2009 (7) TMI 723 - HC - Customs

Suspension of licence Natural Justice Show Cause Notice accorded period of 30 days to CHA to reply. Order of suspension of licence before expiry of said period of 30 days. Petitioner commanded unheard. Held that impugned order of suspension required to be set aside.

Summary

Issues:
1. Alleged evasion of customs duty and misuse of duty exemptions by M/s. Shree Renuka Sugars Limited.
2. Validity of the impugned order suspending the license of the petitioner.
3. Compliance with Customs House Agents Licensing Regulations, 2004.
4. Violation of natural justice in passing the impugned order.
5. Applicability of alternate remedy and discretionary jurisdiction of the court.

Issue 1: Alleged evasion of customs duty and misuse of duty exemptions
The Directorate of Revenue Intelligence (DRI) received intelligence indicating that M/s. Shree Renuka Sugars Limited evaded customs duty by improperly availing duty exemptions during the import of raw cane sugar through Karwar Port in February 2004. The sucrose content in the sugar did not meet Standard Input-Output Norms (SION), allegedly tampered with to meet the specified range. Searches were conducted, and show cause notices were issued to explain the grounds for potential actions.

Issue 2: Validity of the impugned order suspending the license
The petitioner challenged the suspension of their license under Regulation 20(2) of the Customs House Agents Licensing Regulations, 2004. The court held that the impugned order was unsustainable as it was passed after the conclusion of the enquiry, rendering the immediate action provision inapplicable. The order was deemed enforceable only during pending or contemplated enquiries, making it invalid post-enquiry conclusion.

Issue 3: Compliance with Customs House Agents Licensing Regulations
The court emphasized that the power under Regulation 20(2) was interim in nature, applicable when an enquiry is pending, and not post-enquiry conclusion. The impugned order, being enforceable only during an enquiry, was considered unsustainable after the enquiry's completion, making the petitioner liable under the final order of 16-3-2009.

Issue 4: Violation of natural justice in passing the impugned order
The petitioner argued that the impugned order, passed within 30 days of the show cause notice, violated natural justice by not allowing sufficient time for a response. The court agreed, stating that passing the order before the expiry of the notice period condemned the petitioner unheard, necessitating the order's setting aside due to gross violation of natural justice principles.

Issue 5: Applicability of alternate remedy and discretionary jurisdiction
Despite the availability of an alternate remedy, the court exercised its discretionary jurisdiction under Article 226 of the Constitution due to the impugned order's gross violation of natural justice principles. Citing legal precedent, the court held that the existence of an alternate remedy does not bar judicial review in cases of inherent jurisdiction lack, fundamental rights enforcement, natural justice violation, or Act vires questioning.

This detailed analysis highlights the key legal points and arguments presented in the judgment, addressing each issue comprehensively while maintaining the original legal terminology and context.