AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 1362
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....cause notice dated July 18, 2016 calling upon the first petitioner to explain as to why the license issued to it under regulation 9(1) of Customs House Agents Licensing Regulations, 2004 (hereafter the 2004 Regulations) shall not be revoked and security deposit forfeited under regulation 18 of the 2013 Regulations. 3. It is noticed that the order dated May 31, 2016 was preceded by an order dated May 3, 2016 passed by the first respondent, whereby the license issued in favour of the first petitioner was suspended with immediate effect and until further orders under regulation 19(1) of the 2013 Regulations and an opportunity was given to the first petitioner or to its authorized representative to appear for a post-decisional hearing on May 18, 2016. Such order is also under challenge in this writ petition. 4. It would appear on perusal of the two orders dated May 3, 2016 and May 31, 2016 as well as the show cause notice dated July 18, 2016 that there had been an alleged nefarious attempt to smuggle a consignment of high valued mis-declared goods from Singapore to India in the guise of Nepal import transit consignment by a Customs Transit Declaration (hereafter CTD) filed at Kolkata....
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....on that the order of suspension itself deserves to be revoked. One of such grounds has been reiterated before this Bench by Mr. Saraf, learned advocate for the petitioners with sufficient force. 9. According to Mr. Saraf, the incident of alleged offence culminated in the order of penalty dated April 19, 2016 under section 112 of the Customs Act. Before such order, the license of the first petitioner was renewed on January 12, 2016, and no adverse report in regard to functioning of the first petitioner as a customs broker was also received. There was absolutely no warrant for ordering suspension of the license and that it was not an appropriate case where immediate action in the nature of an interim suspension was called for. In such circumstances, the first respondent really acted in excess of jurisdiction by confirming the order of suspension. 10. In support of the submission that immediacy of action is the sine qua non for ordering suspension, Mr. Saraf placed reliance on the Division Bench decision of this Court reported in 1998 (104) E.L.T. 11 (Cal.) [N.C. Singha & Sons v. Union of India] whereby the order of suspension was interdicted and set aside on the ground that neither....
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....tedly by the first respondent on April 19, 2016 and the impugned show cause notice dated July 18, 2016 was dispatched on July 20, 2016, which is beyond the period prescribed by sub-regulation (1). 16. Inviting the attention of the Bench to the supplementary affidavit filed by the petitioners, Mr. Saraf contended that the show cause notice dated July 18, 2016 was received by the petitioners on July 21, 2016. It has been his contention that the show cause notice having been dispatched beyond ninety days from the date of receipt of offence report on April 19, 2016, the first respondent ceased to have the jurisdiction to initiate revocation proceedings. 17. For the proposition that proceedings are required to be initiated within ninety days from the date of receipt of offence report failing which the proceedings would be non est, Mr. Saraf placed reliance on three decisions of the Madras High Court reported in (i) 2014 (309) E.L.T. 433 (Mad.) [A.M. Ahamed & Co. v. Commissioner of Customs (Imports), Chennai], (ii) 2016 (332) E.L.T. 300 (Mad.) [Masterstroke Freight Forwarders P. Ltd. v. C.C. (I) Chennai-I, and (iii) 2016 (334) E.L.T. 289 (Mad.) [Saro International Freight System v. Com....
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....y, it was contended that a writ petition is ordinarily not maintainable against a show cause notice and, therefore, the petitioners ought to be left free to raise whatever points they might raise in their defence to such notice before the first respondent. 23. Finally, it was contended that the proceedings for revocation of licence do not suffer from any jurisdictional error. Relying on the affidavit of the first respondent, it was contended that although the offence report had been received by the Central Receiving Section, Correspondence Department of the first respondent on April 19, 2016, such offence report was actually placed before the first respondent on April 22, 2016, consequent whereupon the file was started for proceeding in the matter in accordance with law. It is claimed in such affidavit that constructive knowledge of the first respondent in relation to the offence report was from April 22, 2016 and not prior thereto and, therefore, issuance of the show cause notice on July 18, 2016 for being dispatched by post cannot be held to be a vitiating factor so as to warrant the show cause notice to be interdicted and the revocation proceedings nipped in the bud. 24. Mr. G....
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....eceipt of the offence report in the show cause notice dated July 18, 2016, Mr. Saraf has himself shown from the order dated May 31, 2016 that the date of receipt of offence report by the first respondent is available in paragraph 32 (xii) thereof. For the purpose of a decision on this point, this Bench shall proceed on the assumption that April 19, 2016 was the date of derivation of knowledge of an offence having been committed, inter alia, by the petitioners, warranting action under regulation 19 of the 2013 Regulations. 32. The power to suspend a customs broker's license under sub-regulation (1) of regulation 19 can be exercised by the principal commissioner or the commissioner of customs, as the case may be, in appropriate cases calling for immediate action where an inquiry against such broker is pending or contemplated. The first and foremost requirement for suspending a license is, therefore, an inquiry, which is either pending or is contemplated. Once such condition is satisfied, the further condition is that of an immediate action being necessary in appropriate cases. The word 'inquiry' has not been defined in the 2013 Regulations. Such word is also not defined ....
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.... declarations in a mechanical manner, without observing the basic principle of representing its client based in Nepal. Such order also records the acceptance of the fact by a director of the first petitioner that it had undertaken the job of handling import consignment of M/s. Jaleshwor Traders for the first time but appeared not to have discharged their basic responsibilities by failing to comply with the provisions of the 2013 Regulations. Considering that an inquiry ought to be made in the manner prescribed by regulation 20 for the first petitioner's failure to comply with the provisions of the 2013 Regulations, the first respondent was of the further view that continuation of business transaction by the first petitioner would be prejudicial to the interest of the revenue and immediate action under regulation 19(1) of the 2013 Regulations is warranted to prevent further misuse of the customs broker license resulting in the order dated May 3, 2016 seeing the light of the day. It is no doubt true that after the DRI on July 11, 2014 detected the offence committed by the Nepalese importer, for whom the first petitioner acted as a customs broker, sufficient time had elapsed and i....
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.... in a given case, where the High Court is satisfied that a show cause notice is totally non est in the eye of law for absolute want of jurisdiction of the authority to even investigate into facts, entertainment of a writ petition in this behalf may not be imprudent. Since Mr. Saraf has alleged that the first respondent did not have the jurisdiction to initiate recovery proceedings beyond the time specified in regulation 20(1), this Bench proposes to consider such contention next. 39. This point is, accordingly, answered by overruling the objection of Mr. Ganguly. Point - (iv) 40. The reported decisions of the Madras High Court cited by Mr. Saraf do advance his cause. However, both on facts as well as in law, this Bench is persuaded to take a different view of the matter. 41. It is settled by a catena of decisions rendered by the Supreme Court, while considering varying statutes, that when a public functionary is required by a statute to do or perform a certain thing or activity within a specified time, the same is ordinarily directory; however, if the consequence for inaction on the part of the statutory authority within such specified time is expressly provided in the statute,....
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....read with the Customs Act) and its broad purpose, and on weighing the consequence that would ensue if the time-limit in regulation 20(1) for issuance of show notice were held mandatory instead of holding it to be directory, it is well-nigh difficult to conclude that unless revocation proceedings are initiated within ninety days of receipt of an offence report, the principal commissioner or the commissioner of customs, as the case may be, would stand denuded of the power to proceed in that direction. This Bench is of the opinion that the time-limit that has been prescribed serves a dual purpose. First, it acts as a check on the public functionary vested with the power to initiate revocation proceedings not to keep the issue pending ad infinitum; if proceedings are not initiated within the stipulated time, that might expose such functionary empowered to initiate proceedings to disciplinary action. On the other hand, initiation of proceedings within ninety days or immediately thereafter is intended to guarantee protection to a customs broker of not being proceeded against on the basis of stale charges. But to hold that in every case where revocation proceedings are not initiated withi....
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....0(1) as mandatory and not directory. 46. The learned Judge in Masterstroke Freight (supra) and Saro International Freight System (supra) further expressed the view that if timely action is not taken under regulation 20, that "would also pave way for inaction by the officials breeding corruption". Yes, indeed, but viewed from a different angle one cannot ignore the ground realities. If an unscrupulous broker commits an act that makes it liable to be proceeded against under regulation 18 read with regulation 20, it may well get away by adopting illegal means. All officers are not honest and if too strict a view is taken on the aspect of time-limit mentioned in regulation 20(1), the same instead of suppressing the mischief would have the potential of promoting illegal activities. This Bench is persuaded to take this view bearing in mind the illuminating observations in Dalchand (supra). 47. Interestingly, the decision of the Supreme Court reported in AIR 1980 SC 303 (Sharif-ud-din v. Abdul Gani Lone) was noticed by the learned Judge while authoring both the decisions and a passage therefrom is found to be quoted in the same. The last sentence from the quoted passage is relevant and ....
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..... The relevant provision of Clause 21 does not disclose any such intention. This is a feature which inclines the Court to hold the time of 3 months is not mandatory." 51. This Bench thus doubts as to whether the three decisions of the Madras High Court relied on by Mr. Saraf lay down correct law, and holds the time limit in regulation 20(1) as not mandatory, and that any proceeding for revocation of a customs broker's license beyond ninety days of receipt of offence report would not per se stand invalidated by mere reason of such belated initiation. 52. The legal position apart, this Bench is also of the considered view upon consideration of the factual aspect that the proceedings have in fact been initiated within ninety days of receipt of the offence report by the first respondent. 53. The offence report was received by the correspondence department of the first respondent on April 19, 2016 and it took a couple of days' time to reach the first respondent's office. In fact, the report was received by him on April 22, 2016. The impugned notice to show cause in connection with revocation proceedings was issued on July 18, 2016, dispatched on July 20, 2016 and received....