2011 (2) TMI 1172 - HC - Customs

Suspension of CHA licence - investigations against the respondent CHA allegedly found that the partner of the respondent firm and its employee had aided and abetted the importers in filing refund claims of 4% SAD in respect of wooden logs in terms of Notification No. 102/2007-Cus. - During the course of search at the respondent CHA s business premises, certain departmental files relating to such refund claims filed by the importers came to be found - Held that - Regulation 22 of the Regulations provides for the procedure for suspending or revoking licence. The said regulation provides for issuance of a notice by the Commissioner of Customs to the Customs House Agent, in writing, stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said CHA to submit, within the period specified therein a written statement of defence etc. Upon receipt of the written statement from the CHA, the Commissioner of Customs is required to direct the Deputy Commissioner of Customs or the Assistant Commissioner of Customs to inquire into the grounds which are not admitted by the CHA, no such procedure as contemplated under regulation 22 of the Regulations has been carried out by the Commissioner, Had such a procedure been followed by the Commissioner, the Deputy Commissioner of Customs or Assistant Commissioner of Customs while conducting the inquiry as contemplated under sub-regulation (2) of regulation 22 of the Regulations would be required to inquire into all facts which were not admitted by the CHA, which in the present case would be the routine practice of the department of permitting the employees of the CHAs to take the files of the department to the office premises of the CHA for the purpose of further processing, no such inquiry has been caused to be made by the Deputy Commissioner of Customs or Assistant Commissioner of Customs as contemplated under regulation 22 of the Regulations, causing immense prejudice to the respondent CHA, it is not possible to state that the Tribunal has committed any legal error so as to give rise to any question of law, much less, a substantial question to law. The appeals, being devoid of merit, are therefore, dismissed

Summary

Issues Involved:
1. Justification of the Tribunal in setting aside the suspension of the CHA license.
2. Legality of the Tribunal's order.

Issue-wise Detailed Analysis:

1. Justification of the Tribunal in Setting Aside the Suspension of the CHA License:

Background:
The Commissioner of Customs, Kandla, suspended the CHA license of the respondent under Regulation 20(2) of the Customs Housing Agents Licensing Regulations, 2004, due to alleged involvement in fraudulent refund claims of 4% SAD on wooden logs. The respondent appealed to the Tribunal, which set aside the suspension.

Tribunal's Findings:
- The Tribunal concluded that assisting another CHA in preparing and filing refund claims does not violate the Regulations.
- It noted that files found at the CHA's office could be there due to a common practice of Customs officers providing files to CHAs for completion or typing, which the Commissioner failed to verify.
- The Tribunal emphasized that the Commissioner did not seek explanations from Customs officers responsible for the files, indicating no theft or unauthorized access.
- Consequently, the Tribunal found no violation of Regulation 13(h) and held that the suspension was unjustified.

Appellant's Arguments:
- The appellant argued that the Tribunal erred by considering irrelevant factors, such as departmental actions against officers who sanctioned fraudulent claims.
- The suspension was based on sufficient evidence from DGCEI investigations.
- The appellant emphasized that the respondent's employee admitted to bringing files to the office, constituting gross misconduct.
- The appellant contended that the Tribunal should only review procedural aspects and adherence to natural justice, not the merits of the suspension.

Respondent's Defense:
- The respondent highlighted a breach of natural justice, as they were not provided with crucial documents before the suspension.
- The respondent argued that the allegations were vague and lacked specific details about fraudulent documents and refund claims.
- The respondent asserted that it was routine for CHA employees to handle files for documentation with Customs officers' knowledge.

Court's Analysis:
- The Court observed that the Commissioner's orders lacked specific details about the fraudulent documents and refund claims.
- The Court noted the respondent's consistent defense that files were handled with Customs officers' consent, a claim not investigated by the Commissioner.
- The Court found no evidence of contravention of Regulation 13(d) or 13(h), as the files were allegedly given by proper officers.
- The Court concluded that the appellant failed to establish any misconduct by the respondent or their employee.

2. Legality of the Tribunal's Order:

Regulation 22 Compliance:
- The Court emphasized that Regulation 22 requires a detailed procedure for suspending or revoking a CHA license, including issuing a notice, conducting an inquiry, and allowing the CHA to present a defense.
- The Court found that the Commissioner did not follow this procedure, causing prejudice to the respondent.

Court's Conclusion:
- The Tribunal did not commit any legal error, and the appellant's arguments lacked merit.
- The appeals were dismissed, and the civil applications for staying the Tribunal's order were rendered infructuous.

Final Judgment:
The High Court upheld the Tribunal's decision to set aside the suspension of the CHA license, finding no substantial question of law and dismissing the appeals. The civil applications for stay were also disposed of as infructuous.