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TMI Blog2015 (10) TMI 2332X X X X Extracts X X X X X X X X Extracts X X X X ..... lant was not new and there was lack of supervision on part of appellant's CFS and no surprise checks were conducted during the night time to ensure that staffs on night duty would remain vigilant - Appellant admitted the role of his employees in illegal act of removal of seized container thus was responsible for every act by their employees - Where immediate action is not required, a prohibitory order can await compliance with requirements of natural justice. Held That:- Principles of natural justice have not been violated - Appellant being custodian of seized container had violated Regulations enshrined in 6(1)(a), 6(1)(f), 6(1)(i), 6(1)(k) and 6(1)(q) of HCCAR, 2009 – Action of Commissioner was fully justified in invoking provisions of Regulation 11(2) as it cannot be said that appellant was not aware of illegal removal of seized container - Employer is liable for acts of its employee in course of employment - Repeated instances of smuggling of goods in appellant’s CFS confirms serious lapses on part of custodian and cannot be overlooked – Commissioner directed to complete the investigation proceedings and pass orders as contemplated under Regulations of HCCAR, 2009 within a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the prevailing customs laws and Handling of Cargo in Customs Area Regulations, (hereinafter it may be referred to as HCCAR, 2009 wherever the context so require). 9. In so far as the present case is concerned, the container bearing No. SEGU 1697558 containing Red Sander logs weighing 9430 kgs was sized by the Directorate of Revenue Intelligence Unit (DIU) under a mahazar, dated 6. 3. 2014 and entrusted with the appellant for safe and secured custody. 10. That on 19. 12. 2004, the said container was removed unauthorisedly from the custody of the appellant by using forged documents. 11. Prima facie, it appeared that the alleged removal of seized goods was due to the gross negligence and utter failure on the part of the appellant for not ensuring safety and security of the seized goods which were kept under their custody. 12. Since the nature of offence was very serious and caused a reasonable doubt on the bona fides of the appellant, the first respondent viz. , the Commissioner of Customs, Chennai, by exercising the powers vested under Regulation 11(2) of HCCAR, 2009, had passed an order on 23. 12. 2014 suspending the custodianship of the appellant. 13. Challengin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified the seals of the container No. HDMU 2601255 in the presence of the independent witnesses and found it intact. Then the container was opened and found to contain wooden logs suspected to be Red Sanders which were prohibited for export. Thereafter, the said container was closed with Customs one time seal and moved to the appellant's CFS, viz. , M/s. Chandra CFS for the detailed examination. 20. That on 14. 2. 2014 the above said container was examined by the appellant CFS in the presence of CHA, Surveyor and two independent witnesses. 21. While so, the container was found to contain 348 numbers of red sander logs totally weighing about 11945 kgs, which were valued at ₹ 1,19,45,000/- and three gunny bags each weighing 25 kgs, containing the plastic granules. The container with the cargo was seized along with the trailer bearing No. TCE 9972 under a mahazar , dated 14. 2. 2014. 22. Nextly, on an information provided by one Mr. B. Vijayabalan, KMK Shipping, a previous consignment pertaining to M/s. Jayam Plast which was already shipped to Malaysia covered under the Shipping Bill No. 9768912, dated 30. 1. 2014 vide container No. SEGU 1697558 through Shipping Line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014, the first respondent, viz. , Commissioner of Customs by virtue of the powers conferred on him under the Regulation 11(2) of HCCAR 2009, had passed an order for immediate suspension of the custodianship vested on the appellant, vide the Public Notice 77/2007, dated 2. 6. 2007 until further orders. 34. It is pertinent to note here that on 29. 12. 2014 a Corrigendum to the order of suspension of Custodianship, dated 23. 12. 2014 was issued by the first respondent, wherein, it is stated that, the existing Import and Export Goods available in the CFS will be allowed to be cleared/exported after completion of necessary Customs formalities. 35. In the interregnum, on a petition filed by the Assistant General Manager of the Appellant under Sections 451 and 457 Cr. P. C. , the learned Judicial Magistrate No. II, Ponneri, had passed an order on 4. 2. 2015 and thereby, interim custody of the said container containing the stolen cargo, namely, 304 Red Sander logs along with 51 bags of cement each containing 50 kgs was given to the appellant CFS on condition that they shall execute a bond to the extent of ₹ 2. 00 crores, as the first respondent police had no objection. 36. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g for the appellant, the impugned order, dated 23. 12. 2014, is an unilateral one as no enquiry was contemplated as against the appellant CFS. 45. Mr. Vijayanarayanan, has projected his arguments on the following grounds:- a. The order of suspension of custodianship of the appellant's CFS was absolutely a gross violation of the tenets of natural justice as the appellant was neither given any pre-decisional nor any post decisional hearing. At present the law was well settled that the principles of natural justice had to be adhered to when any order was passed to the detriment of any person unless the statute had either specifically or by necessary implication excluded the application of principles of natural justice. 46. In support of his contention, he has placed reliance upon the following decisions:- a. Freightwings and Travels Ltd. vs. Commissioner of Customs, Mumbai (2001 (129) ELT 226 (Tri-LB). b. Automative Tyre Manufacturers Association vs. Designated Authority (2011 (263) ELT 481 (S. C. ). c. Pinkcity Logistics Ltd. vs. Commissioner of Customs (2015 (320) ELT 241 (Raj. ). d. International Cargo Services vs. Union of India (2006 (193) ELT 546 (Del. ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is made, is generally read into the provisions of a statute, particularly when the order has adverse civil consequences which obviously cover infraction of property, personal rights and material deprivations for the party affected. The principle holds good irrespective of whether the power conferred on a statutory body or Tribunal is administrative or quasi-judicial. It is equally trite that the concept of natural justice can neither be put in a strait-jacket nor is it a general rule of universal application. Undoubtedly, there can be exceptions to the said doctrine. As stated above, the question whether the principle has to be applied or not is to be considered bearing in mind the express language and the basic scheme of the provision conferring the power; the nature of the power conferred and the purpose for which the power is conferred and the final effect of the exercise of that power. It is only upon a consideration of these matters that the question of application of the said principle can be properly determined. (See: Union of India Vs. Col. J. N. Sinha Anr. 66. ) 50. In Pinkcity Logistics Ltd. , cited third supra, a Division Bench of Rajasthan High Court (Jaipur Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate cases, where immediate action was necessary to suspend the approval granted to a Customs Cargo Service Provider. However, before exercising the power under Regulation 11(2) of HCCAR, 2009, the Commissioner ought to have taken into consideration as to whether an enquiry against such Customs Cargo Service provider was pending or contemplated. 56. In this connection, the learned Senior Counsel has indicated that in the present case, after suspending the custodianship of the appellant on 23. 12. 2014, neither a show cause notice was issued under the provisions of Regulation 12 of HCCAR, 2009, nor any enquiry was initiated and that the Commissioner, had therefore, wrongly stated in the suspension order, dated 23. 12. 2014 that an enquiry was pending or contemplated. Since the Regulation 11(2) was wrongly invoked by the Commissioner, who is the first respondent herein, Mr. Vijayanarayanan, has urged that the impugned order of suspension of custodianship of the appellant's CFS might be set aside. 57. Further, he would submit that no person's right to carry on his profession could be stopped for a prolonged period through a suspension order and that such an approach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also stated that the said act was neither wilful nor wanton and that it was happened under the unforeseen circumstances, which were beyond their control. 66. In this regard, Mr. Vijayanarayanan, has argued that the alleged removal of seized container from the appellant's CFS was not aware of by them and that for the acts committed by their employees, the appellant could not be held responsible. 67. In this connection, he has placed reliance upon the decision in Seetharam Molial Kalal vs. Santanuprasad Jaishaknar Bhat (1996 ACJ 89 (SC). 68. In this case, the Apex Court has held that, the law is settled that a master is vicariously liable for the acts of his servant acting in the course of his employment. Unless the act is done in the course of employment, the servant's act does not make the employer liable. In other words, for the master's liability to arise, the act must be a wrongful act authorised by the master or a wrongful and unauthorized mode of doing some act authorized by the master. . . . 69. He has also adverted to that the first respondent/Commissioner had not proved that the removal of the seized container was done with the knowledge of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... why penal action should not be initiated under Section 114 of the Customs Act, 1962. 76. He has also pointed out that the same modus operandi was applied in the offence case registered against M/s. Jayam Plast, an exporter, who had made an attempt to export the red sanders logs in the container HDMU 2601255 and the same was detained at the container yard of the Chennai Port before loading in the vessel. 77. The said container was also stuffed at the appellant's premises and that the investigation had further revealed that the same modus operandi was adopted in the past for exporting red sanders logs through the container SEGU 1697558, which had already left the country and was called back to India. 78. Upon examination, the container, which is in question in the present case, was found to contain red sanders logs and it was also stuffed at the appellant's premises and the declared cargo was substituted with red sanders logs enroute to Chennai Harbour by tampering the container door but keeping the seals intact. 79. He has also submitted that in so far as the present case is concerned, the conduct of the appellant's CFS had revealed that due to the complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20(2) very clearly indicates that where immediate action is necessary the Commissioner of Customs has been granted such a power to suspend such licence where an enquiry against such agent is pending or even contemplated. Accordingly we answer the aforesaid question of law to the effect that it is not mandatory that in all cases of suspension, Regulation 22(1) ought to be followed. Whereas in cases where immediate action is necessary the Commissioner of Customs is fully empowered to suspend the licence where an enquiry against such an agent is pending or contemplated as per Regulation 20(2). 85. The decision in Pinkcity Logistics Ltd. vs. Commissioner of Customs (2015 (320) ELT 241 (Raj. ) has also been relied upon by Mr. Vijayanarayanan, learned Senior Counsel, in support of the case of the appellant. In this case, the Jaipur Bench of Rajasthan High Court has discussed at length about the Customs House Agents Licensing Regulations, 2004 as well as about the requirements of the principles of natural justice. Since this decision has already been discussed in detail in the foregoing paragraphs, it would be redundant to discuss the same here again. 86. In S. R. Sale's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jayanarayanan, learned Senior Counsel for the appellant and Mr. K. Mohanamurali, learned Standing Counsel for the first respondent. 90. From the submissions made by both the learned counsels, we felt that it has become necessary for us to have reference to Clause 'b' of Regulation 2 of HCCAR, 2009 91. Regulation 2(b) is extracted as under:- (b) Customs Cargo Services provider means any person responsible for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and includes a custodian as referred to in Section 45 of the Act and persons as referred to in sub-section (2) of section 141 of the said Act. 92. Regulation 6 contemplates the, Responsibilities of Customs Cargo Service Provider :- 93. Clauses (a), (f), (i), (k), and (q) of sub-regulation (1) of Regulation 6 assume more importance and read as under:- (1) The Customs Cargo Service provider shall- (a) keep a record of imported goods, goods brought for export or transhipment, as the case may be, and produce the same to the Inspector of Customs or Preventive Officer or Examining Officer as and when required; (f) not permit goods to be removed fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplated. 98. Regulation 12 deals with the, Procedure for suspension or revocation of approval and imposition of penalty . 99. Sub-Regulation 8 of Regulation 12 enacts that, If any Customs Cargo Service provider contravenes any of the provisions of these regulations, or abets such contravention or who fails to comply with any provision of the regulation with which it was his duty to comply, then, he shall be liable to a penalty which may extend to fifty thousand rupees. 100. As we have stated in the foregoing paragraphs, the first question of law is relating to violation of principles of natural justice. 101. What Mr. Vijayanarayanan, learned Senior Counsel has argued is that no showcause notice was issued to the appellant before suspending the custodianship. 102. He has also argued that on 5. 2. 2015, a showcause notice under Section 124 of the Customs Act, 1962 was issued by the customs authority for the alleged violation of the provisions of HCCAR, 2009 without any reference to the order of suspension or any proposal either to continue with the suspension or to cancel the custodianship of the appellant. 103. He has also indicated that the said showcause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of principles of natural justice, because in that event, the Court would not ignore the legislative mandate, the requirement of giving reasonable opportunity of being heard before an order is made, is generally read into the provisions of a statute, particularly when the order has adverse civil consequences which obviously cover infraction of property personal rights and material deprivations for the party affected. 109. On coming to the given case on hand, the impugned order, dated 23. 12. 2014 was issued by the Commissioner of Customs by virtue of the powers conferred on him under Regulation 11(2) of HCCAR, 2009. 110. The operative portion of the impugned order reads that, I order for immediate suspension of the Custodianship vested on the Chandra Container Freight Station and Terminal Operators Pvt. Ltd. , vide the Public Notice 77/2007, dated 2. 6. 2007, until further orders. 111. Regulation 11(2) envisages that the Commissioner of Customs may in appropriate cases where immediate action is necessary, suspend the approval granted to a Customs Cargo Service provider where an enquiry against such Customs Cargo Service provider is pending or contemplated. 112. From th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Customs did not bring the operation of the appellant in a standstill in view of the order passed in corrigendum, dated 29. 12. 2014 and that the appellant was not prejudiced in any way by the impugned order, dated 23. 12. 2014. 121. Keeping in view of the above facts, we have made up our mind to answer the first question of law as against the appellant by holding that the principles of natural justice has not been violated in the case of the appellant. 122. On perusal of the grounds of appeal and the impugned order of CESTAT, dated 29. 6. 2015 against which this appeal is filed and the order, dated 23. 12. 2014, we find that the action of the Commissioner of Customs was fully justified in invoking the provisions of Regulation 11(2) of HCCAR, 2009. 123. It cannot be heard to say that the appellant was not aware of the illegal removal of the seized container from their CFS. Equally, it is not able to be countenanced that the appellant could not be held responsible for the acts committed by their employees. 124. It is trite law that the employer is vicariously liable for the acts of its employee acting in the course of his employment. There are grounds to believe th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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