Customs Department Must Follow CESTAT Directives Unless Overturned by a superior court

Principal Commissioner of Customs Mumbai – General Vs Vilas Transport Company (Bombay High Court)

In the case Principal Commissioner of Customs Mumbai (General) vs Vilas Transport Company, the Bombay High Court dismissed the appeal challenging a CESTAT order. The dispute originated when the Commissioner of Customs suspended the CHA (Customs House Agent) license of Vilas Transport in 2011 for mis-declaration at the Chennai port. CESTAT had ruled that the suspension should be revoked if the inquiry was not completed within three months. However, the Commissioner of Customs revoked the suspension conditionally in 2012, pending further inquiry. CESTAT deemed this action arbitrary and beyond the Commissioner’s authority, as the earlier CESTAT order did not allow for conditional revocation. The High Court agreed with CESTAT’s finding, affirming that the Customs Department must adhere to the specific directive unless overturned by a superior court. The appeal was consequently dismissed, upholding CESTAT’s decision to restore the respondent’s CHA license.

The Matter was argued by Ld. Counsel Bharat Raichandani.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1 The appeal impugns an order dated 23^rd September 2022 passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT). By the said order, the CESTAT observed that CESTAT had in the earlier round of litigation between the parties observed that in the event of non completion of the proceedings under the Customs House Agents Licensing Regulations, 2004 (CHALR), the order of suspension of CHA license of respondent would stand revoked. Not just that, the Commissioner of Customs had revoked the license on 26^th April 2012. The CESTAT observed that the Commissioner kept the revocation conditional till the outcome of inquiry being contemplated under Regulation 22 of CHALR and that action was arbitrary and was found beyond the competency of the Commissioner of Customs. Aggrieved by this, the present appeal came to be filed and the following three substantial questions of law are proposed :

(A) Whether CESTAT is correct in law in setting aside Order of Revocation of License and Forfeiture of Security Deposit imposed on the Respondent on account of Failure of Customs Broker to comply with Regulations 13(d), 13(e) and 13(0) of CHALR, 2004?

(B) Whether, on the basis of facts and circumstances of the case, the purported delay in Inquiry Proceedings in light of CESTAT Order dated 15^th December 2011 vitiates the Order-in-Original dated 24^th October 2019?

(C) Whether, on the basis of facts and circumstances of the case, CESTAT is correct in law in holding that keeping Revocation of Suspension of License vide Order dated 26^th April 2012 a conditional one till the outcome of inquiry being contemplated under Regulation 22 of CHALR, 2004 that is found absent in the Order of CESTAT dated 15^th December 2011 is arbitrary and beyond the competency of Commissioner of Customs?

2 Respondent was holding a CHA license since 1983. Respondent was prohibited from operating at Chennai Customs Port in view of certain mis-declaration in some shipping bill that was reported against the exporter. The license was suspended pursuant to an order passed by the Commissioner of Customs (General) directing discontinuance of the service pending inquiry. Respondent preferred an appeal before the CESTAT and in its order dated 24^th March 2011, while disposing the appeal, the CESTAT passed the following order :

xxxxxxxxxxxxxx As contended by the learned Counsel for the Appellant that their CHA licence was suspended on 24.03.2011 and thereafter they were given a personal hearing on 18.05.2011 and their suspension was confirmed on 26.07.2011 and thereafter no proceedings were initiated under Regulation 22 of the CHALR, 2004. In view of these circumstances, we direct the Commissioner of Customs, Mumbai if they wish to initiate any inquiry against the Appellant under Regulation 22 of CHALR that should be completed within three months from today and during this they may issue charge sheet, initiate inquiry and complete the proceedings. If within the period of three months they fail to complete their proceedings under Regulation 22 of CHALR the order of suspension of CHA licence of the Appellant shall stand revoked. xxxxxxxxxxxxxx

3 By an order dated 30^th April 2012 the Commissioner of Customs (General), Mumbai revoked the suspension of CHA license by observing that it was being done as the investigation is still under progress before the investigating unit. The CESTAT took a view that this has been done despite a clear direction to restore respondent’s license in the event of Department’s failure to conclude the inquiry within three months of receipt of the CESTAT order passed on 15^th December 2011. The CESTAT has held as under :

xxxxxxxxxxxxxx In the instant case the proceeding against the Appellant was not concluded at the first instance within the time limit prescribed for such completion got over. Therefore, the protection available under double jeopardy, though can only be extended by Constitutional Courts, would not come to the rescue of the present Appellant since the first proceeding had not been completed but was aborted. However, when there is a clear finding of the CESTAT that in such an event of non- completion of the proceedings under CHALR, the order of suspension of CHA licence of the Appellant would stand revoked and it was revoked also by the Commissioner of Customs on 26.04.2012. But keeping such revocation a conditional one till the outcome of inquiry being contemplated under Regulation 22 of CHALR, 2004, that is found absent in the order of CESTAT passed on dated 15.12.2011 is arbitrary has beyond the competency of the Commissioner of Customs. Hence the order. xxxxxxxxxxxxx

4 We find nothing incorrect in the conclusion arrived at by the CESTAT. We agree with the CESTAT that there is a specific direction that the Department has to strictly follow it unless that direction is set aside by a superior forum.

5 Therefore, appeal dismissed.

6 In view of the above, the interim application does not survive and the same also stands dismissed.