2009 (9) TMI 318 - HC - Customs

High Court overturns CHA license cancellation, emphasizes CESTAT decision, grants relief pending Supreme Court ruling.

The High Court set aside the orders cancelling the Custom House Agent (CHA) license and rejecting the renewal application. It found the reasons for ... Revocation of licence- The petitioner is carrying on business and acting as licenced Customs House Agent (CHA), there are no allegations of any irregularities committed by the petitioner. by this petition the petitioner challenges the order dated 20th May 2009 passed by the Commissioner of Customs (General) cancelling the Custom House Agent (CHA) licence and further directing that since the licence was pending renewal when the order was passed, the revocation would be applicable as and when the licence became operational on account of the renewal. The petitioner also challenges the order dated 6th July 2009 passed by the Commissioner of Customs (General) rejecting the application of the petitioner for renewal of the CHA licence. Tribunal held that- for first ground-In our view, giving of the visiting card to respondent no. 2 was even assuming if amounted to misconduct was too insignificant a thing warranting cancellation of the licence or its refusal of its renewal. For second ground- the order imposing the fine of Rs.15 lakhs on Mr. Unnikrishnan by the adjudicating authority on which reliance has been placed in the impugned orders was set aside by the CESTAT by its decision rendered in Commissioner of Customs v. R.K. Tommer and other connected matters reported in Special leave petition filed has been filed against the order of the CESTAT. By the SLP the order of CESTAT has been set aside. High Court held that- in the event the order of the CESTAT is set aside, modified or stayed by the Supreme Court it would be open to the respondents to take appropriate action in accordance with law after giving opportunity of hearing to the petitioner. Issues involved:Challenge to cancellation of Custom House Agent (CHA) license and rejection of renewal application.Analysis:1. The petitioner challenged the order cancelling the CHA license and rejecting the renewal application. The High Court found the actions disproportionate to the alleged misconduct of using an old visiting card. The court sought information on past misconduct, which was found to be non-existent. The petitioner had been operating as a CHA licensee for over 20 years without any irregularities until investigations began in 2003 regarding certain exports handled by a partner of the petitioner. The initial order making the CHA license inoperative was set aside by the High Court due to lack of hearing. Subsequently, the renewal application was rejected, and the license was revoked pending renewal, leading to the present challenge.2. The High Court examined the grounds for cancellation and rejection. The first ground was based on the petitioner falsely representing as a CHA agent after the license expired. The court found the explanation provided by the partner of the petitioner regarding the use of old visiting cards to be plausible and insignificant to warrant cancellation or refusal of renewal. The second ground relied on statements and penalties imposed on the partner, which were later retracted and set aside by the CESTAT. The court held that the Commissioner erred in relying on the order that no longer existed due to the CESTAT decision.3. The respondents argued that a special leave petition was filed in the Supreme Court against the CESTAT decision, but it had not been admitted or heard due to objections. The High Court noted that until the Supreme Court decides on the matter, the CESTAT decision remains in effect. However, the court emphasized that as of the impugned order date, the CESTAT decision exonerating the partner was valid, and the respondents erred in relying on the overturned order. The High Court set aside the impugned orders and clarified that if the Supreme Court alters the CESTAT decision, appropriate action could be taken after providing a hearing to the petitioner.4. The High Court concluded by emphasizing that until the Supreme Court's decision, the CESTAT ruling must be considered valid. The respondents were advised to await the Supreme Court's decision before taking any further action against the petitioner. The court granted relief to the petitioner by setting aside the impugned orders and ensuring the fundamental right to carry on business is protected until a final decision by the Supreme Court.