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2015 (12) TMI 1432 - HC - CustomsSuspension of the Customs Broker Licence of the Petitioner - Petitioner is under invoicing the imports and thus, is evading payment of customs duty - Forfeiture of security - Bar of limitation - Held that - Customs Broker Licensing Regulations, 2013 were promulgated in exercise of powers conferred under Sub-Section (2) of Section 146 of the Customs Act,1962. It is only under the regulations, the licence is granted and the regulations also contain various provisions to regulate the affairs of the customs broker including the revocation of the licence. The Regulations contemplates action against the customs broker dehors the provisions under the Customs Act. Therefore, the regulations cannot be treated as sub-ordinate legistlation. Moreover, every implementing authority of any fiscal statute is only performing a public duty. Therefore, it cannot be said that the provision is to be termed as directory just because its adherence is in the nature of performance of a public duty. What is to be considered is the object of the enactment in prescribing a period for the performance of such public duty. - an independent right is issued to the Commissioner to initiate action dehors the enquiry under other Regulations and the Customs Act. The regulations does not only contemplate action against the erring Brokers, but also contemplates timely action. No doubt that action is to be initiated against the erring brokers as laid down by this Court in the case of Kamatchi Agencies cited 2000 (11) TMI 144 - HIGH COURT OF JUDICATURE AT MADRAS, but the same has to be in strict compliance with the provisions. The law of limitation is common to both the parties. The provision not only enables the respondent to levy penalty, but also empowers the respondent to revoke the license, which is an extreme step curtailing the right to carry on any trade or profession as guaranteed by the Constitution of India. Every act of breach by the Broker would entitle the authorities to initiate proceedings from the date of knowledge of the offence. It is only if the time limit is strictly followed, swift action can be initiated against the Customs Brokers and the authorities can also be made accountable. The Regulations only contemplate initiation of proceeding by issuance of notice within 90 days. While, making out a prima facie case, the respondents ought to have, without any shadow of doubt, treated the word shall in Regulation 11 as mandatory and not directory . Therefore, when a time limit is prescribed in Regulations, which empowers action in Regulation 18 and procedure in Regulation 20 (1), the use of the term shall cannot be termed as directory . It is pertinent to mention here that the CBLR, 2013 have replaced the CHA Regulations. The CHA regulations did not have any time limit to complete the proceedings. Therefore, by a Circular 09/2010 dated 08.04.2010, the necessity to include a time limit for initiating action was addressed by the Board after field inspection and by a notification dated 08.04.2010, amendments prescribing time period for initiating action and completing proceedings was made. The same was given effect by notification dated 20.01.2014. Impugned show cause notice dated 13.7.2015 has been issued after 90 days from the date of the suspension order dated 27.3.2015 and the report of the investigating agency dated 17.3.2015 or in other words, from the date of knowledge of the offence. - court is of the view that the impugned show cause notice issued by the respondent is without jurisdiction, as it has been issued beyond the period prescribed in the regulations, which have statutory force and hence, not sustainable. - Decided in favour of Appellant.
Issues Involved:
1. Validity of the continuation of the suspension of the Customs Broker Licence. 2. Validity of the show cause notice issued under Regulation 20 of the Customs Brokers Licensing Regulations, 2013. 3. Whether the prescribed time limits under Regulation 20 are mandatory or directory. Detailed Analysis: 1. Validity of the Continuation of the Suspension of the Customs Broker Licence: The Petitioner was granted a Customs House Agent licence in 1999. Based on intelligence regarding under-invoicing and evasion of customs duty, the Directorate of Revenue Intelligence (DRI) conducted search operations and seized incriminating evidence. Statements from the importers' representatives and the Petitioner's Manager were recorded. Subsequently, the Petitioner's licence was suspended on 27.3.2015 under Regulation 19(1) of the Customs Brokers Licensing Regulations, 2013 (CBLR, 2013). Despite the Petitioner's denial of allegations, the Respondent ordered the continuation of the suspension on 13.7.2015 under Regulation 19(2). 2. Validity of the Show Cause Notice Issued Under Regulation 20: The Respondent issued a show cause notice on 13.7.2015 under Regulation 20, calling upon the Petitioner to explain why their licence should not be revoked and the security deposit forfeited. The Petitioner challenged this notice and the suspension order in a single writ petition, which was dismissed as withdrawn, leading to the filing of separate writ petitions. 3. Whether the Prescribed Time Limits Under Regulation 20 are Mandatory or Directory: The Petitioner contended that the show cause notice was issued beyond the mandatory 90-day period prescribed by Regulation 20(1), making it barred by limitation. The Respondent argued that the 90-day period is directory, not mandatory, and that the show cause notice was issued within 80 working days, excluding weekends and national holidays. The court examined various judgments to determine whether the time limits prescribed in subordinate legislation are mandatory or directory. It was noted that the use of "shall" in Regulation 20(1) generally indicates a mandatory provision unless the context suggests otherwise. The court emphasized that the object of the legislation and the consequences of non-compliance must be considered. Court's Observations and Conclusions: 1. Mandatory vs. Directory Provisions: - The court referred to several judgments, including Ramchandra Keshav Adke vs. Govind Joti Chavare and Babu Verghese vs. Bar Council of Kerala, which highlight that if a statute prescribes a particular manner for performing an act, it must be done in that manner or not at all. - The court also cited P.T. Rajan vs. TPM Sahir, which states that procedural provisions, even if using "shall," may be construed as directory if no prejudice is caused. 2. Regulation 20 of CBLR, 2013: - The court analyzed Regulation 20, which mandates that the Commissioner of Customs shall issue a notice within 90 days from the date of receipt of an offence report. - The court determined that the term "shall" in this context is mandatory, as the provision aims to ensure timely action against customs brokers involved in unlawful activities. 3. Exclusion of Non-Working Days: - The court rejected the Respondent's argument to exclude weekends and national holidays from the 90-day period, stating that the statute does not prescribe such exclusions. 4. Date of Knowledge of the Offence: - The court held that the period starts from the date of knowledge of the offence, not the date of receipt of the offence report. Final Judgment: The court concluded that the show cause notice issued on 13.7.2015 was beyond the 90-day period from the date of the suspension order (27.3.2015) and the investigating agency's report (17.3.2015). Therefore, the notice was barred by limitation and issued without jurisdiction. Consequently, the show cause notice and the continuation of the suspension order were quashed. The writ petitions were allowed, and no costs were imposed.
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