TaxTMI 
TaxTMI 
2010 (10) TMI 674
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.... pending the hearing and disposal of the present petition, Your Lordships may be pleased to stay the operation and implementation of Notification dated 8-4-2010 and public notice fixing date for examination dated 22-4-2010; [D] In ex-parte ad-interim relief in terms of [C] may kindly be granted; [E] Such other and further reliefs as may be deemed just and proper may kindly be granted." 2. Since facts involved in all these petitions are more or less similar and the same involve common questions of law, all the petitions were heard together and are disposed of by this common judgment. For the sake of convenience, Special Civil Application No. 6152 of 2010 is treated as the lead petition and reference is made to the facts as appearing in the said petition. 3. Before adverting to the facts of the present case, it may be necessary to refer to certain statutory provisions so as to understand the facts in proper perspective. 4. Section 146 of the Customs Act, 1962 reads thus : 146. Customs House Agents to be licensed. - (1) No person shall carry on business as an agent relating to the ....
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....ant - The applicant or the person referred to in clause (b) of sub-regulations (2) and (3) of Regulation 5 as the case may be, shall prove to the satisfaction of the Commissioner that : (a) the applicant is a graduate from a recognised University and is an employee of a licensee and that the possessed a permanent pass in Form G prescribed under regulation 20 and has the experience of work relating to clearance of goods through the Customs, for a period of not less than three years in the capacity of such a pass-holder : Provided that the Commissioner may relax the possession of permanent pass in Form G to one year for reasons to be recorded in writing. (b) the applicant has financial viability supported by a certificate issued by a Scheduled Bank or such other proof acceptable to the Commissioner evidencing possession of assets of the value of not less than Rs. 1 lakh in the case of applicants for the grant of licence in respect of any one of the Customs Stations at Bombay, Calcutta, Madras, Cochin, Kandla, Goa, Mangalore, Tuticorin or Visakhapatnam and not less than Rs. 50,000/- in the case of each of the other Customs Station, situated at places other than thos....
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....alifying in the examination in terms of Regulation 9. While granting such extension, the Commissioner of Customs shall satisfy himself that the requirements of Regulations 10(1) (a) and 10(1)(b) had been fully met by the applicant. (2) Any person, whose application for grant of temporary license under sub-regulation (1) of regulation 8 is rejected by the Commissioner of Customs may represent to the Chief Commissioner of Customs or Chief Commissioner of Customs and Central Excise, as the case may be against such order rejecting the grant of a temporary licence, within 30 days of the communication of the impugned order. (3) In case the number of applicants fulfilling the conditions prescribed under regulation 6 is more than the number of licences to be issued as assessed under regulation 4, the Commissioner may adopt seniority in experience as 'G' pass holder of such applicants as the criterion to give precedence to the applicants : Provided that if more than one applicant has the same period of experience, the applicant who is older in age shall get precedence. 9 Examination of the applicant - (1) The holder of a temporary licence in the case of an in....
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....p; the provisions of allied Acts including Imports and Exports (Control) Act, 1947 (18 of 1947), Foreign Exchange Regulation Act, 1973 (46 of 1973), Indian Explosives Act, 1884 (4 of 1884), Arms Act, 1959 (54 of 1959), Opium Act, 1879 (1 of 1878), Drugs and Cosmetics Act, 1940 (23 of 1940), Destructive Insects and Pests Act, 1914 (2 of 1914), Dangerous Drugs Act, 1930 (2 of 1930) in so far as they are relevant go the clearance of goods through customs; (p) procedure in the matter of refund of duty paid, appeals and revision petitions under the Act. (4) The Commissioner shall also satisfy himself whether the licensee in Form B (See Form 48 in para 5) if he is an individual, possesses, or in the case of a firm of company, the persons who will be actually engaged in the work relating to clearance of goods through customs on behalf of that firm or company, possess satisfactory knowledge of English and the local language of the Customs Station : Provided that in the case of persons deputed to work exclusively in the docks, knowledge of English will not be compulsory. Knowledge of Hindi will be considered as a additional or desirable qualification. ....
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....m to transact business at that Customs Station : Provided that no separate licence would be required in places where in addition to a Custom House handling imports by sea, there is also an international airport to handle imports by air even if under the jurisdiction of a different Commissioner. (3) The Commissioner may reject an application for the grant of regular licence to act as Custom House Agent if the holder of the temporary license fails to qualify in the examination in terms of Regulation 9, or the holder of temporary licence on evaluation of his performance in terms of Regulation 10 is not considered suitable due to any other reason to be stated in the order passed by the Commissioner." 7. Adverting to the facts of the case, the petitioner joined a Company, viz., M/s Mathurdas Narandas & Sons Forwarders Limited possessing a permanent Customs House Agent Licence in 1988 in Mumbai and later was transferred to Ahmedabad and power of attorney was granted in his favour on 6-6-1995. The petitioner thereafter appeared for the written examination prescribed under Regulation 9 of CHALR, 1984 and got qualified as per Customs Notice No. 1/99, dated 23-6-1999. He l....
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....pt of application. Such application shall be for clearance work within the jurisdiction of the said Commissioner of Customs. 5. Application for licence. - (1) An application for a license to act as a Customs House Agent in a Customs Station shall be made [in the form of letter to the jurisdictional Commissioner of Customs, containing details as specified in Form A] and shall, inter alia, contain the name and the address of the person applying; and (2) If the applicant is a firm - (a) the name and address of every partner of the firm, the firm's name, and (b) the name of the partner or the duly authorized employee, who will actually be engaged in the clearance of goods or conveyances through the customs. (3) If the applicant is a company - (a) the name of each director, managing director, manager, and (b) the names of director, managing director, manager or the duly authorized employee, who will actually be engaged in the clearance of goods or conveyances through the customs. 6. Conditions to be fulfilled by the applicant. - The applicant r....
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....cessary for the applicant to clear written as well as oral examinations separately. An applicant who clears the written examination but fails in the oral examination linked to it, shall have to clear the oral examination within two years of the related written examination irrespective of the number of chances, and if he fails do so, he shall be treated as having failed in the examination. (4) An applicant shall be allowed a maximum period of seven years within which he shall pass both the written and oral examinations. No further extension of time shall be granted. (5) Notwithstanding anything contained in sub-regulation (4), any person who holds a temporary licence granted under regulation 8 of the Customs House Agents Licensing Regulations, 1984, shall be allowed to pass the examination within a period of two years from the date of commencement of these regulations. (6) The examination may include questions on the following :- (a) preparation of various kinds of bills of entry and shipping bills; (b) arrival entry and clearance of vessels; (c) tariff classification and rates o....
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....the Customs Station : Provided that in the case of persons deputed to work exclusively in the docks, knowledge of English shall not be compulsory. Knowledge of Hindi shall be considered as desirable qualification. (8) The holders of a licence under regulation 9 may authorize any one or more of their employees or partners or directors to appear for the examination referred to in sub-regulation (1) on behalf of such holders of license, in addition to the person of their agency who has passed the examination referred to in sub-regulation (1). 9. Grant of licence. - (1) The Commissioner of Customs shall on payment of a fee of Rs. 5,000/- grant a license in Form B to an applicant who has passed the examination referred to in regulation 8. (2) The Customs House Agents who are granted licences under sub-regulation (1) shall be eligible to work in all Customs Stations within the country subject to intimation in Form C to the Commissioner of Customs of the concerned Customs Station where he intends to transact business. No separate licence shall be required in places where in addition to a Customs House handling imports by sea, there is also an International airpo....
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....d 10-6-2004 being No. 42/04. It may be pertinent to reproduce question 1(b) and the answer thereto in relation to Regulation 9 : Regulation 9 (b) Can persons who have qualified the exam under regulation 9 of CHALR 1984 be exempted from appearing the exam referred to in regulation 8 of CHALR 2004 and be granted licence under regulation 9(1) of CHALR 2004 directly? No. Those who have not been granted licence under CHALR 1984 till 23-2-2004 lose their right. They have to meet the qualifications and pass the examinations under regulation 8 of CHALR 2004 11. On 31st October, 1997 (sic) the respondent No.1 issued a Circular on the issue of Customs House Agent Licence. It may be pertinent to refer to issue No. (ii) thereunder which reads thus : "[ii] Issue of CHA licenses to applicants who had passed the examinations under CHALR, 2004: 4. It has been represented to the Board that some of the Commissionerates have not invited applications for grant of CHA licenses, since the norms for issue of fresh license are required to be reviewed by the Board. Further, in cases where the applicants having passed the requisite examination under Regulation 8 of CHALR, 2....
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....Procedure on appeal and revision petition; [e] Prevention of Corruption Act, 1988; [f] Online filing of electronic Customs declarations; [g] Narcotic Drugs and Psychotropic Substances Act, 1985; [h] Foreign Exchange Management Act, 1999" 14. Thus, Regulation 2 of the (Amendment) Regulations, 2010 introduces a mandatory requirement for all successful candidates who had already passed the examination under CHALR, 1984, to again give examinations in the subjects stated therein, which were already mentioned in CHALR, 2004. The (Amendment) Regulations, therefore, contemplate a situation whereby the candidates successful under Regulation 9 of CHALR, 1984, are still required to appear in the examination of specific subjects as specified therein, while candidates successful in the exam conducted under CHALR, 2004 as well as the persons who had been granted licences under CHALR, 1984 are not required to go through the same. It is the categorical case of the petitioner that in the examinations conducted during the period between the introduction of CHALR, 2004 till the is....
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....n held under CHALR, 1984 based on the qualification prevailing at that relevant point of time, and that a precedent existed wherein a dispensation was prescribed vide Boards Circular No. 48/2000-Customs dated 22-5-2000 for a specific period. Accordingly it was also decided by the Board that in case of Regulation 9 examination passed candidates under the CHALR, 1984, the relaxation provided in respect of educational qualifications vide Boards Circular No. 48/2000-Customs shall be extended on similar basis." 16. Thereafter the Commissioner, Custom House, Ahmedabad issued a public notice being Public Notice No. 26/2010-CUSTOMS, dated 4th May, 2010 declaring examination under the newly introduced mandatory subjects for candidates qualified under regulation 9 of CHALR, 1984 which was to be held on 15th July, 2010. Being aggrieved, the petitioners have moved the present petitions seeking the reliefs noted hereinabove. 17. Mr. K.S. Nanavati, Senior Advocate, learned counsel for the petitioners invited attention to the provisions of Section 146 of the Customs Act, 1962 (the Act) to point out that sub-section(2) thereof empowers the Board to make regulations for the purpose ....
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....the contents of paragraphs 27, 35, 39 and 46 of the above referred decision which read thus : "27. The power of the regulation-making authority, thus, must be interpreted keeping in view the provisions of the Act. The Act is silent as regards conditions for grant of license. It does not lay down any pre-qualifications therefor. Provisions for imposition of general conditions of licence or conditions laying down the pre-qualifications therefor and/or the conditions/qualifications for grant or revocation of license, in absence of such a clear provision may be held to be laying down guidelines by necessary implication providing for conditions/qualifications for grant of licence also. 35. In the event a statute provides for licensing, in a case of this nature, the same must thus be found to satisfy the test oi reasonableness. The standard for determining reasonableness of a statute so as to satisfy the constitutional scheme as adumbrated in Article 14 of the Constitution of India must receive a higher level of scrutiny than an ordinary statute. Such a higher level of scrutiny is necessary not for the purpose of determining the constitutionality of the statute alone vis-....
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....e Commissioner of Customs) invites applications. It was, accordingly, submitted that Regulation 4 is ultra vires Section 146 of the Act. It was contended that there cannot be any arbitrary ceiling on the number of persons who may be allowed to engage in the business of Customs House Agent and that such a restriction creates a monopoly in favour of a few and keeps really meritorious persons from engaging themselves in a profession, business or occupation of their choice. The right to enter such business also cannot be made dependent on the whims and caprice of an officer by leaving to his arbitrary decision whether or not to invite applications from persons interested in working as Customs House Agents or arbitrarily fixing the ceiling on the maximum number of Customs House Agents that may be issued licenses. It was submitted that arbitrariness of the regulations is amply clear from the fact that, in the Ahmedabad region, after 1996, the concerned Commissioner has not invited any applications and persons like the petitioners, having passed the examination in the year 1999 etc. and having requested the Jurisdictional Commissioner of Customs to grant a license, have still not been abl....
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....e left to be done are saved despite the supersession. This clearly implies that once the candidates are successful in the examination under Regulation 9 of CHALR, 1984, the process of scrutiny of the candidate for the issuance of a license has already begun and can only culminate into the Commissioner either granting a license or refusing to grant a license. The candidate, as contemplated under the preamble, is not required to reappear in a separate specific examination to reinstate the right at the stage at which it was already pending and had crystallized under CHALR, 1984, as by virtue of the preamble the crystallized right was already saved. 20. It was further submitted that despite having the ability to satisfy each and every criteria and condition as required of them under the Regulations, that of financial status, experience, proficiency, reliability and success in examination, the petitioners, by virtue of the provisions of CHALR 2004 as amended vide the (Amendment) Regulations, 2010, become ineligible for a license till clearance of the examination as contemplated in the (Amendment) Regulations, 2010 which illegally seeks to take away the pre-existing right bestowe....
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....s in the facts of the present case the persons who have passed the examination held under regulation 9 of CHALR, 1984 and have been granted license are not required to pass the examination held under Regulation 8 of CHALR 2004 read with the impugned (Amendment) Regulations, 2010 to continue to work as Customs House Agents or for renewal of their licenses. The petitioners who have also passed the Regulation 9 examination and are working as Customs House Agents as authorised representatives of licensed Customs House Agents and licensed Customs House Agents fall in the same class. Thus the classification made and differential treatment meted out to the petitioners is therefore, violative of Article 14 and impose an unreasonable restriction on the fundamental rights of the petitioners under article 19(1)(g) of the Constitution. 23. It was, accordingly, submitted that, despite the fact that the petitioners are similarly situated to those persons who had acquired licenses under CHALR 1984, merely because of failure on the part of the concerned Commissioner to invite applications before the coming into force of CHALR, 2004, the petitioners are now sought to be discriminated agains....
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.... by the Kelkar Committee. Reliance was placed upon a decision of the Madras High Court in Writ Appeal No. 498 and 1125 of 2009 and other writ petitions, wherein it had been held that candidates having passed examinations under Regulation 9 of the CHALR 1984, presently seeking Customs House Agents licenses cannot be treated to have passed the examinations under CHALR, 2004 unless they have actually passed the examination prescribed under CHALR, 2004. It was pointed out that based upon the decision of the Madras High Court, the Board decided to conduct written examination for those persons who had passed the Regulation 9 Examination under the earlier Regulations, that is, CHALR 1984 in respect of the following additional subjects : (a) The Patent Act, 1970 and Indian Copyright Act, 1957; (b) Central Excise Act, 1944; (c) Export promotion schemes; (d) Procedure on appeal and revision petition; (e) Prevention of Corruption Act, 1988; (f) Online filing of electronic Customs declarations; (g) Narcotic ....
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....he scope of the regulations gets limited to those mentioned in sub­paragraphs (a) to (f) of Section 146(2) of the Act, it was submitted that the word used in sub-section (2) is "may" which makes it amply clear that the scope of such regulations do not get limited to those mentioned in clauses (a) to (f) enumerated thereunder. That Section 146(2)(d) of the Act clearly lays down that the Board may make regulations which may provide for the restrictions and conditions subject to which a license may be granted. That the Board, in exercise of the said power, has prescribed the restriction on the number of licenses for which Commissioner of Customs may invite applications as per his assessment of the requirement under Regulation 4. Further, the passing of examination under CHALR 1984 and satisfying the requirements of Regulations 5 and 6 of the CHALR, 2004, would not ipso facto entitle a person to grant of a license and the regulations provide for a condition that such persons can apply for a license only when applications for licenses have been invited by the Commissioner of Customs vide regulation 4. It was submitted that, thus, the above restrictions and conditions are not ultra v....
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.... but is yet to get a license, are altogether two different classes of persons. They cannot be equated with each other and are unequal to begin with. Thus, the contention of the petitioners that equals have been treated as unequal, is incorrect and without any basis whatsoever. It was submitted that CHALR, 2004 do not provide for any restrictions on the number of the Customs House Agents. That the Board is of the view that, ideally, no restriction should be placed on the number of Customs House Agents operating in the Customs Houses and the market forces should govern the number of proficient and qualified persons required to carry out the job of Customs House Agents commensurate with the volume of import/export cargo. The Board also has not found any justification in prescribing a turnover based criteria for ascertainment of the number of Customs House Agent licenses required to be issued at a particular Custom House/Station, inasmuch as the practice of undertaking Customs House Agent services on the basis of Form "C" intimation is already in vogue and would render such exercise meaningless. The Board, therefore, has decided against fixing a numeric criterion governing the number o....
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.... Reliance was also placed upon the decision of the Supreme Court in the case of Federation of Customs House Agents' Association and others v. Union of India and others, (1996) 10 SCC 136 = 1997 (91) E.L.T. 519 (S.C.) wherein the validity of Regulation 8 of the Customs House Agents Licensing Regulations, 1984 had been called in question on the ground that it provided for the grant of temporary license before the applicant qualified at the prescribed examination and enables the holder of such temporary license to work on a par with the regular licensees who had got the license after passing the requisite examination. The issue involved in the said case, has no relevance to the controversy in issue in the present case, hence the said decision does not come to the aid of the respondents in any manner. Reliance was placed upon the decision of the Supreme Court in the case of Union of India v. International Trading Co. and another, (2003) 5 SCC 437 for the proposition that the doctrines of promissory estoppel and legitimate expectation cannot come in the way of public interest. Public interest has to prevail over private interest. 33. Reliance was placed upon the decision of the ....
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.... the same benefits as conferred on similarly situated persons in certain other States. Attention was invited to the additional affidavit made by the petitioner of Special Civil Application No. 6152 of 2010, wherein it had been pointed out that he had come across two entities in Jamnagar, who despite being similarly situated, have been granted license by the Commissioner after the new regulations, that is, CHALR, 2004, came into force. That these two entities had cleared Regulation 9 examination under CHALR, 1984 and regular licenses were not issued to them during that regime. As per the information of the petitioner, the two entities were given licenses after CHALR, 2004 came into force while he as well as other similarly situated persons were sought to be denied the same right. 36. Having regard to the facts and circumstances of the case as well as the rival contentions advanced on behalf of the respective parties, the Court is of the view that it is possible to decide these petitions without entering into larger controversy as to whether the Board is empowered to prescribe for a qualifying examination for the grant of Customs House Agent's license, hence, the contentions ....
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.... granted and shall be permitted to avail of three chances within a period of 2 years from the date of issue of the temporary license on payment of prescribed examination fee for each examination. Regulation 9 also provides for the subjects in which the applicants are required to clear the examination. Regulation 10 makes provision for grant of regular license to such holder of a temporary license who qualifies in an examination referred to in Regulation 9 and whose performance, is found to be satisfactory with reference to the conditions enumerated thereunder. Thus, under the Scheme of CHALR, 1984 initially upon receipt of an application to act as Customs House Agent, provision was made for grant of a temporary license upon satisfaction of the requirements of Regulations 5 and 6, and a holder of a temporary license was required to appear in the examination prescribed under Regulation 9 within the period prescribed thereunder. A holder of a temporary license, who qualified in an examination referred to in Regulation 9 and whose performance was found to be satisfactory with reference to the conditions stipulated in Regulation 10, could be granted a regular license in Form "D" by the ....
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....e the position of those candidates who have already cleared the examination under Regulation 9 of CHALR, 1984. The preamble to CHALR, 2004 provides for supersession of CHALR, 1984 "except as respect things done or omitted to be done before such supersession". 41. The Board vide clarification dated 10-6-2004, has clarified that those who have not been granted licenses under CHALR, 1984 till 23-4-2004 lose their right and have to meet the qualifications and pass the examination under Regulation 8 of the CHALR 2004. Subsequently, by virtue of the (Amendment) Regulations 2010, under Regulation 8 of CHALR, 2004, sub-regulation (9) has been inserted, which provides that any person who had passed the examination conducted in Regulation 9 of the Customs House Agents Licensing Regulations, 1984, and has not yet been granted license under the said Regulations, upon declaring successful in a written examination conducted on the subjects specified thereunder, shall be deemed to have passed the examination referred to in Regulation 8 for the purpose of CHALR 2004. Pursuant to the said amendment in the Regulations, the Commissioner of Customs, Ahmedabad has issued Public Notice No. 26/20....
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....oncerned Commissioner to invite applications for grant of Customs House Agent License, the petitioners were unable to get licenses prior to the coming into force of the new regulations, viz., CHALR, 2004. The petitioners are otherwise in all other aspects similarly situated to the license holders under the CHALR, 1984. The issue that arises for consideration is as to whether the provisions of CHALR, 2004 read with the (Amendment) Regulations, 2010 and the clarification issued by the Board, requiring the petitioners to appear in examination of additional subjects for the qualifying to apply for a license under CHALR, 2004 are arbitrary and discriminatory so as to be violative of the petitioners' rights under Article 14 of the Constitution. 44. In the case of Union of India v. International Trading Co. and another (2003) 5 SCC 437, the Apex Court has held that while the discretion to change the policy in exercise of the executive power, when not trammeled by any statute is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was done arbitrarily or by any ulterior criteria....
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....fferent sets of circumstances. The principle of equality does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstances in the same position and the varying needs of different classes of persons require special treatment. The legislature understands and appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based upon adequate grounds. The rule of classification is not a natural and logical corollary of the rule of equality, but the rule of differentiation is inherent in the concept of equality. Equality means parity of treatment under parity of conditions. Equality does not connote absolute equality. A classification in order to be constitutional must rest upon distinctions that are substantial and not merely illusory. The test is whether it has a reasonable basis free from artificiality and arbitrariness embracing all and omitting none naturally falling into that category. 47. Testing the facts of the present case on the anvil of the principles enunciated in the aforesaid decisions, the undisputed facts are that the petition....
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....ated by Risk Management System (RMS), and the rest of the documents are scrutinized by the officers based upon the risk perception; such facilitated documents do not get scrutinized by the Customs Officers. Thus a lot of faith has been imposed on the Trade. According to the respondents in such a situation the onus on the Customs House Agents is much more to scrutinize the documents properly, before filing and to advise their clients properly. However, they can do this work more efficiently only if they are competent enough to do so. The explanation sought to be put forth on behalf of the respondents, however, fails to explain as to how the petitioners are in any manner differently situated than the regular license holders who had qualified under CHALR, 1984, so as to be any less competent than them. If those persons who had passed the Regulation 9 examination under CHALR, 1984 and obtained regular licenses at the relevant time possess the competence to act as regular license holders, one fails to understand as to how, in absence of any other distinguishing feature being pointed out, the petitioners who too have passed the Regulation 9 examination under CHALR, 1984 and have been dis....
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....cts are based upon the need to ensure the same competence and knowledge level amongst successful candidates under both the Regulations. Thus, the object sought to be achieved by the impugned (Amendment) Regulations, is to ensure that the petitioners who had passed the qualifying examination under CHALR, 1984 gain knowledge of the additional subjects as according to the respondents, these were the subjects knowledge of which was essential in case of all Customs House Agents and as such the same has a direct nexus to the object sought to be achieved, namely, that the Customs House Agents should be properly qualified. However, the explanation put forth by the respondents fails to explain as to how if the petitioners, because they have not passed examination in the additional subjects, are not competent and qualified to obtain licenses under CHALR 2004, the license holders who were already holding licenses prior to the new regulations coming into force are qualified to continue with such licenses. 50. In the case of the petitioners, though they are similarly situated to the license holders under CHALR 1984, except for the fact that they had not been granted licenses as the conc....
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.... issued by the Board are on the face of it contrary to the provisions of Regulation 4 of the Regulations which vests in the Commissioner the discretion as to when to invite applications and the number of applications to be invited. In the circular dated 8-4-2010, the Board has expressed the view that no restriction should be placed on the number of Customs House Agents operating in the Custom Houses and the market forces should govern the number of proficient and qualified persons required to carry out the job of Customs House Agent commensurate with the volume of import/export cargo. In the circular dated 31-10-2007, the Board has instructed the Commissionerates that irrespective of the norms prescribed by the Board under CHALR, 1984, the concerned Commissioners of Customs shall issue Customs House Agent license to all those applicants who had passed the Regulation 8 examination conducted under CHALR, 2004, subject to their fulfilment of the requisite conditions as mentioned in CHALR 2004. Thus, it is apparent that the respondents are blowing hot and cold at the same time. When it comes to dealing with the applications made by the petitioners despite the Commissioners not having i....