9911796707
TMI Blog2023 (10) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... have informed that M/s. Aditya Exports, a partnership firm of Shri Mehul Pujara and Shri Naimish Sodha, engaged as a warehousing unit in Kandla Special Economic Zone, was de facto controlled and operated by Shri Pankaj Thakkar, one of the partners of appellant firm; that during October, 2022 and March, 2023, the said M/s Aditya Exports cleared imported Black Pepper from Kandla Special Economic Zone into DTA by wrongly claiming that the said goods were of Afghan origin and thereby, availing benefit of NIL rate of duty on the said goods in a wrongful manner; that the shipping agents stated before DRI that the goods had sailed for India from Jebel Ali and the Bills of Lading showing the port of loading as Bandar Abbas were fake; that the two partners of M/s Aditya Exports stated that all the business was carried out by Shri Pankaj Thakkar only; that Shri Vijay Rathod, an employee of appellant stated that he looked after accounting work of M/s Aditya Exports on the instructions of Shri Pankaj Thakkar, that Shri Sanjeev Roy, employee of M/s Aditya Exports stated that he was hired by Shri Pankaj Thakkar to perform Customs related work of M/s. Aditya Exports and was paid salary by M/s Adi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his individual capacity and not against the appellant, i.e. M/s Krishna Shipping and Allied Services. As a matter of fact, M/s. Krishna Shipping and Allied Services was never appointed as Custom Broker in connection with clearance by M/s Aditya Exports from KASEZ. A decision of Hon'ble Tribunal in the case of Sun Clearance Agency v/s Commissioner of Customs (General), Mumbai, 2023 (8) TMI 360 - CESTAT Mumbai was cited. (v) Regulation 17(9) of CBLR,2013 was erroneously invoked as CBLR,2013 had ceased to exist. 7. Ld. Commissioner after consideration passed the impugned order for continuing the suspension of the Custom Broker Licence granted to appellant. 8. Appellants took the following grounds in appeal during hearing:- 9. The impugned order lacks jurisdiction to suspend Custom Broker and Licence in the facts and circumstances where no clearance of imported goods has taken place on the strength of the Licence. 9.1 The appellant submit that Ld. Commissioner has erred in failing to take into consideration provisions of Regulation 10 (a) of Customs Brokers Licensing Regulations, 2018. The same is reproduced below for the case of ready reference: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignored the expression "in the transaction of business" appearing in Regulation 13 (12) of CBLR,2018 and passed orders for suspension of the Custom Broker Licence without alleging and establishing that the assumed and alleged acts of Shri Pankaj Thakker were in the course of transaction of Custom Broker business of the appellant in relation to goods imported and cleared by M/s. Aditya Exports and/or DTA units. Ld. Commissioner has nowhere found that the alleged acts of Shri Pankaj Thakkar were in the course of transaction of Custom Broker business of appellant with regard to M/s. Aditya Exports. Therefore, merely because it is alleged that Shri Pankaj Thakker is the alleged mastermind and beneficiary of the entire fraud, the same cannot automatically result in immediate suspension of the Custom Broker Licence given to appellant without even establishing that the alleged acts of Shri Pankaj Thakkar were in the transaction of business of the appellant as Customs Broker. A harmonious reading of Regulation 13 (12) would inform that any act of employee which is not in the course of transaction of Custom Broker business and where there is no authorization to act as Custom Broker, is bey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication in a routine or mechanical manner in every case. Further, it has made incumbent upon Commissioner to record reasons for immediate suspension. In this case, the impugned order does not satisfy the criteria laid down by Board in the said Instructions. Therefore, on this ground also, the impugned order is not tenable in the eyes of law and accordingly, the same is liable to be quashed and set aside. 11.2 The impugned order is also contrary to Board's guidelines contained in Circular No. 9/2010-Cus., dated 8.4.2010. At para 7.2 ibid, it is laid down that where immediate suspension is warranted, the investigating authority shall furnish its report to the Commissioner of Customs, within thirty days of the detection of an offence. Further, the Licensing authority shall take immediate suspension action within fifteen days of the receipt of the report of the investigating authority. In this case, it is a matter of record that statements of Shri Sudhakar Chikati, Manager of M/s. Aiyer Shipping Agency Pvt. Ltd., Shri Ankit Sharma, Business Development Manager of M/s. Vision Container Line Pvt. Ltd. & M/s. Evershine Container Line Pvt. Ltd. and Shri Vijay Sureshbhai Ratho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equirements of Regulation 16 (1) is not satisfied. Therefore, the impugned order passed by invoking Regulation 16(1) of CBLR,2018 is liable to be quashed and set aside. 13. The appellant further submitted that suspension with immediate effect is an extreme step having a direct impact on the livelihood of the appellant and their employees. Hence, it was incumbent upon Ld. Commissioner to abide by the legal safeguards provided in Regulation 16(1) of CBLR,2018 as well as Circulars and Instructions issued by the Board from time to time. However, it is evident from the impugned order that the same is passed in a mechanical manner without complying the safeguards prescribed in law as well as by Board. He placed reliance on the following judgments as follows:- * Mb Kotak-2019 (369) ELT 1314 (Tri.-Ahmd.) * HIM Logistics Pvt. Ltd., 2015 (325) ELT 793 (Tri.-Del.) * Exfin Shipping (1) Ltd., 2003 (153) ELT 534 (Tri.-Mumbai) * M. K. Saha & Company, 2021 (376) ELT 534 (Tri.-Kolkata) * Ratnadip Shipping Pvt. Ltd., 2019 (370) ELT 1765 (Tri.-Mum) * International Shipping Agency, 2006 (196) ELT 439 (Tri-Mumbai) * Leo Cargo Services, 2022 (382) ELT 30 (Del.) * Indair Carrier Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023, the learned Counsel for the appellant made following additional submissions:- 18.1 M/s. Krishna Shipping and Allied Services, Gandhidham, the appellant, have filed appeal No. C/10628/2013 against continuation of immediate suspension of their Custom Broker License by Ld. Commissioner of Customs, Kandla under Regulation 16(2) of Customs Broker Licensing Regulations, 2018 ("CBLR,2018"). 18.2 . Ld. Commissioner had ordered for immediate suspension of the Custom Broker License by citing violation of erstwhile Regulation 17 (9) of CBLR,2013, which was rectified to read as Regulation 13 (12) of CBLR, 2018. 18.3 Regulation 13 (12) of CBLR, 2018 is reproduced below for the ease of ready reference: "The Customs Broker shall exercise such supervision as may be necessary to ensure proper conduct of his employees in the transaction of business and he shall be held responsible for all acts or omissions of his employees during their employment" 18.4 The appellant had consistently contended before Ld. Commissioner that they were never appointed to act as Custom Broker by M/s. Aditya Exports, the warehousing unit in Kandla Special Economic Zone as well as M/s. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cense of appellant has been suspended without citing transaction of any Custom Broker business by the appellant. Consequently, Ld. Commissioner has exceeded jurisdiction vested to him in the capacity of the Licensing Authority. 18.10 Hon'ble Tribunal was pleased to direct Revenue to place on record Offence Report based on which Ld. Commissioner had passed Order-inOriginal No. KND-CUSTM-000-COM-03- 2023-24 dated 28.07.2023 (placed at Page No. 30 of the appeal memorandum) for immediate suspension of the Custom Broker license. 18.11 On 15.09.2023, pursuant to the directions of Hon'ble Tribunal, Revenue placed on record copy of the following documents, both addressed to Ld. Commissioner of Customs, Kandla: (a) Letter F. No. DRI/LD/U/856/INT-NIL/ENQ-15/2023/630 dated 07.07.2023 of Additional Director General, DRI, Ludhiana, and (b) Letter F. No. DRI/AZU/GRU/Int-28/Aditya Exports/2022/VII/11465 dated 04.08.2023 of Additional Director, DRI, Gandhidham. 19. The order for immediate suspension of the Custom Broker License of appellant was passed by Ld. Commissioner by solely relying on basis of lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... misread the communication received from DRI. Owing to this, suspension of the Custom Broker license is not justified. 22. Learned AR pointed out the learned Commissioner in the impugned order while continuing with the suspension has relied upon various testimonial evidences as were part of the offence report of DRI and further submitted that there is no delay in taking action and that the investigation report was received on 07 July, 2023 and suspension order was passed on 28.07.2023 by the learned Commissioner and the learned Commissioner also considered various pleas through his order which is reproduced below:- "4.3 I also find from the investigation report that " Krishna Shipping and Allied Services had even made IGST payments in respect of DTA imports made by M/s Cuthbert Winner LLP and M/s Cuthbert Ocean LLP. Both the firms are untraceable. 4.4 In the instant case, the investigations have clearly revealed that Shri Pankaj Thakker, Partner cum F-Card holder of Customs Broker firm M/ s Krishna Shipping & Allied Services (CB License No. KDLICHA/N431201) is the alleged mastermind and beneficiary of entire fraud in which Customs duty of Rs. 66.10 Crore was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute that the officer who made the demand was competent to make demands under law as well confiscate the goods. Following the principle of law laid down in the case of J.K Steel Ltd. vs The UOI-1978(2)E.L.T.355(SC), if the exercise of power can be traced to a legitimate source, the fact that the same was purported to have been exercised different power does not vitiate the exercise of the power in question. This is a well-settled proposition of law. In this connection reference may usefully be made to the decisions of the court in P.Balakotaiah v. The Union of India, 1958 SCR 1052- AIR 1958 SC 232 and Afzal Ulah v. State of U.P., 1964 4 SCR 991-AIR 1964 SC 264. Apex Court in the case of Collector of Central Excise, Calcutta v. Pradyumna Steel Ltd.-1996 (82) E.L.T.441 (S.C) has also held that it is settled that mere mention of a wrong provision of law when the power exercised is available even though under a different provision, is by itself not sufficient to invalidate the exercise of that power". In view of the above Judgments Regulation 13(12) of CBLR, 2018 is applicable to this case and the Custom Broker has clearly violated the same. 4.6 The Custom Broker submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on prima facie appreciation of the evidence made available to him in the report published by the DRI. As far as delay involved is concerned. We however find merit in the submission made by the Learned Advocate he has sought to rely on the decision of Hon'ble High Court of Delhi in the matter reported in Leo Cargo Services V/s. Airport & General, New Delhi as reported in 2022 382 ELT 30 (D-H), which while relying on the various judgments and distinguishing the decision of Principal Commissioner of Customs Vs. Unison Cleaning P Ltd as reported in 2018 361 ELT 321Bom., held that Circular No. 09/2010 dated 08.04.2010, continues to be applicable as far as time lines are concerned even on coming into force of Custom Brokers Licensee Regulation, 2018 as much as they were under earlier Custom House Agent Licensing Regulations, as far as suspension is concerned. Following paras reproduced below make it clear that the time lines are mandatory and not directory and circular of the board is binding on the officers. "14. It can be seen that the timelines as prescribed under various Regulations in CBLR, 2018, have been consistently held by the Courts as mandatory in nature. Each time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obvious and very serious in nature affecting the business and livelihood of the petitioners in toto. iii) When substantial right is affected, the Authorities are bound to comply with the time limit. iv) The order of suspension cannot be perpetuated by not passing the follow up actions within the time prescribed. Therefore, if the time prescribed is not mandatorily followed, the order of suspension would become perpetual. v) Since irretrievable loss is being caused by not passing the proceedings within the time frame, interest of the petitioners are very much affected. Therefore, the limitation period is mandatory. b) The Division Bench order passed by this Court in W.P.(MD) No.11986 of 2018, etc., dated 19.07.2018, holding time prescribed under the provision under Section 14 of the SARFAESI Act, cannot be applied to the present case by the Revenue, since the facts and circumstances are different therein and the parties therein are not affected by any consequences. Moreover, the said order was issued taking note of the public interest. c) Board Circular No.9/2010, which was issued before framing the Regulation clearly stipulated at paragraph 7.1 overall time limit of 9 mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inuation of the suspension order was issued on 20.11.2018. Therefore, the prayer sought for in W.P.No.31383/2018 challenging the suspension has become infructuous in view of the issuance of the show cause notice on 20.12.2018 which is challenged in the subsequent W.P.No.22154/2018. In W.P.No.18041/2018, the offence report was received by the respondent on 13.11.2018 and not on 16.11.2018 as contended by the petitioner. The challenge made in this writ petition against the show cause notice is premature and therefore, the writ petitions are not maintainable. 8. In support of the above contentions, the learned counsel relied on the following decisions: (i)2018(362) ELT 947 (CAL), OTA FALLONS FORWARDERS P LTD VS. UOI; (ii) Manu/WB/0814/2016, ASIAN FREIGHT VS. PRINCIPAL COMMISSIONER; (iii) 2018(361) ELT 321, BOM DB, PRINCIPAL COMMISSIONER VS. UNISON CLEARING P LTD.; iv) the Division Bench decision of this Court made in W.P.(MD) No.11986 of 2019, etc., in the case of C.Bright vs. District Collector, Nagercoil, dated 19.07.2019. 9. Heard the learned counsels for the petitioners and the learned counsels for the respondents. Perused the materials placed before this Court. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntemplated. (2) Where a licence is suspended under sub-regulation (1), the Commissioner of Customs shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose licence is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs Broker: Provided that in case the Commissioner of Customs passes an order for continuing the suspension, the further procedure thereafter shall be as provided in regulation 20." 12. Regulation 17(1) of 2018 Regulations is similar to Regulation 20(1) of 2013 Regulations. Likewise, Regulation 17(5) and Regulation 17(7) of 2018 Regulations are similar to Regulation 20(5) and 20(7) of 2013 Regulations. Thus, for better clarity, Regulation 20 of 2013 regulations in full is extracted hereunder: 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 li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentation thereon, if any, made by the Customs 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." 13. Perusal of the above Regulations would show that the Authority, who suspends the license/revokes the license/imposes penalty, should act/issue certain proceedings within the time stipulated therein. Under 19(1) of 2013 Regulations, the Commissioner of Customs is empowered to suspend the license in an appropriate case, where immediate action is necessary and where an enquiry against such agent is pending or contemplated. It is further seen that if a license is suspended under Sub Regulation (1) of Regulation 19, the Commissioner shall give an opportunity of hearing to the customs broker within 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 26934 of 2018 (Carewell Shipping Pvt. Ltd vs Commissioner of Customs) dated 22.11.2018. This Court, after considering the scope of the relevant regulation and the time frame fixed therein and also after following the Division Bench decision of the Delhi High Court in a case reported in 2016 (338) ELT 347, (Del), Impexnet Logistic vs Commissioner of Customs (General) and the Division Bench decision of this Court made in CMA No.730 of 2016 dated 13.10.2017, found that the time limit fixed is mandatory and that the Enquiry Report filed beyond the period of 90 days cannot be considered as a valid report and consequently, further proceedings cannot be allowed to go as a follow up action. The relevant findings rendered at paragraphs 7 to 12 of the said order of this Court read as follows: "7. The challenge made in these two writ petitions is against the show cause notice and the order of suspension of the petitioner's customs broker license. The prime contention of the petitioner against the show cause notice is that the third respondent/Inquiry Officer has failed to file the report within 90 days from the date of issuance of the show cause notice and therefore, the entire pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The time limits in the CHALR 2004 for issuance of the SCN to the CHA licence holder and completion of the inquiry within 90 days of issuance of such SCN are sacrosanct. The aforesaid time limits were engrafted into Regulation 22 of the CHALR, 2004 by a Notification No. 30/2010-Cus.(N.T.) dated 8th April, 2010. Simultaneously, the CBEC issued Circular No. 9/2010 dated 8th April 2010 clarifying the procedures governing the suspension and revocation of CHA licence. In para 7.1 of the said Circular, it was noted as under: "7.1 The present procedure prescribed for completion of regular suspension proceedings takes a long time since it involves inquiry proceedings, and there is no time limit prescribed for completion of such proceedings. Hence, it has been decided by the Board to prescribe an overall time limit of nine months from the date of receipt of offence report, by prescribing time limits at various stages of Issue of Show Cause Notice, submission of inquiry report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs recording his findings on the issue of suspension of CHA license, and for passing of an order by the Commissioner of Customs. Suitable changes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other issues, that is the merit of the case, this mandatory requirement of the limitation can be ignored." 10. Perusal of the above said decisions of this Court and the Delhi High Court would show that the time stipulated under the Regulations for issuing the show cause notice as well as the filing report is not directory and on the other hand, it is mandatory. No other contra decisions are placed before this Court by the learned counsel for the respondents. Even the decision, which he sought to rely made in W.P.Nos.19312 and 19313 of 2016 dated 13.07.2016, is not relevant to the present facts and circumstances, since in that case this Court has considered the question as to whether the respondent therein had sufficient power to sustain the license invoking Regulation 19(1) of the Regulations. In this case, the petitioner has raised the issue on the time limit fixed under Regulation 20(5) and not 19(1). When the facts placed before this Court are very clear that the report itself was prepared and filed beyond 90 days as statutorily required and when the decision of this Court and the Delhi High Court clearly indicate that such time limit fixed is mandatory, this Court is of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alities." 16. It is stated before this Court that the above order has not been challenged by the Revenue and on the other hand, the same has been given effect to. 17. It is further seen that before introducing the Regulations, Circular No.9/2010 dated 08.04.2010 was issued by the Central Board of Excise and Customs, New Delhi, wherein at paragraph No.7.1, it is stipulated that an overall time limit of 9 months is given from the date of receipt of offence report by prescribing time limits at various stages of issue of show cause notice, submission of enquiry report by the Deputy Commissioner of Customs or Assistant Commissioner of Customs and for passing an order by the Commissioner of Customs. The said Circular NO.9/2010 was considered by the Division Bench of this Court in a case reported in 2014 (310) ELT 673 (Mad), Commissioner of Customs (Sea Port Import) vs. CESTAT, Chennai, wherein the Division Bench has observed that it is not open to the Revenue to take a contra stand in respect of the time limit prescribed, since the Board Circular issued by the Central Board of Excise and Customs is binding on the Revenue. 18. In 2017(348) ELT 640 (Mad), Commissioner of Customs vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , circumstances and the relevant provision of law are not one and the same before this Court as well as the case in Salem Bar Association. In any event, as the very same regulations were considered by this Court and decided in very many cases as discussed supra, the Revenue is not justified in relying on Salem Bar Association case. 23. Mr.V.Sundareswaran, learned counsel for the Revenue relied on the learned Single Judge decision of the Calcutta High Court Manu/WB/0814/2016, Asian Freight vs. Principal Commissioner, to contend that the time limit is only directory. He also relied on the Division Bench decision of the Bombay High Court reported in 2018 (361) ELT 321, Principal Commissioner vs Unison Clearing P Ltd., in support of his submission that the time limit is only directory as non compliance of the provision is not visited with some penalty. In view of the decisions made by this Court as extracted supra and more particularly, decision of this Court made in Carewell Shipping Private Limited as discussed supra arising out of the same issue, which has become final and not questioned, I find that the above decisions taking contra view not having a binding nature on this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prescribed at each stage needs to be complied with mandatorily, if not the consequence that would follow is the continuation of the suspension of his license thereby affecting/paralyzing the business activities of the licensee. These consequences, though not mentioned in the Regulations, are however evident apparently on the face of the facts and circumstances. Therefore, it cannot be said that there is no consequence for non adherence to the time limit and therefore, such time limit is only directory and not mandatory." 23.2 In view of the foregoing and also the fact that no contrary decision by Hon'ble High Court of Gujarat has been brought to our notice by either side on mandatory and declaratory nature of the time lines prescribed as well as to indicate that Board Circular No/. 09/2010-Cus at 08.04.2010 has been withdrawn or superseded, we have no difficulty in observing as deduced from decisions above that time lines are mandatory conditions and need to be observed including those prescribed in the Board Circular of 09/2010-Cus as indicated above. In the instant case since there is a breach of time lines prescribed by the Board, we therefore hold that in the facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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