2018 (5) TMI 360 - AT - Customs

Continuation of prohibition of CHA licence - impugned order prohibited the appellants under Regulations of CBLR, 2013 from working in any sections of the Chennai Customs station under the jurisdiction of Chennai Customs Zone - Shipping Bills filed in respect of goods which were found to be sub-standard/inferior quality/rags allegedly with an intention to claim undue drawback. Held that - since the personal hearing itself was given in the first order, they were awaiting the results of the personal hearing and only when the prohibition order was continued, they have come in appeal. In any case, we find even if the appellants had filed an appeal only against the first order dated 26.09.2017, it could even be done so at this stage with an application for condonation of delay which would have been considered as per the procedure. Regulation 23 is a provision to take immediate action against a Customs Broker on whom there is a reasonable belief of having fallen foul of the CBLR Regulations. The Regulation however allows the competent authority to prohibit the customs broker to function only at one or more sections of the customs station. Surely, this prohibition cannot be extended to all the sections and all the Customs Commissionerates in the Customs station, as has been done in the present case. Continuation of prohibition under Regulation 23 is not an alternative to following the procedure laid down in the CBLR 2013 - we are not able to support or sustain the impugned order which we find is nothing but a travesty of justice - appeal allowed.

Summary

Issues:
1. Prohibition of Customs Broker License under CBLR 2013.
2. Jurisdiction of the authority under Regulation 23 of CBLR 2013.
3. Maintainability of the appeal against the continuation of prohibition order.
4. Compliance with principles of Natural Justice.
5. Allegations against the appellant regarding the export of sub-standard goods.
6. Interpretation of Regulations for Customs Brokers.

Issue 1: Prohibition of Customs Broker License under CBLR 2013:
The case involved the appellant, a holder of a Customs Broker License, facing prohibition from working in Chennai Customs due to alleged involvement in exporting sub-standard goods for undue drawback claims. The Commissioner of Customs issued the prohibition order under CBLR 2013, leading to the appellant filing an appeal challenging the decision.

Issue 2: Jurisdiction of the authority under Regulation 23 of CBLR 2013:
Regulation 23 of CBLR 2013 allows the Commissioner of Customs to prohibit a Customs Broker from working in specific sections of a Customs Station if obligations are not fulfilled. The tribunal found that the authority's action extended beyond the regulation's scope by prohibiting the appellant from functioning in all sections of Chennai Customs, questioning the prolonged disabling of the appellant without following due procedures or principles of Natural Justice.

Issue 3: Maintainability of the appeal against the continuation of prohibition order:
The respondent argued that the appeal was not maintainable as it was filed against the continuation order and not the initial prohibition order. However, the tribunal noted that the continuation order was a part of the original prohibition order, and the appeal was permissible, especially since the appellant awaited the outcome of the personal hearing granted in the initial order.

Issue 4: Compliance with principles of Natural Justice:
The appellant contended that the prohibition order violated the Principles of Natural Justice as the authority failed to provide a proper opportunity to present their case. The tribunal agreed, emphasizing the necessity for adherence to Natural Justice principles in such cases, especially when imposing civil consequences like license prohibition.

Issue 5: Allegations against the appellant regarding the export of sub-standard goods:
The case involved allegations of collusion by the appellant in exporting sub-standard goods for undue drawback claims. However, discrepancies were noted in the investigation process, such as the appearance of representatives of the exporters before the authorities, raising doubts about the basis for the prohibition order against the appellant.

Issue 6: Interpretation of Regulations for Customs Brokers:
The tribunal highlighted the importance of following the prescribed procedures and principles while dealing with Customs Brokers under CBLR 2013. It emphasized that the prohibition under Regulation 23 was a temporary measure and not a substitute for the formal procedures outlined in the regulations for suspension, revocation, or penalty imposition on Customs Brokers.

In conclusion, the tribunal allowed the appeal, setting aside the prohibition order due to procedural irregularities and lack of adherence to the principles of Natural Justice, emphasizing the need for proper application of regulations and due process in such cases.