2015 (7) TMI 1336 - HC - Customs

Court emphasizes strict time limit in CHALR, 2004, overturns penalties on broker

The Commissioner of Customs (Imports), The Inquiry Officer & Deputy Commissioner of Customs (CHA), Chennai Versus M/s. A.M. Ahmed & Co.

The court held that the time limit in Regulation 22(1) of CHALR, 2004 is mandatory, requiring proceedings to be initiated within 90 days. It found that ... Maintainability of petition - jurisdiction of Settlement Commission - prime stand of the Appellants is that the Writ Petition filed by the Respondent/Petitioner is not perse maintainable because of the reason that as against the Impugned Order revoking license granted to the Customs House Agent, Appeal is provided under Section 129A (1) of the Customs Act, 1962, which lies to the Customs, Excise and Service Tax Appellate Tribunal within 90 days from the date of receipt of copy of the Order. HELD THAT:- It is to be borne in mind that Section 127-H of the Customs Act, 1962 confers power on the Settlement Commission to grant immunity from prosecution - for any offence under this Act or the Indian Penal Code (45 of 1860) or under any other Central Act for the time being in force and such immunity may be either in whole or in part from the imposition of a penalty, fine and interest under the Customs act, 1962, in regard to the case covered by the Settlement. The offence discussed in Section 127-H of the Act means an offence pertaining to the case, covered by the Settlement. Even the power 'Waiver' is expressly conferred by Legislative to the Settlement Commission - Furthermore, as per Section 127-J of the Customs Act, 1962, 'every order' of settlement passed under Sub-Section 5 of Section 127-C shall be conclusive as to the matters stated therein and no matter covered by such order shall save as otherwise provided in this chapter (Chapter, 14-A) be reopened in any proceeding under this Act or under any other law for the time being in force - Also it cannot be forgotten that as per Section 127-M of the Customs Act, 1962 the proceedings before the Settlement Commission shall be deemed to be judicial proceedings within the meaning of Sections 193 and 228 and for the purposes of Section 196 of Indian Penal Code (45 of 1860). In the instant case, there is no two opinion of the fact that the importer was guilty of under valuation etc., and he was let out with the nominal fine, but the punishment of revocation its license and the forfeiture of security deposit of the Respondent/Petitioner, in the considered opinion of this Court is the excessive, arbitrary and capricious one - When the importer had escaped liability and when its case was concluded by the Settlement Commissioner, the Respondent/Petitioner is also to reap similar benefits in the considered opinion of this Court. This Court comes to an inescapable and resultant conclusion that the Learned Single Judge had rightly allowed the Writ Petition filed by the Respondent / Petitioner - Appeal dismissed. Issues Involved:1. Whether the time limit prescribed in Regulation 22(1) of CHALR, 2004 is mandatory or directory.2. The impact of the Settlement Commission's order on the liability of the petitioner.3. Whether the Writ Petition was maintainable given the alternative remedy available under the Customs Act, 1962.4. Whether the actions taken by the Commissioner of Customs were justified under CHALR, 2004.Issue-wise Detailed Analysis:1. Time Limit in Regulation 22(1) of CHALR, 2004:The court examined whether the time limit prescribed in Regulation 22(1) of CHALR, 2004 is mandatory. The Learned Single Judge observed that the respondents did not contend that the time limit was directory and not mandatory. The court upheld that the first respondent is duty-bound to initiate proceedings within 90 days from the date of receipt of the offence report.2. Impact of Settlement Commission's Order:The second contention was that the importer had settled the dispute under Section 127(B) of the Customs Act, 1962 with the Settlement Commission. The petitioner argued that since the importer received a clean chit, the petitioner, being only a broker, should not be penalized. The first respondent rejected this contention, stating that the Settlement Commission settled the case based on a true and full disclosure, confirming additional customs duty, interest, and nominal fine and penalty. However, the court noted that revoking the petitioner's license would deprive them of their livelihood, and it would be unfair to impose such an extreme penalty when the importer escaped with a nominal fine.3. Maintainability of Writ Petition:The appellants argued that the Writ Petition was not maintainable as an appeal is provided under Section 129A(1) of the Customs Act, 1962, which lies to the Customs, Excise, and Service Tax Appellate Tribunal within 90 days from the date of receipt of the order. The court noted that the respondent/petitioner had an effective and alternative remedy of preferring an appeal before the Tribunal, making the Writ Petition not maintainable.4. Justification of Actions by Commissioner of Customs:The appellants contended that the actions initiated by the Commissioner of Customs under Regulation 13(b), 13(d), 13(e) of CHALR, 2004 were justified and within the period of limitation. They argued that the Customs Act, 1962, and CHALR, 2004 operate in different areas, and the time limit under Regulation 22(1) of CHALR, 2004 should not apply to proceedings under the Customs Act, 1962. The court pointed out that the term 'offence report' is not defined in CHALR, 2004, and the show cause notice dated 18.05.2010 should be considered the date of receipt of the offence report, making the proceedings initiated beyond the 90-day period invalid.Conclusion:The court concluded that the punishment of revoking the petitioner's license and forfeiting the security deposit was excessive, arbitrary, and capricious. The court emphasized the principle of equal treatment under Article 14 of the Constitution and held that the petitioner should receive similar benefits as the importer. The court upheld the Learned Single Judge's decision to allow the Writ Petition, setting aside the impugned order, and dismissed the Writ Appeal.