2025 (4) TMI 526 - AT - Customs

Revocation of Customs Broker License - forefeiture of security deposit - levy of penalty - alleged breach of timelines obligations enumerated in regulation 10 of Customs Broker Licensing Regulations 2018 - HELD THAT - In the instant case notice was issued on 22nd May 2023 well beyond the 90 days from receipt of offence report stipulated for initiating action. Furthermore the report dated 28th November 2023 was also submitted beyond the 90 days from the date of show cause notice prescribed for completion of inquiry. It is also seen that the revocation order dated 12th June 2024 exceeded the 90 days from the date of enquiry report mandated for completion of the process. There was thus patent breach of timelines at every stage of the proceedings. On perusal of the impugned order there is no finding that the acts omission or commission on the part of the customs broker was cause of one or more of the delays. The Hon ble High Court of Bombay in Principal Commissioner of Customs (General) Mumbai v. Unison Clearing P Ltd 2018 (4) TMI 1053 - BOMBAY HIGH COURT held that the timelimit contained in Regulation 20 cannot be construed to be mandatory and is held to be directory. As it is already observed above that though the time line framed in the Regulation need to be rigidly applied fairness would demand that when such time limit is crossed the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the timelimit was not adhered to. In addition to the circumstances failing to portray any delay occasioned by dereliction on the part of the customs broker there is no explanation whatsoever in the impugned order justifying the delay as unavoidable and beyond human control. Conclusion - The timelines specified in the Customs Broker Licensing Regulations 2018 are directory and not mandatory. The licensing authority failed to justify the delays and that the customs broker was not responsible for any procedural delays. The impugned order is set aside - appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

1. Whether the timelines prescribed under the Customs Broker Licensing Regulations, 2018 for issuing notices, completing inquiries, and issuing revocation orders are mandatory or directory.

2. Whether the customs broker, M/s M D Ruparel & Son, was responsible for any delay in the proceedings and if the revocation of their license was justified.

3. Whether the Principal Commissioner of Customs (General) was justified in revoking the customs broker's license and imposing penalties despite the inquiry officer's report indicating that none of the charges were proven.

ISSUE-WISE DETAILED ANALYSIS

1. Timelines under the Customs Broker Licensing Regulations, 2018

The relevant legal framework involves the Customs Broker Licensing Regulations, 2018, particularly Regulation 14 concerning license revocation and Regulation 10 outlining the obligations of customs brokers. The timeline for various procedural steps is detailed in these regulations.

The Tribunal examined whether the timelines stipulated in the regulations are mandatory or directory. The Court referenced the judgment of the Bombay High Court in Principal Commissioner of Customs (General), Mumbai v. Unison Clearing P Ltd, which discussed the use of the word "shall" in regulations and whether it should be interpreted as mandatory or directory. The Court noted that the purpose of the timelines is to ensure timely proceedings and to protect the rights of customs brokers.

In the present case, the Tribunal found that the notice, inquiry report, and revocation order were all issued beyond the prescribed timelines, indicating a breach at every stage of the proceedings. The Tribunal concluded that the timelines should be considered directory, allowing for some flexibility, especially when delays are justified and not caused by the customs broker.

2. Responsibility for Delay and Justification for Revocation

The Court examined whether the customs broker was responsible for any delays in the proceedings. The Tribunal found no evidence that the customs broker contributed to the delays. The impugned order lacked any findings attributing the delays to the customs broker.

The Tribunal also considered whether the Principal Commissioner of Customs (General) provided any justification for the delays. The Court found no explanation in the impugned order that the delays were unavoidable or beyond human control. The absence of such justification was deemed an irresponsible discharge of responsibilities by the licensing authority.

3. Justification of Revocation and Penalties

The Tribunal assessed whether the revocation of the customs broker's license and the imposition of penalties were justified. The inquiry officer's report had concluded that none of the charges against the customs broker were proven. Despite this, the Principal Commissioner issued a disagreement memo and proceeded with revocation and penalties.

The Tribunal noted that without a valid justification for the delay and without evidence of misconduct by the customs broker, the revocation and penalties were not tenable. The Tribunal emphasized that procedural fairness requires that any deviation from timelines must be justified, and the customs broker's rights must be protected.

SIGNIFICANT HOLDINGS

The Tribunal held that the timelines specified in the Customs Broker Licensing Regulations, 2018, are directory and not mandatory. This interpretation allows for flexibility in procedural timelines, provided that any delays are justified and not caused by the customs broker.

The Tribunal set aside the impugned order, finding that the licensing authority failed to justify the delays and that the customs broker was not responsible for any procedural delays. The revocation of the license and the imposition of penalties were deemed unjustified.

The Tribunal reiterated the principle that procedural timelines must be adhered to, but fairness demands that deviations be justified with reasons. The decision underscores the importance of protecting the rights of customs brokers and ensuring that licensing authorities are held accountable for unjustified delays.

In conclusion, the Tribunal allowed the appeal, setting aside the order of revocation and penalties against the customs broker, M/s M D Ruparel & Son.