2015 (1) TMI 444 - AT - Customs

Suspension of CHA License under Regulation 20 (2) of CHALR 2004 - Held that - initial suspension order dated 11.5.2012 was issued under Regulation 20 (2) of CHALR, 2004 and which was continued by the impugned order dt. 6.6.2012 issued under Regulation 20 (3) of CHALR, 2004. It is seen that no proceeding was initiated under Regulation 22 of CHALR, 2004 in so far as no show cause notice was issued to the appellant under Regulation 22 (1) of Regulations 2004, which is required to be issued within 90 days from the date of receipt of offence report. - Following decision of Manjunatha Shipping Services Versus Commissioner of Customs (Imports), Chennai 2013 (10) TMI 1002 - CESTAT CHENNAI this decision was upheld by High Court - impugned suspension order cannot be sustained - Decided in favour of appellant.

Summary

Issues Involved:
1. Validity of suspension order under Regulation 20(2) of CHALR, 2004.
2. Continuation of suspension order under Regulation 20(3) of CHALR, 2004.
3. Requirement of issuing show cause notice under Regulation 22(1) of CHALR, 2004.
4. Compliance with procedural requirements under Regulation 22 of CHALR, 2004.

Issue-wise Detailed Analysis:

1. Validity of Suspension Order under Regulation 20(2) of CHALR, 2004:
The appellant's CHA license was suspended under Regulation 20(2) of CHALR, 2004 due to allegations of impersonation in baggage declarations. The appellant contended that the alleged incident occurred in 2009, and the CHA section received the information in April 2011, with the DIU report being issued only in April 2012. The appellant argued that there was no justification for immediate suspension under Regulation 20(2) given the delay. The Tribunal found that the suspension under Regulation 20(2) is applicable where immediate action is necessary, and an enquiry is pending or contemplated. However, the Tribunal noted that the suspension order did not indicate that an enquiry was pending or contemplated, and no show cause notice was issued even after two years, making the suspension order unsustainable.

2. Continuation of Suspension Order under Regulation 20(3) of CHALR, 2004:
The Commissioner of Customs ordered the continuation of the suspension under Regulation 20(3) of CHALR, 2004. The Tribunal referred to its previous decision in the case of D. Thimmeswara Rao & Others, where it was held that the continuation of suspension should follow the procedure under Regulation 22. The Tribunal emphasized that the continuation of suspension without initiating the enquiry process under Regulation 22 was not justified, particularly as no show cause notice had been issued.

3. Requirement of Issuing Show Cause Notice under Regulation 22(1) of CHALR, 2004:
Regulation 22(1) mandates that the Commissioner of Customs must issue a show cause notice within 90 days from the date of receipt of the offence report. The Tribunal observed that despite the order of the Hon'ble Single Judge of the High Court to follow the procedure under Regulation 22(2), no show cause notice had been issued till date. The Tribunal reiterated that the enquiry process under Regulation 22(1) should commence with the issuance of a show cause notice, which had not been done in this case.

4. Compliance with Procedural Requirements under Regulation 22 of CHALR, 2004:
The Tribunal noted that the procedure under Regulation 22 involves issuing a notice, receiving a written statement from the CHA, and directing an enquiry by the Deputy Commissioner or Assistant Commissioner of Customs. The Tribunal found that the procedural requirements under Regulation 22 were not followed, as no notice was issued despite the suspension order being in place for a prolonged period. The Tribunal cited the decision in Manjunatha Shipping Services Ltd. and concluded that the suspension order was unsustainable due to non-compliance with the procedural requirements under Regulation 22.

Conclusion:
The Tribunal set aside the suspension order, stating that the continuation of the suspension without initiating the enquiry process under Regulation 22 was unjustified. The appeal filed by the appellant was allowed, and the impugned suspension order was deemed unsustainable. The Tribunal emphasized the necessity of issuing a show cause notice and following the procedural requirements under Regulation 22 for the suspension to be valid.