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2020 (3) TMI 270 - AT - CustomsContinuation of suspension of CHA license - time limitation for issuance of notice - regulation 16(1) of the Customs Brokers Licensing Regulations, 2018 - whether the order dated 05 November, 2019 by which the suspension of the license has been continued under regulation 16(2) would continue to operate, even if a notice contemplated under regulation 17(1) is not issued within a period of 90 days from the date of receipt of the offence report? HELD THAT - Regulation 16 deals with suspension of license. It provides that notwithstanding anything contained in regulation 14, the Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the license of a Customs Broker where an enquiry against such Customs Broker is pending or contemplated. Thus, regulation 16(1) confers power on the Commissioner of Customs to suspend the license if immediate action is necessary, but this action can be taken either when an enquiry against the Customs Broker is pending or is contemplated. The suspension order dated 15 October, 2019 passed by the Commissioner of Customs does not mention that an enquiry against the Customs Broker is pending or is contemplated. To provide a safeguard to a license holder whose license has been suspended on account of necessity of immediate action, sub-regulation (2) of regulation 16 provides that the Commissioner of Customs shall within 15 days from the date of suspension of license under sub-regulation (1) give an opportunity of hearing to the Customs Broker and may pass such order as he deems fit either revoking the suspension or continuing the suspension. In the present case, after providing opportunity of hearing to the appellant, the Commissioner of Customs considered it appropriate to continue the suspension. The proviso to sub-regulation (2) of regulation 16 provides that the Commissioner of Customs shall thereafter follow the procedure as contemplated in regulation 17. The issue as to whether issuance of a notice within the stipulated period was mandatory or directory was examined by the Delhi High Court in Indair Carrier Pvt. Ltd. vs. Commissioner of Customs (General) and Ors. 2016 (5) TMI 775 - DELHI HIGH COURT where it was held that he time limits in the CHALR 2004 for issuance of the SCN to the CHA licence holder and completion of the inquiry within 90 days of issuance of such SCN are sacrosanct. The aforesaid time limits were engrafted into Regulation 22 of the CHALR, 2004 by a Notification No. 30/2010- Cus.(N.T.) dated 8th April, 2010. Simultaneously, the CBEC issued Circular No. 9/2010 dated 8th April 2010 clarifying the procedures governing the suspension and revocation of CHA licence. A perusal of the aforesaid judgment in Indair Carrier shows that the period of 90 days prescribed for issuance of a show cause notice under regulation 22(1), which provision is similar to the provisions of regulation 17(1) of the 2018 Regulations, was held to be mandatory in nature and, therefore, the directions issued by the Tribunal to complete the proceedings contemplated under regulation 22 within 60 days from the date of receipt of the order of the Tribunal was held not to be correct since the notice contemplated under article 17(1) had not been issued within a period of 90 days from the date of receipt of offence report. After considering the judgements of the Delhi High Court, the Bombay High Court in The Principal Commissioner of Customs (General) Mumbai vs. Unison Clearing Pvt. Ltd. 2018 (4) TMI 1053 - BOMBAY HIGH COURT expressed its inability to hold that time limit prescribed under the aforesaid regulations of the 2013 Regulations were mandatory in nature. There are two sets of decisions. The Delhi High Court have held that time limit prescribed for issuance of the notice within 90 days from the date of receipt of the offence report is mandatory in nature, whereas the Bombay High Court and the Calcutta High Court have held that the requirement of issuance of the notice within the stipulated period is not mandatory in nature - The issue, therefore, is which set of decisions should be followed. Fortunately, this issue has been examined by a Larger Bench (Five Member Bench) of the Tribunal in Collector of Central Excise, Chandigarh vs. Kashmir Conductors 1997 (7) TMI 186 - CEGAT, COURT NO. II, NEW DELHI . One issue that was addressed by the Larger Bench was what should be done when the Tribunal is faced with conflicting decisions of High Courts. The five member Larger Bench of the Tribunal held that if the jurisdictional High Court has taken a particular view on an interpretation or proposition of law, that view has to be followed, but if the jurisdictional High Court has not expressed any view in regard to the subject matter and there are conflicting views of other High Courts, then the Tribunal will be free to formulate its own view. In view of the aforesaid decision of the Larger Bench of the Tribunal, the judgements rendered by the Delhi High Court would have to be followed. The Delhi High Court has, in very clear terms, held that the time limit prescribed under the Regulations for issuance of the notice within 90 days from the date of receipt of the offence report is mandatory in nature. Such being the position of law, the Brokers Licence would automatically stand revived if a notice contemplated under regulation 17(1) of the 2018 Regulations is not issued within 90 days from the date of receipt of the offence report - In the present case, the notice contemplated under regulation 17(1) was not issued within 90 days from 27 September, 2019. The suspension order dated 15 October, 2019, as continued subsequently by order dated 5 November, 2019, cannot survive. The Brokers Licence of the Appellant shall, therefore, stand revived. The revocation of license is provided under regulation 14. Suspension can be ordered in the circumstances mentioned in regulation 16. The proviso to regulation 16(2) provides that after an order for continuation of suspension is passed, the procedure set out in regulation 17(1) has to be followed. Thus, if the time limit under regulation 17(1) for issuance of the notice has not been adhered to, the order dated 05 November, 2019 for continuing the suspension of license cannot survive after a period of 90 days from the date of receipt of the offence report - the suspension order dated 15 October, 2019, as continued by subsequent order dated 05 November, 2019, deserves to be set aside and is set aside - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Validity of the continuation of the suspension of the Customs Broker License under regulation 16(2) of the Customs Brokers Licensing Regulations, 2018. 2. Whether the issuance of a notice under regulation 17(1) within 90 days from the date of receipt of the offence report is mandatory or directory. Detailed Analysis: 1. Validity of the Continuation of the Suspension of the Customs Broker License: The appellant's Customs Broker License was initially suspended on 15 October 2019 under regulation 16(1) of the Customs Brokers Licensing Regulations, 2018, and the suspension was continued by an order dated 05 November 2019 under regulation 16(2). The appellant challenged the continuation of the suspension, arguing that the license should automatically revive as the mandatory notice under regulation 17(1) was not issued within 90 days from the date of receipt of the offence report. 2. Mandatory or Directory Nature of Regulation 17(1): The core issue was whether the requirement to issue a notice within 90 days from the date of receipt of the offence report under regulation 17(1) was mandatory or directory. The appellant contended that non-compliance with this provision would result in the automatic revival of the license, citing judgments from the Delhi High Court and the Madras High Court. Conversely, the Department argued that the provision was directory, relying on judgments from the Bombay High Court and the Calcutta High Court. Legal Provisions and Interpretation: Regulation 16 allows for the suspension of a Customs Broker License if immediate action is necessary, while regulation 17 outlines the procedure for revoking a license or imposing a penalty, including the issuance of a notice within 90 days of receiving the offence report. The Tribunal examined various High Court decisions to determine the nature of this time limit. Judgments from Different High Courts: - Delhi High Court: Held that the time limit for issuing a notice under regulation 22(1) of the 2004 Regulations (similar to regulation 17(1) of the 2018 Regulations) is mandatory. Non-compliance would invalidate subsequent proceedings and revive the license. - Madras High Court: Supported the view of the Delhi High Court, emphasizing the mandatory nature of the time limit to ensure swift action and accountability. - Bombay High Court: Contrarily, held that the time limit is directory, suggesting that delays could be justified by recording reasons. - Calcutta High Court: Followed the Bombay High Court's view, interpreting the time limit as directory due to the absence of specified consequences for non-compliance in the regulations. Tribunal's Decision: The Tribunal, guided by the Larger Bench decision in Collector of Central Excise, Chandigarh vs. Kashmir Conductors, determined that in the face of conflicting High Court decisions, the view of the jurisdictional High Court (Delhi High Court) should be followed. Consequently, the Tribunal held that the time limit for issuing a notice under regulation 17(1) is mandatory. Since the notice was not issued within 90 days from 27 September 2019, the suspension order dated 15 October 2019, and its continuation by the order dated 05 November 2019, could not survive. Thus, the appellant's Customs Broker License automatically stood revived. Conclusion: The appeal was allowed, and the suspension orders were set aside. The appellant's Customs Broker License was ordered to be revived automatically due to the non-issuance of the mandatory notice within the stipulated 90-day period.
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