2014 (6) TMI 614 - AT - Customs

Renewal of CHA License - Employee of appellant prosecuted for export of red sander - Work came to standstill - Held that - CHA knowingly involved himself in smuggling of red sanders and acted in a dishonest and fraudulent manner. The allegations are grave and serious. However, it is the contention of the CHA that neither the show cause notice nor the criminal case has been yet decided against them and unless the charges are proved in the first court of law, the pendency of the charge-sheet cannot be held against them. While considering the application for renewal of the licence, Commissioner of Customs has to take into consideration the performance of the licensee with reference, inter alia, to the obligations specified including the absence of instances of any complaints of misconduct. The present dispute revolves around the interpretation of the phrase absence of instances of any complaints of misconduct . It is the contention of the CHA that merely a complaint of misconduct cannot come in the way of renewal unless that complaint has been proved against them. In other words, the CHA is suggesting that the phrase instances of any complaints of misconduct has to be read as instances of any complaints of proven misconduct . Charge sheet reproduced does not lead to the conclusion that there is conclusive evidence of knowledge of red sanders in the container leave alone connivance. There is definitely need for more detailed examination of all the evidences and documents and records. If the show-cause notice issued for revocation of licence was adjudicated and licence revoked, the renewal allowed would not have any effect on the proceedings against the licensee in any way whatever be the outcome. If the revocation is not ordered, the appellant-CHA can continue without any further problems since the only ground for rejection of renewal is the show-cause notice. In the present case if we allow the appeal on a permanent basis, the department cannot issue a show-cause notice for revocation of licence in view of the fact that no show-cause notice has been issued for revocation of licence and the regulations require that if there is a complaint of a misconduct licence should not be renewed. Appellants claim is that the complaints of misconduct are not proven one. If they are proved against the appellants, the appellants claim itself would render the appellant liable for non renewal of licence - License renwed temporarily - Decided conditionally in favour of appellants.

Summary

Issues Involved:
1. Non-renewal of Custom House Agent (CHA) license due to pending complaints and criminal proceedings.
2. Interpretation of the term "complaints of misconduct" under Customs Brokers Licence Regulations (CBLR).
3. The implications of pending criminal charges on the renewal of CHA license.
4. The legal precedent and its applicability to the current case.

Detailed Analysis:

1. Non-renewal of Custom House Agent (CHA) License:
The appellant, engaged in various logistics services, applied for the renewal of their CHA license. The Commissioner of Customs rejected the renewal application citing a pending complaint and criminal proceedings against one of the appellant's employees. The rejection was based on the grounds that the appellant had a blemished record due to the pending show-cause notice and charge sheet filed by the CBI.

2. Interpretation of "Complaints of Misconduct" under CBLR:
The appellant argued that the term "complaints of misconduct" in Regulation 9(2) of CBLR should refer to proven complaints, not mere allegations. The Commissioner, however, interpreted the regulation literally, stating that any complaint, whether proven or not, could be a ground for non-renewal. The Tribunal agreed with the Commissioner's literal interpretation, stating that the regulation does not specify that complaints must be proven.

3. Implications of Pending Criminal Charges on License Renewal:
The Commissioner relied on Regulation 5(d), which requires that the applicant should not have any criminal proceedings pending. The Tribunal noted that while an employee was charge-sheeted, there was no conclusive evidence of the firm's involvement in the smuggling of Red Sanders. The Tribunal emphasized that non-renewal of the license would have severe implications for the appellant's business and employees, and thus required a more detailed examination of the evidence.

4. Legal Precedent and Applicability:
The appellant cited previous cases (Freight AG (P) Ltd. Vs. CC, Tuticorin and Sharp Cargo Movers Vs. CC, New Delhi) to argue that non-renewal of the license was premature. The Tribunal found the case of Sharp Cargo Movers more applicable, where temporary renewal was allowed until the adjudication of the show-cause notice. The Tribunal decided to set aside the non-renewal order temporarily, allowing the appellant to continue operations until the pending proceedings reached a conclusive stage.

Conclusion:
The Tribunal set aside the order of non-renewal of the CHA license, allowing the appellant to get their license renewed immediately. However, it kept the show-cause notice alive, allowing the department to proceed with the renewal issue based on the outcome of the pending proceedings. The decision was made considering the severe implications of non-renewal on the appellant's business and employees, emphasizing the need for a thorough examination of the evidence before making a final decision.