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Cus - broker licence - If prescribed authority perceives suspension to be necessary, it has to be accepted at face value &, though same can be questioned in post-decisional hearing, it cannot be subjected to a judicial review: HC

By TIOL News Service

KOLKATA, MAY 03, 2016: THE petitioner acted as Customs broker for one Sachar International of Delhi and filed a bill of entry dated February 9, 2015 for clearance of a consignment of automotive parts imported from the United Arab Emirates under an airway bill.

The order-in-original dated February 26, 2016 passed by Additional Commissioner (Preventive) pursuant to a show-cause notice of July 29, 2015 observed that on examination of the goods it was found that branded automotive parts of, inter alia , BMW, Mercedes and Toyota were included in the consignment though no brand or model of the automotive parts had been declared by the importer. Further, goods in excess of the declared quantity were discovered in the consignment.

In finding the petitioner liable to penalty under Section 112 of the Act, the order recorded that both the importer and the petitioner had “played active role in mis-declaration of the quantity and brand of goods imported…”. The declared value of Rs.3,18,125/- in respect of the relevant bill of entry was rejected and the value of the consignment was determined at Rs.50,51,391/-. An order for confiscation was also made with an option to the importer to redeem the consignment on payment of a redemption fine of Rs.5 lakh. The differential duty was found to be to the tune of Rs.18,17,588/-. A penalty of Rs.2 lakh was also imposed on the petitioner.

On April 6, 2016 the petitioner received the impugned order of suspension.

Though the impugned order of April 5, 2016 afforded the petitioner a post decisional hearing on April 22, 2016, the petitioner evinced an intention to disregard the same upon instituting the present proceedings before the High Court on April 12, 2016.

The petitioner alleges that the order of suspension is without jurisdiction and betrays the closed mind of the licensing authority and, as such, the usual remedy of a post-decisional hearing would be an exercise in futility.

The petitioner inter alia contends that the licence of a Customs broker may be suspended only if immediate action is necessary and where an inquiry against such broker is pending or an inquiry is contemplated. The petitioner argues that since the matters complained of in the impugned order are of February, 2015 vintage, the petitioner's suspension was neither contemporaneous with the discovery of the perceived misconduct on the part of the petitioner, nor is there any reason proffered in the order of suspension as to the necessity of suspension at this stage. The petitioner claims that since no inquiry against the petitioner was pending as on the date of the order of suspension and no notice has been issued to the petitioner for revocation of his licence under Regulation 20(1) of the said Regulations, no inquiry could be said to be in immediate contemplation.

The petitioner claims on the basis of the Board Circular of April 8, 2010 that the CBEChas prescribed a time limit in cases warranting immediate suspension of a licence and such time-limit is “within thirty days of the detection of an offence”.

The High Court observed -

++ It has to be said that the impugned order of suspension cannot be seen to be without jurisdiction since the licensing authority who has issued the same had due authority to do so.

++ Ordinarily, when this extraordinary jurisdiction is invoked in preference to an alternative remedy available to the petitioner, the petition may not be entertained unless the alternative remedy is demonstrably inefficacious; or the action challenged is palpably without jurisdiction or it is utterly baseless or in absolute breach of the principles of natural justice.

++ On the ground of alternative remedy, the petitioner says that the appellate remedy under Regulation 21 of the said Regulations of 2013 is not available to the petitioner since there is no judicial member at present at the Customs, Central Excise and Service Tax Appellate Tribunal in the city.

++ Though Regulation 21 of the said Regulations permits a Customs broker “who is aggrieved by any order passed by the Principal Commissioner of Customs” to prefer an appeal under Section 129A of the Act, it is doubtful whether an appeal against an order of suspension should be entertained unless such order is demonstrably without jurisdiction or patently absurd, when there is a mechanism for a post-decisional hearing within a short time of 15 days of the suspension.

++ The circular of April 8, 2010was issued under a different regime and not under the Regulations of 2013 relevant for the present purpose. In any event, the circular has the effect of being a kind of advisory or a set of guidelines in respect of the matters covered thereby and cannot have any binding effect qua the interpretation of any statutory regulation. The circular is found to be completely irrelevant in the context of the order of suspension impugned herein.

++ It is equally fallacious to suggest that if the post-decisional hearing is scheduled on a day or two after the 15-day period provided therefor under Regulation 19(2) of the said Regulations, the order of suspension can be seen to be non est only on such ground. A delay of a day or two in either case may not be fatal to the order of suspension.

++ Further, suspension, by its very nature is temporary though it may be a step in the direction of revocation of the licence. Every order of suspension passed under Regulation 19 of the said Regulations must be intended to lead to a possible revocation, subject to the explanation that may be furnished by the suspended broker at the post-decisional hearing qua the order of suspension.

++ The suspension of a licence under the said Regulations is not a punishment by itself but it may be used as a first step for ultimately revoking the licence of the broker. Viewed in such perspective, whenever an order of suspension of a licence is passed under Regulation 19 of the said Regulations, the concerned official passing such order must, prima facie, believe that the licence is liable to be revoked and the word “contemplated” must be understood in such light.

++ An order of suspension cannot be challenged in this extraordinary jurisdiction as being without jurisdiction by calling upon the court to take a different view on the ground of necessity. If the prescribed authority perceives the suspension to be necessary, it has to be accepted at face value and, though the same can be questioned in the post-decisional hearing, it cannot be subjected to a judicial review unless it is palpably absurd.

++ In this case, the order of suspension has been passed within a short time of licensing authority being made aware of the proven misconduct on the part of the petitioner as established by the order of February 26, 2016.

++ Since the challenge in the petition is not founded on any of the grounds that may excite the court to disregard the alternative remedy available to the petitioner, the merits of the petitioner's challenge to the impugned order cannot be gone into.

The Writ Petition is dismissed. The petitioner was ordered to pay costs to the department.

(See 2016-TIOL-876-HC-KOL-CUS)


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