2018 (3) TMI 1264 - HC - Customs

Time limitation - order of prohibition under Regulation 23 of the Customs Brokers Licensing Regulation - the impugned order has been passed prohibiting the petitioner from working in any Section of the Chennai Customs Station under the jurisdiction of Chennai Customs Zone for the reason that the petitioner had failed to collect the relevant documents from the importer directly and to verify the identity of their client and in view of the same, the petitioner has failed to discharge their obligations as Customs Broker as required under Regulation 11 (a), 11 (d) and 11 (n) of the Customs Brokers Licensing Regulation 2013. Held that - Under Regulation 23 of the Customs Brokers Licensing Regulation, the Commissioner of Customs may prohibit any Customs Broker from working in one or more Sections of the Customs Station, if he is satisfied that such Customs Broker has not fulfilled his obligations as laid down under Regulation 11 in relation to work in that Section or Sections. In the case on hand, the Order of Prohibition was passed against the petitioner under Regulation 23 of the Customs Brokers Licensing Regulation, 2013 and on a perusal of Regulation 23, it is clear that 90 days period prescribed under Regulation 22(1) of the Customs House Agent Licensing Regulations, 2004, does not find a place. That apart, Regulation 23 of the Customs Brokers Licensing Regulation has not been considered by the Division Bench for the reason that the issue in that Appeal was only in respect of Regulation 22(1) of the Customs House Agent Licensing Regulations, 2004 and not with regard to the Regulations under Customs Brokers Licensing Regulation, 2013. Admittedly, as per the Regulations, the respondent has also given an opportunity of personal hearing to the petitioner after the passing of the impugned order on 14.12.2017. Since there is no violation of principles of natural justice, the petitioner should exhaust the alternative remedy by way of an Appeal under Section 129 A(1)(a) of the Customs Act. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Validity of the Order of Prohibition under Regulation 23 of the Customs Brokers Licensing Regulation, 2013.
2. Availability and necessity of exhausting alternative remedy by way of an appeal under Section 129 A of the Customs Act.
3. Compliance with principles of natural justice.

Issue-Wise Detailed Analysis:

1. Validity of the Order of Prohibition under Regulation 23 of the Customs Brokers Licensing Regulation, 2013:
The petitioner, a licensed Customs Broker, was prohibited from operating in Chennai Customs Station under Regulation 23. The respondent concluded that the petitioner failed to collect relevant documents directly from the importer and verify the client's identity, violating Regulations 11(a), 11(d), and 11(n). The investigation revealed that the petitioner handled clearances based on authorization from a third party, not directly from the importer, M/s. Niti Traders. This led to the prohibition order to prevent further misuse of the Customs Broker's License, deemed necessary for protecting the interest of the Revenue.

2. Availability and necessity of exhausting alternative remedy by way of an appeal under Section 129 A of the Customs Act:
The respondent argued that the petitioner has a statutory remedy by appealing to the Tribunal under Section 129 A of the Customs Act, making the writ petition inappropriate. The court agreed, noting that the petitioner should have pursued this alternative remedy unless there were exceptional circumstances, such as a violation of natural justice principles. The court found no such exceptional circumstances in this case.

3. Compliance with principles of natural justice:
The petitioner argued that the time limit prescribed under Regulation 18, which mandates action following the procedure in Regulation 20(1), was not adhered to. However, the court noted that the judgment cited by the petitioner related to Regulation 22(1) of the Customs House Agent Licensing Regulations, 2004, which is not applicable here. Regulation 23 of the Customs Brokers Licensing Regulation, 2013, does not prescribe a 90-day period for issuing a prohibition order. The court found that the respondent provided the petitioner with a post-decisional hearing, fulfilling the requirement of natural justice. Consequently, the court concluded that there was no violation of natural justice principles.

Conclusion:
The court rejected the writ petition, emphasizing that the petitioner should have exhausted the alternative remedy available under Section 129 A(1)(a) of the Customs Act. The prohibition order under Regulation 23 was found to be legally sustainable, and the court noted that the respondent had provided sufficient reasons for the order, ensuring compliance with natural justice principles. The petitioner was advised to appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) if desired.