2015 (5) TMI 406 - HC - Customs

Suspension of custom clearance license - Misuse of CHA License - failure to obtain any authorization from the actual IEC holders - contravention of the various provisions of the CBLR - Penalty under Sec. 112(a) - Held that - Show cause notice cannot be read hyper-technically, but it is to be read reasonably and that the Writ Court should be slow and circumspect in interfering at the show cause stage, unless it is successfully proved that the Authority issuing the show cause notice is not competent or the show cause notice is outcome of malice and de hors the provisions of law, but in the present case, the emphasized portion contained (cited supra) in the impugned show cause notice, would clearly indicate that the respondent has predetermined the issue. This Court would have appreciated the respondent if she could have added atleast the words, prima facie before the sentence starting it was concluded that the Customs Broker failed to . Therefore, as rightly contended by the learned counsel for the petitioner that from a reading of the impugned show cause notice, an overall impression one gets is that the respondent has predetermined the issue. Quasi-judicial authority, while acting in exercise of its statutory power must act fairly and must act with an open mind while initiating the show cause proceeding. A show cause notice is meant to give the person proceeded against a reasonable opportunity of making his objection against the proposed charges indicated in the notice. At the stage of show cause notice, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. At that stage, the authority issuing the charge sheet/show cause notice, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in the present case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceedings become an idle ceremony. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi judicial proceeding if such a proceeding has to inspire confidence in the mind of those who are subjected to it. Impugned show cause notice, wherein, the usage of the words, viz., it was concluded that the Customs Broker failed to as pointed out above, would clearly indicate predetermination by the respondent regarding the failure on the part of the petitioner in respect of the obligations cast upon them under the Regulations as well as committal of professional mis-conduct by the petitioner and therefore, on this ground, the impugned show cause is liable to be set aside.- respondent is hereby directed to proceed afresh by issuing show cause notice clearly indicating the alleged failures of obligations cast upon the petitioner as well as mis-conduct by ensuring that it does not indicate any premeditation or prejudgment by the respondent. In case any such fresh show cause notice is issued by the respondent, the petitioner shall be furnished with the material on the basis of which the show cause notice issued and also a reasonable opportunity to file their objections with supporting material apart from personal hearing and then pass a resoned order in accordance with law. - Decided in favour of appellant.

Issues Involved:
1. Suspension of Customs House Agent (CHA) license.
2. Violation of Customs Broker Licensing Regulations (CBLR), 2013.
3. Issuance of show cause notice.
4. Alleged premeditation and prejudgment by the respondent.
5. Maintainability of writ petitions.

Detailed Analysis:

1. Suspension of Customs House Agent (CHA) License:
The petitioner, a licensed Custom House Agent since 1998, had their license suspended by the respondent on 31.07.2014. The suspension was due to allegations of acting as a CHA for import clearances made by M/s. Kawarlal & Co., and D.K. Enterprises without proper authorization and verification, thus violating the Customs Act and CBLR, 2013. The petitioner argued that the suspension was without basis as there was no immediate necessity or offence report from the investigating agency as required under Regulation 20 of CBLR, 2013.

2. Violation of Customs Broker Licensing Regulations (CBLR), 2013:
The respondent alleged that the petitioner had failed to comply with various provisions of the CBLR, 2013, including allowing unauthorized persons to handle customs clearance, not verifying details and documents, and not obtaining authorization from the actual IEC holders. The petitioner contended that the respondent did not properly consider the statutory requirements of Regulation 19(1) of CBLR and passed the suspension order without recording any reasoning for the immediate necessity for suspending their license.

3. Issuance of Show Cause Notice:
The respondent issued a show cause notice on 08.09.2014 under Regulation 20(1) of CBLR, 2013, asking the petitioner to explain why their license should not be revoked and penalties imposed. The petitioner argued that the show cause notice was issued based on a predetermined notion and without following due process, thus causing severe reputational and financial loss.

4. Alleged Premeditation and Prejudgment by the Respondent:
The petitioner contended that the respondent had a predetermined mind and had already concluded that the petitioner had committed professional misconduct, as evidenced by the language used in the show cause notice. The court found merit in this argument, noting that the show cause notice contained categorical conclusions without leaving scope for the petitioner to explain, thus indicating a prejudged opinion.

5. Maintainability of Writ Petitions:
The respondent argued that the writ petitions were not maintainable as the orders were amenable to appeal under CBLR, 2013. However, the petitioner contended that the impugned orders violated the principles of natural justice and were passed without jurisdiction, making the writ petitions maintainable. The court agreed with the petitioner, citing precedents where writ petitions were entertained in cases of premeditation and prejudgment.

Conclusion:
The court allowed the writ petitions, setting aside the impugned order dated 28.08.2014 and the show cause notice dated 08.09.2014. The respondent was directed to proceed afresh by issuing a new show cause notice without any indication of premeditation or prejudgment. The petitioner was to be provided with the material on which the show cause notice was based and given a reasonable opportunity to file objections and be heard. The respondent was also directed to permit the petitioner to operate their customs broker license, considering the suspension deprived them of their livelihood.

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