2022 (3) TMI 59 - HC - Customs

Rejection of Custom Broker application for renewal of license - It was alleged that in the process the appellant as CHA failed to advise his client to comply with the provisions of the Customs Act and failed to bring the matter to the notice of the Deputy Commissioner of Customs - Regulation 9(2) of the said Regulations of 2013 - HELD THAT - Whatever be the irregularity at the end of the tribunal in first pronouncing the order dismissing the appeal and thereafter sending it for rehearing, surely the department cannot capitalize on the same. In substance in the first order which was pronounced but not signed and a subsequent order which confirmed the previous order the appeal of the appellant stood dismissed. We are therefore called upon to decide the correctness of the view of the Commissioner as confirmed by the tribunal. In this context it is found that the decision of the Commissioner to refuse renewal of the license of the appellant was wholly unjustified. Regulation 3 of the said Regulations of 2013 provides that no person shall carry on business as a Customs Broker unless he holds a license granted under the regulations. Application for license has to be made as provided in Regulation 4. Regulation 5 provides the conditions to be fulfilled for grant of license. Under Sub-regulation (2) of Regulations of 2013, renewal of license can be granted if the performance of the licensee is found to be satisfactory with respect inter-alia to obligations specified in the regulation including the absence of instances of any complaints of misconduct. The power for grant of renewal of extension is thus quite wide. The request for renewal would be considered on the parameter of the performance of the licensee if found satisfactory and there being absence of instance of any complaint of misconduct. However to refuse renewal of the license only on the ground of one isolated incident of irregularity for which the competent authority found that appropriate punishment was imposing penalty of ₹ 25,000/-, would be wholly unjustified and impermissible - if there are multiple instances of complaints of misconduct of a Custom House Broker, the renewal of license may be refused. However a mere isolated instance of irregularity which was found to be no more serious than to impose penalty of ₹ 25,000/-, cannot be the ground for refusal to grant renewal. Non-renewal of a license would prevent the appellant from carrying on the business permanently. In absence of allegations of any other complaint the isolated instance of the nature noted, cannot be the sole ground for refusal to grant renewal. The Commissioner of Customs as well as the Tribunal committed serious error - the question of law is answered in favour of the appellant and against the department - appeal allowed.

Summary

Issues:
1. Appeal against rejection of renewal application by the custom house agent.
2. Interpretation of Regulation 9(2) of the Customs Brokers Licensing Regulations, 2013.
3. Consideration of penalty and suspension in renewal of license.
4. Discrepancy in tribunal orders and subsequent rehearing.
5. Validity of non-renewal of license based on isolated irregularity.

Analysis:
1. The appellant, a custom house agent (CHA), filed an appeal against the rejection of his renewal application by the department. The Commissioner of Customs refused to renew the license based on a past irregularity despite imposing a penalty and a suspension earlier. The substantial question of law was whether the rejection of the renewal application was justified.

2. The key issue revolved around the interpretation of Regulation 9(2) of the Customs Brokers Licensing Regulations, 2013. This regulation empowers the Commissioner of Customs to renew a license based on the licensee's satisfactory performance and absence of complaints of misconduct. The appellant argued that the penalty and suspension already imposed should not lead to non-renewal of the license.

3. The appellant contended that the penalty of &8377; 25,000 and the suspension served as adequate punishment for the irregularity detected. The Commissioner's decision not to renew the license was challenged on the grounds of double jeopardy. The tribunal upheld the Commissioner's order, leading to the appeal before the High Court.

4. A discrepancy arose in the tribunal's orders, with a subsequent rehearing being ordered due to a contradictory view taken by another bench on a similar issue. Despite this, the tribunal ultimately dismissed the appeal, leading the appellant to approach the High Court for a final decision on the matter.

5. The High Court found that the refusal to renew the license based solely on one isolated irregularity, which resulted in a penalty but no revocation of the license, was unjustified. The court emphasized that non-renewal would permanently prevent the appellant from conducting business, and the absence of any other complaints made the isolated incident insufficient grounds for denial. The court set aside the impugned orders, ruling in favor of the appellant and against the department.