2017 (2) TMI 816 - AT - Customs

Revocation of CHA licence - revocation on the ground that appellant is a defaulter of service tax liability - Held that - Regulation 11(g) of CBLR, 2013 can be invoked only when the duty, tax or other debt or obligation owing to Government in respect of cargo or baggage is unpaid on behalf of client by the Customs broker - No proceeding under that regulation lies for default to pay service tax by the Customs broker for the service he provides to his clients - licence to be be restored - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Revocation of Customs Brokers Licence based on service tax liability.
2. Breach of time limits in conducting inquiry and concluding proceedings.
3. Interpretation of Regulation 11(g) of Customs Brokers Licensing Regulations, 2013.

Issue 1: Revocation of Customs Brokers Licence based on service tax liability
The appellant argued that the show cause notice proposing to revoke the licence was not in line with the law as it was based on the appellant being a defaulter of service tax liability. The appellant contended that revocation should only occur for breaches of the provisions in Customs Brokers Licensing Regulations, 2013 (CBLR, 2013). The appellant highlighted delays in the inquiry process, such as the submission of the inquiry report beyond the prescribed time limit. The conclusion of the proceeding was also delayed, breaching regulations. The appellant prayed for the impugned order to be set aside based on these violations of law.

Issue 2: Breach of time limits in conducting inquiry and concluding proceedings
The appellant raised concerns regarding the delays in the inquiry process, emphasizing that the law mandates the inquiry to be concluded within 90 days of issuing the notice. However, in this case, the inquiry report was submitted after the statutory limit, and the conclusion of the proceeding was made beyond the required timeframe. The appellant argued that these delays were violations of the regulations, impacting the fairness and legality of the proceedings.

Issue 3: Interpretation of Regulation 11(g) of Customs Brokers Licensing Regulations, 2013
The Revenue contended that the appellant breached Regulation 11(g) of CBLR, 2013 by failing to promptly pay sums due to the Government, including service tax liabilities. The Revenue argued that any unpaid tax or dues to the Government constitute misconduct by the Customs broker, justifying the impugned order. However, the Tribunal, after hearing both sides and examining the records, held that Regulation 11(g) can only be invoked when duty, tax, or other obligations owing to the Government in respect of cargo or baggage remain unpaid on behalf of the client. The Tribunal concluded that no proceeding under this regulation applies for default in paying service tax, as it is not covered by the regulation. Therefore, the appellant succeeded based on a plain reading of the regulation, and the appeal was allowed.

In conclusion, the Tribunal allowed the appeal, emphasizing that the revocation of the Customs Brokers Licence based on service tax liability was not supported by the law, and the delays in the inquiry process constituted violations of the regulations. The interpretation of Regulation 11(g) clarified that it does not apply to service tax defaults, leading to the appellant's success in the case.