2018 (1) TMI 440 - AT - Customs

Penalty on CHA - Regulation 18 of CBLR, 2013 - delay in issue of SCN - Held that - the concerned Commissionerate has been put to knowledge with regard to the offence on 23.12.2016. However, the show cause notice has been issued on 6.4.2017 which is beyond the period of 90 days prescribed in Regulation 20 - In the case of Santon Shipping Services Vs. Commissioner of Customs, Tuticorin 2017 (10) TMI 621 - MADRAS HIGH COURT , the Hon ble High Court of Madras observed that the SCN is not issued within 90 days and the proceedings initiated under CHALR for revocation of licence is vitiated. The SCN issued after 90 days is non est and vitiates the proceedings - Appeal allowed.

Summary

Issues:
Penalty imposed for violation of Regulation 18 of CBLR, 2013 - Delay in issuing show cause notice beyond 90 days.

Analysis:
The appellant, a Customs Broker, challenged a penalty of ?50,000 imposed for alleged violations of CBLR, 2013. The show cause notice proposing license revocation and security deposit forfeiture under Regulation 18 r/w Regulation 20 of CBLR, 2013 was issued beyond 90 days. The appellant argued that the notice was unsustainable due to the delay. The Hon'ble High Court's decision in a similar case emphasized the importance of complying with the time limit for issuing show cause notices. The appellant contended that the show cause notice, issued after the department's knowledge of the offence, was void ab initio. The subsequent confirmation of the prohibition order was received by the Commissionerate, putting them on notice of the offence, yet the notice was issued beyond the prescribed 90 days.

The appellant's counsel highlighted technical grounds, citing the Hon'ble High Court's interpretation of "offence report" in a related case. The argument focused on the necessity of timely issuance of show cause notices as per the regulations. The respondent reiterated the findings in the impugned order, emphasizing the importance of compliance with the regulations. The Tribunal considered the delay in issuing the notice as the primary argument. Despite no formal offence report, the Commissionerate was informed of the offence through the prohibition order, leading to the knowledge of the violation. The Tribunal referenced previous High Court judgments emphasizing the significance of adhering to the time limit for issuing show cause notices. Relying on these precedents, the Tribunal held that the notice issued after 90 days was invalid, thereby vitiating the proceedings.

In alignment with previous High Court decisions, the Tribunal concluded that the show cause notice issued after 90 days was non est and tainted the proceedings. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief. The Tribunal's decision highlighted the critical importance of adhering to statutory time limits for issuing show cause notices in regulatory proceedings to ensure procedural fairness and compliance with legal requirements.