2018 (12) TMI 1043 - AT - Customs

Tribunal reinstates CHA license citing time limits, individual liability

The Tribunal allowed the appeal, setting aside the revocation of the Custom House Agent (CHA) license and forfeiture of the security deposit. The Tribunal ... Revocation of CHA Liense - time limit of issuance of the offence report - Held that:- There is a delay of more than two years after receipt of the offence report, for completion of the proceedings under the CHALR, 2004. In this regard, the CBEC had issued a Circular No. 09/2010-Cus. dated 08.04.2010 conveying a series of instructions with regard to various issues under CHALR. In paragraph 7.1 of the same, the Board has prescribed an overall time limit of nine months from the date of receipt of the offence report and has also prescribed time limits at various stages of the issue of Show Cause Notice, submission of enquiry report, passing of Order by the Commissioner of Customs, etc. The non-adherence of time limit of nine months from the date of issuance of the offence report to passing of order by the Commissioner, in the present case will vitiate the impugned Order - appeal allowed - decided in favor of appellant. Issues:1. Time limits for finalization of proceedings against a Custom House Agent (CHA) under the Custom House Agent Licensing Regulations (CHALR), 2004.2. Imposition of penalties under Section 114 of the Customs Act, 1962.3. Validity of revocation of CHA license and forfeiture of security deposit.4. Involvement of a partner in alleged smuggling activities and its impact on the firm.5. Compliance with Circular No. 09/2010-Cus. dated 08.04.2010 regarding time limits for completion of proceedings.Issue 1: Time limits for finalization of proceedings against a Custom House Agent (CHA):The appellant argued that the action taken against their CHA license exceeded the time limits prescribed in the Circular No. 09/2010-Cus. dated 08.04.2010, which set a mandatory nine-month limit for completion of proceedings against errant CHAs. They cited judgments emphasizing the mandatory nature of these time limits, stating that any delays beyond the specified period would vitiate the proceedings. The appellant contended that the entire process against them, culminating in the revocation of their license, was invalid due to the delay in finalizing the proceedings.Issue 2: Imposition of penalties under Section 114 of the Customs Act, 1962:The Department had initiated proceedings against the appellants under Section 114 of the Customs Act, 1962, proposing penalties for alleged smuggling activities involving one of the partners. The appellant argued that the firm should not be penalized for the actions of an individual partner unless there were specific findings against the firm itself. They contended that the penalties imposed were not justified based on the available evidence and that the revocation of their license was unwarranted.Issue 3: Validity of revocation of CHA license and forfeiture of security deposit:The Department supported the revocation of the CHA license, citing clear evidence of the partner's involvement in the alleged smuggling activities. The appellant, on the other hand, argued that the suspension and subsequent revocation of their license were sufficient punishments, and they requested the revocation order to be set aside to allow them to resume operations as a Customs House Agent/Customs Broker. The Tribunal examined the timeline of events leading to the revocation and found a significant delay in completing the proceedings, rendering the revocation order unsustainable.Issue 4: Involvement of a partner in alleged smuggling activities and its impact on the firm:The appellant highlighted that the partner's involvement in the smuggling activities should not automatically implicate the firm, especially when there were no specific findings against the firm itself. They argued that penalizing the firm based solely on the actions of an individual partner was unjustified and that the revocation of their license should be overturned.Issue 5: Compliance with Circular No. 09/2010-Cus. dated 08.04.2010 regarding time limits for completion of proceedings:The Tribunal considered the Circular issued by the CBEC, which prescribed time limits for various stages of proceedings against CHAs. Despite the Department's argument that these guidelines were not binding as part of the CHALR, the Tribunal referred to judgments emphasizing the mandatory nature of these time limits. Citing relevant case law, the Tribunal held that the failure to adhere to the prescribed time limit of nine months from the date of the offense report invalidated the revocation order and forfeiture of the security deposit. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and reviving the appellant's CHA license.This detailed analysis of the judgment addresses the key legal issues involved in the case, focusing on the time limits for finalizing proceedings, penalties under the Customs Act, validity of the license revocation, impact of individual actions on the firm, and compliance with relevant Circulars.