2024 (8) TMI 1416 - AT - Customs

Time lines for filing SCN - failure to follow the time frame in the present proceedings - Mandatory requirement of issuing the show cause notice within 90 days from the date of receipt of offence report not getting fulfilled - HELD THAT - Regulation 20(7) of the CBLR 2013 is paramateria with the Regulation 17(7) of the present Customs Broker License Regulation, 2018 which is applicable in the present case before - As per the ratio laid down by the Hon ble High Court in M/S. A.B. AGENCIES VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL AND COMMISSIONER OF CUSTOMS 2015 (8) TMI 143 - KERALA HIGH COURT , it is that the time limits set are not mandatory in nature but only directory in nature. Therefore, the view of the appellant cannot be subscribed that the entire proceeding would get vitiated, since the time limit framework has not been followed by Revenue. However, even if these time limits are taken as directory, still we find that the Department has taken unduly high time to issue the show cause notice and to finalise the Order-in-Original even after the Enquiry Report was received from the Deputy Commissioner, Customs. Coming to the facts of the case, admittedly, there are no reference to the present appellant in the show cause notices issued to two importers. As a matter of fact, these show cause notices should have brought in the role, if any, played by the present appellant in the alleged clandestine activities, which the Revenue has failed to do so. Thus, the only point on which the Department is relying upon is the alleged offence committed by the H-cardholder employee who is operating at Chennai, whereas the appellant is located at Hyderabad. The fact that the activity was carried out during the COVID period is also required to be considered, wherein the appellant had to operate with very minimum staff and had no direct control over the transactions being carried out by the employee at Chennai. The revocation of CHA License set aside - the Authorities are directed to immediately restore the CHA License - Though no direct involvement of the appellant is brought out in the entire transaction, but still some part of negligence cannot be ruled out. Therefore, this would call for penalty. However, considering the fact that the appellant has been out of business for more than one year and has suffered loss on account of this, the penalty reduced to Rs. 5,000/-. Appeal allowed in part.

Summary

Issues:
1. Delay in issuing show cause notice and order-in-original by Customs Authorities
2. Compliance with statutory provisions of Regulation 17(7) of CBLR
3. Alleged lack of active role or connivance of the appellant in the offence
4. Vicarious liability of the appellant for acts of its employee
5. Interpretation of time limits as mandatory or directory

Analysis:

1. The appellant raised a preliminary objection regarding the delay in issuing the show cause notice by the Customs Authorities. The appellant argued that the notice was issued beyond the prescribed time frame of 90 days from the date of receipt of the offence report, as required by Regulation 17(1) of CBLR 2018. The appellant contended that the entire proceedings were vitiated due to this delay, as highlighted by the legal representative.

2. The appellant further challenged the delay in passing the order-in-original, citing Regulation 17(7) of CBLR. The appellant pointed out that the order was passed more than 7 months after the submission of the enquiry report, contravening the statutory provision. The appellant asserted that this delay rendered the impugned order legally unsustainable, providing additional grounds for setting it aside.

3. On the merits of the case, the appellant argued that the Department failed to establish the active role or connivance of the appellant in the alleged offence. The appellant highlighted that they were not made co-noticee in the show cause notices issued to the importers, indicating their lack of involvement in the contraventions. The appellant emphasized the absence of any grounds linking them to the offence, asserting their innocence in the matter.

4. The appellant's legal representative also raised the issue of vicarious liability, contending that the appellant was vicariously responsible for the acts of their employee who committed the offence. The appellant argued that the employee's actions should not automatically attribute liability to the appellant, especially considering the circumstances under which the transactions took place during the COVID pandemic.

5. The Tribunal analyzed the interpretation of time limits as mandatory or directory, referencing a judgment of the Hon'ble Telangana and Andhra Pradesh High Court. While acknowledging that the time limits in Regulation 17(7) were not mandatory, the Tribunal noted the undue delay in issuing the show cause notice and finalizing the order-in-original after receiving the enquiry report. The Tribunal considered the impact of these delays on the proceedings, despite the non-mandatory nature of the time limits.

6. In the final decision, the Tribunal set aside the revocation of the Customs House Agent (CHA) License and directed the Authorities to restore it immediately. Acknowledging some negligence on the part of the appellant, the Tribunal imposed a reduced penalty of Rs. 5,000, taking into account the appellant's business losses due to the suspension of the license. The appeal was partially allowed based on these findings.