2015 (12) TMI 999 - AT - Customs

Suspension of CHA license - Misdeclaration of country of origin - Held that - Suspension of CHA licence and revocation of licence originated on account of investigations initiated by DRI based on the intelligence on the alleged import of PVC flex banners in respect of seven IEC holders i.e. including Jeyam Impex and 7 others who filed various Bills of Entries for import of PVC flex banners. It is alleged that IE codes of these firms were lent to persons to import the goods who in turn misdeclared the country of origin as Malaysia to evade anti-dumping duty as the said goods are actually originated from China and not from Malaysia. During the investigation proceedings, the appellant s CHA licence was suspended on 18.11.2013 and the same was continued vide another order dt. 12.12.2013. On perusal of the findings in the order, we find that the appellant failed to inform the department of filing of IE code who are not IEC holders and also failed to verify KYC norms. Even though the investigation was completed in the year Nov 2013, till date no proceedings initiated nor any SCN issued to importers and other persons for the alleged misdeclaration of goods for evasion of anti-dumping duty. Only after issuance of SCN under Customs Act where the charges are brought out only, then authority can allege whether IE code belongs to another person and who is actual importer etc. and the role played by appellant leading to evasion of ADD can be taken as ground for taking any action under CHALR. We failed to understand the reasons for initiating revocation of CHA licence based on the alleged contravention of lending of IE code when no SCN was issued under Customs Act. - SCN itself is premeditated one and violated principles of natural justice. In view of the High Court s order on this account also, the impugned order is liable to be set aside. - Decided in favour of appellant.

Summary

Issues:
Revocation of Custom House Broker Licence based on lending of Importer-Exporter Code (IE Code) for misdeclaration of country of origin to evade Anti-dumping duty.

Analysis:
The appellant's Custom House Broker Licence was suspended and subsequently revoked based on allegations of lending IE Code to importers for misdeclaration of the country of origin to evade Anti-dumping duty. The investigation by the Directorate of Revenue Intelligence (DRI) led to the suspension of the licence. However, no show cause notice was issued to the importers within six months of suspension. The revocation was primarily based on the lending of IE Code, which the appellant argued was not an offence under the Customs Act but fell under the Foreign Trade (Development and Regulation) Act, 1992. The appellant contended that no action was initiated under the Customs Act against any importer, making the revocation premature.

The Tribunal found that the revocation of the licence was premature as no proceedings were initiated under the Customs Act against any importers for the alleged misdeclaration. The Tribunal cited a Bombay High Court case where it was held that there was no justification for taking action under CHALR when no proceedings were initiated under the Customs Act. The Tribunal noted that no seizure of goods had occurred in the case, and the investigation report was only for initiating action against the Custom House Broker.

The Tribunal further observed that the show cause notice issued for revocation of the licence had already concluded the charges and findings within the notice itself, indicating a pre-mediated approach. Citing a Madras High Court case, the Tribunal held that a show cause notice with predetermined conclusions violated principles of natural justice. Therefore, the impugned order of revocation was set aside, and the appeal was allowed.

The Tribunal clarified that its decision did not prevent any action under the Customs Act by the Revenue department. The judgment highlighted the importance of following due process and ensuring that show cause notices are issued without pre-determined conclusions to uphold principles of natural justice.

This detailed analysis of the judgment provides insights into the legal issues surrounding the revocation of a Custom House Broker Licence and the importance of procedural fairness in such cases.