Case Law Details
Airmasters Freight Services Vs Commissioner of Customs (CESTAT Mumbai)
CESTAT Mumbai held that invocation of provisions of immediate suspension of Customs Broker License after more than four years of alleged act is not sustainable in law. Accordingly, order of continuation of immediate suspension is set aside.
Facts- It was alleged that the appellants CB did not exercise due diligence in discharging their obligation as required under sub-regulations 10(d), 10(e), 10(k) and 10(n) of CBLR, 2018. On such basis, and by treating it as an offence report, Commissioner had come to the conclusion that the appellants CB had prima facie failed to fulfill their responsibility as per provisions of CBLR, 2018 for ordering immediate suspension under Regulation 16(2) of CBLR, 2018 vide Order dated 17.04.2023. After giving a post decisional hearing on 24.04.2023, the licensing authority i.e., Commissioner of Customs had ordered for continued suspension of the CB license of the appellants vide order dated 04.05.2023.
Conclusion- The Co-ordinate Bench of the Tribunal in a similar case of P.P. Associates Vs. Commissioner of Customs (General), Mumbai has held that continuation of immediate suspension order is not sustainable, when such action is being taken after a lapse of long period of time. In the present case, the immediate suspension action was taken after passing of more than four years, and hence the above ratio of the decision taken by the Tribunal is squarely applicable to the present case before us.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal has been filed by Airmasters Freight Services, Nagpur (herein after, referred to as ‘the appellants’, for short) assailing the Order-in-Original F. No. VIII(Cus)25-24/CT/CB/Air Master/2023 dated 04.05.2023 (referred to as ‘the impugned orders’) passed by learned Commissioner of Customs, Nagpur.
2.1 In the impugned order dated 04.05.2023, the learned Commissioner of Customs, Nagpur in exercise of powers conferred upon him under Regulation 16 (2) of the Customs Brokers Licensing Regulations, 2018 (CBLR) had passed an order for continued suspension of the CB license issued to the appellants for acting as a Customs Broker under Regulation 71 ibid until further orders. This order is the result of separate show cause proceedings initiated vide Show Cause Notice (SCN) No. 218/2022-23 dated 22.12.2022, inter-alia, seeking action against the appellants CB under Section 124 of the Customs Act, 1962. In the said SCN, it was alleged that the appellants CB did not exercise due diligence in discharging their obligation as required under sub-regulations 10(d), 10(e), 10(k) and 10(n) of CBLR, 2018. On such basis, and by treating it as an offence report, the learned Commissioner had come to the conclusion that the appellants CB had prima facie failed to fulfill their responsibility as per provisions of CBLR, 2018 for ordering immediate suspension under Regulation 16(2) of CBLR, 2018 vide Order dated 17.04.2023. After giving a post decisional hearing on 24.04.2023, the licensing authority i.e., Commissioner of Customs had ordered for continued suspension of the CB license of the appellants vide order dated 04.05.2023.
2.2 The said customs offence case was also adjudicated by the learned Additional Commissioner of Customs vide Order-in-Original CAO No. ADC/PKK/ CC(G)/SJ/CBS Adj. dated 12.06.2023, in a separate proceedings wherein certain specific observations have also been made about the role of the CB in paragraph 80 of the said order and ordered inter-alia for imposition of penalty on the appellants CB for an amount of Rs.3,00,000/- under Section 114(iii) and further another penalty of Rs.2,00,000/- under Section 114AA of the Customs Act, 1962.
2.3 Briefly stated, the facts of the case are that the appellants herein is a Customs Broker (CB) holding a regular CB license issued by Nagpur Customs Commissionerate under Regulation 7(3) of Customs Brokers Licensing Regulations (CBLR), 2018 and was allotted CB license No.11/1215 valid up to 30.10.2027. During an investigation conducted by Directorate of Special Intelligence and Investigation Branch-Exports [SIIB(X)], investigation was conducted against the exporters viz., M/s Ewan Impex and M/s R.S. Creation, who had by resorting to overvaluation of export goods viz., oil filters and semiconductor device, have availed ineligible export benefits by declaring in the Free Shipping Bill (S/B) involving remittance of foreign exchange and claiming both MEIS benefit and IGST refunds. On the basis of such specific intelligence, SIIB(X) carried out 100% examination of export goods in few live shipping bills by the above exporters, and it was found that even though the description and quantity of export goods were found to be as declared, the FOB value of these export goods were highly over valued as ascertained from market inquiries conducted by them. Hence, the SIIB(X) summoned the exporters and none of them participated in the investigation proceedings. Therefore, statements were recorded from the persons concerned including the Shri Peter Gonsalves, proprietor of appellants CB. The appellants were one of the CB who had filed S/Bs for the exporter M/s R.S. Creation, in the past involving over valuation of export goods. From the investigation conducted by the SIIB(X) and offence report in the form of SCN dated 22.12.2022 received from SIIB(X), the Commissioner of Customs, Nagpur had concluded that there is a prima facie case against the appellants for having contravened Regulations 10(d), 10(e), 10(k) and 10(n) of CBLR, 2018 and also considered it appropriate for immediate suspension, pending initiation of inquiry proceedings under Regulation 17 ibid, against violations of CBLR as above, and for continuation of such suspension vide the impugned order dated 04.05.2023. Feeling aggrieved with the impugned order, the appellants have preferred this appeal before the Tribunal.
3.1 Learned Advocate for the appellants contends that all the allegations of violation of Regulations 10(d), 10(e), 10(k) and 10(n) of CBLR, 2018 in both the cases have been countered by them. One of the main arguments advanced by the learned Advocate against the impugned order dated 04.05.2023, is that learned Commissioner had not considered the factual details submitted by them during the adjudication proceedings and passed the impugned order in a mechanical manner. He further stated that the departmental SIIB(X) officers themselves had verified the premises of exporter M/s R.S. Creations and submitted a visit report dated 18.12.2019 stating the existence of the exporter and that the summons was also served upon them which was duly received by exporter, and hence the findings of the learned Commissioner that the exporter did not exist in the said address is factually incorrect. Further, he stated that there is no evidence on record to allege that the appellants have not advised the exporters properly, did not maintain records of transactions handled by them, identification of their client exporters as per prescribed KYC norms and hence, claimed that there is no case made out by the Customs. In addition to this, he submitted that neither the value of the export goods has not been conducted in terms of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 nor any market inquiry was conducted to substantiate the claim of over valuation by the department.
3.2 Further, learned Advocate stated that the appellants CB did not have any prior knowledge about the fact that the exporter is going to mis-declare or overvalue the goods; they had filed the declarations for export under various S/Bs as per the documents received through the exporters. He further stated that for the acts of misdeeds done by the exporters, the appellants CB cannot be held liable. Thus, he claimed that the appellants did not contravene any of the Regulations ibid. Further, the entire proceedings have been initiated after a delay of about four years after the incidence of exports and investigation, and separate action on such alleged offences having already been concluded in a separate proceeding vide order dated 12.06.2023.
3.3 In support of their stand, the learned Advocate had relied upon the following decisions of the Tribunal and the judgement of the Hon’ble High Court of Bombay, in the respective cases mentioned below:
i. Sabin Logistics Private Limited. Vs. Commissioner of Customs, Chennai – 2018 (362) E.L.T. 226 (Tri. – Chennai)
ii. Shasta Freight Services Pvt. Ltd. Vs. Commissioner of Customs, Hyderabad – 2019 (368) E.L.T. 41 (Telengana) upheld by Hon’ble Supreme Court – 2022 (381) E.L.T. 436 (S.C.)
iii. Exim Cargo Services Vs. Commissioner of Customs (General) – 2019 (368) E.L.T. 1024 (Del.)
3.4 In view of the above reasons, learned Advocate pleaded that the case of violation by the appellants for over valuation of export goods for immediate cancellation of their CB license and its continuation, is not sustainable.
4. Learned Authorised Representative (AR) reiterated the findings made by the Commissioner of Customs, Nagpur in the impugned order and submitted that all the violations under Regulation 10 ibid, has been examined in detail by the Principal Commissioner. Thus, learned AR justified the action of Commissioner of Customs in immediate suspension of the appellant’s CB license, as well as continued suspension of the CB license in the impugned order and stated that the same are sustainable in law.
5. We have heard both sides and perused the case records.
6.1 The issue involved herein is to decide (i) whether the action taken for immediate suspension of the appellant Customs Broker and its continuation is legally sustainable in terms of CBLR, 2018 or not. The specific sub-regulations which were alleged to have been violated by the appellants are Regulations 10(d), 10(e), 10(k) and 10(n) of CBLR, 2018, and hence the issue to be decided is also (ii) whether such distinct charges framed against the appellants enable the immediate suspension action and its continuation under Regulation 16 of the CBLR, 2018.
We find that the Regulation 10 ibid, provide for the obligations that a Customs Broker is expected to fulfill during their transaction with Customs in connection with import and export of goods. These regulations are extracted and given below as follows:
“Regulation 10. Obligations of Customs Broker: –
A Customs Broker shall –
…
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 Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;
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;
…
(k) maintain up to date records such as bill of entry, shipping bill, transhipment application, etc., all correspondence, other papers relating to his business as Customs Broker and accounts including financial transactions in an orderly and itemised manner as may be specified by the Principal Commissioner of Customs or Commissioner of Customs or the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be;
(n) verify correctness of Importer Exporter Code (IEC) number, Goods and Service Tax Identification Number (GSTIN), identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information;
Suspension of license.
Regulation 16. (1) Notwithstanding anything contained in regulation 14, the Principal Commissioner or Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the license of a Customs Broker where an enquiry against such Customs Broker is pending or contemplated:
Provided that where the Principal Commissioner or Commissioner of Customs may deem fit for reasons to be recorded in writing, he may suspend the license for a specified number of Customs Stations.
(2) Where a license is suspended under sub-regulation (1), the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose license is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs Broker:
Provided that in case the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, passes an order for continuing the suspension, further procedure thereafter shall be as provided in regulation 17.
Procedure for revoking license or imposing penalty.
Regulation 17. (1) The Principal Commissioner or Commissioner of Customs shall issue a notice in writing to the Customs Broker within a period of ninety days from the date of receipt of an offence report, stating the grounds on which it is proposed to revoke the license or impose penalty requiring the said Customs Broker to submit within thirty days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs Broker desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs.
(2) The Commissioner of Customs may, on receipt of the written statement from the Customs Broker, or where no such statement has been received within the time-limit specified in the notice referred to in sub-regulation (1), direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, to inquire into the grounds which are not admitted by the Customs Broker.
(3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall, in the course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the inquiry in regard to the grounds forming the basis of the proceedings, and he may also put any question to any person tendering evidence for or against the Customs Broker, for the purpose of ascertaining the correct position.
(4) The Customs Broker shall be entitled to cross-examine the persons examined in support of the grounds forming the basis of the proceedings, and where the Deputy Commissioner of Customs or Assistant Commissioner of Customs declines permission to examine any person on the grounds that his evidence is not relevant or material, he shall record his reasons in writing for so doing.
(5) At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall prepare a report of the inquiry and after recording his findings thereon submit the report within a period of ninety days from the date of issue of a notice under sub-regulation (1).
(6) The Principal Commissioner or Commissioner of Customs shall furnish to the Customs Broker a copy of the report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, and shall require the Customs Broker to submit, within the specified period not being less than thirty days, any representation that he may wish to make against the said report.
(7) The Principal Commissioner or Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs Broker, pass such orders as he deems fit either revoking the suspension of the license or revoking the license of the Customs Broker within ninety days from the date of submission of the report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, under sub-regulation (5) :
Provided that no order for revoking the license shall be passed unless an opportunity is given to the Customs Broker to be heard in person by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be.
(8) Where in the proceedings under these regulations, the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, comes to a conclusion that the F-card holder is guilty of grounds specified in regulation 14 or incapacitated in the meaning of the said regulation, then the Principal Commissioner of Customs or Commissioner of Customs may pass an order imposing penalty as provided in regulation 18:
Provided that where an order is passed against an F-card holder, he shall surrender the photo-identity card issued in Form F forthwith to the Deputy Commissioner of Customs or Assistant Commissioner of Customs.
(9) Where in an offence report, charges have been framed against an F-card holder in addition to the Customs Broker who has been issued a license under regulation 7, then procedure prescribed in regulations 16 and 17 shall be followed mutatis mutandis in so far as the prescribed procedure is relevant to the F-card holder:
Provided that where any action is contemplated against a G-card holder alone under these regulations, then instead of authority referred to in sub-regulation (8), a Deputy Commissioner or Assistant Commissioner rank officer shall pass such order as mentioned in the said sub-regulation along with debarring such G-card holder from transacting the business under these regulations for a period of six months from such order :
Provided further that where an order is passed against a G-card holder, then he shall surrender the photo identity card issued in Form G forthwith to the Deputy Commissioner of Customs or Assistant Commissioner of Customs.
Explanation.—Offence report for the purposes of this regulation means a summary of investigation and prima facie framing of charges into the allegation of acts of commission or omission of the Customs Broker or a F card holder or a G-card holder, as the case may be, under these regulations thereunder which would render him unfit to transact business under these regulations.”
6.2 We find that the Commissioner of Customs had come to the conclusion that the appellants CB had violated the above stated sub-regulations (d), (e), (k) and (n) of Regulation 10 ibid, as they did not advice the exporter properly on the need to file declaration with correct details; they did not exercise due diligence and report of any non-compliance by the exporter, to the DC/AC for necessary action. Further, the learned Commissioner had found that the appellants CB could not produce the documents related to S/Bs, and that the exporter could not be located in the address furnished in the S/Bs during verification conducted by the department. Thus, the adjudicating authority had passed the impugned order confirming all the allegations of violation of above Regulations of CBLR, 2018 for justifying the continued suspension of the appellants CB license. Whereas, in terms of the Regulation 16 ibid, what is required to be done is to evidentially provide for the appropriateness for immediate suspension action of the CB license and its continuation, pending regular inquiry proceedings under Regulation 17 ibid. However, we find that there is no record to show such a procedure prescribed has been followed in this case. Therefore, we find that the impugned order is not in conformity with the provisions of CBLR, 2018.
6.3 From plain reading of the provisions of Regulation 16(1) of CBLR, 2018, it transpires that the licensing authority i.e., Commissioner of Customs may, suspend the license of a Customs Broker only in appropriate cases where immediate action is necessary, and where an enquiry against such Customs Broker is pending or contemplated. Further, even in such cases, a post- decisional hearing is required to be given, and a reasoned order is required to be passed either revoking the suspension or continuing it, as the case may be, justifying the reasons to be recorded in writing.
6.4 Further, plain reading of the above legal provisions of Regulation 17 of CBLR state in clear terms that the inquiry proceedings have to be followed as per the procedure prescribed in the Regulation 17 ibid. The following are the various steps involved therein in passing an order under Section 17 inquiry proceedings:
i. Issue of Show Cause Notice to a CB against whom action has been proposed under CBLR
ii. On the basis of written reply submitted by the CB, determine the grounds which have been accepted by him and those which have not been admitted by the CB, and appoint an Inquiry Officer to inquire into such grounds which are not admitted
iii. Inquiry officer to take into account all necessary evidence, oral or documentary for ascertaining the correct position
iv. opportunity for cross-examination of the persons examined in support of the evidence against the CB
v. Preparation of the inquiry report containing the findings of the inquiry officer
vi. Obtaining written representation from the CB, if he wish to submit any grounds against the inquiry report
vii. Principal Commissioner of Customs to consider the inquiry report, CB’s representation and provide an opportunity of personal hearing before passing an adjudication order on the inquiry proceedings
viii. Specific penalties against ‘F’ card holder, if case the Principal Commissioner comes to a conclusion for such imposition, duly following the procedure as above.
The specific sub-regulation (7) of Regulation 17 ibid, provides the legal authority for the Principal Commissioner/Commissioner of Customs to pass such orders as he deems fit, either revoking the suspension of the license or revoking the license of the Customs Broker within ninety days from the date of submission of the inquiry report.
6.5 From the factual matrix of the case, it transpires that the alleged overvaluation in exports had taken place in respect of S/Bs filed during January, 2019; the investigation was initiated thereafter and even certain premises were verified including the exporter M/s R.S. Creation on 18.12.2019 and summons issued by the investigating SIIB officers to the manager of the exporter in person. Upon completion of such investigation, the customs authorities have issued SCN dated 22.12.2022 to the exporters and the CBs as co-noticees. Further, the said SCN had also been adjudicated on 12.06.2023, by specifically mentioning about the role of the appellants CB for imposition of penalty under Section 114(iii) and 114AA of the Customs Act, 1962. On the other hand, the learned Commissioner of Customs in the impugned order dated 04.05.2023, had straight away gone into the conclusion by giving his findings that the appellants CB had violated Regulations 10(d), 10€, 10(k) and 10(n) of CBLR, 2018, even before an independent inquiry proceedings have been initiated,
6.6 From the above discussion and analysis, we find that there is no justification given by the learned Commissioner of Customs in the impugned order for invoking the provisions of immediate suspension and its continuation in the year April, 2023, nearly after more than four years, for an alleged act done by the exporter in overvaluation of export goods in the year January, 2019 to which the appellants CB have been made as a party/co-noticee. Further, no specific evidence has been placed on record to show that there was involvement of the appellants CB in such overvaluation of the export goods. Therefore, we are of the considered view, that there are no specific grounds to evidentially prove that immediate suspension of the appellants CB license is required as an appropriate case, for initiating action under Regulation 16 of CBLR, 2018. Further, none of the parties are able to provide further information about the inquiry proceedings that is required to be initiated under Regulation 17 for bringing the case to a logical conclusion as per CBLR, 2018.
6.7 In this regard, we find that Central Board of Indirect Taxes and Customs (CBIC) had issued certain instructions to all the Chief Commissioners/ Commissioners of Customs about the various references received about suspension of CB licenses being resorted to by the licensing authorities even in cases which do not merit immediate suspension of CB license. Even though such instruction No.24/2023 was issued few months after issue of impugned order, the context with which such instructions was issued and that the problem of immediate suspension being invoked in a number of cases is indicative that the impugned order also needs to be examined from such perspective as to whether such action taken in the impugned order is disruptive or not, and also whether it is in conformity with the instructions of CBIC, which is meant to bring in uniformity in implementation of the CBLR, 2018 among the Customs field formations in terms of Section 151A of the Customs Act, 1962. The extract of said instructions dated 18.07.2023 is extracted and given below:
“Instruction No. 24/2023
F. No. 520/01/2023-Cus.VI
Government of India
Ministry of Finance,
Department of Revenue
Central Board of Indirect Taxes and Customs
***
Room No. 252A, North Block, New Delhi
Dated: 18.07.2023
To,
All Principal Chief Commissioner/Chief Commissioner of Customs/Custom (Preventive),
All Principal Chief Commissioner/Chief Commissioner of Central Tax and Customs,
All Principal Commissioner/Commissioner of Customs /Custom (Preventive),
All Principal Commissioner/Commissioner of Central Tax and Customs.
Subject: Suspension of Licence of Customs Broker – regarding
Madam/Sir,
The undersigned is directed to say that references have been received in the Board that often the suspension of Customs Broker licence is resorted even in the cases which do not merit immediate suspension of licence. It is represented that this may be disruptive, especially in the case of small enterprises of Custom Brokers.
2. The matter has been examined. The Regulation 16 of CBLR, 2018 provides that notwithstanding anything contained in Regulation 14, the Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the licence of a customs broker, where the enquiry against such customs broker is pending or contemplated.
3. Since the power is specified to be exercised in specified circumstances, that is, the appropriate cases where immediate action is necessary, it indicates that suspension is not visualized for application in a manner routine or mechanical or in every case. This aspect is to be kept in view by the Commissioner of Customs in the course of considering a proposal to suspend the licence of a customs broker. Before doing so, the Commissioner should also take the care also of recording his/her reasons as to why it is considered an appropriate case where immediate action of suspension is necessary.”
Plain reading of above instructions reveals that there is twin requirement of appropriateness of the case, as such action is not contemplated in every case. These are (i) the grounds for invoking immediate suspension action should be indicated so as to demonstrate that it is not an exercise undertaken in a mechanical or routine manner; and (ii) that the reasons for such immediate suspension should be recorded. These are to be fulfilled for taking action on immediate suspension of CB license under Regulation 16 of CBLR, 2018. From the facts of the case, it is clear that there is no ground or evidence produced by the department to implicate the appellants CB in overvaluation of export goods. In fact, even in the proceedings initiated for the customs offences against the appellants CB, there is no such evidence forthcoming as seen from the adjudication order dated 12.06.2023, in order to claim that the learned Commissioner had gone by his preponderance of probability, in order to decide that the present case is an appropriate case for immediate suspension, on the basis of his subjective satisfaction of the facts and evidences. There is neither such basis recorded by learned Commissioner of Customs nor there exists any facts or documents evidencing such ground. Hence, we are of the considered opinion, that the impugned order is contrary to the requirement of the provisions of Regulation 16 of CBLR, 2018 and therefore it does not stand the scrutiny of law.
6.8 In this regard, we find that the Co-ordinate Bench of the Tribunal in a similar case of P.P. Associates Vs. Commissioner of Customs (General), Mumbai – 2016 (343) E.L.T. 684 (Tri. – Mumbai) have held that continuation of immediate suspension order is not sustainable, when such action is being taken after a lapse of long period of time. The relevant paragraphs of the said order are extracted and given below:
“7. Having considered the rival contentions, I find that there is no allegation made out against the appellant CHA firm of the active involvement in the alleged undervaluation by the said importers. Further no documents appeared to have been executed and handled by the said Faiyaz Merchant, on behalf of the appellant firm. It is further admitted fact that the suspension have been made by way of interim measure for alleged misgivings and/or action or inaction on the part of the appellant for imports prior to March, 2012, almost after 2 years and as such interim suspension, pending inquiry is bad and not called for. The appellant have also drawn our attention to the ruling of the Hon’ble Bombay High Court in the case of Commissioner of Customs v. National Shipping Agency – 2008 (226) E.L.T. 46 (Bom.), wherein, the Hon’ble Court have noted that the power to suspend as an interim measure, is to be used in those cases, where it is required that the CHA licence be immediately suspended. Under the fact that the alleged violation was of the year 2005 September and the order of suspension was issued in October, 2006, itself indicates that there is no emergency which required that the licence be suspended.
8. It is therefore ordered that the suspension of the appellant CHA firm vide the impugned order is set aside. The Commissioner of Customs is directed to complete the inquiry proceedings expeditiously preferably within a period of 12 months from receipt of a copy of this order. The appellant CHA firm is entitled to carry on its business as CHA with immediate effect.
In the present case, the immediate suspension action was taken after passing of more than four years, and hence the above ratio of the decision taken by the Tribunal is squarely applicable to the present case before us.
6.9 We further find that in one another case involving smuggling of prohibited goods for export, long gap of nine months from the date of incident and action for immediate suspension and non-initiation of inquiry proceedings were cited as the grounds by the Co-ordinate Bench of the Tribunal in the case of K.S. Kannan Vs. Commissioner of Customs, Chennai – 2008 (227) E.L.T. 414 (Tri. – Chennai) setting aside the order for immediate suspension. The relevant paragraphs of the said order is extracted and given below:
“2. It is submitted by the counsel for the appellants that the suspension of CHA licence without enquiry or show-cause notice after more than nine months from the date of the relevant incident cannot be sustained in law. In this connection, learned Counsel has relied on the following decisions :-
i. Ganesh Shipping Agency v. Commissioner of Customs, Chennai – 2008 (222) E.L.T. 536 (Tri. – Chennai)
ii. P. C. India Shipping Agency v. Commissioner of Customs (General), Mumbai-I – 2007 (213) E.L.T. 251 (Tri. – Mumbai)
iii. P. V. Ramana Murthy Son v. Commissioner of Customs, Cochin – 2006 (205) E.L.T. 861 (Tri. -Bang.)
iv. International Cargo Services v. Union of India – 2006 (193) L.T. 546 (Del.)
v. Kunal Travels (Cargo) v. Commissioner of Customs, New Delhi – 2005 (180) E.L.T. 345 (Tri. – Del.)
vi. Kamal Kumar Agarwal v. Union of India – 2004 (171) E.L.T. 301 (Cal.)
It was also submitted that the export consignment was handled by M/s. K.S. Kannan & Co. and not by M/s. K.S. Kannan & Coo. and, therefore, the appellants cannot be proceeded against on the basis of the incident in question. We have heard learned JDR also, who has reiterated the findings and observations of the Commissioner.
3. Judicial authorities placed before us are unanimous on the point that immediate suspension of a CHA licence could be ordered only in cases where such action is necessary and where any enquiry against the CHA is pending or contemplated. In the instant case, the licence was suspended after more than nine months since the incident in question [attempted smuggling of red sanders in the guise of export of calcite powder]. No enquiry whatsoever was conducted by or on behalf of the Commissioner so as to be able to make out a ground for immediate suspension of the operation of the licence. Under Regulation 20(2) of the CHALR, it was incumbent upon the Commissioner to gather enough information justifying immediate action against the CHA. He should have obtained enough materials warranting urgent action against the CHA. He could have suspended the operation of the licence only where an enquiry against the CHA was pending or contemplated. In the present case, no enquiry was pending when the impugned order was passed inasmuch as no show-cause notice had been issued against them. The circumstances did not even indicate that any enquiry was contemplated against the CHA. The long gap of nine months between the relevant incident and the suspension of licence is per se indicative of the haphazardness on the part of the Commissioner in proceeding against the CHA. On these facts, we have got to set aside the Commissioner’s order and it is ordered accordingly. The appeal stands allowed. It is, however, made clear that nothing stands in the way of the Commissioner proceeding against the CHA in accordance with Regulation 20(1) of the CHALR, if enough materials are available for the same.”
7. In view of the above discussion on the crux of the grounds of appeal against the impugned order, it is hereby made very clear that we are not examining the allegations of violation of various Regulations under CBLR against the appellants, as it is pre-mature inasmuch as the licensing authority i.e., Commissioner of Customs is yet to finally pass a speaking order under Sub-regulation (8) of Regulation 17 of CBLR, 2018. We are also therefore not expressing our opinion on any of the alleged violations of Regulation 10 ibid, as there is an independent inquiry proceeding that is required to be conducted by the jurisdictional Customs Commissionerate as licensing authority and on which a speaking order is required to be passed by him in terms of Regulation 17 of CBLR.
8.1 In view of the above analysis of the legal provisions under Regulation 16 and 17 of CBLR, 2018 and on the facts of the case, we find that the impugned order dated 04.05.2023 is liable to be set aside, as it does not stand the scrutiny of law.
8.2. In view of the foregoing discussions, we do not find any merits in the impugned order 04.05.2023 passed by the learned Commissioner of Customs, Nagpur in continued suspension of the CB license of the appellants, inasmuch as there is no finding given by the Commissioner of Customs for displaying the appropriateness of the case for invocation of such action, and justifying the continued suspension of CB license under Regulation 16 of CBLR, 2018. Further, the impugned order dated 04.05.2023 is also not sustainable as it has failed to establish the role of appellants CB in the alleged overvaluation of export goods to claim that regular inquiry proceedings are contemplated against such alleged violations of Regulations 10(d), 10(e), 10(k) and 10(n) ibid.
9. Therefore, by setting aside the impugned order dated 04.05.2023, we allow the appeal in favour of the appellants. We also direct the learned Commissioner of Customs to complete the inquiry proceedings under Regulations 17 of CBLR, 2018 expeditiously, preferably within a period of six months from receipt of a copy of this order. Consequently, the appellants CB firm is entitled to carry on its business as CB with immediate effect, for which the jurisdictional Commissioner shall issue necessary order for compliance.
(Order pronounced in open court on 29.11.2024.)
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