2 of its judgment.

Petitioner submits that even if the view of the Hon’ble Bombay High Court is considered, it is evident that in case of delay and non­compliance of timeline, the authority is required to justify and give reasons as to why the timeline could not be adhered to.

Petitioner submits that in the facts of the present case the Adjudicating Authority has misconstrued the judgment of the Hon’ble Bombay High Court and has merely come to a conclusion that timelines under the aforesaid Regulation are directory and proceeded to pass the order beyond the period of time of limitation of 90 days, rendering the timelines nugatory and otiose. In any event since the impugned order neither records any reason nor there is any justification for delay in passing the impugned order revoking the license of the petitioner beyond the period of 90 days from the date of submission of the Inquiry Report, the impugned order deserves to be set aside and/or quashed on that ground alone. That apart, the order impugned is also, otherwise, not sustainable as none of the grounds provided under Regulation 10(d), (m), (n) and (q) of the CBLR, 2018, has any application in the present case as the same is evident from the Inquiry Report which has specifically held, upon detailed enquiry, except allegation under Regulation 10(d), which was partially proved none of the allegations stands proved against the petitioner.

Petitioner submits that the Exporters in question are still very much in existence which would be evident from statutory records available with Government portals; GSTIN Status – Pages 36, 37, 43 & 51 IEC Status – Pages 32, 42 & 48 of the Writ Petition.

Petitioner submits that adjudicating authority has usurped the jurisdiction of the authority under the customs and Central Excise Duty Drawback Rules, 2017 relating to Duty Drawback on export transactions. Such findings have been noted in the disagreement note and subsequently in the impugned order relating to Bank Realization Certificate (BRC), a certificate issued by a Bank to an exporter certifying realization of export proceeds.

In view of the aforesaid factual and legal position, the impugned order deserves to be set aside and/or quashed.

Learned counsel appearing for the respondents opposing this Writ Petition justifies the impugned order dated 11^th July, 2022 revoking the license of the petitioner and defends the same on the issue of impugned order of revocation of petitioner’s license relating to period of limitation under Regulation 17(7) of the CBLR, 2018, by contending that the limitation prescribed under the said regulation which is 90 days from the date of receipt of inquiry report is directory and not mandatory. He further defends the impugned order on the issue of delay in passing the impugned order beyond the expiry of 90 days as per regulation 17(7) of the CBLR, 2018 by contending that delay in passing the impugned order was contributory on the part of the petitioner who sought adjudication twice during the course of impugned proceedings for revocation of petitioner’s license.

Learned Counsel appearing for the respondents in support of this proposition of law that the timeline prescribed under Regulation 17(7) of the CBLR, 2018 is directory and not mandatory, relies on a judgment of this Court dated 30t^h August, 2016, in the case of Asian Freight Vs Principal Commissioner of Customs reported in 2020 (373) ELT 323 (Cal) which according to me is not applicable to the facts and circumstances of the present case since in the said case the show cause notice was challenged which was issued beyond the period of 90 days under Regulation 20(1) of the CBLR, 2018 and without giving reply to the same and time to complete the proceedings were still few months away as appears from concluded paragraph 58 of the aforesaid judgment petitioner had filed the Writ Petition challenging the said show cause notice while in the instant case petitioner has not come up at the stage of show cause notice and that the time was still available to complete the impugned proceeding rather petitioner has come up before this Court at the stage when the final adjudication order has already been passed beyond the statutory period of limitation of 90 days without any explanation for violation of such period of limitation prescribed under the aforesaid Regulation 17(7).

Furthermore, the Inquiry Officer in his Inquiry Report under Regulation 17(5) of the said regulation has specifically found that the allegations of violation of Regulation 10(m), (n) and (q) under CBLR, 2018 against the petitioner as “not proved” except allegation under Regulation 10(d) was partially proved. It also appears from record that the order of suspension of petitioner’s license though it was set aside by the order of the Tribunal on 19^th August, 2022 but before such order was passed by the Tribunal the respondent authority passed the impugned order of revocation of petitioner’s license.

Considering the facts and circumstances of the case, I am of the view that the issues involved in this Writ Petition is a pure question of law with regard to interpretation of Regulation 17(7) of the CBLR, 2018 and as to whether time prescribed under the said Regulation for completion of the proceedings and passing of the final order within 90 days from the date of receipt of inquiry report is directory or mandatory and this Writ Petition on this legal issue should be heard on affidavits by the respondents.

Considering the facts and circumstances of the case I am also of the view that the petitioner has been able to make out a prima facie case for an interim order for the following reasons :

1) The Inquiry Officer himself has given his finding that the allegation of violation of Regulation 10 (m), (n) and (q) of CBLR, 2018 against the petitioner as “not proved”.

2) Division Bench of the Hon’ble Delhi High Court after considering the judgment of the Bombay High Court upon which adjudicating authority has relied on the timeline as prescribed under Regulation 17(7) of the aforesaid regulation has held the same as mandatory.

3) The Tribunal has already set aside the permanent suspension of the petitioner’s license by its order dated 19t^h August, 2022.

Learned advocate appearing for the petitioner in support of his contention also relies on an unreported order of this Court dated 29^th September, 2022 in WPA 20050 of 2022 (Cargo Marketing International vs. Principal Commissioner of Customs (Airport & Administration) & Ors.) where this Court while granting the interim order had recorded the following reasons.

“Considering the facts and circumstances of the case as appears from record and submission of the parties and discussion made above the impugned order of revocation of petitioner’s license dated 11t^h July, 2022 shall remain stayed till 31st January, 2023 or until further order, whichever is earlier.”

Learned advocate appearing for the petitioner further submits that the present case is better than the said unreported case since in that case permanent suspension of the license of the petitioner was merely stayed but in the instant case it has been set aside. He also submits that pursuant to order dated 29^th September, 2022 in the aforesaid case the respondent Authority have already accepted the same by giving effect to the same and in support of his contention he has placed a communication dated 19^th October, 2022 which may be kept with the record.

Considering the facts and circumstances of the case as appears from record and submission of the parties and discussion made above the imagined order of revocation of petitioner’s license dated 11t^h July, 2022 shall remain stayed till 30^th April, 2023 or until further order, whichever is earlier.

Respondents shall file affidavit-in-opposition to the Writ Petition within four weeks . Petitioner to file reply thereto, if any, within two weeks thereafter.

List this matter for ‘Final Hearing’ in the monthly list of March, 2023.