2006 (2) TMI 179 - HC - Customs

Suspension of licence - Misconduct of the Customs House Agent - Power of Commissioner - Whether the CESTAT was right in holding that the suspension of licence was bad in law for non-service of prior notice to the delinquent licence holder? - HELD THAT - It was a case for invoking Regulation 20(2) of the said Regulations which is meant only in cases where immediate action is necessary. In such a case even without giving notice the licence could be suspended. We make it clear that the observations of the CESTAT that in all cases of suspension the procedure under Regulation 22(1) ought to have been followed in the sense prior notice before suspension ought to be given cannot be sustained. A bare reading of Regulation 20(2) very clearly indicates that where immediate action is necessary the Commissioner of Customs has been granted such a power to suspend such licence where an enquiry against such agent is pending or even contemplated. Accordingly we answer the aforesaid question of law to the effect that it is not mandatory that in all cases of suspension Regulation 22(1) ought to be followed. Whereas in cases where immediate action is necessary the Commissioner of Customs is fully empowered to suspend the licence where an enquiry against such an agent is pending or contemplated as per Regulation 20(2). Thus there is absolute no material with regard to involvement of the Respondent-Clearing Agency excepting that it s former employee was collecting illegal gratification for one of the Appraiser. Therefore there is no substance in the Appeal. Appeal stands disposed of.

Summary

Issues:
Appeal against judgment and order of CESTAT regarding suspension of license of Customs House Agent without prior notice as per Regulation 22(1) of Customs House Agents Licensing Regulations, 2004.

Analysis:
1. The main contention in this case was whether the CESTAT was correct in holding that the suspension of license of the Customs House Agent required prior notice as per Regulation 22(1) of the Customs House Agents Licensing Regulations, 2004. The Appellant argued that immediate action was necessary due to misconduct, and prior notice was not mandatory in such cases.

2. The relevant regulations discussed were Regulation 20(1), Regulation 20(2), and Regulation 22(1). Regulation 20(1) allows for revocation of license based on various grounds, including failure to comply with conditions or misconduct. Regulation 20(2) empowers the Commissioner of Customs to suspend a license immediately when necessary, even without prior notice, if an inquiry is pending or contemplated. Regulation 22(1) outlines the procedure for suspending or revoking a license, requiring a written notice to the agent stating the grounds and providing an opportunity to respond.

3. The Commissioner of Customs had suspended the license of the Respondent-Clearing Agency based on a Vigilance Report indicating misconduct by an employee of the agency. The employee was found collecting illegal gratification for an Appraiser, leading to the suspension of the agency's license. However, the agency claimed no involvement in the illegal activities and promptly dismissed the employee. The court noted that immediate action was necessary in this case, as per Regulation 20(2), and prior notice under Regulation 22(1) was not mandatory.

4. The court concluded that there was no substantial evidence implicating the Respondent-Clearing Agency in the illegal activities, and the suspension of their license was justified based on immediate action requirements. It was clarified that Regulation 22(1) did not apply in cases where immediate action was necessary, as allowed under Regulation 20(2). The appeal was dismissed, and no costs were awarded in the case.

This detailed analysis of the judgment highlights the key legal arguments, regulations, and findings in the case regarding the suspension of a Customs House Agent's license without prior notice.