TaxTMI 
TaxTMI 
2021 (2) TMI 899
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....ent have not raised objection to the order dated January 29, 2021. 3. The issue that arises for consideration is whether the expression issue of a notice occurring in regulation 17(1) of the Customs Brokers Licensing Regulations 2018 [2018 Regulations] would mean service of notice. According to the appellant, if the Commissioner of Customs does not serve a notice in writing on 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 license, the order revoking the Customs Brokers License [the License] issued to a Customs Broker will lapse. 4. It would be necessary to refer to certain relevant facts before proceeding to decide this issue. The appellant was granted a License under the 2018 Regulations. An offence report dated May 10, 2018 was submitted to Commissioner of Customs on May 18, 2018 by the Directorate of Revenue Intelligence regarding the appellant and two others, namely M/s. Leo Cargo Handling Service and M/s. R P Cargo Handling Services alleging that they had failed to ensure compliance of regulations 10 (b), 10(d), 10(e), and 10(n) of the 2018 Regulations. A show caus....
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....ovisions of the 2018 Regulations. 8. Regulation 3 provides that no person shall carry on business as a Customs Broker relating to the entry or departure of a conveyance or the import or export of goods, including work relating to audit at any Customs Station unless such person holds a License granted under these Regulations. Regulation 7 deals with grant of License. Regulation 10 deals with obligations of Customs Broker. 9. Regulation 14 deals with revocation of License 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 Cu....
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....quiry 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 Commissioner of Customs or Assistant Commissioner of Customs, under sub-regulation (5) : Provided that no order for revoking the license shall be passed unless an opportunity is given to the Customs Broker to be heard in person by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be. (8) xxxxxxxxxxxxxxxxx (emphasis supplied) 11. The relevant dates for determining the issue are as follows; (i) Date of offence report : May 10, 2018 (ii) Date of receipt of offence report : May 18, 2018 (iii) Date of notice : August 10, 2018 (iv) envelope containing the notice tendered to the Postal Department (but it was returned unserved) : August 14, 2018 (v) Notice delivered by hand : August 28, 2018 12. Regulation 17 (1) provides that the Commissioner of Customs shall issue a notice in writing to the Customs Broker within a period of ninety days f....
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.... aware of the date when the offence report is received in his office but would certainly not be aware of the date when the notice would actually be served upon the Customs Broker. It is for this reason that the expression 'issue' has been deliberately used in regulation 17(1) so that the Commissioner of Customs knows for certain that the notice has to be issued within ninety days from the date of receipt of the offence report. There can be a situation where the Commissioner of Customs issues the notice immediately upon receipt of the offence report, but for some reason it is not served upon the Customs Broker within ninety days. Should regulation 17(1) be so interpreted that no action for revocation of License can be taken even in such a situation. Of course, the period of thirty days during which the Customs Broker has to file a reply would start from the date the notice is served upon him. 17. When different words are used in the same regulations or notifications, the courts have held that the words should be assigned different meanings. 18. It would be appropriate to refer, in this context, to the judgment of the Bombay High Court in Devidayal Electronics and Wires Limited....
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....visions of the Customs Act would also, therefore, throw light on the expressions used in the 2018 Regulations. 22. Section 153 of the Customs Act deals with modes for services of notice. The said section 153, as it stood prior to its amendment on March 29, 2018, is as follows: "153. Service of order, decision, etc. Any order or decision passed or any summons or notice issued under this Act, shall be served,- (a) by tendering the order, decision, summons or notice or sending it by registered post or by such courier as may be approved by the Principal Commissioner of Customs or Commissioner of Customs; or (b) if the order, decision, summons or notice cannot be served in the manner provided in clause (a), by affixing it on the notice board of the customs house." (emphasis supplied) 23. A perusal of the aforesaid section 153 brings out a clear difference between 'service of notice' and 'issue of notice', for it provides that any notice issued under the Customs Act shall be served in the manner provided for in that section. 24. Such a distinction can also be noticed from the amended provisions of section 153 of the Customs Act. The relevant provision is reproduce....
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....ngs. It would, therefore, be useful to examine these decisions. 30. The Supreme Court in Kumho Petrochemicals Company Limited observed as follows: "32. ..................The learned counsel for respondent rightfully pointed out that the legislature has consciously used the expression 'may' and 'shall' at different places in the same Section, i.e., Section 9A of the Act. In such a scenario, it has to be presumed that different expressions were consciously chosen by the Legislature to be used, and it clearly understood the implications thereof. Therefore, when the word 'may' is used in the same Section in contradistinction to the word 'shall' at other places in that very Section, it is difficult to interpret the word 'may' as 'shall'. Therefore, it is difficult to read the word 'may' as 'shall'." (emphasis supplied) 31. The Andhra Pradesh High Court in Madhucon Projects Limited also observed that two different expressions in a statute must be construed to carry different meanings and the observations are as follows: "IX. Two Different expressions in a statue must be construed to carry different meanings: 49. As Parliament has used two different expressions in ....
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....otice. 2. List on thirty.09.2019 for arguments. 3. In the meantime, the operation of the impugned order shall remain stayed." 35. On September 30, 2019 adjournment was sought by the learned Counsel for the appellant and therefore the matter directed to be listed on October 15, 2019 and the interim order was directed to continue. 36. On October 15, 2019, the matter was directed to be listed on April 13, 2020. 37. Learned Counsel for the appellant, on receiving the information sent by the Authorized Representative of the Department that he had been telephonically instructed that an appeal had been filed in the Delhi High Court against the order passed by the Tribunal in R.P Cargo Handling, sent a communication to the Tribunal that the statement made by him during the course of hearing of the appeal that the order had attained finality was on the basis of the instructions given to him by the appellant and the learned Counsel expressed regret for the statement made by him. 38. These facts have been stated only to put on record the conduct of the appellant that even without proper verification of the facts, the appellant had instructed the learned Counsel that no appea....
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....d that the judgment of the Gujarat High Court that was assailed before the Supreme Court had relied upon a decision of the Supreme Court in Banarsi Debi, which had considered the validity of a notice issued under section 34 (1) of the Income Tax Act, 1922. The Supreme Court observed that though it was held by the Supreme Court in Banarsi Debi that in view of the provisions of section 34 of the Income Tax Act, 1922 there was really no distinction between "issue of notice" and "service of notice", but the decision in Banarsi Debi was clearly distinguishable for the reason that in sections 148 and 149 of the Income Tax Act 1961, a clear distinction has been made between "issue of notice" and "service of notice". The observations of the Supreme Court are as follows:- "2. The High Court in our opinion went wrong in relying upon the ratio of 53 ITR 100 in disposing of the case in hand. The scheme of the 1961 Act so far as notice for reassessment is concerned is quite different. What used to be contained in section 34 of the 1922 Act has been spread out into three sections, being sections 147, 148 and 149 in the 1961 Act. A clear distinction has been made out between 'issue of noti....
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....filed within three months from the date of the communication to him of such a decision. Section 35E (1) authorises the Board of its own motion to call for and examine the records of any proceeding in which the Collector of Central Excise has passed any decision or order for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Collector to apply to the Appellate Tribunal for determination of such points. Such power has also been conferred on the Collector of Central Excise under sub-section (2) of section 35E. Sub-section (3) of section 35E of the Act, which deals with the limitation for exercise of the powers under sub-sections (1) and (2) of the Act, provides that no order shall be made under sub-section (1) or sub-section (2) after the expiry of one year from the date of the decision or order of the adjudication authority. Sub-section (4) of section 35E provides that the adjudicating authority shall file the application before the Tribunal in pursuance of the order made under sub-section (1) or sub-section (2) within a period of three months from the date of communication of the order under sub-section (1) o....
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....st of the person adversely affected, by providing a remedy against the order or decision any period of limitation prescribed with reference to invoking such remedy shall be read as commencing from the date of communication of the order. But if it is a limitation for a competent authority to make an order the date of exercise of that power and in the case of exercise of suo moto power over the subordinate authorities' orders, the date on which such power was exercised by making an order are the relevant dates for determining the limitation. The ratio of this distinction may also be founded on the principle that the Government is bound by the proceedings of its officers but persons affected are not concluded by the decision. Section 35E comes under the latter category of an authority exercising its own powers under the Act. xxxxxx The power under Section 35E is a power of superintendence conferred on a superior authority to ensure that the subordinate officers exercise their powers under the Act correctly and properly. Where a time is limited for the purposes by the statute, such power, as under Section 33A(2) of the Indian Income-tax Act, 1922 referred to in Muthi....
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....eceived by the assessee. The Tribunal accepted this contention of the assessee and held that the application was not maintainable. The Supreme Court upheld the order of the Tribunal. 47. In this connection, it would also be pertinent to refer to the Full Bench decision of the Punjab and Haryana High Court in The Jai Hanuman Trading Co. Pvt. Ltd. vs The Commissioner of Income Tax [AIR 1977 P H 314], wherein the provisions of sections 147 and 148 of the Income Tax Act, 1961 came up for consideration. The decision of the Supreme Court in Banarsi Debi was also distinguished by observing that while section 34(1) of the Income Tax Act 1922 prescribes limitation for service of notice on the assessee, section 149 of the Income tax Act, 1961, prescribes limitation on the issuance of the notice. The relevant portion of the judgment is reproduced below:- "xxxxxxx Section 149 of the 1961 Act stipulates that no notice under Section 148 shall be issued after the expiry of eight years from the end of the assessment year in cases falling under Section 147(a) and after the expiry of four years from the end of the assessment year in cases falling under Section 147(b). It is to be noti....
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....t thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whom they were seized. Section 124 (a) provides that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods is given a notice in writing, informing him of the grounds on which it is proposed to confiscate the goods or impose the penalty. The High Court examined whether a mere dispatch of the notice contemplated under section 124 (a) would imply that the notice was given within the meaning of sections 124(a) and 110(2) of the Customs Act. It was sought to be contended by the writ petitioners that the expression given used in sections 110(2) and 124(a) was distinct and different from the word issue or served and, therefore, the legislative instant was clear that the notice had to be received by the person concerned and mere dispatch by post would not satisfy the requirement of given. It is in this context that the Delhi High Court observed that a conjoint reading of sections 110(2) and 124(a) of the Customs Act would indicate that notice can be regarded as having been given only when....
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....ression issue in regulation 17(1) of the 2018 Regulations would not mean service of notice. It needs to be noted that regulation 17(1) of the 2018 Regulations is in pari materia with regulation 20 (1) of the 2013 Regulations. 53. The Second issue that has been referred to is whether the time limit prescribed in regulation 20(1) of the 2018 Regulations is mandatory or directory in nature. 54. Though this issue did not arise for consideration in R P Cargo Handling, it has been framed by the Division Bench for the reason that in case it is held that the notice was issued within ninety days from the date of receipt of the offence report, then too, it may not result in setting aside the revocation of License since the requirement contemplated under sub-regulation (1) of regulation 17 is merely directory in nature. 55. Regulation 17 provides for time limit at various stages. Under sub-regulation (1), a time limit of ninety days from the date of receipt of an offence report has been set out for issuance of a notice proposing to revoke the license or impose a penalty. The Customs Broker is required to submit his reply to the show cause notice within thirty days. Under sub-regulati....
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....tice under regulation 22(1) was not issued to the appellant within the stipulated period, but the Tribunal had directed the respondent to complete the proceedings under regulation 22 within sixty days from the date of receipt of order of the Tribunal, failing which the suspension order would stand revoked. This order of the Tribunal was assailed before the Delhi High Court. 58. The Delhi High Court emphasized upon the mandatory nature of regulation 22(1) of the 2004 Regulations and the relevant paragraphs are as follows:- "6. The time-limits in the CHALR, 2004 for issuance of the SCN to the CHA licence holder and completion of the inquiry within ninety 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. thirty/2010-Cus. (N.T.), dated 8th 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 in....
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.... aside. 10. The CHA licence of the Petitioner/Appellant that stood revoked will stand revived forthwith. In the event that the Petitioner's original CHA licence has expired in the meanwhile, its application for renewal will be processed by the Respondents without unnecessary delay. The appeal and the writ petition are allowed in the above terms with no order as to costs." (emphasis supplied) 59. A perusal of the aforesaid judgment in Indair Carrier shows that the period of ninety days prescribed for issuance of a show cause notice under regulation 22(1), which provision is similar to the provisions of regulation 17(1) of the 2018 Regulations, was held to be mandatory in nature and, therefore, the directions issued by the Tribunal to complete the proceedings contemplated under regulation 22 within sixty days from the date of receipt of the order of the Tribunal was held not to be correct since the notice contemplated under article 17(1) had not been issued within a period of ninety days from the date of receipt of offence report. 60. This decision of the Delhi High Court in Indair Carrier was followed by the Delhi High Court in Impexnet Logistic vs. Commissioner of Custo....
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....rms of Regulation 22(5) of the CHALR, 2004, the enquiry had to be completed and a report submitted within ninety days of the issuance of the SCN under Regulation 22(1). In the present case, it is not disputed that the inquiry report was submitted only on 16th January, 2015 more than three years after the SCN dated 14th October, 2011 was issued. 17. Consequently, following the above decisions, the Court holds that the impugned order dated 10th April, 2015 passed by the Commissioner of Customs (General), Delhi revoking the CHA license of the appellant to be unsustainable in law. The said order and the consequential order dated 16th September, 2015 of the CESTAT affirming it are hereby set aside." (emphasis supplied) 62. The Madras High Court in Saro International Freight System vs. Commissioner of Customs, Chennai VIII [2016(334) ELT 289(Mad.)] examined the provisions of regulation 20(1) of the Customs Brokers Licensing Regulations 2013 [2013 Regulations]. The provisions of regulation 20(1) of the 2013 Regulations are similar 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....
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....and in the result to cancel the licences of the brokers if they are involved and to impose penalty. The interpretation of a statute must always be to give a logical meaning to the object of the legislation and the aim must be to implement the provisions rather than to defeat it. As laid down by the Apex Court in the judgments relied upon by the learned counsel for the petitioners, when a statute prescribes a thing to be done in a particular manner, it must be performed in such a manner. Also, the use of the language "shall" in the regulation cannot be termed as "directory" as one of the consequence of the action is the revocation of the licence and it would also pave way for inaction by the officials breeding corruption. The offences complained in the cases are breach of Regulation 11 ...... 28. It is also to be noted that every act of breach by the Broker would entitle the authorities to initiate proceedings from the date of knowledge of the offence. It is only if the time limit is strictly followed, 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 issua....
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....321(Bom.)] to contend that the time limit prescribed under regulation 17(1) of the 2018 Regulations is not mandatory in nature and is only directory. The issue that arose before the Bombay High Court was whether the time period prescribed for issuance of the notice contemplated under regulation 20(1) of the 2013 Regulations within ninety days from the receipt of the offence report and whether the time period prescribed for submission of the inquiry report under regulation 20(5) of the 2013 Regulations within ninety days from the date of issue of the notice under regulation 20(1) were mandatory. 66. After considering the judgements of the Delhi High Court and the Madras High Court referred to above, the Bombay High Court expressed its inability to hold that the time limit prescribed under the 2013 Regulations were mandatory in nature. The observations of the Bombay High Court are as follows:- "15. In view of the aforesaid discussion, the time limit contained in Regulation 20 cannot be construed to 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 de....
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....reting a statute when it provides for a time limit for doing a certain act, then, the entire statute is required to be considered, in the context of the object that the statute seeks to achieve. A statutory provision prescribing a time limit without providing for the consequence of non-adherence can be interpreted to mean that, the time limit provided is directory and not mandatory. Regulation 22 of the Regulations of 2004 and Regulation 20 of the Regulations of 2013 are provisions for the purpose of checking unwholesome practices at the instance of a Customs House Agent or a Customs Agent as the case may be. These are provisions which empower the authority to revoke the licence granted as a measure of punishment for a wrongdoing of the licensed person. Any licence granted unless coupled with a grant or interest, is revocable. These provisions provide for the procedure for the revocation of the licence granted. These provisions seek to regulate the affairs of the licensed persons, so that, such licensed persons obeys 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 Reg....
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..../s. East India Commercial Co. Ltd. v. Collector of Customs, Calcutta reported in 1983 (13) E.L.T. 1342 (S.C.) was brought to the notice of the Larger Bench, but, was not adverted to sufficiently in the course of discussion. In the East India Commercial Co. case, one of the questions for consideration was whether the interpretation given by the Calcutta High Court to Section 167 of the Sea Customs Act, 1878 would be binding on authorities functioning within the jurisdiction of the High Court and the Supreme Court held that "it is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. ........We, therefore, hold that the law declared by the highest Court in the State is binding on authorities or Tribunals under its superintendence.........". This decision has been followed by the Bombay High Court in CIT v. Godavaridevi Saraf reported in 1978 (2) E.L.T. (J 624). 10.1 In the case of U.P. Laminations v. Collector 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....