2015 (10) TMI 2332 - HC - Customs

Suspension of Custodianship Unauthorised removal of seized Red Sander logs - Whether suspension was in violation of principles of natural justice and Commissioner was justified in invoking the provisions of Regulation 11(2) of Handling of Cargo in Customs Area Regulations 2009, when no enquiry against appellant was pending? Appellant contends that there has been violation of tenets of natural justice as appellant was neither given any pre-decisional nor any post decisional hearing - After suspending custodianship neither SCN was issued under Regulation 12 of Handling of Cargo in Customs Area Regulations (HCCAR), 2009, nor any enquiry was initiated and thus Commissioner wrongly stated that an enquiry was pending or contemplated - Commissioner had not proved that removal of seized container was done with knowledge of appellant thus impugned order was absolutely erroneous. Revenue contended that offence committed in contravention to provisions of HCCAR, 2009 by appellant was not new and there was lack of supervision on part of appellant s CFS and no surprise checks were conducted during the night time to ensure that staffs on night duty would remain vigilant - Appellant admitted the role of his employees in illegal act of removal of seized container thus was responsible for every act by their employees - Where immediate action is not required, a prohibitory order can await compliance with requirements of natural justice. Held That - Principles of natural justice have not been violated - Appellant being custodian of seized container had violated Regulations enshrined in 6(1)(a), 6(1)(f), 6(1)(i), 6(1)(k) and 6(1)(q) of HCCAR, 2009 Action of Commissioner was fully justified in invoking provisions of Regulation 11(2) as it cannot be said that appellant was not aware of illegal removal of seized container - Employer is liable for acts of its employee in course of employment - Repeated instances of smuggling of goods in appellant s CFS confirms serious lapses on part of custodian and cannot be overlooked Commissioner directed to complete the investigation proceedings and pass orders as contemplated under Regulations of HCCAR, 2009 within a period of three months Decided in favour of Revenue.

Summary

Issues Involved:
1. Violation of principles of natural justice.
2. Justification of the Commissioner of Customs in invoking Regulation 11(2) of HCCAR, 2009.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The appellant argued that the order of suspension was passed without any pre-decisional or post-decisional hearing, which is a gross violation of the principles of natural justice. The appellant cited several cases to support the argument that principles of natural justice must be adhered to unless explicitly excluded by statute. The court referred to the case of *Automative Tyre Manufacturers Association vs. Designated Authority*, where it was held that the requirement of giving a reasonable opportunity of being heard is generally read into the provisions of a statute, especially when the order has adverse civil consequences. However, the court concluded that in cases where immediate action is necessary, the Commissioner of Customs can suspend the approval granted to a Customs Cargo Service provider without prior notice, as per Regulation 11(2) of HCCAR, 2009. The court found that the principles of natural justice were not violated in this case since the circumstances warranted immediate action.

2. Justification of the Commissioner of Customs in Invoking Regulation 11(2) of HCCAR, 2009:
The appellant contended that no enquiry was pending or contemplated against them when the suspension order was passed, and thus, the invocation of Regulation 11(2) was unjustified. The court observed that the appellant had a history of violating HCCAR regulations, and the illegal removal of a seized container from their premises indicated a serious lapse in security. The court also noted that the appellant had outsourced security functions without obtaining permission from the Commissioner of Customs, violating Regulation 6(2) of HCCAR, 2009. The court upheld the Commissioner's decision to suspend the custodianship, stating that the immediate action was necessary to prevent further lapses and ensure the safety and security of customs goods. The Tribunal's finding that the appellant's repeated violations could not be overlooked was endorsed by the court.

Conclusion:
The appeal was dismissed, and the order of the Tribunal was confirmed. The court directed the Commissioner of Customs to complete the investigation and take appropriate action under HCCAR, 2009, within three months. The court found that the principles of natural justice were not violated and that the Commissioner of Customs was justified in invoking Regulation 11(2) of HCCAR, 2009 due to the appellant's repeated violations and the necessity for immediate action.