Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
% Judgment Reserved on: 16 October, 2015
nd
Judgment Delivered on: 02 November, 2015
+ WP(C) 9660/2015
Him Logistics Pvt. Ltd. .... Petitioner
versus
The Commissioner of Customs (General) .....Respondent
Advocates who appeared in this case:
For the Petitioner : Mr Priyadarshi Manish, Ms Anjali Manish and Mr Rahul
Ranjan
For the Respondent : Ms Sonia Sharma.
CORAM:-
HON’BLE MR JUSTICE BADAR DURREZ AHMED
HON’BLE MR JUSTICE SANJEEV SACHDEVA
JUDGMENT
SANJEEV SACHDEVA, J
WP(C) 9660/2015 & CM No.23058 /2015(stay)
1. The petitioner has filed the present petition seeking quashing of
the order-in-original dated 01.09.2015, whereby the Commissioner of
Customs has revoked the Customs House Agent (CHA for short)
licence of the petitioner and ordered forfeiture of the security
furnished by the petitioner and further imposed a penalty under
Regulation 22 read with Regulation 20 of the Customs Brokers
W.P.(C) No.9660/2015 Page 1 of 13
Licensing Regulations, 2013 (hereinafter referred to as the CBLR,
2013).
2. Though the impugned order is an appealable order, the
petitioner has approached this Court under Article 226 of the
Constitution for exercise of its writ jurisdiction on the ground that the
order has been passed without complying with the principles of
natural justice.
3. Normally, in a case where a petitioner is seeking to invoke the
writ jurisdiction of this Court, impugning an order from which an
appeal lies, this Court would be reluctant to interfere in the same and
relegate the petitioner to the alternative remedy, however, in the
peculiar facts and circumstances of the case, as would be apparent
from the facts referred to herein below, we are making an exception
and are exercising discretion in entertaining this petition under Article
226.
4. On 01.11.2014, a show-cause notice was issued to the petitioner
along with an importer to show-cause as to why penalty should not be
imposed upon them for violation of the Customs Act, 1962 and Rule
13 of the Customs House Agents Licensing Regulations, 2004. A
detailed reply to the same was filed by the petitioner.
5. On 14.02.2015, another show-cause notice was issued to the
W.P.(C) No.9660/2015 Page 2 of 13
petitioner to show-cause as to why its CHA licence should not be
revoked for failure to comply with the provisions of Regulations
11(a), 11(d), 11(e) and 11(n) of the CBLR, 2013 and why penalty be
not imposed in terms of Regulations 22 read with Regulation 20 of the
CBLR, 2013. The petitioner filed a detailed reply to the show-cause
notice and submitted the relevant documents.
6. The Assistant Commissioner of Customs, who was appointed as
the Inquiry Officer, after conducting the inquiry on 05.06.2015,
submitted a report that the petitioner had not contravened the
provisions of the Regulations 11(a), 11(d), 11(e) and 11(n) of the
CBLR, 2013 and exonerated the petitioner from all charges.
7. On 10.06.2015, a copy of the inquiry report was furnished to
the petitioner, and the petitioner was directed to submit his
representation against the same, within thirty days. On 13.07.2015,
the petitioner, in response to the furnishing of the inquiry report,
submitted a representation to the Commissioner stating that it agreed
with the report of the Inquiry Officer and requested for revocation of
suspension of licence and dropping of the show-cause notice in view
of the exoneration of the petitioner by the inquiry report. On
20.08.2015, the petitioner received a letter from the Commissioner of
Customs requiring the petitioner to appear for a personal hearing on
31.08.2015. On 31.08.2015, the petitioner appeared pursuant to the
W.P.(C) No.9660/2015 Page 3 of 13
notice of personal hearing and reiterated its stand in its representation
that in view of the exoneration by the inquiry report, the same be
accepted and the suspension of the licence of the petitioner be
revoked.
8. By the impugned order dated 01.09.2015, the Commissioner of
Customs disregarding the inquiry report, has revoked the petitioner’s
CHA licence and has directed forfeiture of the security deposit and
imposed penalty under Regulation 22 read with Regulation 20 of the
CBLR, 2013.
9. The petitioner has impugned the order contending that the
Commissioner of Customs could not have disregarded the findings
returned in the inquiry report and should have accepted the same and
revoked the suspension of the licence of the petitioner. In the
alternative, it is contended that if the Commissioner of Customs had
any reason to disagree with the inquiry report, the Commissioner of
Customs should have at least communicated the same to the petitioner
prior to taking a decision to disregard the inquiry report. It is
contended that, it would have afforded the petitioner sufficient
opportunity to represent against the reasons for disagreement and to
answer/explain any adverse material.
10. The questions that arise for consideration are: (i) whether the
W.P.(C) No.9660/2015 Page 4 of 13
principal commissioner or commissioner of customs, as the case may
be, is bound to accept the inquiry report, if it is in favour of the
Custom Broker or can he disagree with the same?, and (ii) in case the
answer to question no. (i) is that the commissioner can disagree with
the inquiry report, then is it necessary for him to communicate the
reasons for disagreement to the Custom Broker?
11. For answering the questions, it would be necessary to examine
the provisions of Regulations 20 and 22 of the CBLR, 2013, which
prescribe the procedure for revocation of licence and imposition of
penalty. Regulations 20 and 22 of the CBLR, 2013 read as under:-
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 submit
within thirty days to the Deputy Commissioner of
Customs or Assistant Commissioner of Customs
nominated by him, a written statement of defense
and also to specify in the said statement whether
the Customs Broker desires to be heard in person
by the said Deputy Commissioner of Customs or
Assistant Commissioner of Customs.
(2) The Commissioner of Customs may, on receipt
W.P.(C) No.9660/2015 Page 5 of 13
of the written statement from the Customs Broker,
or where no such statement has been received
within the time-limit specified in the notice
referred to in sub-regulation (1), direct the Deputy
Commissioner of Customs or Assistant
Commissioner of Customs, as the case may be, to
inquire into the grounds which are not admitted by
the Customs Broker.
(3) The Deputy Commissioner of Customs or
Assistant Commissioner of Customs, as the case
may be, shall, in the course of inquiry, consider
such documentary evidence and take such oral
evidence as may be relevant or material to the
inquiry in regard to the grounds forming the basis
of the proceedings, and he may also put any
question to any person tendering evidence for or
against the Customs Broker, for the purpose of
ascertaining the correct position.
(4) The Customs Broker shall be entitled to cross-
examine the persons examined in support of the
grounds forming the basis of the proceedings, and
where the Deputy Commissioner of Customs or
Assistant Commissioner of Customs declines to
examine any person on the grounds that his
evidence is not relevant or material, he shall record
his reasons in writing for so doing.
(5) At the conclusion of the inquiry, the Deputy
Commissioner of Customs or Assistant
Commissioner of Customs, as the case may be,
shall prepare a report of the inquiry and after
recording his findings thereon submit the report
within a period of ninety days from the date of
W.P.(C) No.9660/2015 Page 6 of 13
issue of a notice under sub-regulation (1).
(6) The Commissioner of Customs shall furnish to
the Customs Broker a copy of the report of the
Deputy Commissioner of Customs or Assistant
Commissioner of Customs, as the case may be, and
shall require the Customs Broker to submit, within
the specified period not being less than thirty days,
any representation that he may wish to make
against the said report.
(7) The Commissioner of Customs shall, after
considering the report of the inquiry and the
representation 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.
xxxx xxxx xxxx
22. Penalty.-
A Customs Broker, who contravenes any
provisions of these regulations or who fails to
comply with any provision of these regulations
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shall be liable to a penalty, which may extend to
fifty thousand rupees.
12. Sub-regulations 5, 6 and 7 of Regulation 20 of CBLR, 2013
stipulate that the Inquiry Officer shall prepare a report and record his
findings within ninety days from the date of issuance of notice under
sub-Regulation (1). The Principal Commissioner or Commissioner of
Customs, as the case may be, is to furnish to the Customs Broker a
copy of the report of the Deputy Commissioner of Customs or the
Assistant Commissioner of Customs, as the case may be, and
requiring the Customs Broker to submit any representation that he
may wish to make against the said report and on consideration of the
report on inquiry and the representation thereon, if any, made by the
Customs Broker, the Principal Commissioner or the Commissioner of
Customs, as he deems fit, may pass orders, revoking the suspension of
the licence or revoking the licence of the Customs Broker or imposing
penalty not exceeding the amount mentioned in Regulation 22. It is
provided that no order for revoking the licence shall be passed unless
an opportunity is given to the Customs Broker to be heard in person
by the Principal Commissioner of Customs or Commissioner of
Customs, as the case may be.
13. The fact that the Principal Commissioner of Customs or
Commissioner of Customs, as the case may be, on consideration of
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the inquiry report and the representation, if any is to pass an order as
he deems fit, envisages that he is not bound to accept the inquiry
report in all circumstances. He is to independently assess the material
and the report and to pass appropriate orders. Under Regulation 22 of
the CHA Licensing Regulations, 2004 it is the Commissioner who is
empowered to issue show cause notice to the CHA to suspend or
revoke the CHA license and it is the Commissioner who is empowered
to pass ‘such orders as he deems fit’ after considering the inquiry
report and the representation of the CHA, if any. Therefore, whether
the inquiry report is in favour of the CHA or not, it is the
Commissioner who has to pass the final order as he deems fit on the
show cause notice issued by the Commissioner. The words ‘such
orders as he deems fit’ in Regulation 22(7) leave no manner of doubt
that it is entirely at the discretion of the Commissioner, whether to
agree or disagree with the inquiry report and pass such orders as he
deems fit on the show cause notice. When Regulation 22(7) expressly
empowers the Commissioner to pass such orders as he deems fit, it
would not be possible to hold that if the inquiry report is in favour of
the CHA, the Commissioner cannot pass an order against the CHA
1
even if the Commissioner disagrees with the inquiry report.
14. The answer to question no. (i) is clearly that the principal
1
M/s. Delta Logistics v. Union of India (2012) 286 ELT 517 (Bombay High Court Full Bench)
W.P.(C) No.9660/2015 Page 9 of 13
commissioner or commissioner of customs, as the case may be, is not
bound to accept the inquiry report, if it is in favour of the Custom
Broker and he can disagree with the same.
15. Coming to question no. (ii). The opportunity of hearing, as
contemplated by Regulation 20, envisages that the Customs Broker
should be provided the material, which is to be used against him for
passing an adverse order, so he is in a position to rebut, qualify or
explain the same and show cause against the proposed adverse action.
In case only favourable material is provided to the Customs Broker
and the adverse material or the reasons for disagreement are withheld
from him, then, the entire exercise would be a futility as he would not
be provided with an opportunity to rebut, qualify or explain the same
and show cause against the proposed adverse action. When an inquiry
report is in favour of the Customs Broker and completely exonerates
him and the Principal Commissioner of Customs or the Commissioner
of Customs, as the case may be, intends to disregard the inquiry report
on the basis of any material available or reason, then the principles of
natural justice require that the said material/reasons must be
communicated to the agent to enable the agent to rebut, qualify or
explain the same and to show cause against the proposed adverse
action. In the absence of communication of adverse material/reasons,
the Customs Broker would not be aware of the proposed adverse
W.P.(C) No.9660/2015 Page 10 of 13
action and would not be able to show cause against the same and there
would be failure of compliance with the principles of natural justice,
as envisaged by Regulation 20 of CBLR, 2013.
16. In the present case, the inquiry report is in favour of the
petitioner and exonerates him. Mere communication of the inquiry
report, which is in favour of the petitioner and without communication
of adverse material and/or reasons for difference, would not enable
the petitioner to rebut, qualify or explain the adverse material and
show cause against the proposed adverse action. Principles of natural
justice required that before an adverse decision was taken against the
petitioner, the petitioner should have been communicated the adverse
material/reasons for disagreement. The fact that the reasons for
disagreement were not communicated to the petitioner prior to the
adverse decision being taken by the Commissioner of Customs, there
was clearly a violation of principles of natural justice. The
Commissioner of Customs should have recorded the reasons for
disagreement and forwarded the same to the petitioner for his
comments before passing the impugned order. Because of failure to
do so, the impugned order is clearly in violation of the principles of
natural justice.
17. The decision of the full Bench of the Bombay High Court in the
case of M/s. Delta Logistics v. Union of India (Supra) relied upon by
W.P.(C) No.9660/2015 Page 11 of 13
the Respondent, does not help the case of the respondent as in the said
case, the only question before the Full Bench was whether the
Commissioner of Customs is bound by the findings recorded in the
inquiry report, if the finding was in favour of the CHA or could he
disagree with the findings recorded in the inquiry report and pass such
orders, as he deems fit. The Full Bench answered the question
holding that the Commissioner was empowered to disagree with the
findings recorded in the inquiry report and was not bound to accept
the same even if the same were in favour of the CHA. The Full Bench
was not considering the question whether the principles of natural
justice required the Commissioner to record adverse material and
communicate the same to the Customs Broker?
18. We answer question no. (ii) by holding that where the principal
commissioner or commissioner of customs, as the case may be,
intends to disagree with the inquiry report, that is in favour of the
Customs Broker, then it is mandatory for him to communicate the
adverse material/reasons for disagreement to the Custom Broker and
require him to show cause/represent against the proposed adverse
order.
19. In view of the above, the impugned order dated 01.09.2015
cannot be sustained. The same is accordingly quashed. However, the
impugned order dated 01.09.2015 shall be treated as a communication
W.P.(C) No.9660/2015 Page 12 of 13
of the reasons for disagreement entered by the Commissioner and the
petitioner, if it so desires, may furnish its objections to the reasons for
disagreement within a period of two weeks and show cause/represent
against the proposed adverse order. The proceedings shall be
finalized by the Commissioner of customs within a period of four
weeks thereafter.
20. The writ petition is accordingly disposed of in the above terms.
There shall be no order as to costs.
SANJEEV SACHDEVA, J.
BADAR DURREZ AHMED, J.
November 02, 2015
‘sn’
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