2025 (4) TMI 1099 - AT - Customs

Suspension of the Customs Broker Licence No. R-308/CHA of the appellant under Regulation 19(1) of the Customs Broker Licensing Regulations 2013 (CBLR 2013) - forgery and failure to supervise employees properly - HELD THAT - In view of the Orders of the Hon ble High Court of Madras dated 03.01.2020 2020 (2) TMI 175 - MADRAS HIGH COURT both the impugned orders i.e. suspension order dated 09.06.2015 and the Order-in-Original (order of continuation of the suspension) dated 02.07.2015 have been quashed and so the appeals have become infructuous and need to be closed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the suspension of the Customs Broker Licence No. R-308/CHA of the appellant under Regulation 19(1) of the Customs Broker Licensing Regulations, 2013 (CBLR, 2013) was justified on the grounds of alleged forgery and failure to supervise employees properly.

- Whether the appellant violated Regulation 17(9) and Regulation 11(b) of CBLR, 2013 by failing to exercise necessary supervision over employees and engaging an employee without a valid customs identity card.

- The validity and legality of the continuation of the suspension order by the Commissioner of Customs under Regulation 19(2) of CBLR, 2013.

- Whether the impugned orders of suspension and continuation of suspension were sustainable in light of the findings and relief granted by the Hon'ble High Court of Madras.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification for suspension of Customs Broker Licence under Regulation 19(1) of CBLR, 2013

Relevant legal framework and precedents: Regulation 19(1) empowers the Commissioner of Customs to suspend a Customs Broker's licence if there is prima facie evidence of misconduct or failure to comply with the provisions of the Customs Broker Licensing Regulations. Regulation 17(9) mandates that a Customs Broker must exercise necessary supervision over employees and is responsible for their acts or omissions. Regulation 11(b) requires that business in the Customs Station be transacted either personally or through an employee duly approved by the Customs authorities.

Court's interpretation and reasoning: The Commissioner of Customs found prima facie evidence of forgery involving an "open chit" document used for container clearance. The Customs Broker's employee forged the signature of the CFS clerk and obtained other signatures on the forged document. Additionally, an employee without a valid customs identity card was found transacting customs business. These acts constituted a failure to supervise employees properly and a breach of licensing regulations.

Key evidence and findings: The complaint by the custodian M/s. German Express Shipping Agency, investigation by the SIIB, and admission of forgery by the Customs Broker's staff were pivotal. The presence of an unapproved employee working in the customs area further substantiated the allegations.

Application of law to facts: The Customs Broker was held responsible for the acts of its employees under Regulation 17(9), and engaging an unapproved employee violated Regulation 11(b). The prima facie case warranted suspension of the licence under Regulation 19(1).

Treatment of competing arguments: The appellant contested the suspension, arguing procedural and substantive grounds. However, the Commissioner relied on the regulatory provisions and evidence of misconduct to justify suspension.

Conclusions: The suspension order dated 09.06.2015 was initially justified on the basis of prima facie misconduct and regulatory violations.

Issue 2: Continuation of suspension under Regulation 19(2) of CBLR, 2013

Relevant legal framework and precedents: Regulation 19(2) allows the Commissioner to continue suspension pending enquiry or further orders if misconduct is established.

Court's interpretation and reasoning: The Commissioner observed that the misconduct by the employee amounted to failure in supervision, thereby justifying continuation of suspension. The order-in-original dated 02.07.2015 reiterated the findings and extended the suspension.

Key evidence and findings: The same evidence of forgery and unauthorized employee engagement was relied upon.

Application of law to facts: Given the prima facie violations, continuation of suspension was deemed appropriate under the regulatory framework.

Treatment of competing arguments: The appellant challenged the continuation order, but the Commissioner maintained that suspension was necessary to uphold regulatory discipline.

Conclusions: The continuation of suspension was consistent with the regulatory provisions and the findings of initial misconduct.

Issue 3: Legality and validity of the impugned orders in light of the Hon'ble High Court of Madras' decision

Relevant legal framework and precedents: Judicial review under Article 226 of the Constitution of India allows High Courts to quash administrative orders if found illegal, arbitrary, or beyond limitation periods.

Court's interpretation and reasoning: The Hon'ble High Court of Madras quashed both the suspension order dated 09.06.2015 and the continuation order dated 02.07.2015. The Court noted that the impugned notice dated 07.07.2015 was issued beyond the period of limitation and that there was no justification for keeping the licence suspended any longer.

Key evidence and findings: The High Court relied on the procedural lapse regarding limitation and considered the appellant's challenge to the suspension.

Application of law to facts: The High Court's decision effectively nullified the basis for suspension and continuation, thereby restoring the appellant's licence.

Treatment of competing arguments: While the Department reiterated the findings of misconduct, the High Court prioritized procedural safeguards and limitation norms, leading to quashing of the orders.

Conclusions: The impugned orders were quashed by the High Court, rendering the appeals before the Tribunal infructuous.

3. SIGNIFICANT HOLDINGS

"The mis-conduct of the employee by way of forgery amounts to failure in exercising such supervision as may be necessary to ensure the proper conduct of the employees of the Customs Broker in the transaction of business, the Customs Broker shall be held responsible for all acts or omissions of his employees during their employment."

"The impugned notice dated 07.07.2015 is liable to be quashed as being issued beyond the period of limitation."

"There is no justification keeping the petitioners' license suspended any longer. Therefore, impugned order dated 09.06.2015 is also quashed."

Core principles established include the strict responsibility of Customs Brokers under Regulation 17(9) to supervise employees and the requirement that all employees transacting customs business must be duly approved under Regulation 11(b). However, administrative orders suspending licences must comply with procedural requirements including limitation periods to withstand judicial scrutiny.

Final determinations: The Tribunal, in view of the High Court's quashing of the suspension and continuation orders, held that the appeals had become infructuous and closed the proceedings accordingly.