Case Law Details
Commissioner of Customs Vs Axis Shipping Agency (CESTAT Kolkata)
Introduction: In a recent case before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata, the Commissioner of Customs faced off against Axis Shipping Agency. The key issue at hand was the issuance of a show cause notice under an incorrect section of the Customs Act, which raised questions about its validity. This article delves into the details of the case and the tribunal’s verdict.
Detailed Analysis: The case revolved around a show cause notice issued by the Department against Axis Shipping Agency. The notice alleged a violation of Regulation 11 of the Customs Broker Licensing Regulations 2013 (CBLR) concerning the application for a new Customs House Agents Licence. However, the significant discrepancy lay in the fact that the notice was issued under Section 124 of the Customs Act, which deals with the confiscation of goods and penalties, and not under the relevant Section 146 that pertains to the licensing of customs brokers.
Section 146 of the Customs Act is explicit about the licensing of customs brokers and provides the framework for the issuance of licenses. The Customs Act empowers the Board to make regulations to facilitate these licensing functions, including the qualifications of license applicants and the form and fees for licenses. This section governs the proper procedure for granting a customs broker license.
On the other hand, Section 124 of the Customs Act is concerned with issuing a show cause notice before confiscating goods or imposing penalties. It outlines the due process to be followed when contemplating confiscation or penalties related to goods.
The show cause notice in question incorrectly invoked Section 124, which is irrelevant to the purpose of granting a Customs Broker License under Section 146.
In light of this clear statutory misalignment, the CESTAT Kolkata declared the show cause notice to be void ab initio. This Latin term, meaning “void from the beginning,” denotes that the notice was invalid and legally worthless from its inception. Consequently, any proceedings initiated based on a void show cause notice also inherit the same inherent defect.
The tribunal’s ruling underscored that the notice was issued under a section that did not apply to the circumstances, rendering it null and void. Therefore, any actions taken in furtherance of this defective notice held no legal force. The tribunal’s decision, which centered on the fundamental procedural error of invoking the wrong section, obviated the need to delve into the merits of the case.
Conclusion: In the case of Commissioner of Customs vs. Axis Shipping Agency, CESTAT Kolkata has ruled that the issuance of a show cause notice under the wrong section of the Customs Act renders the notice void ab initio. This decision emphasizes the paramount importance of adherence to correct legal procedures and highlights the consequences of failing to do so. The tribunal’s ruling serves as a precedent, affirming that statutory correctness is a foundational requirement in legal proceedings, ensuring that the law is applied correctly and fairly.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The Revenue has filed the present Appeal being aggrieved by the Order-in-Original No. CCP/WB/Tech/03/2015 dated 09.10.2015 passed by the Commissioner of Customs (Preventive), Kolkata, West Bengal, dropping the proceedings initiated vide Show-Cause-Notice C. No. VIII(48)63/CUS/P/WB/Tech/2012 dated 08.08.2014 against the Appellants.
2. The Department issued a show cause notice to the respondent whereby it alleged that the respondent had violated the provisions of Regulation 11 of Customs Broker Licensing Regulations 2013 (CBLR) (Regulation 13 of Customs House Agents Licensing Regulations, 2004), at the time of applying for a new Customs House Agents Licence, in terms of Section 146 of the Customs Act, 1962.
3. We note that Section 146 of the Customs Act, provides for the Licensing of a Customs Broker who are required to carry out various functions and responsibilities under the statute for and on behalf of the importing and exporting community. It vests in the Board powers to make regulations for purpose of carrying out the various functionalities as required under Section 146 of the Customs Act. The same reads as under :
- “146. Licence for customs brokers
(1) No person shall carry on business as a customs broker relating to the entry or departure of a conveyance or the import or export of goods at any customs station unless such person holds a licence granted in this behalf in accordance with the regulations.
(2) The Board may make regulations for the purpose of carrying out the provisions of this section and, in particular, such regulations may provide for-
(a) the authority by which a licnece may be granted under this section and the period of validity of such licence;
(b) the form of the licnece and the fees payable therefor;
(c) the qualifications of persons who may apply for a licence and the qualifications of persons to be employed by a licensee to assist him in his work as a customs broker;
(d) the manner of conducting the examination;
(e) the restrictions and conditions (including the furnishing of security by the licensee) subject to which a licence may be granted;
(f) the circumstances in which a licence may be suspended or revoked; and
(g) the appeals, if any, against and order or suspension or revocation of a licence, and the period within which such appeal may be filed.”
5. We note that the opening sentence of the impugned show cause notice referred to supra reads as under:
“NOTICE TO SHOW CAUSE, UNDER SECTION 124 OF THE CUSTOMS ACT, 1962”
6. The fact of notice being issued in terms of Section 124 of the Customs Act, is also recorded in Para 1 of the impugned Order-in-Original, now appealed by the Revenue. We note that Section 124 of the Customs Act, deals with the subject of issuance of notice before adjudging confiscation of goods. The said section does not cater to a situation concerning issuance of a notice to an individual seeking a Customs Broker Licence, in terms of Section 146 of the Customs Act. For ready reference Section 124 of the Customs Act is reproduced hereunder :
“124. Issue of show cause notice before confiscation of goods, etc.
No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person-
(a) is given a notice in [writing with the prior approval of the officer of customs not below the rank of [an Assistant Commissioner of Customs], informing] him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and
(c) is given a reasonable opportunity of being heard in the matter:
PROVIDED that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person concerned be oral:
[PROVIDED FURTHER that notwithstanding issue of notice under this section, the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed.”
7. Thus, under the circumstances, we have no hesitation in holding that the issuance of the impugned notice under Section 124 of the Customs Act, for the aforesaid purpose, is just not made out under the statute. In the circumstances, we find that the show cause notice issued by the Department is ab initio void and is therefore liable to be quashed. We, therefore, dismiss the show cause notice issued by the Department as a nullity in law. Under the circumstances, all and any proceeding issued in pursuance of a void show cause notice are in themselves void ab initio and therefore, carry no legal force. The proceedings initiated are therefore set aside on this preliminary ground alone, without going into the merits of the case.
8. In view of the aforesaid discussions, we dismiss the Appeal filed by the Department and drop all proceedings initiated in pursuance of the void notice, under reference.
(Order pronounced in the Court on. 22.09.2023 )
