2024 (12) TMI 753 - HC - Customs

Revocation of the license - Forfeiture of security deposit - imposition of penalty - timelines for initiating proceedings for revocation of license - proceedings are beyond the period of ninety days - HELD THAT - The power to suspend the licence is traceable to Regulation 16 (1) of the Customs Brokers Licensing Regulations, 2018. In terms of Regulation 16 (1), the Commissioner of Customs in appropriate cases where immediate action is required, is empowered to suspend the licence of a Customs broker, where an enquiry against such Customs broker is pending or contemplated. No doubt, a preliminary enquiry was conducted by the Customs authorities before suspending the licence on 25.3.2022. The said preliminary enquiry can be construed only for the purpose of the proceedings initiated under Regulation 16 (1). It is also evidenced by documents that after the suspension of the licence, a further enquiry was conducted and an offence report was drawn on 1.9.2022. It is based on the said report, which was drawn on 1.9.2022 that the proceedings for revocation of the licence was initiated by the Customs authorities. A reading of Regulations 16 (1) and 17 of the Customs Brokers Licensing Regulations, 2018 makes it explicitly clear that the powers to suspend the licence and the power to revoke the licence are distinct and different. No doubt, Regulation 17 (1) of the Regulations of 2018 mandates that the notice to revoke the licence has to be issued within a period of ninety days from the date of the report - The mere fact that a preliminary enquiry was conducted for the purpose of ascertaining the facts to determine as to whether a prima facie case for suspension of the licence with immediate effect has been made out or not by itself will not enable the Customs broker to contend that the proceedings for revocation, if any, ought to have been taken within ninety days from the date of the said report. Therefore, we find no merit in the contention raised by the learned counsel for the appellant. A reading of Regulation 17 (1) of the Customs Brokers Licensing Regulations, 2018 shows that the Commissioner of Customs is under an obligation to issue a notice to show cause stating the grounds on which it is proposed to revoke the licence. However, the consequence of not issuing the notice within the aforesaid period is nowhere laid down in the Regulations. A reading of Regulation 10 (n) undoubtedly shows that it is the solemn obligation of the Customs broker to verify the details of the exporter. As a matter of fact, there were other instances also wherein proceedings were initiated against the appellant for revocation of the licence on violation of the Regulations. In other words, the consistent case of the authorities is that the appellant is a habitual offender of the violation of Regulation 10 of the Customs Brokers Licensing Regulations, 2018. It is in the above backdrop that the Tribunal proceeded to consider the appeal and found that the proceedings initiated against the appellant are proper - though it was not within the domain of the Tribunal to have passed the order in the nature which is impugned in this appeal, it is refrained from commenting further on the order, since it meets the interest of justice. It is found that no substantial question of law arises for consideration in this appeal - appellant has not made out a case for entertaining the appeal - appeal dismissed.

Summary

Issues:
1. Challenge to the order revoking the license by the Customs, Excise & Service Tax Appellate Tribunal.
2. Allegations of violation of Customs Brokers Licensing Regulations, 2018.
3. Legal interpretation of the timelines for initiating proceedings for revocation of license.
4. Obligation of Customs broker to verify exporter details.
5. Tribunal's decision to set aside license revocation but uphold penalty and forfeiture of security deposit.

Analysis:

The judgment involves a challenge by a Customs Broker against the order revoking their license issued by the Customs, Excise & Service Tax Appellate Tribunal. The appellant, a licensed Customs broker, was found involved in a case where wooden logs, suspected to be red sanders, were concealed in a consignment of oil tanks meant for export. The Customs authorities suspended the license and later initiated proceedings for revocation based on the violation of Customs Brokers Licensing Regulations, 2018.

The primary contention raised by the appellant was that the proceedings for revocation were time-barred, as the notice to show cause was issued beyond the prescribed ninety days from the date of the offense report. However, the Court held that the powers to suspend and revoke the license are distinct, and the timeline for revocation initiation should be calculated separately from the suspension order date. The Court found no merit in the appellant's argument regarding the limitation period.

Another significant issue addressed was the obligation of a Customs broker to verify exporter details. The appellant argued against this obligation, but the Court emphasized that it is indeed the solemn duty of a Customs broker to verify exporter details as per the regulations. The Court noted that the appellant had a history of violating these regulations, strengthening the case against them.

The Tribunal's decision to set aside the license revocation but uphold the penalty and forfeiture of the security deposit was also discussed. The Court acknowledged that the Tribunal's decision was not entirely within its domain but refrained from further comment as it served the interest of justice. Ultimately, the Court dismissed the appeal, stating that no substantial question of law was raised, and the appellant failed to make a case for appeal.