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TMI Blog2019 (9) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... it is now necessary to go into the root of the matter. The vexed question as to whether a particular provision in a statute is mandatory or directory has come up time and again before Courts under different circumstances. One of the earliest cases to draw the attention of the Constitution Bench of the Supreme Court was DATTATRAYA MORESHWAR VERSUS STATE OF BOMBAY [ 1952 (3) TMI 32 - SUPREME COURT] . The Court in that case created a dichotomy between (i) the provisions of statutes creating public duties and (ii) those conferring private rights. The provisions of statutes creating public duties were held to be directory and those conferring private rights were considered mandatory - In RAZA BULAND SUGAR CO. LTD. VERSUS MUNICLPAL BOARD, RAMPUR [ 1964 (10) TMI 82 - SUPREME COURT] , another Constitution Bench of the Supreme Court, without referring to the dichotomy created in Dattatreya Moreshwar laid down certain independent tests. The petitioner contended that if the time prescribed by Regulation 20 (7) is not held to be mandatory, there can be no check on the power of the authority and they can pass orders at any time they like. In fact, he went to the extent of contending that the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arma, learned Senior Standing Counsel appearing for the respondents. 3. The petitioner holds a licence as a Customs Broker, under Hyderabad Customs, with permission to transact operations by Mumbai Customs Zone. 4. An offence report was received by Customs Broker Section (CBS), Mumbai from the Directorate of Revenue Intelligence (DRI), Mumbai on 24-01-2017 alleging that the petitioner was carrying out clearances of undervalued assorted consumer goods that were imported from China by using fake Import Export Code (IEC) obtained in the name of M/s. Victor Enterprises. A copy of the offence report along with the relied upon documents and enclosures were forwarded by CBS, Mumbai to the Customs Commissionerate, Hyderabad, vide letter dated 18-8-2017. 5. Therefore, a show cause notice dated 11-10-2017 was issued to the petitioner calling upon them to show cause as to why the Customs Broker Licence given to them shall not be revoked in terms of Regulation 18(1) read with Regulation 20 of the Customs Brokers Licensing Regulation (CBLR), 2013, for contravention of the provisions of Regulations 11(a), 11(e), 11(k) and 11(n) of the CBLR, 2013. The petitioner submitted a reply dated 06-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of the power conferred by sub-section (2) of Section 146 of the Customs Act, 1962, the Central Board was issuing regulations from time to time. A set of regulations issued in the year 2004 known as "Customs House Agents Licensing Regulations, 2004" were superseded in the year 2013 by a set of regulations known as "Customs Brokers Licensing Regulations, 2013". 13. Regulation 18 of these Regulations empowers the Commissioner of Customs to revoke the licence of a Customs Broker on certain grounds, with which we are not concerned in the present case. Regulation 19 empowers the Commissioner even to order the suspension of the licence of a Customs Broker, when an enquiry against such agent is pending or contemplated. 14. Regulation 20 prescribes the procedure for revocation of licence and for imposition of penalty. It reads as follows: "20. Procedure for revoking licence or imposing penalty.- (1) The Commissioner of Customs shall issue a notice in writing to the Customs Broker within a period of ninety days from the date of receipt of an offence report, stating the grounds on which it is proposed to revoke the licence or impose penalty requiring the said Customs Broker to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Broker, pass such orders as he deems fit either revoking the suspension of the license or revoking the licence of the Customs Broker or imposing penalty not exceeding the amount mentioned in regulation 22 within ninety days from the date of submission of the report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, under sub-regulation (5) : Provided that no order for revoking the license shall be passed unless an opportunity is given to the Customs Broker to be heard in person by the Commissioner of Customs." 15. The steps to be taken by the Commissioner of Customs and the time limit prescribed for him to take action, before revoking the licence and imposing a penalty upon the Customs Broker, can be easily understood if presented in a tabular column as follows: Steps to be taken/Procedure to be followed Time limit 1. Receipt of offence report --- 2. Commissioner to issue notice to the Customs Broker Within 90 days of receipt of offence receipt 3. Customs Broker to submit a written statement of defence also specifying whether he wishes to be heard in person Within 30 days of receipt of show cause notice 4. Commissioner to direct the Deputy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l date of receipt of the offence report was not established by the respondents and that there was no rationale as to why the Mumbai Commissionerate which issued a prohibition on 17-3-2017 kept quiet till August, 2017 to send a copy of the offence report. 19. But the aforesaid contention of the learned counsel for the petitioner borders on disputed questions of fact. If the petitioner had chosen to go before the CESTAT by way of an appeal they could have raised these submissions. The petitioner has taken the risk of limiting their contentions only to admitted facts and hence we have to go by the assertion made by the respondents that the offence report was received only on 18-8-2017 and that therefore there was no violation of Regulation 20 (1). 20. The second contention of the learned counsel for the petitioner is that no opportunity to cross-examine the witnesses was granted, despite the petitioner making a request. We have already seen that under Regulation 20(4) a Customs Broker is entitled to cross-examine the witnesses. But Regulation 20 (4) is carefully worded. The entitlement of the Customs Broker to cross-examine, is confined only to "persons examined in support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms Act, 1962 which is admissible evidence in the Court of law." 22. Paragraphs-24, 25 and 26 of the enquiry report also shows that the Enquiry Officer was persuaded to hold the petitioner guilty of violation of the Regulations, on the basis of the oral testimony of the aforesaid witnesses. Therefore, the condition precedent under Regulation 20 (4) for considering the request of the Customs Broker for cross-examination, stood satisfied. Hence, the petitioner became entitled to cross-examination of these witnesses. 23. But unfortunately, the request for cross-examination was rejected by the Enquiry Officer for the reasons stated in paragraph- 27 of his report. Paragraph-27 of the enquiry report reads as follows: "27. As the request for cross-examination of witnesses was made to the Assistant Commissioner (Inquiry Officer) during the 4th PH, necessary correspondence to facilitate the same on 08-01-2018 were made as detailed in para-17 above. While the noticee has further requested for a fresh date and time for cross-examination with at least one week notice; but since the inquiry report has to be submitted within a period of 90 days from the date of issue of Notice as per Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt dated 10-01-2018 was received on 12-01-2018 and that the impugned order was passed only on 03-7-2018, which was clearly beyond the period of ninety days. 27. But the explanation sought to be given by the Department is that the petitioner went on dragging the matter and eventually gave a representation to the enquiry report only on 06-04-2018 and that therefore the petitioner who prevented the 1st respondent from discharging his duties within the timeframe, cannot take advantage of his own wrong. 28. But the above explanation is hardly convincing. We have extracted in the tabular column the timeline within which every single step prescribed in Regulation 20 had to be followed. Under Regulation 20(6), a copy of the enquiry report should be furnished to the Customs Broker specifying a period of not less than thirty days to make a representation against the report. If he did not submit a representation within the time stipulated in the notice under Regulation 20(6), it was open to the Commissioner to proceed to pass orders after providing an opportunity to be heard in person as per the proviso under sub-regulation (7). There was no impediment for the 1st respondent to do this. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 32. Interestingly, another judgment of the Madras High Court in A.M. Ahamed & Co., v. Commissioner of Customs (2014 (309) ELT 433) authored by one of us (VRSJ) is also sought to be pressed into service by the petitioner. But the Court was concerned in that case with Regulation 22 (1) of the 2014 Regulations and it was made clear in paragraph 24 of the said decision that the question of mandatory or directory nature of the Regulations was not raised. In other words, the decision of the Madras High court in A.M.Ahamed & Co did not go into the question whether the Regulation is mandatory or directory. No other court may be more competent to say so, since one of us (VRS) was the author of A.M.Ahamed & Co. 33. Thus that there are conflicting views of different High Courts, with Madras and Delhi being on one side and Bombay and Calcutta being on another side, on the question whether the Regulation is mandatory or directory. Therefore, it is now necessary to go into the root of the matter. 34. The vexed question as to whether a particular provision in a statute is mandatory or directory has come up time and again before Courts under different circumstances. One of the earliest ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M.R.F. Ltd v. Manohar Parrikar. 37. In Sharif-Ud-Din v. Abdul Gani Lone AIR 1980 SC 303, the Supreme Court held that the question whether a provision of law is mandatory or not depends upon (i) its language, (ii) the context in which it is enacted and (iii) its object. The Court went on to hold as follows: "In order to find out the true character of the legislation, the Court has to ascertain the object which the provision of law in question is to sub-serve and its design and the context in which it is enacted. If the object of a law is to be defeated by non-compliance with it, it has to be regarded as mandatory. But when a provision of law relates to the performance of any public duty and the invalidation of any act done in disregard of that provision causes serious prejudice to those for whose benefit it is enacted and at the same time who have no control over the performance of the duty, such provision should be treated as a directory one. Where however, a provision of law prescribes that a certain act has to be one in a particular manner by a person in order to acquire a right and it is coupled with another provision which confers an immunity on another when such act is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e his own sweet time to pass orders, is actually a concern that was expressed even by the Supreme Court, in para 10 of its decision in Chander Sain. In paragraph 10 of its decision in Chander Sain, the Supreme Court after extracting the relevant portion of the decision in Dattatreya Moreshwar, stated as follows: "Of course that does not mean that the Public Analyst can ignore the time-limit prescribed under the rules. He must in all cases try to comply with the time-limit. But if there is some delay, in a given case, there is no reason to hold that the very report is void and on that basis to hold that even prosecution cannot be launched." 42. Therefore, if the tests laid down in Dattatreya Moreshwar, which have so far held the field, are applied, it would be clear (i) that the time limit prescribed in Regulation 20 (7) is for the performance of a public duty and not for the exercise of a private right; (ii) that the consequences of failure to comply with the requirement are not spelt out in Regulation 20(7) (iii) that no prejudicial consequences flow to the aggrieved parties due to the non-adherence to the time limit; and (iii) that the object of the Regulations, the nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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