TaxTMI 
TaxTMI 
2021 (8) TMI 1229
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....in-Original dated 28.03.2019 passed by the Commissioner of Customs (General)? (b) Whether, on the facts and in the circumstances of the case, the CESTAT was right in holding that there is no link between the smuggling of red sanders by Shri Vijay Poojary with the activities for which the Respondent herein was licensed?" 3. Factual background is that the Respondent viz. M/s Srinivas Clearing and Shipping (I) Pvt. Ltd., was granted regular Customs Broker Licence under Regulation 10(1) of the Custom House Agent Licensing Regulations, 1984 (Now Regulation 7 (2) of Customs Brokers Licensing Regulations, 2013 ("CBLR")) in Mumbai. The Directorate General of Revenue Intelligence (DRI), Mumbai Zonal Unit, vide letter dated 16.05.2016 informed that during the investigation of a case related to large scale smuggling of Red Sanders to the tune of Rs. 48 Crores by a smuggling cartel, it was revealed that one Shri Vijay Poojary, a 'G' Card Customs pass holder was a key member of the smuggling syndicate; that he was a Director of the Respondent and that he also had a Freight Forwarding Company in the name of Srinivas International. 4. It is submitted that investigations, inquiries,....
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.... is violation of International Trade in Endangered Species of Wild Fauna and Flora which are major, serious and heinous crimes having both National and International ramifications". 8. Being aggrieved by the aforesaid order, the Respondent herein filed the appeal i.e. Customs Appeal No. 86403 of 2019 before the CESTAT, Mumbai. 9. The CESTAT, Mumbai vide order dated 21.11.2019 allowed the Respondent's appeal and ordered restoration of the Respondent's license. 10. Aggrieved by the aforesaid order that the Revenue is before us raising the aforesaid substantial questions of law on inter alia the following grounds :- (i) That the Impugned Order dated 21.11.2019, passed by the CESTAT, Mumbai is illegal, baseless, perverse and bad in law. (ii) That it is a non-speaking and cryptic order and is thus, liable to be set aside on this ground alone. (iii) That the Tribunal failed and neglected to appreciate the reasons given by the Principal Commissioner of Customs in the order impugned before the Tribunal, while holding in paragraph 6 of the Impugned order that the delay in commencement of the proceedings for revocation of the license does not command itsel....
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....on. Further, there is no evidence that in the instant case, any representation or complaint against any investigating officer who allegedly used threat, coercion or duress to record the statements and therefore the statements of Shri Balu Ramchandra Babar and Shri Santosh D'Souza should be taken as confessional statements. (viii) The CESTAT ought to have appreciated that Shri Vijay Poojary has forged and fabricated the documents and booking of freight for all the 18 consignments was done by him in benami names by making cash payments. The employees of the firm admitted that they have destroyed the documents at the instructions of said Vijay Poojary. The CESTAT failed and neglected to appreciate that the Respondent's director namely Vijay Poojary is an habitual offender and has been detained under COFEPOSA in the case of fraudulent exports of garments and for obtaining undue benefits under the DEPB. The CESTAT ought to have appreciated that Scheme. Consequently, this CHA license issued in the name of Kunverji Dharshi & Sons was suspended on 14.09.2005 and revoked on 06.11.2012. (ix) The CESTAT ought to have appreciated that the said Shri Vijay Poojary has admitted,....
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....on of Regulations 11(a), 11(e), 11(j), 11(k) and 11(n) of CBLR, 2013. He submits that the suspension was based on the report from the DRI dated 16th May, 2016 and a post decisional hearing on 30th June, 2016. The suspension was continued till 14th July, 2016, pending inquiry proceedings under Regulation 20 of CBLR, 2013. He submits that subsequently as appeal was filed in the CESTAT against the continuation order and pursuant to order dated 11th January, 2017 read with order dated 15th January, 2018, Respondent's licence was restored. A show-cause notice dated 14th May, 2018 was thereafter issued to initiate inquiry. This notice was challenged in a writ petition before this Court, which petition had been withdrawn. 15. It is submitted that the office of the Principal Commissioner of Customs (General) is a cadre controlling authority and not only deals with the personal matters and consequential litigations in various judicial fora, but also looks after Customs Broker Section, which deals with the licences and an offence and adjudication in respect of approximately 2500 Custom Brokers Licences. Learned Senior Counsel submits that all these matters require due application of mind ....
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....the facts set out above. He explains that red sanders is a type of red wood and as per the Convention of International Trade in Endangered Species of Wild Fauna and Flora, 1973 (CITES), red sanders is an endangered species and export of red sanders is a serious crime having both national and international ramifications. He submits that there is no denial that Respondent's business is controlled and operated by Mr. Poojary, who has himself admitted his role in the smuggling of red sanders, and for which he was arrested under COFEPOSA. He submits that what is intriguing is that despite the admission by Shri Vijay Poojary vide statement recorded under Section 108 of the Act that he is involved in the smuggling red sanders, CESTAT has completely ignored this fact and the circumstances in detail as well as the documentary evidence on record thereby erroneously ordering restoration of Respondent's customs broker license. He submits that being the Director of the Respondent company he was the king pin and the key conspirator and perpetrator of the offence of exporting red sanders. The Commissioner of Customs (General) agreeing with the inquiry report submitted on 14th November, 2018, pass....
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....not only in the commencement of proceedings but also in conclusion of the enquiry. 24. Learned counsel for the Respondent submits that there has been a complete breach of Regulation 20 as Commissioner of Customs had not adhered to the time lines contained therein. He refers to Regulation 20(1) to submit that the said Regulation requires the Commissioner to issue a notice to the Customs Broker within a period of 90 days from the date of offence report, whereas as is evident from the dates, the said notice has been issued after two years after receipt of the offence report. He submits that a two year delay for the commencement of proceedings is not reasonable. He submits that in accordance with the Regulation 20 (5) at the conclusion of the inquiry, report of the inquiry and the findings thereon are to be submitted in the form of a report within a period of 90 days from the issue of notice under Regulation 20(1), whereas that has also been breached. It is submitted that the overall delay is 976 days which includes further delays as well. 25. Mr. Prakash Shah also refers to the appeal that was filed by the Respondent before the CESTAT in support of his contention that the delay ....
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....nd rupees on a Customs Broker on any of the following grounds, namely: (a)..... (b) failure to comply with any of the provisions of these regulations, within his jurisdiction or anywhere else; (c)..... (d).... (e).... (f)...." 29A. Mr. Prakash Shah, learned counsel for Respondent submits that the Customs Broker has complied with all his obligations under the CBLR. He refers to Regulation 11 with respect to obligation of Customs Broker and submits that the Respondent has whenever required by the Customs authorities obtained and produced the authorisation from the persons who have employed the Respondent as Customs Broker. 30. With respect to the second question, Mr. Shah submits that there is no connection between the Respondent and Shri Vijay Poojary and the alleged act of smuggling by Shri Vijay Poojary and reiterates what is stated in paragraph 7 of the Impugned order. 31. Mr. Prakash Shah takes us to the paper-book of the documents referring to letter dated 16th May 2016 from the DRI to the Commissioner of Customs (General) to submit that it is recorded in paragraph 4 thereof that Shri Vijay Poojary has not used the ....
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....nquiry proceedings to commence and, thereafter there was a lapse of more than six months in completion of inquiry and a further lapse of more than two months in revocation of the licence, whereas the incident had its origin in November, 2015. We firstly observe that Tribunal has only dealt with the delay in commencement of the proceedings but nowhere dealt with submissions on delay in conclusion of the proceedings. We also observe that the Tribunal has failed to consider the submissions on timelines as canvassed by the parties nor the explanation for delay furnished by the Revenue. In any event, we are unable to agree with the CESTAT's interpretation as from a plain reading of the decision in the case of Principal Commissioner of Customs (General), Mumbai Vs. Unison Clearing P. Ltd. (supra), where after considering the provisions of CBLR in detail as well as the Customs Act, the background, object and the scheme of the CBLR and in particular Regulation 20, this Court had concluded that the timelines contained in Regulation 20 cannot be construed to be mandatory but are directory. This conclusion was arrived at by this court after deliberating on various Supreme Court decisions and ....
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.... imposes a public duty and lays down the manner and time within which the duty shall be performed, the injustice or inconvenience resulting from a rigid adherence to the statutory prescription, is a relevant factor for holding such provision only as directory has been completely overlooked. As observed by Justice Denman in Caldow v. Pixell, (1877) 2 CPD 562, "in considering whether the statute is imperative, the balance may be struck between inconvenience or sometime rigidly adhered to, or sometime departure from this direction". In that case, it was held that where a public officer was directed by statute to perform a duty within a specific time the case is established that the provisions are only directory, as already discussed above. There might be reason why such time limits cannot be adhered to and these reasons may be at times attributable to the revenue and some time to the Customs house agent. Strict adherence to the said time limit and not making it even slightly flexible would warrant a situation where even one day deviation from the time line would be equally fatal as a delay of one year. This surely is not the intention in framing the Regulation. Undisputedly, the inten....
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.... 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 time-limit 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. 34. The Tribunal completely erred in ignoring the true import and misread the binding decision of this court. We observe that the Tribunal has failed to consider the d....
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.... that he was involved in smuggling of red sanders. 38. It is incomprehensible as to how in the light of the factual submissions discussed above and without any discussion on the same, a factual finding is recorded stating that there is no link between the smuggling of Red Sanders by Shri Vijay Poojary with the activities for which Respondent was licenced. 39. It is also surprising that without any detailed discussion, absence of link is being given as the reason for the delay in completion of the proceedings. 40. On a query from the Court during the hearing, as to the shareholding pattern of the Respondent, we have been furnished with a certificate dated 23rd July 2021 issued by Chartered Accountant of the Respondent, where it is stated that out of total 5,00,000/- equity shares, Shri Vijay Poojary holds 4,99,900/- shares and the balance 100 shares are held by one Bhupendra K. Motta and Chandrahas L. Poojary. From the above information also prima facie it appears that Shri Vijay Poojary controls 99.9% of share holding of the Respondent which fact also needs to be considered while determining his link with the Respondent. The said certificate is reproduced as under :- "T....