2018 (8) TMI 503 - AT - Customs

Suspension of CHA License - principles of Natural Justice - It is the contention of the appellant that the immediacy warranting prohibition did not exist as the alleged incident occurred five months before and that no opportunity had been granted to them to be heard in their defence - Held that - Once the requisites of law and principles of natural justice are not found wanting in an order under the Regulations, no authority appellate, executive or oversight, should interfere in the operational functioning of a customs house - In disposal of this appeal, our scrutiny shall be limited to conformity with the law and compliance with principles of natural justice in the impugned order. The impugned order makes no express mention of satisfaction that prohibition was necessary in the said circumstances. On the contrary, the a priori conclusion appears to be mere replication of an investigative opinion, not of the Commissioner, and there is a certain thriftiness of expression that implies lack of consideration of the whole. The lapse of time between the incident and prohibition erases the immediacy that is a pre-requisite for resort to the detriment. The Commissioner is not adequately cognizant of the limits of the prohibitory power vested in him. Prohibition is to be imposed for non-fulfillment of obligation in carrying out functions in a section (or sections) of the customs station. And the prohibition is to be restricted to that sections (or sections) of the customs station. It cannot extend to the entire zone as the impugned order does - The correct implementation of this provision may require the authority concerned to obtain from archival record a comprehension of the structural division of customs houses. The order of prohibition for failing to comply with the limitation placed on exercise of power by the Commissioner of Customs under regulation 15 of Customs Broker Licensing Regulations, 2018 set aside - appeal allowed.

Summary

Issues Involved:
1. Maintainability of the appeal before the Tribunal.
2. Jurisdiction of the Tribunal under section 129A of the Customs Act, 1962.
3. Compliance with principles of natural justice.
4. Scope and limits of the Commissioner’s prohibitory power under Regulation 15 of Customs Broker Licensing Regulations, 2018.

Issue-wise Detailed Analysis:

1. Maintainability of the Appeal Before the Tribunal:
The respondent questioned the maintainability of the appeal, arguing that the impugned order is administrative in nature and beyond the scope of section 129A of the Customs Act, 1962. The Tribunal, however, referenced the decision in Eastern Clearing and Forwarding Agency Pvt Ltd v. Commissioner of Customs (General), which directed the revocation of a prohibition order for non-compliance with natural justice principles. The Tribunal concluded that the claim of binding precedent by the respondent does not hold, and the appeal is maintainable.

2. Jurisdiction of the Tribunal Under Section 129A of the Customs Act, 1962:
The Tribunal noted that section 146 of the Customs Act, 1962, governs the institution established to facilitate trade, making it a special law distinct from the rest of the statute. The Tribunal cited the Supreme Court’s decision in Commercial Tax Officer v. Binani Cements Ltd, emphasizing that specific provisions prevail over general ones. The Tribunal concluded that the empowerment to frame Regulations under section 146(2) attaches appeals to an existing appellate mechanism, thus deeming section 129A as repealed in relation to licensed brokers. The Tribunal affirmed its jurisdiction to hear the appeal.

3. Compliance with Principles of Natural Justice:
The appellant argued that the prohibition order was issued without an opportunity to be heard, violating natural justice principles. The Tribunal referenced the Supreme Court’s decision in Assistant Collector of Customs v. Charan Das Malhotra, which mandates an opportunity for the aggrieved entity to be heard. The Tribunal found that the impugned order lacked any mention of such an opportunity, constituting a grave and irreparable lacuna.

4. Scope and Limits of the Commissioner’s Prohibitory Power:
The Tribunal scrutinized the Commissioner’s prohibitory power under Regulation 15. It noted that the impugned order lacked express mention of satisfaction that prohibition was necessary and appeared to replicate an investigative opinion without the Commissioner’s consideration. The Tribunal highlighted that prohibition should be restricted to specific sections of the customs station and not extend to the entire zone, as the impugned order did. This overreach demonstrated a lack of application of mind and exceeded the limits of empowerment.

Conclusion:
The Tribunal set aside the prohibition order for failing to comply with the limitations on the Commissioner’s power under Regulation 15 of the Customs Broker Licensing Regulations, 2018. The Tribunal directed the respondent to serve a copy of the order on the Commissioner to give effect to the decision.