2017 (8) TMI 767 - HC - Customs

Revocation of CHA licence - forfeiture of security deposit - principles of natural justice - Held that - it cannot be disputed that the principles of natural justice are applicable to the proceedings under the Customs Act as well and if such principles are not complied with that will vitiate the proceedings. Law is settled that in an enquiry when documents are relied on against a person either copies of the documents should be furnished to the person against whom it is sought to be relied on or at least the contents thereof should be disclosed to him - None of the documents including the offence report were furnished to the appellant. Even the contents of these documents were also not disclosed to them. In other words these documents were relied on against the appellant behind their back and thus in violation of principles of natural justice. Statements recorded under Section 108 of the Customs Act - Held that - In terms of Section 138 B (2) of the Customs Act such statements could not have been used in any proceedings under the Act without the person who made the statement being examined as a witness so long as the maker of the statement is available. Insofar as this case is concerned even the department has no case that the makers of the statements who are very much available were examined. If that be so these statements could not have been relied on. The appeal is disposed remitting the matter to the respondent Commissioner who shall appoint an Enquiry Officer who shall conduct a fresh enquiry - appeal allowed by way of remand.

Summary

Issues:
1. Alleged violation of Customs Brokers Licensing Regulations, 2013 leading to revocation of license.
2. Violation of principles of natural justice during the enquiry process.
3. Reliance on statements recorded under Section 108 of the Customs Act without compliance with Section 138 B.

Analysis:

Issue 1: Alleged violation of Customs Brokers Licensing Regulations, 2013 leading to revocation of license:
The appellant, a customs broker, had their license suspended and subsequently revoked based on allegations of contravening various provisions of the Customs Brokers Licensing Regulations, 2013. The appellant denied the allegations, and an enquiry was conducted where findings indicated violations of regulations. The Enquiry Officer recommended revocation of the license under Regulation 18(b) and (c) of the Regulations. The Tribunal upheld the revocation. However, the High Court found discrepancies in the enquiry process that required a fresh examination. The Court remitted the matter back to the Commissioner for a fresh enquiry, emphasizing the importance of following principles of natural justice and providing the appellant with access to all documents relied upon.

Issue 2: Violation of principles of natural justice during the enquiry process:
The appellant contended that the enquiry was conducted in violation of principles of natural justice as they were not provided with all documents relied upon, and the contents of certain documents were not disclosed to them. The Court acknowledged that failure to provide relevant documents to the appellant amounted to a violation of natural justice, which could potentially vitiate the proceedings. The Court highlighted the importance of disclosing all relied-upon documents to ensure a fair enquiry process.

Issue 3: Reliance on statements recorded under Section 108 of the Customs Act without compliance with Section 138 B:
The appellant raised concerns regarding the reliance on statements recorded under Section 108 of the Customs Act without complying with Section 138 B (2), which requires the examination of the statement maker if available. The Court noted that in this case, the statement makers were available but were not examined. As a result, the Court concluded that these statements could not have been relied upon during the proceedings. This finding further supported the decision to remit the matter for a fresh enquiry to ensure compliance with statutory provisions.

In conclusion, the High Court set aside the impugned proceedings, remanding the matter to the Commissioner for a fresh enquiry conducted in accordance with principles of natural justice. The Court emphasized the importance of providing the appellant with access to all relevant documents and ensuring compliance with statutory requirements during the enquiry process.