2024 (2) TMI 624 - HC - Customs

Customs Broker License suspension quashed due to Inquiry Officer's failure to meet Regulation 17(5) deadline

M/s. Jai Logistics Services Pvt. Ltd., Represented by its Director, A. Velu Versus The Principal Commissioner of Customs, The Assistant Commissioner of Customs (CCO), Chennai

The HC quashed the suspension of petitioner's Customs Broker License under CBLR 2018. The Inquiry Officer failed to submit the report within the ... Suspension of petitioner's Customs Broker License under Regulation 16 of the Customs Brokers Licensing Regulations (CBLR), 2018 - forfeiture of security deposit - levy of penalty - serious lapse on the part of the Inquiry Officer in forwarding the report dated 30.12.2020 within the stipulated time - whether the petitioner had no role to play in the alleged fraud committed by the exporter, who allegedly wrongly claimed Duty Draw Back under the provisions of Section 75 of the Customs Act, 1962 read with Customs, Central Excise and Service Tax and Drawback Rules, 2017? HELD THAT:- Ordinarily the Inquiry Officer ought to have submitted a report by 20.9.2020 with the 1st respondent in accordance with Regulation 17 (5) of the Customs Broker Licensing Regulation, 2018. However, the report was made ready only on 30.12.2020. By this time, the Government had already promulgated the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Ordinance, 2020 on 31.3.2020. The Ordinance was replaced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The Act and the Ordinance came into force with effect from 31st day of March 2020 - 30th day of December, 2020 was the end date of the period during which the time limit specified in, or prescribed or notified under, the Central Excise Act, 1944 (1 of 1944), the Customs Act, 1962 (52 of 1962) (except sections 30, 30A, 41, 41A, 46 and 47), the Customs Tariff Act, 1975 (51 of 1975) or Chapter V of the Finance Act, 1994 (32 of 1994) for the completion or compliance of such action as specified under clause (a) or (b) of Section 6 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (No.38 of 2020). 31st day of December 2021 was construed as the last day to which the time limit for completion of compliance of such action was extended. The 1st respondent has given approval for transmitting the enquiry report only on 02.02.2021. Thus, it cannot be said that the Enquiry Report dated 30.12.2020 was communicated to the 1st respondent within 90 days from the issuance of the show cause notice and within the extended period as specified in the above notification issued for the purpose of section 6 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Though, COVID 19 pandemic, did not abate and there was a 2nd wave till May-June, 2021, no notification has been brought to the attention of this Court that the time was further extended by the Central Board of Indirect Taxes, similar to the Notifications issued by the Central Board of Direct Taxes under the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 for the Purpose of Income Tax Act, 1961 - Since the time was not extended by any other notifications by the Central Government under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Ordinance, 2020 on 31.03.2020 as was replaced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the proceedings initiated under the provisions of the Customs Broker Licensing Regulation, 2018 has to abate. Therefore, the failure on the part of the enquiry Officer to communicate the enquiry report within the period of 90 days stipulated in Regulation 17 (5) of the Customs Licensing Broker Regulation, 2018 is fatal - Proceedings have to therefore abate, since there was a failure in complying with the requirements of Regulation 17 (5) of the Customs Broker Licensing Regulation, 2018 and the enquiry report was not communicated in time, the question of 1st respondent considering the report and the representation of the petitioner would have risen. Petition allowed. Issues Involved:1. Suspension of Customs Broker License under Regulation 16 of the Customs Brokers Licensing Regulations (CBLR), 2018.2. Issuance of Show Cause Notice under Regulation 17(1) of CBLR, 2018 for revocation of license.3. Delay in submission and communication of the Inquiry Report under Regulation 17(5) of CBLR, 2018.Summary:Issue 1: Suspension of Customs Broker LicenseThe petitioner challenged the impugned order dated 12.06.2020, suspending their Customs Broker License under Regulation 16 of CBLR, 2018. The court found the challenge to be academic due to the subsequent issuance of a Show Cause Notice.Issue 2: Issuance of Show Cause NoticeThe petitioner also challenged the Show Cause Notice dated 21.06.2020 issued under Regulation 17(1) of CBLR, 2018, which called for the revocation of the license and forfeiture of security deposit. The court found no irregularity in the issuance of the Show Cause Notice and dismissed the related writ petitions.Issue 3: Delay in Submission and Communication of Inquiry ReportThe petitioner argued that the Inquiry Report, which should have been submitted within 90 days from the issuance of the Show Cause Notice, was delayed. The report was prepared on 30.12.2020 but was communicated to the petitioner only on 03.02.2021. The court noted that the COVID-19 pandemic led to an extension of deadlines under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, extending the time limit to 31.12.2020. However, the court found that the Inquiry Report was not communicated within the extended period, deeming the delay fatal. Consequently, the proceedings under Regulation 17(5) of CBLR, 2018, were found to be non-compliant and the related writ petition was allowed.Conclusion:1. W.P.No.9145 of 2020 and W.P.No.5782 of 2021 were dismissed.2. W.P.No.5787 of 2021 was allowed due to the failure to comply with the 90-day requirement for the Inquiry Report, resulting in the abatement of the proceedings.