M/S. Saarthee Shipping Company vs Commissioner Of Customs, Kandla

(Arising out of OIO-7/CHA/2013-14 dated 15.10.2014 and OIO-12-CHA-2014-15 dated 03.03.2015, Passed by Commissioner of Customs, Kandla)

M/s. Saarthee Shipping Company : Appellant (s)

VERSUS

Commissioner of Customs, Kandla : Respondent (s)

Represented by :

For Appellant (s) : Shri Hardik Modh, Advocate For Respondent (s) : Shri T.K. Sikdar, Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Hon'ble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Hon'ble Member (Technical)

Date of Hearing / Decision : 12.05.2015

ORDER No. A/10593-10594/2015 Dated 12.05.2015

Per : Mr. P.K. Das;

The appellant filed appeal No. C/10075/2015 against order dated 15.10.2014, where the Commissioner of Customs suspended Customs House Broker License, with immediate effect, issued under Regulation 19 (1) of Customs Brokers Licensing Regulation, 2013 (in short Regulation 2013). The appellant also filed appeal No. C/10537/2015 against order dated 03.3.2015 passed by the Commissioner of Customs for continuation of suspension of Customs Brokers License under Regulation 19 (2) of the said Regulation, 2013, until further orders. The appellant filed application for early hearing of the appeal No. 10537/2015. As the issue involved in these appeals is common, we take up both the appeals together for disposal.

2. The relevant facts of the case, in brief, are that appellant is holding Customs Broker Licence, under Regulation 2013. On 09.01.2014, the Custom officers intercepted four containers imported in the name of M/s. Sun Enterprises declared as Waste Paper OCC and it was found cigarettes and the Bill of Entry dated 09.1.2014 was filed by the appellant. The goods were seized by the Customs authorities and statements of the importer and appellant were recorded in the month of January, February and October 2014. As per investigation report dated 15.10.2014, the Commissioner of Customs suspended the Customs Broker License by order dated 15.10.2014 with immediate effect, under Regulation 19(1) of the Regulation 2013. The Commissioner of Customs granted personal hearing on 30.10.2014 to the appellant, who appeared before the Commissioner. No further order was passed by the Commissioner within the stipulated period under Regulation 19 (2) of the said Regulation. Hence, on 15.01.2015, the appellant filed Appeal against order dated 15.10.2014 before this Tribunal, which is listed today. Thereafter, the Commissioner by order dated 03.3.2015 directed continuation of suspension order till further orders under Regulation 19(2) of Regulations, 2013.

3. Learned Advocate on behalf of the appellant submits that the alleged offence was committed on 09.01.2014 and the statements were recorded in the month of January and February 2014 and therefore, there is no reason to exercise the powers under Regulation 19(1) to suspend the Licence with immediate effect. Further, the Commissioner had not passed order within stipulated period for continuation of suspension order, which is fatal and on this ground the suspension order should be set-aside. It is further submitted that no notice was issued to the appellant within 90 days from the date of receipt of offence report under Regulation entry 20 (1) of Regulation 2013. He submits that there is a long delay in issuing order under Regulation 19 (2) and no notice was issued under Regulation 20(1) till date and on these grounds the appeal should be allowed. He relied upon the decision of the Honble Madras High Court in the case of Commissioner of Customs (Sea Port Import) Chennai vs. CESTAT, Chennai  2014 (310) ELT 673 (Mad.). He also relied upon the decisions of the Honble Delhi High Court, in the case of Falcon Air Cargo and Travels (P) Limited vs. UOI  2002 (140) ELT 8 (Del.) and the decision of the Tribunal in the case of D. Thimmeswara Rao vs. Commissioner of Customs, (Sea Import)  2014 (313) ELT 147 (Tri. Chennai).

4. Learned Authorised Representative for the Revenue submits that the appellant committed a grave offence which was detected by investigation and therefore, there is delay in submitting offence report. He further submits that the delay in passing final suspension order under Regulation 19 (2) is not fatal and therefore, the suspension order should not be set-aside. He also submits that the action under Regulation 20 (1) is not linked with the suspension order under Regulation 19 of the Regulation 2013. It is submitted that issuing notice for revocation of license under Regulation 20 is separate proceedings.

5. After hearing both the sides and on perusal of the records, we find that M/s. Sun Enterprises Limited imported a consignment and filed bills of entry on 09.01.2014. Custom Officers detected the alleged mis-declaration of the goods. Statements of importer and the appellant were recorded in the month of January and February 2014. Learned Advocate submits that a statement was also recorded in October 2014 for the purpose of issuing offence report on 15.10.2014. In any event, we find that offence report was submitted on 15.10.2014 against the import on 09.01.2014. The Commissioner issued suspension order immediately on 15.10.2014. It has also granted personal hearing within 15 days, which was attended by the appellant. But, no order was passed within 15 days from the date of hearing to the appellant as required under Regulation 19 (2) of the said Regulation. After filing of the appeal against the order under Regulation 19(1) of the Regulation before Tribunal, the Commissioner passed the order on 03.3.2015 under Regulation 20 (2).

6. For the purpose of proper appreciation of the case, we reproduce Regulation 19 and 20 of Regulation 2013, as under:-

19. Suspension of licence.  (1) Notwithstanding anything contained in regulation 18, the [Principal Commissioner or Commissioner] of Customs may, in appropriate cases where immediate action is necessary, suspend the licence of a Customs Broker where an enquiry against such [broker] is pending or contemplated.

(2) Where a licence is suspended under sub-regulation (1), the [Principal Commissioner or Commissioner] of Customs shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose licence 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 Commissioner of Customs passes an order for continuing the suspension, the further procedure thereafter shall be as provided in regulation 20.

20. Procedure for revoking licence or imposing penalty.  (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 licence 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 defence 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 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 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 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 licence of the Customs Broker or imposing penalty not exceeding the amount mentioned in regulation 22 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 Commissioner of Customs.

7. Regulation 19 (1) of the Regulation 2013 has given a power to the Commissioner of Customs to suspend the license of a Custom Broker in appropriate case, where immediate action is necessary, where enquiry is pending or contemplated. As per Sub-regulation (2) of Regulation 19, the Commissioner of Customs shall give an opportunity of hearing to the Customs Broker within 15 days from the date of order under sub-regulation (1) of the said Regulation. The Commissioner of Customs shall also pass an order within 15 days from the date of hearing granted to the Customs Broker. Proviso to Regulation 19(2) provides that after passing an order for continuation of suspension, procedure under Regulation 20 will be followed. Regulation 20(1) provides that Commissioner of Customs shall issue notice in writing to the Customs Broker within a period of 90 days from the date of receipt of offence report. To sum up, there is statutory requirement on the part of Commissioner to pass an order within 30 days from the date of order under Regulation 19(1) to the Customs Broker for continuation of suspension order. The action under Regulation 19 is linked with Regulation 20 (1).

8. In the present case, we find that the offence was committed on 09.01.2014 and the offence report was submitted on 15.10.2014 and the suspension order was issued on the same day under Regulation 19(1) of the said Regulation and also fixed a post decisional hearing on 30.10.2014. But, the Commissioner of Customs had not issued order for continuation of suspension under Regulation 19(2) within the stipulated period. Proviso to Regulation 19 (1) provides that after passing an order for continuing of the suspension, the further procedure thereafter shall be followed in Regulation 20. Learned Advocate submitted that no notice was issued till date by the Commissioner of Customs under Regulation 20(1) of the Regulation 2013. On a query from the Bench, learned Authorised Representative submits that he had written to the Commissioner of Customs whether notice was issued but no reply has yet been received. Learned Advocate categorically submitted before the Bench that they have not received any notice.

9. We find that post decisional hearing was granted on 30.10.2014, but, no order was passed within 15 days. After about five and half months, the impugned order was passed and there is no indication that the matter was heard by the Commissioner. The finding of the Commissioner is as under:-

3. Now, the suspension of the CB Licence has been reviewed by me and considered the gravity of offence and since the investigation of the case is still in progress, I, hereby order for continuation of the suspension of the CB Licence No. KDL/CHA/R/09/2011 dated 10.02.2011 valid up to 09.02.2021 issued to M/s. Saarthee Shipping Co., Gandhidham, in exercise of powers conferred under Regulation 19 (2) of CBLR, 2013 until further order.

10. We are unable to accept the finding of the Commissioner for the reasons, the Commissioner in his earlier Order dated 15.10.2014 issued under Regulation 19(1), observed that the said order was issued on the basis of investigation report dated 15.10.2014. Further, the Tribunal in the case of Manjunatha Shipping Services Limited vs. Commissioner of Customs, Chennai, vide Final Order No. 40461/2013 dated 10.10.2013 observed that there is distinction between the investigation to unearth evidence required to issue show cause notice and inquiry under Regulation 22(1) as it stood during the relevant time, presently Regulation 20 (1) of Regulation 2013. The relevant portion of the said order in the case of Manjunatha Shipping Services Limited (supra), are reproduced below:-

9.?Regulation 22(1) is applicable for issuing both suspension order and revocation order. However Regulation 20(2) authorizes the Commissioner of Customs to suspend the licence of a CHA in emergent situations without following the procedure under Regulation 22(1). It is very obvious that immediate suspension of license is permitted only when an enquiry is pending is contemplated. The non obstante clause Regulation 20(2) makes an exception only in the matter of suspension and not in the matter of revocation. So, it is implied that such inquiry has to be completed, within the time frame prescribed in various sub-regulations of Regulation 22 and a final view in the matter of revocation of license is to be taken.

10.?It may be noted that investigation to unearth evidence required to issue SCN and inquiry as envisaged in Regulation 22(1) are two distinct processes. Investigation is to be done by Revenue using its powers to unearth documents and to record statements which process apparently has been done in this case substantially even before the suspension order was passed and investigating authority had given report and on that basis suspension order was passed. Now, the next stage is the enquiry as envisaged in Regulation 22(1). This can commence only after issue of a show cause notice, as envisaged in Regulation 22(1), which has not been done in this case so far. We are of the view that where the immediate suspension has been ordered under the provisions of Regulation 20(2) and thereafter the procedure would follow procedure for enquiry under Regulation 22(1), which starts from the issue of notice, has to be followed. We have already discussed above that such enquiry has to start with the issue of show cause notice and such process is different from investigative process required to unearth evidences. Furthermore, in our considered view, the impugned order dated 03.03.2015 was passed without considering the submissions of the Customs Broker, after about more than five months, is contrary to Regulation 19(2) and such order cannot be sustained.

11 The Tribunal in the case of Concord Zoom vs. CC, CE & ST, Hyderabad  2013 (291) ELT 298 (Tri. Bang.), held that time-limit of 15 days under Regulation 20 (3) of old Regulation and Regulation 19 (2) of Regulation 2013, is mandatory. Non-passing of the order within prescribed period is in clear violation of Regulation vitiated ex-parte order. Relevant portion of the said decision is reproduced:-

Regulation 20(3) of the CHALR, 2004 is reproduced below :

Where a licence is suspended under sub-regulation (2), notwithstanding the procedure specified under Regulation 22, the Commissioner of Customs may, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs House Agent whose licence 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 House Agent. (underlining added) On a comparison of the underlined sentences, we observe that the Circular, by adding the clause where it is possible to do so, liberalised the sub-regulation with a departmental bias. The time limit of fifteen days has to be considered as mandatory as per Regulation 20(3). Therefore we hold that the non-passing of order by the learned Commissioner of Customs, Hyderabad within 15 days from the post-decisional hearing dated 24-10-2011 is in clear violation of the mandatory provision of Regulation 20(3) which, as rightly pointed out by the learned counsel, vitiated the ex parte suspension order passed by the Commissioner. From the report received from the respondents side today, it appears that it is not the case of the respondent that non-passing of the order was due to any omission or fault or mistake of the appellant. 12 The Honble Bombay High Court in the case of Commissioner of Customs vs. National Shipping Agency  2008 (226) ELT 46 (Bom.) held that power of suspension is an emergent power to be used in those cases where it is required that CHA licence be immediately suspended. Honble Delhi High Court in the case of Falcon Air Cargo and Travels (P) Limited vs. UOI  2002 (140) ELT 8 (Del.) held that there is distinction between Suspension and Revocation. Suspension renders licence inoperative for a particular period whereas revocation renders licence totally inoperative in future.

13. Taking into account the facts and circumstances of the present case, we find that investigation report was submitted on 15.10.2014 as revealed from order dated 15.10.2014, issued under Regulation 19(1) and no order was passed within 30 days from the date of the said order under Regulation 19(2). The impugned order dated 03.3.2015 under Regulation 19(2) was issued after about five and half months in a wrong premises that since the investigation of the case is still in progress and no enquiry under Regulation 20 was initiated till date and such order can not be sustained and is liable to be set-aside.

14. In view of the above discussions, the impugned order dated 30.03.2015 issued under Regulation 19 (2) of Regulation 2013 is set-aside and the appeal filed by the appellant is allowed. Appeal No. C/10537/2015 filed by the appellant against suspension order under Regulation 19 (1) is dismissed as infructuous. Application for Early hearing of the appeal is disposed of.

(Dictated and pronounced in the Court)

(H.K. Thakur) (P.K. Das) Member (Technical) Member (Judicial) ..KL

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