2020 (9) TMI 268 - AT - Customs

Suspension of Customs Broker License - over-valuation of rough diamonds/precious stones - regulation no. 16(2) of Customs Brokers Licensing Regulations, 2018 - HELD THAT - The procedure laid down, in regulation 17, as a prerequisite for revoking of the license, or for imposing a penalty under regulation 14 of the said Regulations, are not mandated to be gone through before suspension. Nevertheless, five essential aspects must be complied with; an enquiry against the broker is pending or contemplated, immediate action is necessary, an opportunity to be heard to be granted within fifteen days from the date of such suspension, passing order of revocation, or continuation, of suspension within fifteen days from the date of hearing and, in the event of the latter, to be followed by initiation of proceedings under regulation no. 17 with adherence to all the timelines therein - The business activities of an importer or exporter, against whom proceedings are initiated under Customs Act, 1962, are not jeopardised as it is only the impacted consignments that are interdicted. Any deviation from the procedures for suspension, revocation or penalising has to be approached with due responsibility and, owing to the unsupervised exercise of power, will have to be at the cost of the detriment being overruled. In no uncertain terms, that statutory actions against customs broker, the hyphen that connects the importer/exporter with the customs authorities and, thereby, administratively accountable to the licensing authority, are to be interfered with only for colourable decisions, adjudged against prescriptions in the Regulations and proportionate deprivation by such authority. The temptation to take a stick to an underling for any real, or perceived, misdemeanour is as old as the master-servant institution and which the wheels of justice must, unhesitatingly, obliterate. For lapses in import and export in which breach of the obligations prescribed in Customs Broker Licensing Regulations, 2018, the licensing authority is empowered, under regulation no. 14 of Customs Broker Licensing Regulations, 2018, to revoke the license and/or to impose appropriate penalties, subject to compliance with procedure laid down in regulation no. 17 of Customs Broker Licensing Regulations, 2018. This process could take as long as six months, as per prescribed timelines, for investigations, issue of notice comprising specific charges of violation, conduct of enquiry in hearing, furnishing of a report of enquiry, response of the broker and culminating in issue of speaking order by the licensing authority. In the meanwhile, the continued validity of the licence would entitle the broker to carry on normal activities which may, in specific circumstances, be prejudicial to public interest and, regulation no. 16 of Customs Broker Licensing Regulations, 2018 permits temporary validation subject to certain basic procedural prescriptions. In the present instance, the gap of more than a year since the alleged overvaluation was attempted, and the continued operation of the appellant as a customs broker since then, does indeed raise doubts about the urgency for suspension. We find that the impugned order has not recorded any justification for curtailing the broking operations of the appellant at this stage. The Regulations do not into envisage suspension to be retribution for alleged wrongdoing for which separate provisions exist and which should already have been initiated if the licensing authority is serious about compliance with the timelines prescribed therein. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Challenge against the suspension of a custom broker license under regulation no. 16(2) of Customs Brokers Licensing Regulations, 2018.
2. Compliance with procedural requirements for suspension and revocation of license.
3. Justification for immediate suspension based on alleged involvement in over-valuation of imported goods.
4. Interpretation of the principle of immediacy in regulatory actions against customs brokers.
5. Comparison with past legal precedents regarding suspension of licenses.
6. Consideration of the impact on business activities and livelihood of individuals dependent on the licensee.
7. Evaluation of the necessity and timing of suspension in relation to pending adjudication proceedings.

Analysis:
The judgment pertains to an appeal by a custom broker against the suspension of their license under regulation no. 16(2) of Customs Brokers Licensing Regulations, 2018. The order of suspension was based on allegations of the broker's involvement in the over-valuation of imported 'rough diamonds/precious stones.' The tribunal highlighted the procedural requirements for suspension, emphasizing the need for an enquiry against the broker, immediate action, and granting an opportunity for a hearing within fifteen days. It was noted that suspension does not require compliance with the procedures for revocation or penalties under regulation 17.

The tribunal emphasized that statutory actions against customs brokers should only be interfered with for colorable decisions and proportionate deprivation by the authority. The judgment discussed the principle of immediacy in regulatory actions, citing past legal precedents to support the argument that suspension should be used in emergency situations where immediate action is necessary. The tribunal evaluated the gravity of the alleged wrongdoing and conspiracy involving the broker to determine the justification for immediate suspension.

Furthermore, the judgment considered the impact of suspension on business activities and individuals dependent on the licensee. It was noted that suspension should not be used as retribution for alleged wrongdoing, as separate provisions exist for such cases. The tribunal highlighted the importance of adhering to prescribed timelines and procedures, especially in cases where suspension could prejudice the decision in pending adjudication proceedings.

In conclusion, the tribunal set aside the impugned order of suspension, emphasizing that the gap between the commencement of investigations and the issue of show cause notice did not justify the immediate suspension. The decision was based on the consistent view of legal precedents and the lack of justification for curtailing the broker's operations at that stage.