2022 (2) TMI 372 - HC - Customs

Excess duty drawback - overvaluation of goods - principal allegation against the respondent was that he had not complied the obligations arising under the Regulations 11(b), 11(d), 11(e) and 11(n) of the Customs Brokers Licensing Regulations, 2013 - Regulation 17 of the C.B.L.R., 2018 - HELD THAT - In the case on hand, the inquiry report is filed on 15.07.2019 and the order of revocation of licence and levying of penalty as provided under Regulation 17(7) and 17(8) has been passed on 15.10.2019. It cannot be disputed that the order under Regulation 17(7) and 17(8) has been passed beyond the period of 90 days. To be precise, the order has been passed on the 92nd day after receipt of the inquiry report. Whether the time limit for issuing the show cause notice and for completion of the inquiry report and passing of orders after receipt of the inquiry report are mandatory or directory? - HELD THAT - It is a settled position of law that whenever a statute prescribes or provides that a particular act has to be done within a time frame in a particular manner and also further provides that failure to comply with the requirements of the provision, would lead to a specific consequence then while interpreting such a provision of law, it has to be held that the compliance of the said provision of law is mandatory and not directory and this interpretation is required to be given for the simple reason that the specified consequence would follow if there is no compliance of the provision of law - A reading of Regulation 17 of the C.B.L.R., 2018 makes it very clear that though there is a time limit stipulated in the Regulations to complete a particular act, non-compliance of the same would not lead to any specific consequence. A reading of the Regulation 17 would also go to show that the Inquiry Officer during the course of his inquiry is not only required to record the statement of the parties but also to give them an opportunity to cross-examine and produce oral and documentary evidence. In the event of the respondents not co operating, it would be difficult for the Inquiry Officer to complete the inquiry within the prescribed period of 90 days, as provided under Regulation 17(5) - though the word shall has been used in Regulation 17, an overall reading of the said provision of law makes it very clear that the said provision is procedural in nature and non-compliance of the same does not have any effect. If there is no consequence stated in the Regulation for non-adherence of time period for conducting the inquiry or passing an order thereafterwards, the time line provided under the statute cannot be considered as fatal to the outcome of inquiry. The provisions of Regulation 17 of the C.B.L.R., 2018 is required to be considered as directory and not mandatory - having regard to the finding of fact recorded by the Tribunal to the effect that the department has failed to provide sufficient evidence to show that the respondent had lent the IEC without proper verification and thereby he had violated Regulation 11(d) of C.B.L.R., 2013, the substantial question of law No.4 becomes only academical in the present case, because the respondent cannot be held guilty on the merits of the case for want of sufficient evidence as recorded by the Tribunal. The substantial questions of law Nos.1 to 3 answered in favour of the appellant, the finding of fact recorded by the Tribunal on the merits of the case cannot be interfered with for want of sufficient evidence on record and therefore, the appeal has to fail - appeal stands dismissed.

Issues Involved:
1. Whether the Tribunal is justified in holding that the time limit to pass the order in original within 90 days of the receipt of the inquiry report is correct and justified.
2. Whether Regulation 17, which prescribes the time limit of 90 days for passing the order in original, is mandatory or directory.
3. Whether the Tribunal was justified in holding against the Appellant on the ground of limitation when the respondent adopted dilatory tactics to claim the mileage of limitation under Regulation 17 of CBLR.
4. Whether the Tribunal was justified in holding that lending of IEC is not an offense under the Customs Act, 1962.

Analysis:
1. Time Limit for Passing Order in Original:
The court examined Regulation 17 of the Customs Brokers Licensing Regulations (C.B.L.R.), 2018, which outlines the procedure for revoking a license or imposing a penalty, including the timeline for issuing notices and completing inquiries. The regulation stipulates that the Principal Commissioner or Commissioner of Customs must issue a notice within 90 days from the date of receipt of an offense report, and the Customs Broker must submit a defense within 30 days. An inquiry report must be filed within 90 days from the notice, and the final order must be passed within 90 days from the submission of the inquiry report. The court noted that the order in this case was passed on the 92nd day after the inquiry report, beyond the prescribed 90-day period.

2. Mandatory or Directory Nature of Regulation 17:
The court referred to precedents from the Bombay High Court and the High Court of Calcutta, which held that similar time limits in the Customs Brokers Licensing Regulations, 2013, were directory and not mandatory. The rationale was that the strict adherence to the time frame could be impractical due to various unforeseen circumstances, such as the non-cooperation of the Customs Broker or administrative exigencies. The court concluded that Regulation 17 of C.B.L.R., 2018, should be considered directory, emphasizing that procedural timelines should not invalidate the proceedings if not strictly followed, provided there is a reasonable justification for the delay.

3. Tribunal's Holding on Limitation:
The appellant argued that the delay in completing the inquiry was due to the non-cooperation of the respondent, and thus, the Tribunal should not have held against the appellant on the ground of limitation. The court agreed with this argument, stating that the regulation is procedural and directory, and delays caused by the respondent's tactics should not invalidate the proceedings.

4. Lending of IEC as an Offense:
The Tribunal had found that there was no sufficient evidence to prove that the respondent had knowledge of the lending of the Importer Exporter Code (IEC) and had not obtained necessary documents from the exporters. The court noted that the Tribunal's finding was a factual determination based on the lack of evidence provided by the department. The appellant failed to demonstrate that this finding was incorrect. Therefore, the court held that the question of whether lending of IEC is an offense under the Customs Act, 1962, becomes academic in this case due to the lack of evidence.

Conclusion:
The court answered the first three substantial questions of law in favor of the appellant, holding that Regulation 17 of C.B.L.R., 2018, is directory and not mandatory. However, it upheld the Tribunal's factual finding regarding the lack of evidence on the lending of IEC, leading to the dismissal of the appeal. The court emphasized that procedural timelines should not invalidate proceedings if there is a reasonable justification for delays, and factual findings based on evidence should not be interfered with without sufficient cause.

← Previous Next →