2021 (9) TMI 380 - HC - Customs

Suspension of Customs Broker License - Deemed Suspension or automatic suspension? - validity of respondents action of displaying of Alert in the Customs EDI system - infringement of petitioners right to livelihood and right to carrying on its business - Section 154 of the Customs Act, 1962 - Security deposit has the same nature and character legally as of Duty and Penalty or not - pre-deposit of the penalty amount imposed in the original adjudication order - pre-deposit would amount to automatic stay or revocation of the order of the forfeiture of security deposit passed in the original adjudication order - HELD THAT - The impugned action of suspending Customs Broker Licence of the petitioner which is penal in nature depriving livelihood of the petitioner, is not supported by any provision of law and has no legal sanction and is not sustainable in law since it is settle position of law that every action of the statutory authority must be supported by legal provisions and authorization by the statute and a statutory authority cannot act or do anything which has not been authorised under the law and it shall act only in the manner it has been authorised by law - The impugned order of corrigendum under Section 154 of the Customs Act, 1962 is not sustainable in law since in the name of rectification of clerical or arithmetical or typographical mistake neither any additional penal order of suspension of licence can be inserted nor any fresh condition can be imposed for restoration of Customs Broker licence when the punishment of suspension of licence itself had no existence in the original order of adjudication. Whether the term Security deposit has the same nature and character legally as of Duty and Penalty ? - whether by mere pre-deposit of 7.5% of the penalty amount imposed in the original adjudication order, in filing the appeal would amount to automatic stay or revocation of the order of the forfeiture of security deposit passed in the original adjudication order against which appeal has been filed? - HELD THAT - The term Security deposit cannot be equated with the term Penalty or Duty and their nature and character are totally different since security deposit does not arise out of any demand and Security Deposit is a condition precedent for granting Customs Broker Licence while the Duty and Penalty arise out of a transaction and adjudication proceeding and security deposit has nothing to do with Duty or Penalty which arise out of an adjudication proceeding. Petitioner itself before filing the appeal has made predeposit of 7.5% of the penalty only which was imposed in the adjudication proceeding and not any pre-deposit of any percentage of amount of the security deposit - On perusal of Section 129 E of the Customs Act, 1962, it is found that it talks only about pre-deposit of certain percentage of duty demand or penalty imposed before filing appeal and nowhere it talks anything about the security deposit. Considering the circulars and relevant provisions of Customs Act etc., only by mere pre-deposit of 7.5% of the penalty in filing appeal against the order of adjudication imposing both penalty and forfeiture of security deposit, order of forfeiture of security deposit will not stand stayed/revoked automatically unless specific order of stay of the same or is revoked by the appropriate authority. This position becomes more clear from the conduct of the petitioner that it has made pre-deposit of 7.5% of the penalty only and not pre-deposit of any percentage of amount of security deposit which has been forfeited by the adjudicating authority. There is no existence of any provision of Deemed Suspension or automatic suspension of licence of a Customs Broker under the Customs Act, 1962 or under the Customs Brokers Licensing Regulations, 2018 and action of the respondent Customs authority suspending the Customs Broker Licence of the petitioner infringing the petitioner s right to livelihood is penal in nature and is without any authority of law and is without jurisdiction since respondent Customs authority has failed to show any document of formal order of suspension of Customs Broker licence under Regulation 16 of Customs Brokers Licensing Regulations, 2018 - Regulation 18 (3) of the Customs Brokers Licensing Regulations, 2018 and no other provisions of the said Regulations or the Customs Act does confer any power upon the Commissioner of Customs to waive or dispense with the fulfilment of criteria and compliance of formalities under Regulation 16 (1) (2) of the Customs Brokers Licensing Regulations, 2018, for suspending Customs Broker licence of the petitioner. Petition disposed off.

Summary

Issues Involved:
1. Automatic or deemed suspension of Customs Broker licence.
2. Jurisdiction of the Commissioner of Customs to suspend the licence without following formalities.
3. Power of the Commissioner to waive or dispense with formalities for suspension.
4. Use of Section 154 of the Customs Act, 1962 to impose additional penalties or conditions.
5. Nature and character of "security deposit" compared to "duty" or "penalty."
6. Effect of pre-deposit of penalty on the forfeiture of security deposit.

Detailed Analysis:

Automatic or Deemed Suspension of Licence:
The court found no provision under the Customs Act, 1962, or Customs Brokers Licensing Regulations, 2018, for "automatic" or "deemed suspension" of a Customs Broker licence. The respondents failed to show any formal order of suspension or compliance with Regulation 16 (1) & (2). The court emphasized that statutory authorities must act within the confines of the law.

Jurisdiction of Commissioner to Suspend Licence Without Formalities:
The court held that Regulation 18 (3) does not confer any power upon the Commissioner to waive or dispense with the formalities required under Regulation 16 (1) & (2) for suspending a Customs Broker licence. The respondents could not provide any legal basis for suspending the licence without following the prescribed procedures.

Power to Waive or Dispense with Formalities:
The court concluded that the Commissioner of Customs does not have the discretion to waive or dispense with the formalities required under Regulation 16 (1) & (2) for suspending a Customs Broker licence. The action of displaying "suspension" in the Customs EDI system without a formal order and compliance with the necessary formalities was deemed illegal and unsustainable.

Use of Section 154 for Additional Penalties or Conditions:
The court found that Section 154 of the Customs Act, 1962, cannot be used to impose additional penalties or conditions that were not part of the original adjudication order. The corrigendum issued under Section 154 was invalid as it sought to introduce significant changes rather than correct clerical, arithmetical, or typographical errors.

Nature and Character of Security Deposit:
The court clarified that "security deposit" cannot be equated with "duty" or "penalty." Security deposits are a condition precedent for granting a Customs Broker licence and are not related to any transaction or adjudication proceeding. The court emphasized that the security deposit has a different legal nature and character compared to duty or penalty.

Effect of Pre-deposit of Penalty:
The court ruled that the mere pre-deposit of 7.5% of the penalty for filing an appeal does not automatically stay or revoke the order of forfeiture of the security deposit. The court noted that legal consequences would follow automatically in case of non-compliance with the adjudication order unless there is a specific stay or revocation order from an appropriate authority.

Conclusion:
The writ petition was disposed of with the court ruling that the suspension of the Customs Broker licence was illegal and without jurisdiction. The corrigendum issued under Section 154 was also deemed unsustainable. The court emphasized the need for statutory authorities to act strictly within the bounds of the law and follow prescribed procedures.