2014 (3) TMI 839 - AT - Customs

Tribunal overturns Customs Broker prohibition order, requires compensation bond for revenue protection.

M/s Flyjac Logistics Pvt. Ltd. Versus Commissioner of Central Excise, Customs and Service Tax - BANGALORE-I

The Tribunal set aside the prohibition order issued under Regulation 23 of the Customs Broker's Licensing Regulations, 2013, finding it unjustified. ... Principle of natural justice - CHA - Appeal against the order of prohibition passed under the provisions of Regulation 23 of the Customs Broker’s Licensing Regulations, 2013 (the Regulations) against the appellant prohibiting them from operating within the jurisdiction of Bangalore Customs Commissionerate with immediate effect until further order. - Held that:- Either suspension or prohibition in a particular Commissionerate should precede an enquiry and if prohibition succeeds suspension and revocation of suspension, in our opinion, the prohibition should be for specific period and should be subject to the conclusion that will be reached after the enquiry is over and final decision is given by the Commissioner who should specifically indicate the quantum of punishment and nature of punishment of the CHA. There was no provision for prohibition in the earlier Regulations and there are no precedent decisions before us to consider the issue. Therefore, we have no option but to take a holistic view after considering the relevant provisions of Regulations to come to a logical conclusion which, in our view, would meet the ends of justice. Revocation of suspension is subject to the condition of the CHA undertakes to pay the differential duty along with fine and penalty in respect of the two Bills of Entry filed in Bangalore if it is found they are in anyway responsible to revenue loss. Such being the case, prohibiting the CHA from operating in the jurisdiction of Bangalore Commissionerate totally, in our opinion, is not justified. In fact, the provisions of Regulations 19 & 20 are considered, the suspension can continue till the enquiry is over, which, going by Regulation 20 can take up to 330 days. Once the suspending authority has decided that CHA can operate in other places, a prohibitory order, in our opinion, cannot be justified. Order of prohibition set aside subject to an undertaking to make good the loss of revenue, if any, caused by them because of their activity in Bangalore Customs till the enquiry and proceedings thereon are over. - Decided in favor of CHA. Issues Involved:1. Legality of the prohibition order under Regulation 23 of the Customs Broker's Licensing Regulations, 2013.2. Compliance with procedural requirements for prohibition and suspension.3. Impact of prohibition on the appellant's operations and employees.4. Justification for prohibition in light of previous suspension and revocation orders.Issue-wise Detailed Analysis:1. Legality of the prohibition order under Regulation 23 of the Customs Broker's Licensing Regulations, 2013:The prohibition order was issued under Regulation 23, which allows the Commissioner of Customs to prohibit a Customs Broker from operating if they fail to fulfill their obligations. The Commissioner concluded that the CHA had contravened Regulation 13 of the erstwhile CHALR 2004, and the contraventions were 'grave and serious,' necessitating immediate action to protect revenue interests.2. Compliance with procedural requirements for prohibition and suspension:The appellant argued that the prohibition order was issued after they had already undergone suspension, affecting the livelihood of their employees. The appellant also contended that the prescribed timeline for proceedings under Regulation 23 was not followed. The Tribunal noted that Regulations 19 and 20 provide for suspension and revocation procedures, while Regulation 23 allows for prohibition. The Tribunal highlighted that prohibition should precede suspension and revocation, not the other way around. The Tribunal found that the prohibition order did not specify a review period or indicate that it would be lifted after the licensing authority's final decision.3. Impact of prohibition on the appellant's operations and employees:The appellant submitted that the prohibition order affected the livelihood of their employees and that they had been operating without any adverse notice for the past fifteen years. The Commissioner of Customs (Seaport-Import), Chennai, had observed that what happened in Bangalore was an aberration and not sufficient to suspend the CHA's operation across the country. The Tribunal agreed, noting that the prohibition order did not consider the CHA's overall compliance history and the impact on their employees.4. Justification for prohibition in light of previous suspension and revocation orders:The Tribunal found that the Commissioner of Customs (Seaport-Import), Chennai, had already revoked the suspension, indicating that the incident in Bangalore was an aberration. The Tribunal noted that the prohibition order should be for a specific period and subject to the conclusion of the enquiry. The Tribunal also observed that the prohibition order was not justified since the suspending authority had allowed the CHA to operate in other places.Conclusion:The Tribunal set aside the prohibition order, finding no justification for sustaining it. However, to safeguard the revenue interest, the Tribunal directed the CHA to give an undertaking to make good any revenue loss caused by their activities in Bangalore Customs until the enquiry and proceedings were over. The prohibition order would be lifted once the appellant executed a bond to this effect. The Tribunal emphasized the need for a holistic view and compliance with procedural requirements to meet the ends of justice.