2014 (8) TMI 174 - AT - Customs

Suspension of CHA license - Demand of additional security to issue fresh license - Held that - The result of the Commissioner s order is that the CHA would be entitled to perform CHA service after the period of suspension is over. However as already observed by us above, the security provided by the CHA has to be available with Government when the CHA is performing his obligation since the bank guarantee or security deposit is related with the activity of the appellant as a CHA. Therefore if no security is available because it has been forfeited in this case, Commissioner has to determine the amount of security payable. For determination he has to refer to the regulation. When he has to refer to the regulations, the only regulations available would be CBLR 2013. While renewal of a licence issued under the old CHALR and continuation of a person as a CHA under CBLR 2013 would be automatic even if no fresh licence is granted under CBLR (this is in view of the provisions of Section 159A of Customs Act 1962), the determination of security which becomes not available for any reasons has to be under new CBLR 2013 only. In fact if the Commissioner was to specifically order that appellant has to provide security deposit of ₹ 5 lakhs in the order itself in accordance with new CHALR 2013, it would have been difficult to contest the same. Just because the Commissioner did not mention it in the order, if the legal position requires the appellant to deposit the amount, which is the situation in this case, the revised security is to be deposited - There is no estoppel in law. Therefore in whatever manner we look at the issue, we cannot find fault with the view taken by the Commissioner that appellant has to deposit an additional amount of ₹ 4.25 lakhs for allowing him to continue his activity as a CHA. - ground taken by the appellant that requirement of additional security deposit has to be held as incorrect and suspension to be held as incorrect and therefore the suspension has to be revoked cannot be accepted - Decided against the appellant.

Summary

Issues Involved:
1. Validity of the suspension of the Customs Broker's license.
2. Requirement of additional security deposit under the Customs Brokers Licensing Regulations, 2013 (CBLR, 2013).
3. Applicability of previous regulations (CHALR, 2004) versus new regulations (CBLR, 2013).
4. Legal standing of internal correspondence and public notices.
5. Consequences of non-compliance with the security deposit requirement.

Detailed Analysis:

1. Validity of the Suspension of the Customs Broker's License:
The Customs Broker's license was initially suspended for one month and the security deposit of Rs. 75,000 was forfeited. The Customs Broker accepted this penalty and requested the restoration of the license after the suspension period. However, the Commissioner ordered the continuation of the suspension until the completion of the procedure under Regulation 20 of CBLR, 2013, due to the non-furnishing of additional security. The Tribunal noted that normally it would not interfere at this interim stage, but due to the peculiar circumstances and legal nature of the issue, it allowed an early hearing.

2. Requirement of Additional Security Deposit under CBLR, 2013:
The Customs Broker argued that the additional security deposit of Rs. 4,25,000 was not required as their license was issued under CHALR, 2004. They relied on a 2004 Board Circular which stated that fresh financial viability certificates and bonds were required only for new licenses under CHALR, 2004. However, the Tribunal found that the clarification issued by the Board on 06.09.2013, though internal, was legally correct. The Tribunal also referenced a Bombay High Court decision which required security deposits to be made in accordance with current rules and regulations. Hence, the Tribunal upheld the Commissioner's requirement for the additional security deposit.

3. Applicability of Previous Regulations (CHALR, 2004) versus New Regulations (CBLR, 2013):
The Customs Broker contended that their license, issued under CHALR, 2004, should not be subject to the new security requirements of CBLR, 2013. The Tribunal examined Regulations 7, 8, and 9 of CBLR, 2013, and concluded that while the regulations did not explicitly cover the appellant's situation, the intent was to ensure that security is always available with the Government. Therefore, the requirement for a fresh security deposit under CBLR, 2013, was justified.

4. Legal Standing of Internal Correspondence and Public Notices:
The Customs Broker argued that the internal correspondence between the Commissioner and the Board should not override the public Board Circular from 2004. The Tribunal, however, determined that internal clarifications, while not in the public domain, are still legally valid if they address the specific issue at hand. The Tribunal decided not to consider these internal clarifications to avoid any perception of bias but upheld the principle that current regulations must be followed.

5. Consequences of Non-Compliance with the Security Deposit Requirement:
The Customs Broker's failure to furnish the additional security deposit was considered a contravention of Regulation 8 of CBLR, 2013, amounting to grave misconduct. The Tribunal emphasized that the security deposit is essential for ensuring compliance with regulations and protecting the Government's interests. Therefore, the Commissioner's action to suspend the license until the additional security was deposited was deemed appropriate.

Conclusion:
The Tribunal rejected the appeal, upholding the requirement for the additional security deposit and the continuation of the suspension until compliance. It clarified that the appellant's right to act as a Customs Broker under CHALR, 2004, did not exempt them from the security requirements under CBLR, 2013. The Tribunal did not address the correctness of the original proceedings or the findings of the Commissioner, focusing solely on the legal necessity of the security deposit.