2011 (3) TMI 1367 - HC - Customs

CHA - stay application- undue drawback claim - it was noticed that two companies had filed forty two shipping bills for the export, companies made export with very less quantity of utensils, but falsely declared the weight to nearly 5 to 8 times more than the actual weight exported, only with the fraudulent intention of claiming undue Duty Drawback - Managing Director of the petitioner has given a statement before the investigating officers of the customs that his employee by name S.P. Boopalan connived with the said two exporters and committed violation of the Customs Act, with the sole intention to claim undue Duty Drawback - main thrust of the arguments of the learned counsel for the petitioner is that in view of the action of the Tribunal in not passing any orders in the stay application, the petitioner is prejudiced as there is no effective remedy to protect his interest. Therefore, he moved this court under Article 226 of the Constitution - when there as an effective, efficacious alternative remedy available and having chosen that remedy, it is not proper for any party to come before this court under Article 226 of the Constitution of India, unless it is shown to this court that there is a violation of any fundamental right or the principles of natural justice, writ petition is disposed of with a direction to the 3rd respondent to take up the stay application filed by the petitioner pending before them and dispose of the same in accordance with law

Summary

Issues:
1. Maintainability of writ petition challenging a prohibitory order despite pending appeal before Customs Excise and Service Tax Appellate Tribunal.
2. Allegations of violations leading to prohibitory order against a Partnership firm engaged in clearing and forwarding operation.
3. Responsibility of a Custom House Agent for omissions and commissions of their employees.
4. Suspension of license under Custom House Agent Regulations.
5. Availability of alternative remedies and principles of natural justice in challenging orders under Article 226 of the Constitution of India.

Issue 1:
The petitioner, a Partnership firm operating as a Custom House Agent, challenged a prohibitory order before the High Court despite having an appeal pending before the Customs Excise and Service Tax Appellate Tribunal (CESTAT). Respondents contended that the writ petition was not maintainable as the petitioner had already availed the statutory appeal remedy before CESTAT. The High Court emphasized the principle that when an effective alternative remedy is available, it is not appropriate to approach the High Court under Article 226 of the Constitution unless fundamental rights or natural justice principles are violated. The court directed the Tribunal to expedite the pending stay application within two weeks, allowing parties to contest the matter legally.

Issue 2:
The petitioner, a Custom House Agent, faced allegations of violations related to exporters' fraudulent Duty Drawback claims. The Managing Director of the petitioner admitted that an employee connived with exporters to commit Customs Act violations for claiming undue Duty Drawback. The respondents argued that the prohibitory order under Regulation 21 was lawful, citing evidence of the petitioner's involvement in fraudulent claims causing loss to the Government exchequer. The court acknowledged the seriousness of the allegations but focused on the procedural aspect of approaching the appropriate forum for remedy.

Issue 3:
Under Custom House Agent Regulations, the petitioner firm was responsible for the actions of its employees. The investigation revealed collusion between an employee and exporters for fraudulent Duty Drawback claims. The court noted the significance of this responsibility in the context of the alleged violations and emphasized the need for proper legal proceedings to address such matters.

Issue 4:
The respondents suspended the petitioner's license under Regulation 20(2) as a consequential action following the prohibitory order. The court highlighted that the petitioner would have an opportunity for a post-decision hearing, ensuring procedural fairness despite the immediate suspension of the license. The legality of the suspension was upheld within the framework of the Custom House Agent Regulations.

Issue 5:
The judgment underscored the importance of adhering to established legal principles, including exhausting alternative remedies before seeking extraordinary relief under Article 226 of the Constitution of India. The court reiterated the need to demonstrate violations of fundamental rights or natural justice to justify bypassing available statutory avenues for redressal. The decision aimed to balance the petitioner's concerns with procedural requirements and legal recourse available through the appropriate forum.