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TMI Blog2011 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... to apply for a licence as CHAS. A person who seeks a licence after the enforcement of the Regulation of 2004 must therefore comply with the requirements of the new regulations.Decided against assessee. - W.P. (Lodg) No. 1522 OF 2011 - - - Dated:- 7-12-2011 - Dr. Shri D.Y. Chandrachud and Shri A.A. Sayed, JJ Represented by: Mr. Vikram Nankani with Mr. Jitendra Motwani and Mr. Sushanth Murthy for Appellant Mr. Pradeep S. Jetly for Respondent JUDGEMENT Per: Shri D.Y. Chandrachud: 1. The First Petitioner is an association of Customs House Agents (CHAs). The Second and Third Petitioners are members of the First Petitioner both of whom passed a written examination conducted under Regulation 9 of the Customs House Agents Licensing Regulations 1984. In these proceedings under Article 226 of the Constitution the Petitioners have sought to impugn (i) The constitutional validity of Regulations 8 and 15 of the Customs House Agents Licensing Regulations 2004; (ii) A notification dated 8 April 2010 issued by the First Respondent; and (iii) A public notice issued on 15 June 2011 by the Commissioner of Customs. Briefly stated, the issue which is raised by the Petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him to act as Customs House Agents, in the month of January every year for clearance work falling in his jurisdiction. Under Regulation 5, if the applicant was either a firm or a company the application was to inter alia contain the name of a duly authorized employee or, as the case may be, a partner, director or manager who would actually be engaged in the clearance of goods or conveyances through the customs. Regulation 6 spelt out the conditions to be fulfilled by each applicant. Under Regulation 8 a temporary licence was required to be granted initially for a period of one year. An examination was provided in Regulation 9 under which either the holder of a temporary licence in the case of an individual and the person or persons who would be actually engaged in the work of clearance on behalf of the firm or the company which held a temporary licence were to qualify in an examination within a period of two years availing of not more than three chances. The subjects of the examination included the following : "(a) preparation of various kinds of bills of entry and shipping bills; (b) arrival entry and clearance of vessels; (c) tariff classification and rates of duty; (d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s House Agents Licensing Regulations 2004 on 23 February 2004. The new regulations of 2004 were framed pursuant to the recommendations of the Kelkar Committee. The Committee had recommended that there should be a review of the technical qualifications of Customs House Agents. The Central Board of Excise and Customs revisited the earlier regulations and while notifying the new regulations of 2004 considered that there was a need to ensure upgradation of levels of competencies and knowledge on the part of CHAs. The new regulations do not provide for a restriction on the number of CHAs since it is considered that market forces should govern the number of proficient and qualified persons required to carry out the job of CHAs commensurate with the volume of import and export cargo. The new regulations of 2004 stipulate in Regulation 3 that no person shall carry on business as a CHA relating to the entry or departure of a conveyance or the import or export of goods at any customs station unless such person holds a licence granted under the Regulations. Regulation 6 stipulates the conditions to be fulfilled by each applicant and is to the following effect : "6. Conditions to be fulfille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Assistant Commissioner of Customs. 6. On 8 April 2010 the provisions of Regulation 8 were amended. In Regulation 8, clause (9) came to be introduced to the following effect : "(9) Notwithstanding anything contained in these regulations, any person who had passed the examination conducted in regulation 9 of the Customs House Agents Licensing Regulation, 1984, and has not yet been granted license under these regulations, upon declaring successful in a written examination conducted on the following subjects, shall be deemed to have passed the examination referred to in regulation 8 for the purpose of these regulations. (a) The Patents Act, 1970 and Indian Copyright Act, 1957; (b) Central Excise Act, 1944; (c) Export promotion schemes; (d) Procedure on appeal and revision petition; (e) Prevention of Corruption Act, 1988; (f) Online filing of electronic Customs declarations; (g) Narcotic Drugs and Psychotropic Substances Act, 1985; and (h) Foreign Exchange Management Act, 1999." 7. Following the amendment a public notice was issued on 15 June 2011 by the Commissioner of Customs, Mumbai inviting applications for the grant of new Customs House Agents licences und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the requirement that persons who have passed the examination under the earlier regulations of 1984 must appear in and pass an examination in certain additional subjects as a condition precedent to the grant of a new licence is arbitrary and violative of the fundamental rights conferred by Articles 14 and 19(1)(g) of the Constitution. 10. On the other hand, Counsel appearing on behalf of the Respondents has adverted to the background and rationale underlying the enforcement of the new regulations in 2004. Learned counsel submitted that - (i) The new regulations of 2004 were brought into force following the recommendations of the Kelkar Committee which suggested a review of the qualifications for CHAs; (ii) A candidate who had passed the examination held under the 1984 regulations, but has not been granted a licence under those regulations had no vested right to obtain a licence; (iii) Upon the enforcement of the new regulations in 2004 the rights which have enured to persons who had been granted licences under the 1984 regulations have been saved. Similarly, a person who on the strength of having passed the earlier examination had obtained employment with a licensee would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the conduct of an examination. Every applicant who fulfills the requirements of Regulations 5 and 6 is required to appear for the examination. The regulations of 2004 have been further amended on 8 April 2010 to stipulate that a person who had passed the examination conducted under Regulation 9 of the erstwhile regulations but had not yet been granted a licence would be deemed to have passed the examination referred to in Regulation 8 of the new regulation upon passing an examination in certain additional subjects. 13. The mere passing of an examination held under the regulations of 1984 would not render a candidate eligible to obtain a licence under the regulations of 2004. The regulations of 2004 superseded the earlier regulations and stipulated the passing of an examination as provided for in Regulation 8. Amended Regulation 8(9), however, stipulates that a candidate who had passed the examination held under the Regulations of 1984 would be deemed to have passed the examination held under Regulation 8 of the 2004 regulations subject to passing in certain additional subjects. This was a concession which was granted to candidates who had passed the examination held under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the requirement of passing an examination in additional subjects is lacking in an intelligible rationale. The requirement has a reasonable nexus with the object which is sought to be achieved viz. to ensure that CHAs who seek a licence for the first time after the issuance of the regulations of 2004 fulfill the requirement of competencies, knowledge and skills. 14. Section 159A of the Customs Act 1962 stipulates that where any rule, regulation, notification or order made under the Act or any notification or order issued under a rule or regulation is amended, repealed, superseded or rescinded, then, unless a different intention appears, such amendment, repeal, supersession or rescinding, shall not affect the previous operation of the rule, regulation, notification or order or affect any right, privilege, obligation or liability acquired, accrued or incurred, under any rule, regulation, notification or order so amended, repealed, superseded or rescinded. The regulations of 2004 are consistent with the mandate of Section 159A. A person who has passed the examination which has been held under the regulations of 1984 and has obtained employment with a licensee who has a licence und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the appeal filed by the department. Besides this, it has also been stated in the further affidavit dated 11 November 2011 that in Mumbai 40 persons who had qualified under the 1984 regulation appeared pursuant to a special examination conducted by the Customs House on 15 July 2010 of whom 13 were declared to have passed the examination. 16. In a further affidavit dated 11 November 2011 it has been stated that the Deputy Commissioner of Customs, Bhopal has clarified that four CHA licences had been issued to persons who had cleared the examination held under the 2004 regulations. The Assistant Commissioner of Customs, Mangalore has stated that CHA licences were issued to two applicants who had passed the examination under the 1984 regulations, and that the said two cases are under review. No case of discrimination has hence been made out. 17. Four Supreme Court decisions have been relied on by the petitioners. These decisions enunciate well settled principles of constitutional law under Article 14 of the Constitution. In Suneel Jatley v. State of Haryana (1984) 4 SCC 296, the Supreme Court held that the state is not permitted to make a facile distinction between two class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent with the view taken by a Division Bench of the Madras High Court in C.V. Karunakaran v. Chairman, Central Board of Excise and Customs 2010 (249) E.L.T. 324 (Mad.). The Division Bench of the Madras High Court presided over by Mr. Justice H.L. Gokhale (as His Lordship then was) held that an applicant who had passed the examination held under the regulations of 1984 had no vested right to obtain a licence. Such an applicant had at best an opportunity to apply for licences which could not be treated as a vested right. A contrary view has been taken in a judgment of a Division Bench of the Gujarat High Court in D.N. Thakkar v. Union of India (Special Leave Application 6152 of 2010 and connected cases) decided on 13 July 2010. Leave has been granted by the Supreme Court to appeal against the judgment of the Gujarat High Court. The Gujarat High Court has held that persons who had cleared the examination which was held under Regulation 9 of the 1984 regulations and were otherwise qualified for the grant of a licence subject to fulfillment of certain conditions fell in one class. Such persons were working in some capacity or other with regular licence holders. According to the judgment, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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