2016 (8) TMI 1362 - HC - Customs

Revocation of CHA License - forfeiture of security deposit - Whether the petitioners ought to be relegated to the CESTAT for challenging the order dated May 31 2016 confirming the order of suspension dated May 3 2016? - Held that - Although the cause lists of the CESTAT for August 9 and 10 2016 were produced by Mr. Ganguly he admitted that one of the two members comprising the Bench is an outstation member and therefore the Bench is not regularly available - an efficacious alternative and speedy remedy to the petitioners cannot be said to be available and therefore this Bench would proceed to consider the other points on merits overruling the objection of Mr. Ganguly. Does the order of suspension dated May 3 2016 and the subsequent order dated May 31 2016 confirming such suspension warrant interference? - Held that - Having regard to the materials disclosed by the first respondent it is not a case where no reasons have been disclosed why immediate action was not required or warranted - Although the first respondent may not have disclosed in the order impugned why the decisions placed before him were not applicable mere omission to do so cannot be held fatal. The reasons furnished by the first respondent for confirming the order of suspension are sound and justify acceptance - the action taken by the first respondent under regulation 19 of the 2013 Regulations is unexceptionable and no interference is called for. Whether on facts and in the circumstances the noticee should be allowed to challenge the show cause notice dated July 18 2016 in writ proceedings? - Held that - Since Mr. Saraf has alleged that the first respondent did not have the jurisdiction to initiate recovery proceedings beyond the time specified in regulation 20(1) this Bench proposes to consider such contention next - This point is accordingly answered by overruling the objection of Mr. Ganguly. Whether initiation of action for revocation of license against the petitioners by notice dated July 18 2016 is valid in law having regard to the provisions of regulation 20 (1) of the 2013 Regulations? - Held that - It is well known that in Government offices very often a file moves at a snail s pace while passing through various tables. It is therefore not difficult to think of circumstances disabling transmission of the offence report to the first respondent on the same date it was received by the correspondence department. Regulation 20(1) has to be reasonably construed and so construed the time-limit of ninety days must be held to commence from the date the offence report reaches the principal commissioner or the commissioner of customs as the case may be authorized to issue show cause notice - decided against petitioner. Revocation proceedings - suspension order - Whether the petitioners are entitled to any relief on this ground? - Held that - The first petitioner is yet to respond to the show cause notice. In fact its interest was protected by an interim order passed by this Bench on August 12 2016. The time to complete the proceedings is still few months away - If at all the proceedings for revocation are not completed within the time limit stipulated in sub-regulation (7) of regulation 20 the petitioners may approach the Court afresh for revocation of the order of suspension dated May 31 2016. But for the present they are not entitled to the relief of revocation of the order of suspension - decided against petitioner. Petition dismissed.

Issues Involved:
1. Relegation to CESTAT for challenging the suspension order.
2. Validity of the suspension order.
3. Maintainability of writ petition against the show cause notice.
4. Validity of revocation proceedings initiated under regulation 20(1) of the 2013 Regulations.
5. Entitlement to relief based on the decision in Md. Yeasin.

Detailed Analysis:

Point (i): Relegation to CESTAT for Challenging the Suspension Order
The court acknowledged that the CESTAT Bench is not regularly available due to the outstation member. Given this uncertainty, the court decided to consider the merits of the case rather than relegating the petitioners to CESTAT. Therefore, the objection raised by the respondents was overruled.

Point (ii): Validity of the Suspension Order
The incident leading to the suspension occurred in July 2014, with the offence report received by the first respondent on April 19, 2016. The suspension order was issued on May 3, 2016, under regulation 19(1) of the 2013 Regulations, which allows for immediate action where an inquiry is pending or contemplated. The court found that the suspension was justified due to the serious nature of the alleged offence involving high-value mis-declared goods. The court distinguished this case from previous decisions cited by the petitioners, noting that the reasons for immediate action were sufficiently disclosed. Thus, the suspension order was upheld.

Point (iii): Maintainability of Writ Petition Against the Show Cause Notice
While generally, writ petitions against show cause notices are not entertained, the court decided to consider the petitioners' challenge on the grounds of jurisdictional error. The court overruled the respondents' objection and proceeded to examine the validity of the revocation proceedings.

Point (iv): Validity of Revocation Proceedings Initiated Under Regulation 20(1)
The court examined whether the time limit prescribed in regulation 20(1) is mandatory or directory. Referring to various Supreme Court decisions, the court concluded that the time limit is directory, not mandatory, as no specific consequence for non-compliance is provided in the regulation. The court held that the revocation proceedings initiated beyond ninety days would not be invalidated merely due to the delay. Additionally, the court found that the proceedings were initiated within ninety days from the date the offence report was received by the first respondent on April 22, 2016. Therefore, the revocation proceedings were deemed valid.

Point (v): Entitlement to Relief Based on the Decision in Md. Yeasin
The court noted that the reasoning in Md. Yeasin, which mandated the completion of proceedings within a specific time frame to avoid prolonged suspension, was not applicable here due to the different regulatory framework. The court held that the petitioners could seek relief if the revocation proceedings were not completed within the stipulated time. However, for the present, the petitioners were not entitled to revocation of the suspension order.

Conclusion:
The writ petition was dismissed, and the interim order was vacated. The petitioners were given fifteen days to respond to the show cause notice, after which the proceedings would continue in accordance with the law.

← Previous Next →