2018 (4) TMI 1053 - HC - Customs

Suspension of CHA License - Time Limitation - Whether the CESTAT is right in law in setting aside the order or suspension of the Custom Broker Licence on the ground of delay between the suspension and the notice of deviation or omission ignoring that DRI letter dated 24th July 2014 and the Custom Broker Licence was suspended on 8th August 2014? - Regulation 18 Regulation 19 and Regulation 20 of CBLR. Whether the time line as prescribed in Regulation 20 is directory in nature or is mandatory? Held that - when a time limit is prescribed in Regulations which empowers action in Regulation 18 and procedure in Regulation 20(1) the use of the term shall cannot be termed as directory . Adherence to the time schedule prescribed in the Regulation 20 in a rigid way would lead to a situation where non- compliance with the time frame and even deviation by a single day would resultantly invalidate the entire action and the licence which is under suspension or which is revoked is liable to be restored. The procedural formality as required to be complied within the time frame prescribed in the regulation even if it is deviated for whatsoever reason beyond the control of the revenue or the custom house agent would result into consequences of declaring the entire action invalid if the provision is construed as mandatory. The time limit contained in Regulation 20 cannot be construed to be mandatory and is held to be directory - though the time line framed in the Regulation need to be rigidly applied fairness would demand that when such time limit is crossed the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the time limit was not adhered to. CESTAT was not justified in setting aside the order or suspension of the Customs Brokers Licence on the ground of delay between suspension and the notice of deviation or omission and it cannot be laid down as an absolute proposition of law that delay in taking immediate action of suspension or initiation of inquiry within a period of 90 days would vitiate the action of the Commissioner. Matters are remanded to the CESTAT for fresh adjudication.

Issues Involved:
1. Whether the CESTAT is right in law in setting aside the order of suspension of the Custom Broker Licence on the ground of delay.
2. Whether the Appellate Tribunal ignored the decisions of this Court regarding the delay in suspension actions.
3. Whether the time frame prescribed under Regulation 20 of CBLR-2013 is mandatory or directory.

Issue-Wise Detailed Analysis:

1. Delay in Suspension of Custom Broker Licence:
The primary issue revolves around whether the CESTAT was correct in setting aside the suspension of the Custom Broker Licence due to a delay between the suspension and the notice of deviation or omission. The court examined the statutory schemes under the Customs Act, 1962, and the Customs House Licensing Regulation (CHLR) as notified from time to time. The Customs Act, 1962, under Section 146, imposes restrictions on carrying on business as a Customs Broker without a licence. The CHLR-2013, which governs the appeals, prescribes a time frame for suspension and revocation of licences under Regulation 19 and 20. The court noted that the CHALR-2004 and its amendments introduced time limits for suspension and revocation procedures, emphasizing the need for prompt action.

2. Ignoring Previous Court Decisions:
The court addressed whether the Appellate Tribunal ignored previous decisions that did not establish an absolute proposition that delay in suspension vitiates the action. The court referred to various judgments, including those of the Delhi and Madras High Courts, which have consistently held that the time limits prescribed in the CHALR-2004 and CBLR-2013 are mandatory. These judgments emphasized that the time limits are sacrosanct to ensure swift action against customs brokers involved in misconduct and to prevent prolonged suspension without resolution. The court also considered the balance between the interests of the customs broker and the revenue authorities, highlighting the need for a reasonable period to complete inquiries.

3. Mandatory or Directory Nature of Time Frame in Regulation 20:
The court extensively analyzed whether the time frame prescribed under Regulation 20 of CBLR-2013 is mandatory or directory. It examined the language of the regulation, the intent of the legislature, and the consequences of non-compliance. The court noted that while the word "shall" is generally construed as mandatory, it is not an absolute rule. The court referred to principles from various legal texts and judgments, emphasizing that the determination depends on the legislative intent, the nature of the statute, and the consequences of non-compliance. The court concluded that the time frame in Regulation 20 is directory, not mandatory. It reasoned that strict adherence to the time limits would result in unjust consequences, such as allowing customs brokers to benefit from minor delays or administrative exigencies beyond the control of the revenue authorities. The court emphasized the need for flexibility and accountability, suggesting that reasons for delays should be recorded and justified to ensure fairness.

Conclusion:
The court held that the CESTAT was not justified in setting aside the suspension of the Customs Brokers Licence solely on the ground of delay. It ruled that the time frame prescribed in Regulation 20 of CBLR-2013 is directory, not mandatory, and deviations from the time schedule should be justified with valid reasons. The court remanded the matters to the CESTAT for fresh adjudication in light of this interpretation.

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