2016 (7) TMI 42 - HC - Customs

Revocation of CHA license - Writ application - Misuse of IEC - allegations of misconduct against the petitioner - Held that - We would have granted the petitioner the liberty to avail the alternative remedy, but since we have considered and discussed the merits of the case, we are not inclined to do so. We deprecate the conduct of the petitioner in making statement in paragraph 5 of CWJC No. 5540 of 2015, as discussed above. There is statement in the said paragraph that said Sheikh Khursheed resigned his post on 30.01.2013. Neither resignation letter has been brought on record nor there is any material to show that in compliance with the requirement under Clause (5) of Regulation 17 of Customs Broker Licensing Regulations, 2013, any intimation was given to the competent authority. writ applications dismissed - Decided against the applicants.

Issues Involved:
1. Suspension and subsequent revocation of the petitioner’s Customs House Agent (CHA) license.
2. Issuance and challenge of the show cause notice.
3. Maintainability of the writ application under Article 226 of the Constitution of India.
4. Allegations of misconduct and imputation of charges against the petitioner.
5. Examination of the role and responsibilities of the petitioner and associated individuals in the import transactions.
6. Analysis of the statutory provisions and regulations governing the actions of the petitioner.
7. Evaluation of the decision-making process and adherence to principles of natural justice.

Detailed Analysis:

1. Suspension and Revocation of CHA License:
The petitioner’s CHA license was initially suspended by the Commissioner of Customs, Patna, through Adjudication Order No. 1 (7) and C.H.A. Order No. 01/2013, dated 04.04.2013, invoking provisions of Regulation 20 and 22 of the CHALR. Subsequently, the petitioner’s license was revoked by an order dated 04.09.2015, following an enquiry that found the petitioner had breached Regulation 11 (e) and 11 (o) of the Customs Broker Licensing Regulations, 2013. The Court noted that the petitioner was given an opportunity for a personal hearing before the final revocation order was passed.

2. Issuance and Challenge of Show Cause Notice:
During the pendency of the initial writ application, a show cause notice dated 05.03.2015 was served on the petitioner, imputing misconduct and proposing an enquiry. The petitioner challenged this notice by filing CWJC No. 5540 of 2015. The enquiry officer, after conducting the enquiry, found the charges against the petitioner to be proved, leading to the revocation of the license.

3. Maintainability of the Writ Application:
A preliminary objection was raised regarding the maintainability of the writ application (CWJC No. 5540 of 2015) due to the existence of an equally efficacious statutory remedy under Regulation 21 of the CBLR, which allows an appeal to the Customs, Central Excise and Service Tax Appellate Tribunal. The Court acknowledged that the rule of non-maintainability of a writ petition under Article 226 is a rule of discretion and not compulsion, but emphasized the availability of statutory remedies.

4. Allegations of Misconduct and Imputation of Charges:
The petitioner was charged with facilitating the import of goods using the IEC of another person (Izahar Hussain) and not verifying the actual importer, which was a violation of Regulation 11 (n) of the CBLR. The investigation revealed that the goods were imported by Ramesh and Kamlesh in the name of M/s Regent Enterprises, with Sheikh Khursheed of the petitioner-company involved in the process. The Court found that the petitioner failed to exercise due diligence and supervise its employee, leading to the misconduct charges being substantiated.

5. Examination of Role and Responsibilities:
The Court scrutinized the responsibilities of the petitioner and its employees, particularly Sheikh Khursheed, who was described as either the Executive Director or a G-card holder employee. The petitioner’s attempt to distance itself from Sheikh Khursheed’s actions was found unconvincing, as there was no evidence of his resignation or withdrawal of authorization as required under Regulation 17 of the CBLR.

6. Analysis of Statutory Provisions:
The Court analyzed the relevant statutory provisions, including Section 7 of the Foreign Trade (Development and Regulation) Act, 1992, and the Customs Broker Licensing Regulations, 2013. It emphasized that an importer must have a valid IEC and cannot use someone else’s IEC for import transactions. The Court disagreed with the Kerala High Court’s decision in Proprietor, Carmel Exports and Imports, which did not consider these statutory provisions.

7. Evaluation of Decision-Making Process:
The Court evaluated the decision-making process and found no violation of principles of natural justice. The petitioner was given due opportunity to be heard, and the findings of the competent authority were based on substantial evidence. The Court reiterated that in a proceeding under Article 226, it is required to evaluate the correctness of the decision-making process rather than the decision itself.

Conclusion:
The Court dismissed the writ applications, finding no merit in the petitioner’s claims. It emphasized the statutory obligations of the petitioner and its failure to exercise due diligence and proper supervision. The Court also decried the petitioner’s conduct in making misleading statements in the writ application.

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