2019 (3) TMI 522 - AT - Customs

Court overturns Customs Broker Licence revocation citing procedural flaws & lack of evidence

The court set aside the order revoking M/s Mysoor 4M's Customs Broker Licence and forfeiting their security deposit due to irregularities in baggage ... Revocation of CHA License - forfeiture of security deposit - irregularities in ‘baggage declaration’ - another grievance of theirs is that the action has been initiated while M/s Mysore Business Associates, which was in existence earlier, had ceased its operations at Chennai. Whether the impugned order is legal in the context of the pleading that the licence that was alleged to have been utilized for the misdemeanor in clearance of unaccompanied baggage at Chennai Customs stood cancelled much before the order of revocation in the impugned order? Held that:- We find no reason to disagree with Learned Authorized Representative that the licensing authority would have been influenced by an adverse finding against a proprietary concern whose proprietor subsequently sought issue of fresh licence as a partnership firm. Nevertheless, the fundamental principles of natural justice prescribes that the entity proposed to be imposed with detriment should be placed on notice of jurisdiction, and the alleged deviation from prescribed Rules of Conduct along with sufficient evidence of such misdemeanor. It is seen from the show-cause notice leading to the present proceedings that the charges are specific to the four consignments of unaccompanied baggage and, though based on the connection between M/s Mysore Business Associates and M/s Mysoor 4M, is conspicuously silent on (a) the discretion to withhold a licence on the ground of proved misconduct and; (b) the provision within the Regulation that permits a successor licence to be proceeded against for alleged misdemeanor under the erstwhile licence. Even if it be prejudicial to the proper functioning of a custom house to permit a licence to operate under a different garb even after committing of an offence, the relation between the action initiated and the present proceedings should have been made amply clear along with the intent to take it to its logical conclusion. We find marked lack of such forthrightness on detailed articulation of intent in the show-cause notice. It would, therefore, appear that revocation of the licence of M/s Mysoor 4M is based solely on the commonality of the individual, Shri MS Diwakar, to the two licences. This does not appear to be adequately evidenced in the show-cause notice; nor do we find an elaboration on this in the impugned order. It is seen from the records that the appellant had been assailing the allegation of blank documents having been given, as well as of their complicity in the forgeries, though, doubtlessly, with no evidence to substantiate these. Nevertheless, in the context of such firm rebuttal of the allegations, the original authority should have taken steps to ascertain the possible role of the appellant by appropriate forensic reference. Appellant too has also failed to undertake this task but that does not overcome the obligation of the licensing authority to establish, beyond doubt, that the appellant was involved in the fraudulent transaction. It is not necessary to examine the correctness of the finding pertaining to the six charges that had been held as proved by the enquiry authority. That is a matter that would have to be determined on its own if the licensing authority had proceeded against a licence which was valid when the misdemeanor occurred - appeal allowed - decided in favor of appellant. Issues:Revocation of Customs Broker Licence and forfeiture of security deposit due to irregularities in baggage declaration; Compliance with time-limits for initiating proceedings against agents; Legal validity of the impugned order in the context of cancelled licence; Adherence to principles of natural justice in revoking licences.Issue 1: Revocation of Customs Broker Licence and forfeiture of security depositThe case involved M/s Mysoor 4M, aggrieved by the revocation of their Customs Broker Licence and forfeiture of security deposit due to irregularities in baggage declaration. The irregularities occurred in Chennai Customs, claimed to have happened before M/s Mysoor 4M commenced operations there. The background revealed the transition from M/s Mysore Business Associates to M/s Mysoor 4M, with contentions about the validity and surrender of licences. The proceedings included suspension, show-cause notice, and enquiry leading to the revocation of the licence. The appellant argued that the lapse of time between investigation and proceedings exceeded prescribed timelines, rendering the revocation void.Issue 2: Compliance with time-limits for initiating proceedings against agentsThe appellant contended that the time-limits prescribed for taking action against agents were not adhered to, vitiating the proceedings. Although the show-cause notice and penalties were imposed within regulatory timelines, the delay between investigation and initiation of proceedings exceeded the frame set by the Central Board of Excise & Customs. The opposing view suggested that the statutory prescriptions were followed, and any non-compliance was limited to non-mandatory directions in a circular. The focus was on immediate action for suspension and the time between the event and licence suspension.Issue 3: Legal validity of the impugned order in the context of cancelled licenceThe argument centered on the legality of revoking a licence that had already been cancelled. It was contended that the revocation of M/s Mysoor 4M's licence, which succeeded M/s Mysore Business Associates, was influenced by adverse findings against the predecessor. The importance of natural justice in imposing penalties and the need for clear articulation of intent in show-cause notices were highlighted. The lack of evidence linking the individual involved in both licences was noted, raising doubts about the basis for revocation.Issue 4: Adherence to principles of natural justice in revoking licencesThe judgment emphasized the significance of adhering to principles of natural justice in revoking licences that impact livelihoods. Glaring inadequacies in the impugned order, including failure to establish the appellant's involvement in fraudulent transactions and lack of forensic verification, led to the decision to set aside the order and allow the appeal. The failure to comply with natural justice principles overshadowed the findings on the proved charges, necessitating a reevaluation of the case.In conclusion, the judgment focused on the procedural aspects of revoking a Customs Broker Licence, highlighting issues of compliance with time-limits, legal validity in the context of cancelled licences, and the importance of natural justice in such proceedings. The decision to set aside the order was based on the failure to meet the standards of natural justice, underscoring the need for fairness and clarity in regulatory actions affecting livelihoods.