TaxTMI 
TaxTMI 
2018 (4) TMI 1053
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....Customs (General) Mumbai Versus Unison Clearing Pvt.Ltd., Rudolph Thomas Lobo & Co.(P) Ltd, M.D.Shipping Agency, Maa Krupa Forwarders Pvt.Ltd, Mahendra Shipping Agency, K.M.Commercial Services P. Ltd., Kismat Clearing Agency, Mehul and Co., Veena Shipping Agency Pvt.Ltd, Ukinex Commercial Services Customs Broker (CHA firm), SSS Sai Shipping Services P.Ltd, (Customs Appeal No. 17 of 2016, 68 of 2016, 88 of 2016, 4 of 2017, 49 of 2017, 53-54 of 2017, 6 of 2017, 6 of 2018, 26 of 2016, 9 of 2016, 17 of 2016, Notice of Motion (Appeals) Lodging No.2404 OF 2017, 49 of 2017, 2491 of 2017, 53 of 2017, 2495 of 2017, 54 of 2017, 245 of 2016, 1 of 2017,) JUDGMENT: ­ (Per Smt.Bharati H. Dangre, J) 1. This group of appeals came to be admitted on the following substantial question of law. (1) Whether the CESTAT is right in law in setting aside the order or suspension of the Custom Broker Licence on the ground of delay between the suspension and the notice of deviation or omission, ignoring that DRI letter dated 24th July 2014 and the Custom Broker Licence was suspended on 8th August 2014 ? (2) Whether the Appellate Tribunal completely ignored the two decisions of this Court rel....
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....ence may be granted, period of validity of such licence, qualification of a person who may apply for such licence, and also to prescribe circumstances in which the licence may be suspended or revoked. In exercise of power conferred by Sub­section (2) of Section 146 of the Customs Act, 1962, Regulations have been framed from time to time and the regulations which are in existence and governing the group of appeals is the Customs House Licensing Regulation of 2013 ("CHLR­2013", for short). 3. The Customs House Agent Licence Regulation, 2004 ("CHALR­2004", for short) were brought into force by notification issued on 23rd March, 2004 by the Central Board of Excise and Customs. The Regulation defines Custom House Agent as an agent for transaction of any business relating to the entry or departure of conveyances or import or export of goods at any customs stations. Regulation 20 contained a provision for suspension or revocation of licence by the Commissioner of Customs on the grounds mentioned therein. Sub­clause (2) of the said Regulation authorizes the Commissioner of Customs to suspend the licence of a CHA pending or contemplating an inquiry, where immediate act....
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.... his findings and submit his report within ninety days from the date of issue of a notice under sub­regulation (1). (6) The Commissioner of Customs shall furnish to the Customs House Agent a copy of the report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, and shall require the Customs House Agent to submit, within the specified period not being less than thirty days, any representation that he may wish to make against the findings of the Deputy Commissioner of Customs or Assistant Commissioner of Customs. (7) The Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs House Agent, pass such orders as he deems fit within ninety days from the date of submission of the report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, under subregulation (5). (8) Any Customs House Agent aggrieved by any decision or order passed under regulation 20 or subregulation (7) of regulation 22, may prefer an appeal under section 129A of the Act to the Customs, Central Excise and Service Tax Appellate Tribunal established under sub­section (1) of section ....
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.... the entry or departure of conveyances or the import or export of the goods at any customs station to hold a licence. The Regulation, 2013 sets out the procedure for procuring such licence on an application being preferred to the Commissioner of Customs having jurisdiction over the area where the applicant intends to carry on his business. Regulation 5 of the Regulation, 2013 then set out the conditions to be fulfilled by the applicant, so as to be considered fit for grant of licence and contemplates an application to be made either by an individual applicant or by a firm or company and then sets out the qualification required to be possessed by the partner of a firm or Director of a company or an authorised employee, who may handle the customs work. Regulation 6 prescribes for conduct of written as well as oral examination by the DGICCE. Regulation 7 provides for grant of Licence by the Commissioner of Customs on payment of Rs. 5,000/­ to an applicant who has passed oral examination within two months of the declaration of the result. The said licence granted under the Regulation, 2013, is held to be valid for a period of ten years from the date of its issuance and is entitled ....
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....ifteen days from the date of hearing granted to the Customs Broker: Provided that in case the Commissioner of Customs passes an order for continuing the suspension, the further procedure thereafter shall be as provided in Regulation 20. 20. Procedure for revoking licence or imposing penalty: (1) The Commissioner of Customs shall issue a notice in writing to the Customs Broker within a period of ninety days from the date of receipt of an offence report, stating the grounds on which it is proposed to revoke the licence or impose penalty requiring the said Customs Broker to submit within thirty days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs Broker desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs. (2) The Commissioner of Customs may, on receipt of the written statement from the Customs Broker, or where no such statement has been received within the time­limit specified in the notice referred to in sub­regulation (1), direct the Deputy Commissioner of Customs or Ass....
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....lations would reveal that a procedure is prescribed for revocation of a licence of a customs broker and for imposition of penalty on the grounds set out in Regulation 18. Regulation 19 provides for suspension of a licence in contemplation of an inquiry against a broker or pending an inquiry, which authorizes the Commissioner of Customs to suspend the licence of the customs broker forthwith, where immediate action is necessary. Sub­section 2 of Regulation 19 contemplates a post decisional hearing where the licence is suspended in subclause (1) and after affording an opportunity of hearing to the customs broker, whose licence is suspended, the Commissioner of Customs is authorised to pass such order as he deems fit either revoking the suspension or continuing it, as the case may be. However, when the Commissioner passes an order for continuing the suspension, it is imperative for him to follow the procedure under Section 20. The procedure for revocation of licence is provided in Regulation 20 and the issue involved before us in the present set of appeals is whether the time frame prescribed in the said Regulation is mandatory or directory. If the time frame is mandatory then t....
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.... Tribunal in the said judgment had held that since there are no consequences provided in the regulation for non­adherence of the time period for conducting the inquiry, the non­compliance of the time line cannot become fatal to the outcome of inquiry. Mr. Jetly would invite our attention to the observations made by the Tribunal in paragraph 4.2 of the judgment and to the conclusion drawn by it that the time line laid down in the Regulations are directory in nature. According to the learned Counsel, the duty of a customs house agent is to render assistance in the export and import business at the port and the purpose of the the Regulation, 2013 is to streamline the working of the customs brokers. The learned Counsel Mr. Jetly would submit that if the provision is construed as mandatory, it would result into serious consequences but he would fairly submit that even if it is construed to be directory, it does not mean that it is open for the custom authorities to continue the suspension for an indefinite period. The learned Counsel would submit that an inquiry and the proceedings nonetheless are required to be completed within a reasonable period and no absolute principle c....
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....0­CUS, dated 8th April, 2010 and would submit that the Government of India, Ministry of Finance (Department of Revenue), Central Board of Excise and Custom, New Delhi, had issued the said circular and it contains a preface reflecting that it has been brought to the notice of the Board by certain field formations that they are facing difficulties in issuance of CHA Licence for eligible person and in implementation of Customs House Agents Licensing Regulation, 2004. All the aforesaid issues came to be examined by the board in consultation with the custom field formation in the board meeting and there was also a meeting held with the Chief Commissioner of Customs having jurisdiction over major customs houses and thereafter the decision was taken to provide a time stipulation for completion of proceedings of inquiry, on suspension of a licence. In this background, Mr. Shah would submit that the provisions in regard to the time limit contained in the CBLR­2013 need to be construed as mandatory. He would rely upon the series of judgments delivered by the Hon'ble Delhi High Court and Madras High Court, which have consistently taken a view that the time limit prescribed in t....
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..... Commissioner of Cus. (General), Mumbai, reported in 2012 (286) E.L.T. 704 (Tri.­Mumbai). (6) Overseas Air Cargo Services vs. Commr. Of Cus. (General), New Delhi, reported in 2016 (340) E.L.T. 119 (Del.) (7) M/s. Zen Cargo Movers Pvt Ltd. vs. Commissioner of Customs, New Delhi, reported in 2016­TIOL­524­CESTAT­DEL. (8) Saro International Freight System vs. Commr. Of Cus., Chennai­VIII, reported in 2016 (334) E.L.T. 289 (Mad.) (9) S.K. Logistics vs. Commr. Of Cus. (General), New Delhi, reported in 2016 (331) E.L.T. 486 (Tri.Del.). (10) Commissioner of Customs (General) vs. S.K.Logistics, reported in 2016 (337) E.L.T. (Del.). (11) Sunil Dutt vs. Commissioner of Cus. (General) NCH, reported in 2016 (337) E.L.T. 162 (Del.). (12) Indair Carrier Pvt. Ltd. vs. Commissioner of Customs (General), reported in 2016 (3370 E.L.T. 41 (Del.). (13) Trinity Sea & Air Pvt Ltd vs. Commr of Cus (Import General), New Delhi, reported in 2017 (350) E.L.T. 293 (Tri.­Del.). (14) Sowparnika Shipping Services vs. Commr. Of Customs, Chennai­VIII, reported in 2017 (352) E.L.T. 286 (Mad.) 8 The question that arises for determination in the present s....
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....gation of the customs house agent, which mandates him to follow a regime of discipline while he acts so and while he discharges his duty in the said capacity. In order to continue the regime of discipline, the Commissioner of Customs is empowered to revoke a licence of the customs house agent and order forfeiture of his security if the customs house agent fails to comply with any of the conditions of the bond executed by him and he fails to comply with the provisions of the Regulation or indulge into an act which would amount to "misconduct". The licence of customs house agent, therefore, continues subject to his abiding by the obligations imposed upon him and he acting in a fair manner as expected in terms of the regulations. The Regulation 19 authorises the Commissioner of Customs to suspend the licence if it is so required to be suspended immediately even without an inquiry against the customs broker being pending or even when it is not initiated, but only contemplated. Regulation 19 sub­clause (2) contemplates a post decisional hearing when a licence has been suspended and the Commissioner of Customs was required to take an action immediately without following the proced....
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....ion of report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs under clause (5) of Regulation 20. However, when he decides to revoke the licence, it is imperative for him to grant an opportunity of hearing to the customs broker in person. 9. The scheme of Regulation 20, reveals a procedure to be followed by revenue for revocation of licence and the said procedure mandates following the principle of natural justice and is based the principles of fairness and equity. The said regulation affords an opportunity to the customs broker to defend an action proposed against him, but at the same time, it sets out a time limit to be followed at every stage of the inquiry. A show cause notice asking to show cause as to why licence should not be revoked, is to be issued within a period of 90 days from the date of receipt of offence report. The customs broker is given 30 days time to submit his written statement of defence and also to specify whether he proposes be heard in person. The Deputy Commissioner of Customs or Assistant Commissioner of Customs, who is nominated by the Commissioner of Customs would enquire into the grounds with which the customs broker is cha....
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....e frame within which the duty shall be performed. The injustice or inconvenience resulting from a rigid adherence to the statutory prescriptions may not be relevant factor in holding such prescriptions to be only directory. For eg., when dealing with provisions relating to criminal law, legislative purpose is to be borne in mind for its proper interpretation. It is said that the purpose of criminal law is to permit everyone to go about the daily lives without fear of harm to person or property and it is in the interest of everyone that serious crime be effectively investigated and prosecuted. There must be fairness to all sides. In a criminal case, the Court is required to consider the triangulation of interests taking into consideration the position of the accused, the victim and his or her family or the public. The basic purpose of interpretation of statutes is further to aid in determining either the general object of the legislation or the meaning of the language in any particular provision. It is obvious that the intention which appears to be most in accordance with convenience, reason, justice and legal principles should, in all cases of doubtful interpretation, be presume....
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....ears that the Parliament intended disobedience to render the act invalid, the provision in question is described as "mandatory", "absolute", imperative" or "obligatory", if on the other hand compliance was not intended to govern the validity of what is done, the provision is said to be "directory". Crawford in statutory constitution, 1940 Edition has brought the distinction between mandatory and directory provision in the following words "A statute, or one or more of its provisions may be either mandatory or directory. While usually in order to ascertain whether a statute is mandatory or directory, one must apply the rules relating to the construction of statutes; yet it may be stated, as a general rule, that those whose provisions relate to the essence of the thing to be performed or to matters of substance, are mandatory, and those which do not relate to the essence and whose compliance is merely a matter of convenience rather than of substance are, directory. So, a mandatory statute may be defined as one whose provisions or requirements, if not complied with, will render the proceedings to which it relates illegal and void, while a directory statute is one where noncompliance....
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....he provision contained in Section 20 of the regulation whether it is mandatory or directory and whether the word "shall" used in the said regulation be construed as mandatory, it would be necessary to ascertain the real intention of the legislature by carefully evaluating the whole concept of the statute. The question whether the statute is mandatory or directory, would depend on the intention of the legislature and not necessarily merely by looking at the language in which it is clothed. It is mandatory for the Court to look into the nature of the statute and the consequences which would follow from construing it in one way or the other, the ambit of the other provisions, the necessity of compliance of the provisions in question. The circumstance, namely, the statute provides a contingency of the non­compliance of the provisions, the fact that the noncompliance of the provision is or is not visited with some penalty, the consequences flowing therefrom and above all whether the object of the enactment is defeated by holding it to be directory and whether the object would be achieved by construing it to be mandatory. If the provisions are construed as mandatory, the act done in ....
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....be postponed by extending the date for submitting his written statement or submitting evidence, resultantly postponing the final time limit prescribed. In such a situation, can the provision be construed to be mandatory to the detriment of the customs house agent, since it was beyond his control to respond to the allegations made against him. Another contingency may occur, when the hearing in the proceedings is completed, but on account of administrative exigency, the Commissioner of Customs is transferred, can it be still said that the time line was so mandatory that when the order was not passed on 16th day, the entire action becomes invalid. It is also possible that the customs house agent avoids to adhere to the time limit and does not file his reply under Regulation 19 (2) and then takes advantage of the fact that the suspension was not revoked on the 16th day, irrespective of the fact that the alleged action is detrimental to the interest of the revenue or the allegations levelled against him are of serious nature. In such circumstances, can it be permissible that the customs house agent is entitled to take benefit of his own wrong, on the ground that the process is not compl....
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....ription as to time will be construed as mandatory but whether it is a case of statutory duty or statutory power, the statute may expressly or impliedly make the authority functus officio on expiry of the prescribed period. In the words of Privy Council in case of Monterial Street Railway vs. Normandin AIR 1917 P.C 142, the principle was stated thus: "When the provision of a statute relates to performance of a public duty and the case is such that to hold null and void acts, in neglect of this duty, would work serious general inconvenience, or injustice to persons who have no control over those who are entrusted with the duty, and at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory only". In that case the question involved was that whether omission to revise the jury list in terms of the statute had the effect of invalidating the verdict of the jury and it was held that the verdict of the jury cannot be avoided on account of irregularities in due revision of the jury list. Applying the aforesaid principle to Regulations 19 and 20, it can be safely concluded that if the provision is construed....
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....be on account of administrative exigencies, and the department working at different levels through different persons. The principles of fairness and equity demands that when there is deviation from the time schedule prescribed in the Regulation, the Revenue enumerates the reasons and attributes them to an officer dealing with it and also accounts for every stage at which the delay occurs. Every endeavour should be made to adhere to the time schedule but in exceptional circumstances, which are beyond the control of the revenue if the time schedule is not adhered to, an accountability be fastened on the Revenue, to cite reasons why the time schedule was not adhered to, and then leave the decision to the adjudicating authority to examine whether the explanation offered is reasonable or reflects casual attitude on behalf of the Revenue. This is the only way how the Regulation can be made effective and worthy of its existence so as to safe­guard the interest of the customs house agent, who is in a position of the delinquent and faces an inquiry somehow similar to an inquiry in disciplinary proceedings on one hand and the revenue in the capacity of the administration on the other han....
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....a view that the time limits in the CHALR for issuance of show cause notice to the customs house licencee and completion of inquiry within 90 days being sacrosanct. The Delhi High Court in Indian Courier Pvt Ltd vs. Commissioner of Customs (General) emphasized on the mandatory nature of the CHALR as regards the time limit in the following words: "6. The time limits in the CHALR, 2004 for issuance of the SCN to the CHA licence holder and completion of the inquiry within 90 days of issuance of such SCN are sacrosanct. The aforesaid time limits were engrafted into Regulation 22 of the CHALR, 2004 by a Notification No.30/2010­Cus. (N.T.) dated 8^th April, 2010. Simultaneously, the CBEC issued Circular NO.9/2010 dated 8th April, 2010 clarifying the procedures governing the suspension and revocation of CHA licence. In para 7.1 of the said Circular, it was noted as under: "7.1 The present procedure prescribed for completion of regular suspension proceedings takes a long time since it involves inquiry proceedings, and there is no time limit prescribed for completion of such proceedings. Hence, it has been decided by the Board to prescribe an overall time limit of nine months from ....
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....prima facie case, the respondents ought to have, without any shadow of doubt, treated the word "shall" in Regulation 11 as "mandatory" and not "directory". Therefore, when a time limit is prescribed in Regulations, which empowers action in Regulation 18 and procedure in Regulation 20(1), the use of the term "shall" cannot be termed as "directory". It is pertinent to mention here that the CBLR, 2013 have replaced the CHA Regulations. The CHA regulations did not have any time limit to complete the proceedings. Therefore, by a Circular 9/2010, dated 8­4­2010, the necessity to include a time limit for initiating action was addressed by the Board after field inspection and by a notification dated 8­4­2010, amendments prescribing time period for initiating action and completing proceedings was made. The same was given effect by notification dated 20­1­2014. Whereas, under the CBLR, 2013 having found the necessity to prescribe a period, the Central Board, the statutory authority had included the same in the Regulations itself, when they were brought into force. Therefore, when a time limit is prescribed in Regulations, which empowers action under Regulation 18 b....
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.... directory or mandatory, is to be tested by examining the consequences of the Regulation being treated either way in the context of the aim and object of the provision. 14. Adherence to the time schedule prescribed in the Regulation 20 in a rigid way would lead to a situation where non­compliance with the time frame and even deviation by a single day would resultantly invalidate the entire action and the licence which is under suspension or which is revoked, is liable to be restored. The procedural formality as required to be complied within the time frame prescribed in the regulation, even if it is deviated for whatsoever reason beyond the control of the revenue or the custom house agent would result into consequences of declaring the entire action invalid if the provision is construed as mandatory. On the other hand, if the provision the construed as directory, the custom house agent would be deprived of his licence for considerable long time, if the time schedule is not adhered to the Revenue at its sweet choice would prolong the procedure and which is a likely situation, no attempts would be made to complete the inquiry within the stipulated period. This is what has w....
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....tion in framing the Regulation. Undisputedly, the intention is to curb the delay in concluding the inquiries, however, it should not be stretched to an extent where it would defeat the very purpose of the Regulation, being to enforce a regime of discipline in the custom arena and it would result in letting the miscreant set loose by taking benefit of deviation of the time schedule. The said CESTAT West Zonal Bench, Mumbai in Unison Clearing Pvt Ltd vs. Commissioner of Customs (General, Mumbai) (supra) has in detail dealt with the Regulation 22 and has examined whether it has to be construed as mandatory or directory. Relying on catena of judgments delivered by the Hon'ble Apex Court, and specifically in Delhi Air take Services Pvt Ltd and another Vs. State of West Bengal and another, CESTAT has concluded that while deciding whether the time period is directory or mandatory, it would be seen that the purpose of law prescribing it as mandatory and consequently the absence of provisions of consequences in case of non­compliance with the requirement would indicate that the provisions are directory irrespective of use of the word "shall". The CESTAT has concluded that if the time li....