TaxTMI 
TaxTMI 
2020 (3) TMI 270
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.... the order dated 05 November, 2019 by which the suspension of the license has been continued under regulation 16(2) would continue to operate, even if a notice contemplated under regulation 17(1) is not issued within a period of 90 days from the date of receipt of the offence report. 4. The appellant was granted a Broker License by the Commissioner of Customs at Indore and was transacting business at Mumbai Customs Zone. This License was to continue upto October, 2024. It transpires that on 05 February, 2019, M/s. Opera enterprises and M/s. Om Traders filed two separate Bills of Entry and on 07 February, 2019, information regarding mis-declaration of goods in the said Bills of Entry was reported. Thereafter, on 06 August, 2019, a show cause notice was issued under section 124 of the Customs Act, 1962 ^Customs Act to an employee of the appellant and an order dated 16/18 September, 2019 was issued by the Principal Commissioner of Customs at Mumbai for withdrawal of the permission granted to the appellant to transact business at Mumbai Customs Zones with immediate effect. This order together with a copy of the show cause notice dated 6 August, 2019 was communicated to the Commissio....
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....nse or imposition of penalty and is reproduced below: "14. Revocation of licence or imposition of penalty. - The Principal Commissioner or Commissioner of Customs may, subject to the provisions of regulation 17, revoke the license of a Customs Broker and order for forfeiture of part or whole of security, on any of the following grounds, namely :- (a) failure to comply with any of the conditions of the bond executed by him under regulation 8; (b) failure to comply with any of the provisions of these regulations, within his jurisdiction or anywhere else; (c) commits any misconduct, whether within his jurisdiction or anywhere else which in the opinion of the Principal Commissioner or Commissioner of Customs renders him unfit to transact any business in the Customs Station; (d) adjudicated as an insolvent; (e) of unsound mind; and (f) convicted by a competent court for an offence involving moral turpitude or otherwise." 10. Regulation 16 deals with suspension of license and is as follows:- "16. Suspension of license. - (1) Notwithstanding anything contained in regulation 14, the Principal Commissioner o....
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.... admitted by the Customs Broker. (3) xxxxxxxxxxxxx (4) xxxxxxxxxxxxx (5) At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall prepare a report of the inquiry and after recording his findings thereon submit the report within a period of ninety days from the date of issue of a notice under sub-regulation (1). (6) The Principal Commissioner or Commissioner of Customs shall furnish to the Customs Broker a copy of the report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, and shall require the Customs Broker to submit, within the specified period not being less than thirty days, any representation that he may wish to make against the said report. (7) The Principal Commissioner or Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs Broker, pass such orders as he deems fit either revoking the suspension of the license or revoking the license of the Customs Broker within ninety days from the date of submission of the report by the Deputy ....
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.... Ltd. with immediate effect under the provisions of Regulation 16 (1) of CBLR, 2018." 14. It would be seen from the aforesaid paragraph of the order dated 15 October, 2019 that immediate action was considered necessary, but the order does not mention that an inquiry against the Customs Broker was pending or contemplated. 15. Regulation 16 (2) provides that where a license is suspended under sub-regulation (1), the Commissioner of Customs shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose license has been suspended and may pass such order as he deems fit either revoking the suspension or continuing the suspension within fifteen days from the date of hearing granted to the Customs Broker. Personal hearing was provided to the appellant whereafter the suspension of the Brokers Licence of the appellant was continued by order dated 5 November, 2019. 16. The proviso to regulation 16(2) provides that in case the Commissioner of Customs passes an order for continuing the suspension, further procedure thereafter shall be as provided in regulation 17. 17. Regulation 17 (1) provides that the Commissioner of Custom....
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....pt of offence report as contemplated under regulation 17(1) is mandatory or merely directory. 22. As noted above, regulation 14 deals with revocation of license or imposition of penalty. It provides that the Commissioner of Customs may, subject to the provisions of regulation 17, revoke the license of a Customs Broker and order for forfeiture of part or whole of security, on any of the following grounds :- "(a) failure to comply with any of the conditions of the bond executed by him under regulation 8; (b) failure to comply with any of the provisions of these regulations, within his jurisdiction or anywhere else; (c) commits any misconduct, whether within his jurisdiction or anywhere else which in the opinion of the Principal Commissioner or Commissioner of Customs renders him unfit to transact any business in the Customs Station; (d) adjudicated as an insolvent; (e) of unsound mind; and (f) convicted by a competent court for an offence involving moral turpitude or otherwise." 23. Regulation 16 deals with suspension of license. It provides that notwithstanding anything contained in regulation 14, the Commissioner of Custom....
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....the report. 26. Learned Counsel for the appellant has submitted that time limits have been provided in regulation 17 for a specific purpose because a license of a Customs Broker should not be suspended indefinitely as suspension of the licence deprives the licencee from carrying on business as a Customs Broker. The submission is that in order to achieve this purpose, regulation 17(1) provides for issue of a notice within 90 days from the date of receipt of the offence report In the present case, it is not disputed by the Revenue that the offence report was received by the Commissioner of Customs at Indore on 27 September, 2019. 27. It is in the light of the aforesaid discussion that the decisions relied upon by learned Counsel for the Appellant and the learned Authorized Representative of the Department need to be examined. 28. The issue as to whether issuance of a notice within the stipulated period was mandatory or directory was examined by the Delhi High Court in Indair Carrier Pvt. Ltd. vs. Commissioner of Customs (General) and Ors. 2016 (337) ELT 41(Del) The provisions of the Customs House Agents Licensing Regulations, 2004 ^2004 Regulations had come up for interpreta....
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...."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 the date of receipt of offence report, by prescribing time limits at various stages of Issue of Show Cause Notice, submission of inquiry report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs recording his findings on the issue of suspension of CHA license, and for passing of an order by the Commissioner of Customs. Suitable changes have been made in the present time limit of forty five days for reply by CHA to the notice of suspension, sixty days time for representation against the report of AC/DC on the grounds not accepted by CHA, by reducing the time to thirty days in both the cases under the Regulations." 7. This Court has consistently emphasised the mandatory nature of the aforementioned time-limits in several of its decisions. These include the decision in Schankar Clearing & Forwarding v. C.C. (Import & General) - 2012 (283) E.L.T.....
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....f the Delhi High Court in Indair Carrier Pvt. Ltd. was followed by the Delhi High Court in Impexnet Logistic vs. Commissioner of Customs (General) 2016 (338) ELT 347 (Del) and the observations are as follows: "9. Admittedly, the SCN under the CHALR/CBLR in the present case was issued only on 9th December, 2013, i.e., beyond the mandatory period of 90 days from the date of receipt of the offence report by the Respondent, i.e., 31st January, 2013. Consequently, all proceedings pursuant thereto are held to be invalid. Further, even the enquiry report was not submitted within a period of 90 days of the issuance of the SCN." 33. In Overseas Air Cargo Services vs. Commissioner of Custom (General), New Delhi 2016 (340) ELT 119 (Del), the Delhi High Court again after placing reliance upon a number of judgments, observed that the provisions of regulation 22(1) of the 2004 Regulations are mandatory in nature and the relevant paragraphs are as follows:- "13. This Court has in a series of judgments dealt with the question of mandatory nature of time limits set out in CHALR, 2004 and the corresponding provisions under the CBLR, 2013. This Court has in the following judgment....
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....r to the provisions of regulation 22(1) of the 2004 Regulations and regulation 17(1) of the 2018 Regulations. Regulation 20(1) of the 2013 Regulations is reproduced below:- "Regulation 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 defence 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." 35. After taking note of the earlier decision of the Madras High Court in The Commissioner of Customs, Chennai vs. CESTAT and Others) 2014 (310) ELT 673, the Madras High Court in Saro International held that the time limit prescribed under regulation 20(1) of the 2013 Regulations is mandatory. The observations of the High Court....
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...., swift action can be initiated against the Customs Brokers and the authorities can also be made accountable. The Regulations only contemplate initiation of proceeding by issuance of notice within 90 days. While, making out a 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 8-4-2010, the necessity to include a time limit for initiating action was addressed by the Board after field inspection and by a notification dated 8-4-2010, amendments prescribing time period for initiating action and completing proceedings was made. The same was given effect by notification dated 20-1-2014. Whereas, under the CBLR, 2013 having found the necessity to prescribe a period, the Central Board, the statuto....
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.... be mandatory and is held to be directory. As it is already observed above that though the time line framed in the Regulation need to be rigidly applied, fairness would demand that when such time limit is crossed, the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the timelimit was not adhered to. This would ensure that the inquiry proceedings which are initiated are completed expeditiously, are not prolonged and some checks and balances must be ensured. One step by which the unnecessary delays can be curbed is recording of reasons for the delay or non-adherence to this time limit by the Officer conducting the inquiry and making him accountable for not adhering to the time schedule. These reasons can then be tested to derive a conclusion whether the deviation from the time line prescribed in the Regulation, is "reasonable". This is the only way by which the provisions contained in Regulation 20 can be effectively implemented in the interest of both parties, namely, the Revenue and the Customs House Agent." (emphasis supplied) 39. This decision of the Bombay High Court was subsequently followed b....
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....eys the grant of licence in true spirit, on the pain of cancellation of the licence upon being found to have transgressed its parameters. The licence granted under the Regulations of 2004 or 2013 cannot be said to be coupled with any grant or interest making it irrevocable. Such is not the contentions of the petitioner." (emphasis supplied) 41. Thus, there are two sets of decisions. The Delhi High Court and the Madras High Court have held that time limit prescribed for issuance of the notice within 90 days from the date of receipt of the offence report is mandatory in nature, whereas the Bombay High Court and the Calcutta High Court have held that the requirement of issuance of the notice within the stipulated period is not mandatory in nature. 42. The issue, therefore, is which set of decisions should be followed. Fortunately, this issue has been examined by a Larger Bench (Five Member Bench) of the Tribunal in Collector of Central Excise, Chandigarh vs. Kashmir Conductors 1997 (96) ELT 257 (Tri). One issue that was addressed by the Larger Bench was what should be done when the Tribunal is faced with conflicting decisions of High Courts. The five member Larger Bench of th....
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....ctor of Central Excise, Kanpur reported in 1988 (35) E.L.T. 398 (T), the Tribunal has followed the Supreme Court judgment in the case of East India Commercial Co. case and set aside the show cause notice issued against the appellants therein as it was in direct violation of the law laid down by the Allahabad High Court within whose jurisdiction both the manufacturer and the Collector of Central Excise were situated. 10.2 In a recent decision of the Tribunal in the case of Madura Coats v. CCE, Bangalore reported in 1996 (82) E.L.T. 512, it has been held that the decision of a particular High Court should certainly be followed by all authorities within the territorial jurisdiction of that High Court and that the authorities in another State are not bound to follow the views taken by a particular High Court in the absence of a decision by the jurisdictional High Court with regard to constitutionality of a provisions. The Tribunal has held that since the adjudication of vires of a provision of a statute or Notification is outside the jurisdiction of the Tribunal and the jurisdictional High Court i.e., the High Court having jurisdiction over the authority and the assessee, has ....