2019 (1) TMI 11 - HC - Customs

Court finds violation of natural justice in Customs Broker License revocation, orders fresh decision within four weeks.

The Court held in favor of the petitioner, a Customs Broker License holder, finding a violation of principles of natural justice in the revocation of the ... Natural justice - right to be heard - inquiry report - disagreement with inquiry report - procedural fairness in disciplinary proceedings - revocation of Customs Broker Licence - non-compliance of Regulation 11(m) of Customs Broker Licensing Regulations, 2013 - forwarding of inquiry report and representation under Regulation 20(7)Natural justice - disagreement with inquiry report - right to be heard - Validity of imposing punishment by the disciplinary authority when it disagrees with the Inquiry Officer's favourable finding without disclosing the disagreement or calling for objections - HELD THAT: - The Court held that where an inquiry officer's report finds a charge not sustainable, the disciplinary/punishing authority, if it intends to disagree with that finding, must disclose its disagreement and give the affected party an opportunity to represent against the proposed adverse conclusion. The mere forwarding of the inquiry report without specifically stating the authority's disagreement and without calling for objections does not satisfy the requirements of natural justice. In the present case the communication dated 23.08.2018 merely forwarded the inquiry report and invited representations against the report generally under Regulation 20(7), but did not disclose any adverse reasons or the Commissioner's disagreement with the Inquiry Officer's finding on the charge under Regulation 11(m). Reliance on the Division Bench decision of the Delhi High Court (Him Logistics Pvt. Ltd.) supported the proposition that adverse material/reasons for disagreement must be communicated and an opportunity to show cause afforded before imposing punishment. Applying these principles, the Court concluded that passing the impugned order without informing the petitioner of the Commissioner's disagreement and without inviting objections amounted to violation of the right to be heard and procedural fairness. [Paras 6]Impugned punishments imposed without disclosing the Commissioner's disagreement with the Inquiry Officer's finding on Regulation 11(m) and without giving opportunity to object are set aside as violative of natural justice.Inquiry report - forwarding of inquiry report and representation under Regulation 20(7) - procedural fairness in disciplinary proceedings - Procedure to be followed on remand when the disciplinary authority disagrees with the inquiry report - HELD THAT: - The Court directed that the impugned order/communication be treated as the Commissioner's reasons for disagreement. The petitioner is to be given a fresh opportunity to furnish objections to those reasons within two weeks from receipt of the order, and on receipt of such objections the Commissioner shall decide the matter afresh on merits and in accordance with law within four weeks. These directions operationalise the requirement that adverse reasons and an opportunity to respond must precede final punitive action where the authority disagrees with the inquiry officer's findings. [Paras 8]Proceedings remitted: the communication is to be treated as reasons for disagreement; petitioner to file objections within two weeks; Commissioner to pass a fresh order on merits within four weeks.Final Conclusion: Writ petition allowed; punishments in the impugned proceedings set aside for violation of natural justice. The impugned communication is treated as reasons for disagreement, petitioner to submit objections within two weeks, and the Commissioner to decide afresh on merits within four weeks. Issues:Violation of principles of natural justice in revoking Customs Broker License.Analysis:The petitioner, a Customs Broker License holder, filed a Bill of Entry for clearance of consignment on 24.07.2018. Subsequently, a show cause notice was issued proposing a penalty under the Customs Act. An Order-in-Original was passed imposing a penalty on the petitioner. Another notice was issued under Customs Broker License Regulations, 2013, for non-compliance with certain provisions. An Inquiry Officer was appointed, who found one charge sustainable and another not. However, the respondent passed an order revoking the license without informing the petitioner about the disagreement on the charges. The petitioner contended a violation of principles of natural justice citing a Delhi High Court decision.During the proceedings, the Standing counsel for the respondent argued that the Inquiry Officer's report was forwarded to the petitioner for representation, but it did not disclose the respondent's disagreement on one of the charges. The communication lacked transparency in expressing disagreement with the findings, depriving the petitioner of the opportunity to respond to the disagreement. The Court emphasized the importance of disclosing disagreement and allowing the concerned party to present objections in such cases, citing a Delhi High Court decision.In light of the above, the Court held that the petitioner must be given an opportunity to present objections regarding the disagreement on one of the charges. The punishments imposed were set aside, and both parties were directed to treat the communication as reasons for disagreement, with the petitioner required to submit objections within two weeks. The respondent was instructed to pass a fresh order based on merits and in compliance with the law within four weeks. No costs were awarded, and the connected miscellaneous petition was closed.