2010 (10) TMI 653 - AT - Customs

Customs House Agent license suspension upheld despite prima facie stay case; Tribunal emphasizes discipline & natural justice

The suspension of a Customs House Agent's (CHA) license was upheld by the Tribunal despite a prima facie case for a stay being found by the ... Application for stay - waiver of pre-deposit - Suspension of the CHA licence - The filing of the bill of entry classifying “1-6-CHLORO-3-PYRIDYLEMETHYL-N-NITROIMIDAZOLIDIN-2-YLIDENEA-MINE” under Chapter 38 which covers ‘pesticides’ does not amount to violation of the CHALR, 2004 - the order of suspension is in the nature of a disciplinary action and is also in the nature of interim order as the same requires to be followed by an inquiry proceeding and a subsequent proceeding, if necessary as a result of such inquiry, for cancellation of the CHA licence - Prima facie, it appears that in this case, there existed sufficient reason for issuing the impugned suspension order and the order for its continuance - Held that: an order of suspension of a CHA licence cannot be allowed to continue indefinitely. To a specific query from the Bench during hearing of the stay application, the learned SDR was at a loss to say why the Custom House has not initiated the inquiry proceedings against the CHA so far Mere claiming of a particular classification may not be a violation under the provisions of the Regulations of CHALR - The suspension has been envisaged as a weapon to be used in emergent situations with a view to prevent recurrence of illegal activities/irregularities - The suspension of licence by its nature is an interim action to be necessarily followed by further investigation - the investigation for violation of provisions of the Customs Act by the importer stands concluded and show-cause notice under Section 124 of the Customs Act issued on 17-11-2009 itself - Stay application is rejected Issues Involved:1. Suspension of CHA Licence2. Prima Facie Case for Stay3. Principles of Natural Justice4. Disciplinary Measures and Administrative Authority5. Judicial Review and Tribunal's InterferenceDetailed Analysis:1. Suspension of CHA Licence:The CHA licence was suspended on 10-12-2009 under Regulation 20(2) of the Customs House Agents Licensing Regulations, 2004. The suspension was based on allegations that the CHA had facilitated imports without proper authorization, verification, or interaction with the importer, and had misclassified imported goods. The suspension was continued by an order dated 18-2-2010.2. Prima Facie Case for Stay:The Vice-President found a strong prima facie case for staying the suspension, arguing that the classification of the imported goods under Chapter 38 did not constitute a violation of CHALR, 2004. The suspension was based on different violations than those alleged in the show-cause notice. The show-cause notice issued to the importer did not propose penal action against the CHA, which was deemed irrelevant for proceedings under CHALR, 2004.3. Principles of Natural Justice:The suspension order was followed by a post-decisional hearing on 5-1-2010, fulfilling the principles of natural justice. The Technical Member emphasized that the jurisdictional Commissioner had recorded reasons for the suspension, and the Tribunal should not interfere unless the action was whimsical or mala fide.4. Disciplinary Measures and Administrative Authority:The Technical Member cited the Bombay High Court's decision in Worldwide Cargo Movers, emphasizing that the Commissioner of Customs is responsible for maintaining discipline in the Customs area. The Tribunal should not interfere with the disciplinary measures unless they are shockingly disproportionate or mala fide. The suspension was deemed necessary to prevent recurrence of illegal activities, and the CHA's continued work in the Custom House was undesirable pending inquiry.5. Judicial Review and Tribunal's Interference:The Tribunal's role in judicial review is to ensure that the administrative action has a reasonable basis and is not whimsical or mala fide. The Calcutta High Court in Shashi Deo Jha held that the Tribunal should not replace its judgment over that of the administrative authority. The Vice-President's grounds for staying the suspension were found unconvincing by the Technical Member, who argued that staying the suspension would effectively grant the relief sought in the appeal, making the appeal infructuous.Majority Order:The matter was referred to a third member due to a difference of opinion between the Vice-President and the Technical Member. The third member concurred with the Technical Member, holding that it was not appropriate to stay the suspension. The stay application was ultimately rejected by majority order.