2015 (1) TMI 1279 - HC - Customs

CHA - Imposition of prohibition under regulation 23 - prohibited from operating in three land Customs stations on the basis of some perceived irregularity committed several years back - Violation of principles of natural justice - Licence suspended and thereafter revoked i.e. temporary revokation - Held that - the scheme of the said Regulations of 2013 is such that the authority to impose prohibition under Regulation 23 thereof must be regarded as an extraordinary power which is to be sparingly used. Ideally, if a broker who has been granted a licence is found to have acted in derogation of the conditions of the grant, regular proceedings for revocation of the licence should ensue. A broker s licence may be prohibited in respect of a particular Customs station or a group of stations when it is perceived to be in the interest of revenue so to do; but Regulation 23 cannot be resorted to on a permanent basis without the procedure applicable for the revocation of a licence being adhered to. Even when a broker is handed down an order of prohibition under Regulation 23 of the said Regulations, he must be informed of the reasons therefor. The extraordinary nature of the power conferred by Regulation 23 has to be retained, but a balance has to be struck by providing for the reasons therefor to be immediately disclosed, may not be by the same document but by another. Since an order of prohibition amounts to the revocation of the licence limited to the customs stations specified by the order, such order cannot be for an indefinite period. Quite apart from the fact that reasons should be furnished for prohibiting a licencee from a Customs station even temporarily, if the intention is to debar him altogether from the relevant stations, the procedure for revocation or alteration of the conditions of the grant has to be adopted. Therefore, the order of prohibition is set aside. - Decided in favour of petitioner

Summary

Issues involved:
Prohibition order by Commissioner of Customs based on perceived irregularity; Challenge to maintainability of proceedings; Application of rules of natural justice; Pre-decision hearing necessity; Authority to impose prohibition under Regulation 23; Balance between extraordinary power and disclosure of reasons; Revocation of license procedure; Furnishing reasons for prohibition; Duration of prohibition order.

Analysis:
The petitioners challenge the prohibition order issued by the Commissioner of Customs, contending that it was based on a perceived irregularity committed several years back. Although the respondents cite Regulation 21 of the Customs Brokers Licensing Regulations, 2013, which allows for an appeal against orders under Regulation 23, the petitioners argue that the principles of natural justice were breached, thus questioning the maintainability of the proceedings.

The petitioners rely on a previous court order emphasizing the incorporation of natural justice principles into relevant regulations. They advocate following the directions outlined in the mentioned judgment to ensure fairness in the proceedings. However, the court notes that while natural justice should apply to provisions affecting licensed individuals, the cited judgment does not mandate a pre-decision hearing in every case, emphasizing that the reasons supporting an order serve as a precedent.

Considering the responsibilities of a Commissioner of Customs and the complexities in import-export activities, the court opines that immediate prohibition under Regulation 23 may be necessary in certain exigencies without prior notice to the broker. However, it stresses that the principles of natural justice require informing the individual of their shortcomings leading to the penalty of prohibition. The court views the power under Regulation 23 as extraordinary and to be sparingly used, suggesting that regular revocation proceedings should typically follow any prohibition order.

Even when issuing a prohibition order, the court emphasizes the importance of informing the broker promptly of the reasons for the decision. It underscores the need for a balanced approach, where reasons are disclosed shortly after the prohibition order, and the duration of the prohibition should not be indefinite. The court highlights that if the intention is to debar the broker permanently, the procedure for revocation or altering license conditions must be followed.

In conclusion, the court allows the petition, setting aside the prohibition order and specifying a timeline for a fresh hearing if a new prohibition order is invoked. The judgment underscores the significance of adhering to natural justice principles, providing reasons for decisions, and ensuring a fair and transparent process in matters concerning license prohibition under customs regulations.