2018 (12) TMI 1160 - HC - Customs

Suspension of CHA License - case of petitioner is that the third respondent/Inquiry Officer has failed to file the report within 90 days from the date of issuance of the show cause notice - Held that - There is no dispute to the fact that the show cause notice was issued on 13.04.2018. It is also not in dispute that the petitioner filed their reply and participated in the inquiry on 25.04.2018. However, the third respondent prepared the report only on 14.08.2018, which is evident from the perusal of the said report itself, made available in the typed set of papers. Therefore, it is clear that the third respondent has prepared the said report on 14.08.2018, which is undoubtedly beyond the period of 90 days from the date of issuance of the show cause notice. If the petitioner is an habitual offender, as alleged by the Revenue, it is not known as to what prevented the concerned authorities in proceeding against the petitioner by following the mandatory requirements contemplated under law. When there is a lapse on the part of the concerned authority in not making the report within the time stipulated which prevents further proceedings, the Revenue has to blame itself for such lapse, especially when the Courts have held that the period of limitation prescribed under the Regulation, as discussed supra, is mandatory. Therefore, it is for the authorities to be more vigilant in complying with the mandatory requirements under law, while proceeding against an offender without giving room for any lapse even on technicalities. This Court is inclined to set aside the impugned show cause notice dated 13.04.2018 - petition allowed.

Summary

Issues Involved:
1. Validity of the show cause notice dated 13.04.2018.
2. Legality of the suspension order dated 14.03.2018 of the customs broker license.

Issue-wise Detailed Analysis:

1. Validity of the Show Cause Notice:
The petitioner challenged the show cause notice dated 13.04.2018, arguing that the Inquiry Officer failed to file the report within the mandatory 90-day period as required under Regulation 20(5) of the Customs Broker License Rules, 2013. The show cause notice was issued on 13.04.2018, and the petitioner participated in the inquiry on 25.04.2018. However, the report was prepared only on 14.08.2018, beyond the stipulated 90 days. The court referred to Regulation 20(5), which mandates that the inquiry report must be submitted within 90 days from the date of issuance of the notice. The court cited several precedents, including the Division Bench decision of the Delhi High Court in Impexnet Logistic vs Commissioner of Customs (General) and the Division Bench decision of the Madras High Court, which emphasized that the time limits under the Regulations are mandatory. Consequently, the court concluded that the report filed beyond the 90-day period is invalid, and further proceedings based on such a report cannot continue. Therefore, the impugned show cause notice dated 13.04.2018 was set aside.

2. Legality of the Suspension Order:
The petitioner also challenged the suspension order dated 14.03.2018, contending that it was issued without disclosing the necessity for immediate action as required under Regulation 19(1). The court observed that since the inquiry report itself was invalid due to the lapse in the mandatory time limit, the suspension order, which was a follow-up action, could not be sustained. The court noted that the suspension order would automatically cease to operate as a result of setting aside the show cause notice. The court further clarified that setting aside the suspension order does not preclude the Revenue from initiating any other action against the petitioner in accordance with the law. Thus, the suspension order dated 14.03.2018 was also set aside.

Conclusion:
Both the writ petitions were allowed, and the impugned show cause notice dated 13.04.2018 and the suspension order dated 14.03.2018 were set aside on the ground of violation of the mandatory time limits prescribed under the Customs Broker License Rules, 2013. The court did not express any view on the merits of the allegations against the petitioner.