2019 (12) TMI 22 - HC - Customs

Court sets aside proceedings for exceeding time limits, ruling in favor of petitioners on license suspension.

M/s. KTR Logistics Solutions Pvt. Ltd. Versus The Commissioner of Customs, The Inquiry Officer/Deputy Commissioner of Customs

The court allowed all the writ petitions, setting aside the impugned proceedings due to the mandatory nature of the time limits prescribed under the ... Revocation of Customs Brokers (CB) License - forfeiture of security deposit - time limit for issuance of offence/enquiry report - main contention of the petitioners in all these cases is that the time prescribed under the Regulations for doing each act is mandatory and therefore, if no such act is done within the time prescribed, the same cannot be sustained. HELD THAT:- The Authority, who suspends the license/revokes the license/imposes penalty, should act/issue certain proceedings within the time stipulated therein. Under 19(1) of 2013 Regulations, the Commissioner of Customs is empowered to suspend the license in an appropriate case, where immediate action is necessary and where an enquiry against such agent is pending or contemplated. It is further seen that if a license is suspended under Sub Regulation (1) of Regulation 19, the Commissioner shall give an opportunity of hearing to the customs broker within 15 days from the date of suspension of license and pass such order, as he deems it fit, either revoking the suspension or continuing it within15 days from the date of hearing granted to such customs broker. In case, the Commissioner passes an order for continuing the suspension, further procedure thereafter shall have to be followed as provided under Regulation 20. This Court, after considering the scope of the relevant regulation and the time frame fixed therein and also after following the Division Bench decision of the Delhi High Court in IMPEXNET LOGISTIC VERSUS COMMISSIONER OF CUSTOMS (GENERAL) [2016 (6) TMI 348 - DELHI HIGH COURT] found that the time limit fixed is mandatory and that the Enquiry Report filed beyond the period of 90 days cannot be considered as a valid report and consequently, further proceedings cannot be allowed to go as a follow up action. No doubt, under the Regulations, it is not specifically stated as to what would follow as a consequence if each and every act contemplated under the Regulations is not done or completed within the prescribed time limit. Merely because the Regulation does not prescribe or spell out expressly or specifically as to what would be the consequence, there could be no presumption that there is no consequence at all in these cases - a broker, whose license is suspended and is not visited with any further order within the time limit prescribed, is undoubtedly deprived of his business endlessly and thus, such hardship detrimental to the interest of the licensee is to be treated and viewed as consequence. Likewise, the revocation of the license or imposing penalty should also be done within the time prescribed so that the customs house agent will be in a position to know where does he stand. In this case, non compliance of the time limit would certainly affect the interest of the customs house broker and therefore, the above said decisions relied on by the respondents are not applicable to the present facts and circumstances. In other words, it is obvious that by not adhering to the time limit, the substantial right of the licensee to continue the business is affected and therefore, it is evident that only to protect such substantial right, the time limit is prescribed under the regulations and thus, the compliance of the same is mandatory and not directory. Petition allowed. Issues Involved:1. Validity of revoking licenses beyond the prescribed time limit.2. Validity of suspension orders and show cause notices issued beyond the prescribed time limit.3. Compliance with the Customs Brokers Licensing Regulations (CBLR) 2013 and 2018.Issue-wise Detailed Analysis:1. Validity of revoking licenses beyond the prescribed time limit:- W.P.No.3366/2019: The petitioner challenged the revocation of their license on the grounds that the Enquiry Officer issued the report beyond 90 days from the date of issuance of the show cause notice, and the Commissioner did not pass orders within 90 days from the date of the enquiry report, violating Regulation 20(5) and 20(7) of CBLR, 2013.- W.P.No.27948/2019: The petitioner argued that the Enquiry Report was submitted beyond 90 days from the date of the show cause notice, and the Commissioner did not pass the final order within 90 days from the submission of the Enquiry report, violating Regulations 20(5) and 20(7) of CBLR 2013.- W.P.No.28726/2019: The petitioner contended that the Enquiry report was not given within 90 days from the date of the show cause notice, thus violating Regulation 17(5) and Regulation 17(7).2. Validity of suspension orders and show cause notices issued beyond the prescribed time limit:- W.P.No.1855/2019 & W.P.No.18041/2019: The petitioner challenged the suspension order and subsequent show cause notice for cancellation of the license, arguing that the show cause notice was issued beyond 90 days from the date of the offence report, violating Regulation 17(1) of CBLR 2018.- W.P.No.18060/2019: The petitioner challenged the extension of the suspension order, arguing that the order continuing the suspension was passed beyond 15 days from the date of personal hearing, violating Regulation 16 of 2018 Regulations.- W.P.No.6755/2019: The petitioner contended that the enquiry report was not filed within 90 days from the date of the show cause notice, violating Regulation 17(5) of 2018 Regulation.- W.P.No.18755/2019: The petitioner argued that the show cause notice was issued beyond 90 days from the date of the offence report, and the Enquiry Report was filed beyond 90 days from the show cause notice, violating Regulation 17(1) and Regulation 17(5) of CBLR 2018.- W.P.No.22154/2019: The petitioner contended that the Enquiry report was not filed within 90 days from the date of the show cause notice, and the Commissioner did not pass the final order within 90 days from the receipt of the Enquiry Report, violating Regulation 17(5) and Regulation 17(7).- W.P.No.31383/2018: The issue raised in this writ petition got merged with W.P.No.22154 of 2019.- W.P.No.28850/2019: The petitioner argued that the show cause notice was issued beyond 90 days from the date of the offence report, violating Regulation 17(1) of 2018 Regulations.- W.P.No.28858/2019: The petitioner contended that the show cause notice was issued beyond 90 days from the date of the offence report, and the Enquiry report was not submitted within 90 days from the date of the show cause notice, violating Regulations 20(1), 20(5), and 20(7) of 2013 Regulations.3. Compliance with the Customs Brokers Licensing Regulations (CBLR) 2013 and 2018:- The petitioners argued that the time prescribed under the Regulations for doing each act is mandatory. If no act is done within the prescribed time, the same cannot be sustained.- The respondents contended that the limitation prescribed under the relevant regulations is not mandatory since no consequence follows for not following the time limit. They argued that the time limit prescribed is only directory and not mandatory.- The court considered the relevant provisions under both regulations, which are pari materia, and found that the time limit fixed is mandatory. The court referred to previous decisions, including the Delhi High Court's decision in Impexnet Logistic vs. Commissioner of Customs (General) and the Division Bench decision of this Court made in CMA No.730 of 2016, which held that the time limits are mandatory.- The court observed that merely because the Regulation does not prescribe or spell out expressly or specifically as to what would be the consequence, there could be no presumption that there is no consequence at all. The court emphasized that suspending a license pending enquiry cannot be prolonged endlessly without completing the other procedures as a follow-up action within the prescribed time limit.- The court concluded that the time limit prescribed under the relevant regulations is mandatory and not directory. Consequently, the impugned proceedings passed/issued beyond the prescribed time limit were set aside.Conclusion:The court allowed all the writ petitions and set aside the impugned proceedings, emphasizing the mandatory nature of the time limits prescribed under the relevant regulations. The court made observations and suggestions to the Revenue to safeguard the interest of both parties in future cases.