2012 (9) TMI 679 - AT - Customs

Suspension of CHA licence - interim order of suspension - violation of Regulations 13(a), 13(d) and 13(o) of Customs House Agent Licensing Regulations, 2004 - Held that - As the offence report is yet to reach to the Commissioner of Customs under Regulation 22(1) and crucial date for counting limitation under Regulation 22 being receipt of offence report by the Commissioner of Customs under Regulation 22(1), that stage has not yet been arrived. Interim suspension order passed is purely an administrative disciplinary measure to prevent CHA to enter into Customs area. Therefore, any intervention to such order of suspension during pendency of investigation shall be detrimental to the process of investigation and shall defeat the object of fair, impartial and independent investigation. The interim order of suspension of the CHA licence by the Commissioner of Customs should be viewed in the light of the grave and serious allegation of misconduct of the CHA Appellant as appellant appears to have allowed its agent exporter to use its licence irresponsibly and thereby actively involved in the fraudulent act in connivance with the exporter. As a name lender to the exporter it caused prejudice to Revenue, making breach of trust and failed to discharge its responsibility under Regulation 13. Affecting the interest of the country was due to reckless and irresponsible behaviour of the Appellant in the course of acting as a CHA licensee. Accordingly interim order of suspension passed by the leaned Commissioner does not appear to be improper since principles of vicarious liability is applicable to the present case in hand - Thus as the Commissioner of Customs who is well placed to understand the role of the CHA in customs area is responsible for the happenings in that area and for the discipline to be maintained thereat and if he takes a decision necessary in accordance with law as an interim measure, Tribunal would ordinarily not interfere on the basis of its own notions of the difficulties likely to be faced by the CHA or their employees. Appropriate SCN be issued levelling charges if any, against the CHA within a period of twelve weeks from the date of receipt of this order, failing which the interim order of suspension shall stand revoked and in case of revocation it would be open to learned Commissioner of Customs to initiate appropriate proceeding and take appropriate steps against the Appellant in accordance with law - against assessee.

Issues Involved:
1. Prohibition and suspension of CHA license.
2. Compliance with time limits under Regulation 22 of 2004 Regulations.
3. Allegations of misconduct and involvement in fraudulent activities.
4. Due process and procedural fairness in issuing suspension orders.
5. Applicability and interpretation of precedents and legal principles.

Detailed Analysis:

1. Prohibition and Suspension of CHA License:
The appellant was prohibited from transacting business at Pipavav Customs station due to violations of Regulations 13(a), 13(d), and 13(o) of the Customs House Agent Licensing Regulations, 2004. This was based on findings that the appellant was involved in the export of restricted goods (Muriate of Potash) under false declarations, which led to the suspension of the CHA license by the Commissioner of Customs, Jaipur.

2. Compliance with Time Limits under Regulation 22 of 2004 Regulations:
The appellant argued that the 90-day time limit prescribed by Regulation 22 was not followed. However, the tribunal clarified that the time limit for the final order runs from the date of receipt of the offense report, not from the date of the interim suspension order. Since the offense report had not yet reached the Commissioner, the time limit had not started.

3. Allegations of Misconduct and Involvement in Fraudulent Activities:
The appellant was found to have allowed M/s. Tulsi Logistics Pvt. Ltd. to use its CHA license for a monthly fee, and staff of Tulsi Logistics were working under H Cards issued by the appellant. This arrangement was considered a serious violation, as it facilitated the export of restricted goods under false declarations, thereby prejudicing revenue interests and breaching trust.

4. Due Process and Procedural Fairness in Issuing Suspension Orders:
The tribunal emphasized that the interim suspension was an administrative measure to prevent further misconduct during the investigation. The suspension was deemed necessary to ensure a fair and uninterrupted investigation, and the tribunal found no procedural unfairness in the issuance of the suspension order.

5. Applicability and Interpretation of Precedents and Legal Principles:
The appellant cited various precedents to argue against the suspension, but the tribunal found these cases inapplicable due to the ongoing investigation and the gravity of the alleged offenses. The tribunal also referenced several judgments to support the necessity and appropriateness of the interim suspension, highlighting that any leniency in cases involving corruption would be contrary to public interest and policy.

Conclusion:
The tribunal concluded that the interim suspension was justified and necessary due to the gravity of the alleged misconduct. However, it directed that a show-cause notice be issued within twelve weeks, failing which the suspension would be revoked. The tribunal dismissed the stay petition and emphasized that the Commissioner of Customs could still take appropriate actions in accordance with the law.

Final Order:
The final order was amended to correct an inadvertent repetition regarding the dismissal of the stay petition. The corrected order reads: "In the result, appeal is disposed in above terms."

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