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Cus – Relationship of a custom broker with a licensing authority is one of ‘near employment’ – suspension for long periods of time impacts lives of brokers as well as their dependents – reinstatement ordered: CESTAT

2019-TIOL-2298-CESTAT-MUM

IN THE CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH, MUMBAI

Customs Appeal No. 89840 of 2018

Arising out Order-in-Original No. PUN-CUSTM-000-COM-01-18-19, Dated: 12.09.2018
Passed by the Commissioner of Customs, Pune

Date of Hearing: 29.03.2019
Date of Decision: 29.03.2019

M/s SAI DUTTA SHIPPING AGENCY PVT LTD
10, JAIN HOUSE, JERBAL WADIA ROAD
PAREL, MUMBAI – 400012

Vs

COMMISSIONER OF CUSTOMS, GST BHAVAN
41/A, SASSOON ROAD, PUNE – 411001

Appellant Rep by: Shri D H Nadkarni, Adv.
Respondent Rep by: Shri Dharmender Singh, Supdt. (AR)

CORAM: D M Mishra, Member (J)
C J Mathew, Member (T)

Cus – Suspension of Customs broker licence – relationship of a custom broker with a licensing authority is one of ‘near employment’ as a facility for smooth clearance of cargo on behalf of importers/exporters who may be at other locations – Unlike tax disputes, the consequence of detriment under the Licensing Regulations has a bearing on the lives of the brokers as well as their dependents – There can be no doubt that suspension for long periods of time or disproportionate penalties impact these persons – It is in acknowledgement of the criticality of expeditious action that the Regulations contemplate prescription of timeline, without which an atmosphere of lack of accountability would pervade the entire exercise – it is seen that the gap between the original order of suspension on 12th July 2018 and confirmation of the said suspension is close to two months – The Regulations prescribe that the offer and completion, of post decisional process be limited to 15 days from the date of the first suspension – Authorised Representative is unable to assure us that the proceedings under regulation 19 of Customs Broker Licensing Regulation, 2018 would commence in the near future – It would appear that either the evidence required to sustain the proceedings is not available or that the role of the customs broker may not have been so critical in the transaction to fraudulently claim the drawback – cause of justice cannot be further enabled except by an immediate revocation of the suspension and reinstatement of the licence – appeal allowed: CESTAT [para 5, 6, 7]

Appeal allowed

Case law cited:

Principal Commissioner of Customs (General), Mumbai v. Unison Clearing P Ltd – 2018-TIOL-1826-HC-MUM-CUS… Para 3, 4…referred

FINAL ORDER NO. A/85718/2019

Per: C J Mathew:

This appeal of M/s. Sai Dutta Shipping Agency Pvt Ltd lies against suspension of custom broker licence. The licence, issued under regulation 10 of the erstwhile Custom House Agent Licensing Regulations, 1984, was valid till 3rd May 2020. By order no. 1/2018- 19 dated 12th July 2018, the licence was suspended consequent upon alleged irregularities that were noticed by Directorate of Revenue Intelligence in exports made under claim for drawback that was subjected to investigation. The said order was followed by a postdecisional hearing, which, thereafter, vide order dated 12th September 2018 stood confirmed.

2. Learned Counsel for the appellant submits that time-frame, prescribed in the Customs Brokers Licensing Regulation, 2018, has been observed, more often than not, in its breach at every step of the way and that, till today, proceedings for revocation, or any other detriment, was yet to be initiated. According to him, this is in direct contravention of instructions of Central Board of Excise & Customs in circular no. 9/2010-Cus dated 8th April 2010 mandating adherence to the time limits.

3. Learned Authorised Representative submits that letter dated 20th March 2019 from the office of Commissioner of Customs, the licensing authority, has clearly brought out the justification for continuation of the investigation which was necessary for establishing the role of appellant herein. He also placed reliance on the decision of Hon’ble High Court of Bombay in Principal Commissioner of Customs (General), Mumbai v. Unison Clearing P Ltd [2018 (361) ELT 321 (Bom.)] 2018-TIOL-1826-HC-MUM-CUS holding that

’15. In view of the aforesaid discussion, the timelimit contained in Regulation 20 cannot be construed to be mandatory and is held to be directory. As it is already observed above that though the time line framed in the Regulation need to be rigidly applied, fairness would demand that when such time limit is crossed, the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the timelimit was not adhered to. This would ensure that the inquiry proceedings which are initiated are completed expeditiously, are not prolonged and some checks and balances must be ensured. One step by which the unnecessary delays can be curbed is recording of reasons for the delay or non-adherence to this timelimit by the Officer conducting the inquiry and making him accountable for not adhering to the time schedule. These reasons can then be tested to derive a conclusion whether the deviation from the time line prescribed in the Regulation, is “reasonable”. This is the only way by which the provisions contained in Regulation 20 can be effectively implemented in the interest of both parties, namely, the Revenue and the Customs House Agent.’

4. Having heard both sides, the issue before us is limited to the correctness of continuing of the order of suspension despite the long drawn investigation having failed to crystallise the memo of charges against the appellant herein. The claim advanced on behalf of the respondent-Commissioner that there was justification for the nonadherence to the timeline and is in accord with the decision of the Hon’ble High Court in re Unison Clearing P Ltd, to the effect that time-line is not mandatory, appear to us, an insufficient defence. In re Unison Clearing P Ltd, the Hon’ble High Court of Bombay had disapproved of the setting aside of the detriment imposed in accordance with Customs Brokers Licensing Regulation, 2018 merely on failing the test of adherence to the time-line. While acknowledging the prescriptions as statutorily binding, the Hon’ble High Court held that the time-line and adherence thereof needed further test against the facts and circumstances of each case and the reasons for delay should also be considered to appreciate and assign the responsibility as well as consequences thereof.

5. The relationship of a custom broker with a licensing authority is one of ‘near employment’ as a facility for smooth clearance of cargo on behalf of importers/exporters who may be at other locations. Unlike tax disputes, the consequence of detriment under the Licensing Regulations has a bearing on the lives of the brokers as well as their dependents. There can be no doubt that suspension for long periods of time or disproportionate penalties impact these persons. It is in acknowledgement of the criticality of expeditious action that the Regulations contemplate prescription of timeline, without which an atmosphere of lack of accountability would pervade the entire exercise.

6. In the present instance, it is seen that the gap between the original order of suspension on 12th July 2018 and confirmation of the said suspension is close to two months. The Regulations prescribe that the offer and completion, of post decisional process be limited to 15 days from the date of the first suspension. It would, therefore, be reasonable to expect such confirmation order soon after the hearing, however much the delay is attributable to the broker, instead of it being much delayed even further. On ascertainment of the present status of the proceedings, Learned Authorised Representative is unable to assure us that the proceedings under regulation 19 of Customs Broker Licensing Regulation, 2018 would commence in the near future. All that is available on record is that the investigation in a major fraudulent activity is still under way. It is not the case of the respondent- Commissioner that any act on the part of the appellant has delayed the initiation of proceedings. The explanation that investigation is pending is also not readily acceptable. It would appear that either the evidence required to sustain the proceedings is not available or that the role of the customs broker may not have been so critical in the transaction to fraudulently claim the drawback. Either way, the continuation of suspension in such circumstances does not, in our opinion, appear to be in concord with the principles of accountability or of prompt response. There is no evidence of any lack of cooperation on the part of appellant herein.

7. In these circumstances, the cause of justice cannot be further enabled except by an immediate revocation of the suspension and reinstatement of the licence. Needless to say, this is without prejudice to continuation with other proceedings permissible under the Customs Brokers Licensing Regulation, 2018. Appeal is accordingly allowed.

(Operative part pronounced in Court)

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