TaxTMI 
TaxTMI 
2023 (10) TMI 249
X X X X Extracts X X X X
X X X X Extracts X X X X
....er noted that, DRI, in their Offence Report have informed that M/s. Aditya Exports, a partnership firm of Shri Mehul Pujara and Shri Naimish Sodha, engaged as a warehousing unit in Kandla Special Economic Zone, was de facto controlled and operated by Shri Pankaj Thakkar, one of the partners of appellant firm; that during October, 2022 and March, 2023, the said M/s Aditya Exports cleared imported Black Pepper from Kandla Special Economic Zone into DTA by wrongly claiming that the said goods were of Afghan origin and thereby, availing benefit of NIL rate of duty on the said goods in a wrongful manner; that the shipping agents stated before DRI that the goods had sailed for India from Jebel Ali and the Bills of Lading showing the port of loading as Bandar Abbas were fake; that the two partners of M/s Aditya Exports stated that all the business was carried out by Shri Pankaj Thakkar only; that Shri Vijay Rathod, an employee of appellant stated that he looked after accounting work of M/s Aditya Exports on the instructions of Shri Pankaj Thakkar, that Shri Sanjeev Roy, employee of M/s Aditya Exports stated that he was hired by Shri Pankaj Thakkar to perform Customs related work of M/s. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; DRI is carrying out investigation in the matter involving Shri Pankaj Thakker in his individual capacity and not against the appellant, i.e. M/s Krishna Shipping and Allied Services. As a matter of fact, M/s. Krishna Shipping and Allied Services was never appointed as Custom Broker in connection with clearance by M/s Aditya Exports from KASEZ. A decision of Hon'ble Tribunal in the case of Sun Clearance Agency v/s Commissioner of Customs (General), Mumbai, 2023 (8) TMI 360 - CESTAT Mumbai was cited. (v) Regulation 17(9) of CBLR,2013 was erroneously invoked as CBLR,2013 had ceased to exist. 7. Ld. Commissioner after consideration passed the impugned order for continuing the suspension of the Custom Broker Licence granted to appellant. 8. Appellants took the following grounds in appeal during hearing:- 9. The impugned order lacks jurisdiction to suspend Custom Broker and Licence in the facts and circumstances where no clearance of imported goods has taken place on the strength of the Licence. 9.1 The appellant submit that Ld. Commissioner has erred in failing to take into consideration provisions of Regulation 10 (a) of Custom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns of his employees during their employment." 9.6 The appellant say and submit that Ld. Commissioner could not have ignored the expression "in the transaction of business" appearing in Regulation 13 (12) of CBLR,2018 and passed orders for suspension of the Custom Broker Licence without alleging and establishing that the assumed and alleged acts of Shri Pankaj Thakker were in the course of transaction of Custom Broker business of the appellant in relation to goods imported and cleared by M/s. Aditya Exports and/or DTA units. Ld. Commissioner has nowhere found that the alleged acts of Shri Pankaj Thakkar were in the course of transaction of Custom Broker business of appellant with regard to M/s. Aditya Exports. Therefore, merely because it is alleged that Shri Pankaj Thakker is the alleged mastermind and beneficiary of the entire fraud, the same cannot automatically result in immediate suspension of the Custom Broker Licence given to appellant without even establishing that the alleged acts of Shri Pankaj Thakkar were in the transaction of business of the appellant as Customs Broker. A harmonious reading of Regulation 13 (12) would inform that any act of employee which is no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the impugned order does not abide by the Board's Instruction No. 24/2023, wherein, it is set out that suspension is not visualized for application in a routine or mechanical manner in every case. Further, it has made incumbent upon Commissioner to record reasons for immediate suspension. In this case, the impugned order does not satisfy the criteria laid down by Board in the said Instructions. Therefore, on this ground also, the impugned order is not tenable in the eyes of law and accordingly, the same is liable to be quashed and set aside. 11.2 The impugned order is also contrary to Board's guidelines contained in Circular No. 9/2010-Cus., dated 8.4.2010. At para 7.2 ibid, it is laid down that where immediate suspension is warranted, the investigating authority shall furnish its report to the Commissioner of Customs, within thirty days of the detection of an offence. Further, the Licensing authority shall take immediate suspension action within fifteen days of the receipt of the report of the investigating authority. In this case, it is a matter of record that statements of Shri Sudhakar Chikati, Manager of M/s. Aiyer Shipping Agency Pvt. Ltd., Shri Ankit Sharma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n order passed on 28.03.2011 by citing knowledge of Customs authority about alleged irregularities in January, 2011. 12.6 Hence, it is submitted that the legal requirements of Regulation 16 (1) is not satisfied. Therefore, the impugned order passed by invoking Regulation 16(1) of CBLR,2018 is liable to be quashed and set aside. 13. The appellant further submitted that suspension with immediate effect is an extreme step having a direct impact on the livelihood of the appellant and their employees. Hence, it was incumbent upon Ld. Commissioner to abide by the legal safeguards provided in Regulation 16(1) of CBLR,2018 as well as Circulars and Instructions issued by the Board from time to time. However, it is evident from the impugned order that the same is passed in a mechanical manner without complying the safeguards prescribed in law as well as by Board. He placed reliance on the following judgments as follows:- • Mb Kotak-2019 (369) ELT 1314 (Tri.-Ahmd.) • HIM Logistics Pvt. Ltd., 2015 (325) ELT 793 (Tri.-Del.) • Exfin Shipping (1) Ltd., 2003 (153) ELT 534 (Tri.-Mumbai) • M. K. Saha & Company, 2021 (376) EL....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The time lines prescribed by Board with reference to CBLR are sacrosanct and Revenue is bound to follow the same, as duly held by Hon'ble High Court of Delhi in Leo Cargo Services, 2022 (382) ELT 30 (Del.) and Indair Carrier Pvt. Ltd., 2016 (337) ELT 41 (Del.) that are placed in the compilation. 18. Again vide letter dated 23rd September, 2023, the learned Counsel for the appellant made following additional submissions:- 18.1 M/s. Krishna Shipping and Allied Services, Gandhidham, the appellant, have filed appeal No. C/10628/2013 against continuation of immediate suspension of their Custom Broker License by Ld. Commissioner of Customs, Kandla under Regulation 16(2) of Customs Broker Licensing Regulations, 2018 ("CBLR,2018"). 18.2 . Ld. Commissioner had ordered for immediate suspension of the Custom Broker License by citing violation of erstwhile Regulation 17 (9) of CBLR,2013, which was rectified to read as Regulation 13 (12) of CBLR, 2018. 18.3 Regulation 13 (12) of CBLR, 2018 is reproduced below for the ease of ready reference: "The Customs Broker shall exercise such supervision as may be necessary to ensure proper conduct of his em....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 18.8 It is evident from the impugned order that Ld. Commissioner has nowhere rebutted the primary contention of appellant that they were never appointed to act as Custom Broker and have not filed any shipping bill or bill of entry in connection with the transactions amongst the above parties. 18.9 Hence, it is respectfully submitted that the Custom Broker license of appellant has been suspended without citing transaction of any Custom Broker business by the appellant. Consequently, Ld. Commissioner has exceeded jurisdiction vested to him in the capacity of the Licensing Authority. 18.10 Hon'ble Tribunal was pleased to direct Revenue to place on record Offence Report based on which Ld. Commissioner had passed Order-inOriginal No. KND-CUSTM-000-COM-03- 2023-24 dated 28.07.2023 (placed at Page No. 30 of the appeal memorandum) for immediate suspension of the Custom Broker license. 18.11 On 15.09.2023, pursuant to the directions of Hon'ble Tribunal, Revenue placed on record copy of the following documents, both addressed to Ld. Commissioner of Customs, Kandla: (a) Letter F. No. DRI/LD/U/856/IN....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vided that the period for which any Customs Broker may be prohibited from transacting business in one or more of the Customs Stations shall not exceed one month from the date of such prohibition: (Emphasis Supplied) 21.2 Therefore, Ld. Commissioner in passing the impugned order which has the impact of blanket suspension beyond one month across all the customs stations where appellant was transacting business, has misread the communication received from DRI. Owing to this, suspension of the Custom Broker license is not justified. 22. Learned AR pointed out the learned Commissioner in the impugned order while continuing with the suspension has relied upon various testimonial evidences as were part of the offence report of DRI and further submitted that there is no delay in taking action and that the investigation report was received on 07 July, 2023 and suspension order was passed on 28.07.2023 by the learned Commissioner and the learned Commissioner also considered various pleas through his order which is reproduced below:- "4.3 I also find from the investigation report that " Krishna Shipping and Allied Services had even made IGST payments in res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n though under a different provision, is by itself not sufficient to invalidate the exercise of that power". The Tribunal Mumbai in the case of SEAMEC Ltd Vs Commissioner of Customs (Imports) Mumbai, reported at 2018(364) E.L.T.440(Tri. Mumbai) in para no. 73 has held as under: "Appellant's plea that Show cause notice intended confiscation under section 111(m) of the act instead of section 111(e) and 111(f) of the act is of no significance for the reason that there is no dispute that the officer who made the demand was competent to make demands under law as well confiscate the goods. Following the principle of law laid down in the case of J.K Steel Ltd. vs The UOI-1978(2)E.L.T.355(SC), if the exercise of power can be traced to a legitimate source, the fact that the same was purported to have been exercised different power does not vitiate the exercise of the power in question. This is a well-settled proposition of law. In this connection reference may usefully be made to the decisions of the court in P.Balakotaiah v. The Union of India, 1958 SCR 1052- AIR 1958 SC 232 and Afzal Ulah v. State of U.P., 1964 4 SCR 991-AIR 1964 SC 264. Apex Court in the case of Col....
X X X X Extracts X X X X
X X X X Extracts X X X X
....including of the employee acting in the personal capacity and on behalf of appellant as in this case appellant was never engaged and also there is no case on merits as well as that the recommendation of DRI as per the text was of prohibition and not of suspension. At this stage, we find that the appreciation of evidence and the capacity in which the employee worked cannot be clearly established either way, till the investigation is still in progress. We appreciate that the Learned Commissioner has acted on prima facie appreciation of the evidence made available to him in the report published by the DRI. As far as delay involved is concerned. We however find merit in the submission made by the Learned Advocate he has sought to rely on the decision of Hon'ble High Court of Delhi in the matter reported in Leo Cargo Services V/s. Airport & General, New Delhi as reported in 2022 382 ELT 30 (D-H), which while relying on the various judgments and distinguishing the decision of Principal Commissioner of Customs Vs. Unison Cleaning P Ltd as reported in 2018 361 ELT 321Bom., held that Circular No. 09/2010 dated 08.04.2010, continues to be applicable as far as time lines are conce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d time lines prescribed were mandatory or declaratory Following para which are relevant are reproduced below: "5. The crux of the contentions of the petitioners is as follows: a) i) The period of limitation prescribed in the relevant Regulation for doing each act is mandatory and not directory. ii) Even though the Regulations do not provide the consequence event, if the limitation period is not adhered to, the nature of business being done and the action initiated against the petitioners would show that such consequences are obvious and very serious in nature affecting the business and livelihood of the petitioners in toto. iii) When substantial right is affected, the Authorities are bound to comply with the time limit. iv) The order of suspension cannot be perpetuated by not passing the follow up actions within the time prescribed. Therefore, if the time prescribed is not mandatorily followed, the order of suspension would become perpetual. v) Since irretrievable loss is being caused by not passing the proceedings within the time frame, interest of the petitioners are very much affected. Therefore, the limitation period is mand....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ight to get the license and do the business. Only when the consequence is spelt out in the regulations itself, the time limit prescribed could be treated as mandatory. In W.P.No.27948/2019, the enquiry report was made ready on 23.05.2018 within 90 days from the date of the show cause notice. Because of the petitioner's non-cooperation, the time schedule could not be adhered to Regulations are only procedural laws and therefore, prescription of time limit therein is only directory. In W.P.No.31383/2018, the time limit is fully complied with. The suspension order was issued within one month from the date of receipt of the offence report. The continuation of the suspension order was issued on 20.11.2018. Therefore, the prayer sought for in W.P.No.31383/2018 challenging the suspension has become infructuous in view of the issuance of the show cause notice on 20.12.2018 which is challenged in the subsequent W.P.No.22154/2018. In W.P.No.18041/2018, the offence report was received by the respondent on 13.11.2018 and not on 16.11.2018 as contended by the petitioner. The challenge made in this writ petition against the show cause notice is premature and therefore, the writ petitions are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsing Regulations, 2013 and 2018, which are relevant for the present case. There is no dispute to the fact that the relevant provisions under both regulations are pari materia. Thus, it is seen that Regulation 16(1) of 2018 Regulations and 19(1) of 2013 Regulations are pari materia with each other. For the sake of convenience, I refer 2013 regulations. The regulation 19 deals with the suspension of the customs broker license. It reads as follows: "19.Suspension of licence: (1) Notwithstanding anything contained in regulation 18, the Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the licence of a Customs Broker where an enquiry against such agent is pending contemplated. (2) Where a licence 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 licence is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs Broker: Provided that in case th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....doing. (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 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 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 licence of the Customs Broker or imposing penalty not exceeding the amount mentioned in regulation 22 within ninety days from the date of submission of the report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 20(7) contemplates that the Commissioner of Customs, after considering the report of the enquiry and the representation of the customs broker, shall pass an order either revoking the suspension of the license or revoking the license of the customs broker or imposing penalty, within 90 days from the date of submission of the report by the enquiry Officer. It is further contemplated therein that no order for revoking license shall be passed, unless an opportunity of hearing is given to the customs broker in person by the Commissioner of Customs. 15. Perusal of the above Regulations thus would show that at every stage, a time limit is fixed for the authorities concerned to act. The question as to whether the time limit prescribed in the regulations is mandatory or not, has been considered by this Court in W.P.Nos.26923 and 26934 of 2018 (Carewell Shipping Pvt. Ltd vs Commissioner of Customs) dated 22.11.2018. This Court, after considering the scope of the relevant regulation and the time frame fixed therein and also after following the Division Bench decision of the Delhi High Court in a case reported in 2016 (338) ELT 347, (Del), Impexnet Logistic vs Commissioner of Custom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reported in 2016 (338) ELT 347 (Del), Impexnet Logistic vs Commissioner of Customs (General). The Delhi High Court at paragraph Nos. 6 to 10 has observed as follows: "6. From the list of dates submitted by the Respondent, it appears that an enquiry report dated 4th March, 2015 was forwarded by the Inquiry Officer only on 10th March 2015 which was 13 months after the suspension of the licence. It is thereafter that the impugned order dated 1st June, 2015 was passed after affording the petitioner an opportunity of being heard. 7. It is plain that in the case there has been a violation of the time-limits set out in Regulation 20 of the CBLR (corresponding to Regulation 22 of the CHALR) in the decision dated 12th May, 2016 in Cus. AA 25/2015 (Indair Carrier Pvt. Ltd. v. Commissioner of Customs (General) [2016 (337) E.L.T. 41(Del)] this Court held: "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. 30/2010-Cus.(N.T.) dated 8th April, 2010. S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te 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. 10. Consequently, the Court set asides the impugned order dated 1st June, 2015 passed by the Respondent revoking the licence of the petitioner." 9. The other decision relied on by the petitioner is the decision made in CMA No.732 of 2016 dated 13.10.2017 by the Division Bench of this Court. In the said decision, the Division Bench, after following the Delhi High Court decision reported in 2016 (337) ELT 41 (Del), Indair Carrier Pvt. Ltd vs Commissioner of Customs (General), has observed at paragraph No.42 as follows: "42. Once the limitation prescribed is mandatory, as has been declared by the courts of law, it cannot be stated that, because of the other issues, that is the merit of the case, this mandatory requirement of the limitation can be ignored." 10. Perusal of the above said decisions of this Court and the Delhi High Court would show that the time stipulated under the Regulations for iss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt is not inclined to go into such allegation against the petitioner, as this Court is inclined to interfere with the impugned proceedings only on the ground of limitation, as discussed supra. If the petitioner is an habitual offender, as alleged by the Revenue, it is not known as to what prevented the concerned authorities in proceeding against the petitioner by following the mandatory requirements contemplated under law. When there is a lapse on the part of the concerned authority in not making the report within the time stipulated which prevents further proceedings, the Revenue has to blame itself for such lapse, especially when the Courts have held that the period of limitation prescribed under the Regulation, as discussed supra, is mandatory. Therefore, it is for the authorities to be more vigilant in complying with the mandatory requirements under law, while proceeding against an offender without giving room for any lapse even on technicalities." 16. It is stated before this Court that the above order has not been challenged by the Revenue and on the other hand, the same has been given effect to. 17. It is further seen that before introducing the Regulations....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d report was made ready on 23.05.2018, admittedly, it was submitted before the Authority concerned only on 12.06.2018 and therefore, the very submission of the report itself is beyond the period of 90 days. I am in agreement with the submission made by the learned counsel for the petitioner in view of the fact that Regulation 20(5) contemplates not only preparing a report of the enquiry and also submitting the same within a period of 90 days from the date of issuance of the show cause notice. Therefore, it cannot be said that preparation was made in time and thus, it satisfies Regulation 20(5). 22. The decision of the Apex Court made in Salem Bar Association case reported in 2005 (6) SCC 344, is also sought to be relied by the Revenue to contend that the time limit prescribed in these regulations are directory. In the above said case, the question before the Apex Court is with regard to the filing of the written statement under Order 8 Rule 1 CPC. Therefore, it is evident that facts, circumstances and the relevant provision of law are not one and the same before this Court as well as the case in Salem Bar Association. In any event, as the very same regulations were conside....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quence at all in these cases. On the other hand, the consequence is obvious and can be inferred easily in these cases. Needless to state that suspending a license pending enquiry cannot be prolonged endlessly without completing the other procedures as a follow up action, within the time prescribed therein. Otherwise, the suspension of the license gets perpetuated. This cannot be the intention or the object behind stipulating the time limit. Therefore, a broker, whose license is suspended and is not visited with any further order within the time limit prescribed, is undoubtedly deprived of his business endlessly and thus, such hardship detrimental to the interest of the licensee is to be treated and viewed as consequence. Likewise, the revocation of the license or imposing penalty should also be done within the time prescribed so that the customs house agent will be in a position to know where does he stand. 28. Needless to state that the show cause notices are issued after suspending the license and therefore, the time limit prescribed at each stage needs to be complied with mandatorily, if not the consequence that would follow is the continuation of the suspension of his ....