Subrata Guha Sarkar vs Union of India

Indira Banerjee, J.—This writ application is directed against an order being CHA Order No. 07/2012, dated 16/21st August, 2012 whereby the Commissioner of Customs [Airport and Administration] has in exercise of power conferred on him under Regulation 20(2) of the Customs HOUSE Agents Licensing Regulations, 2004, hereinafter referred to as the 2004 CHALR, suspended operation of the Customs House Agents license No. S-114, held by M/s. S. Guha Sarkar and Company, with immediate effect. From the order impugned, it appears that M/s. S. Guha Sarkar and Company of Village Chandrapur under Digha Post Office area in 24 Parganas [North] is a Customs House Agent and its Customs House Agent''s license No. is S-114.

By a letter dated 23rd July, 2012, the Directorate of Revenue Intelligence, intimated the Commissioner of Customs [Airport and Administration] that it had booked a case where prohibited goods were attempted to be smuggled into India along with other goods through Kolkata Port vide Bill of Entry No. 6935877 dated 26th May, 2012.

It was alleged that while the goods were declared as 360 rolls of RG-6 Semi-finished Coaxial cables, on examination, 860 cylinders [13.6 kgs. each] of R-22 refrigerant gas, a prohibited item for import and 49920 pieces of measuring tapes, an item liable to anti-dumping duty, were found concealed behind 120 rolls of coaxial cable.

The declared importer Nityananda Dey of M/s. Zen Electronics and M/s. P.K. Ghosh and Sons, had acted as CHA. A similar consignment of goods, declared as coaxial cable, was imported previously in the name of Nityananda Dey vide Bill of Entry No. 6710287, dated 2nd May, 2012. In that case, M/s. S. Guha Sarkar and Company had acted as CHA.

It appears that the statements of various persons including the representative of the importer and representatives of various Customs House Agent, were obtained.

It appears from the impugned show cause notice that Sri Amar Chandra Roy, representative of M/s. S. Guha Sarkar and Company tendered his statement u/s 108 of the Customs Act on 31st March, 2012. The said Customs House agent stated that:

they received the job and related import documents through their agent Sri Manas Palit;

they did not verify the existence of Shri Nityananda Dey, the declared importer;

they accepted the clearing job despite not knowing the declared importer and without any verification as both Shri Manas Palit and himself knew that Shri Nityananda Dey, the declared importer was not the actual importer;

the actual importer of the consignment was one Shri Vinod Lachwani, with whom they discussed time and again in connection with the above consignment;

after clearance of the goods by customs they arranged for delivery of the goods from Haldia to Concor Depot, Khidirpore.

There can be no doubt that the allegations against the petitioner are of a serious nature. The 2004 CHALR casts obligations on a holder of clearing house agency license. The obligations have allegedly not been discharged. Acceptance of job of clearing without verifying whether the declared importer at all existed, constitutes dereliction of duty. However, the petitioner is ultimately entitled to be heard on the question of whether Nityananda Dey was the actual importer or not; whether Nityananda Dey existed and whether there was any misconduct on the part of the Clearing House Agent; in other words, whether the Clearing House Agent knowingly cleared the goods imported in the name of a dummy importer.

Be that as it may, Regulation 20(2) of 2004 CHALR inter alia provides as follows:

Notwithstanding anything contained in sub-regulation (1), the Commissioner of Customs may, in appropriate cases where immediate action is necessary, within 15 days from the date of receipt of a report from investigating authority, suspend the licence of a Customs House Agent where an enquiry against such agent is pending or contemplated.

In the instant case the impugned notice has been issued on August 21, 2012. On the face of the impugned notice intimation was received by the concerned Commissioner of Customs vide a letter No. DRI. F. No. 97/Kol/APP/2012/2839, dated July 23, 2012. In the records pertaining to the case produced by Mr. Bharadwaj appearing on behalf of the respondent authorities, there is nothing on record to show that the intimation was received earlier than 15 days before the date of issuance of show-cause notice. On the other hand, Mr. Bharadwaj upon reference to the records submitted that the suspension order was, in fact, issued on August 7, 2012. However, the final order was typed out and ultimately signed on August 21, 2012.

An order can only take effect when it is finally signed and not when the decision to pass the order is taken. It is difficult to accept the submission that the order was issued on 7th August, 2012 within 15 days from the date of receipt of intimation from the investigating agency.

In Schankar Clearing and Forwarding Vs. Commissioner of Customs (Import and General), a Division Bench of Delhi High Court held as follows:

Regulation 20 empowers the Commissioner of Customs to revoke or suspend the license of CHA, in certain eventualities including in the case of misconduct. Regulation 20(2) is an overriding provision conferring emergency powers upon the Commissioner to - without any previous show-cause or any previous hearing - wherever immediate action is warranted, direct suspension of license pending an inquiry. Regulation 22 spells out the procedure for suspension or regulation of license. It is in effect the procedure to be adopted for the purpose of holding an inquiry. However, proviso to Regulation 22(1) reserves the right of the Commissioner of Customs to order immediate suspension of the CHA license. A close reading of these provisions would disclose that the power to direct immediate action is confined to taking it within 15 days from the date of receipt of a report from the investigating authority. In this case the report of the investigating agency was received on 9-3-2011 - a fact which is borne out in the order of the Tribunal and contentions of the parties before us. Concededly the Commissioner did not seek recourse to the power under Regulation 20(2). The immediacy or urgency of the situation was allowed to lapse and eventually the Commissioner issued the suspension order on 10-10-2011; even then, the power invoked was Regulation 20(1). This was later modified through a corrigendum. However, the fact remains that this power could not have been taken recourse to after the lapse of 15 days which is underlined by a ''non-obstante'' clause in Regulation 20(2) and further underlined by the proviso to Regulation 22(1). The net result is that where immediate suspension is called for, the Commissioner has to take swift action and cannot wait; if he does so suspension can be made only after the full inquiry is held as provided by Regulation 22. In this case the final report of the inquiry was made on 7-5-2012; the appellant was issued with a show-cause notice on 5-6-2012.

The law relating to immediate suspension under Regulation 20(2) has correctly been enunciated in the judgment of the Division Bench in Schankar Clearing & Forwarding (supra) and I am in full agreement with the judgment.

Regulation 20 confers emergency power of immediate suspension in an emergent case where there is exceptional urgency. In such case licence might be suspended without recourse to the procedure stipulated in Regulation 22. In all other cases, the procedure prescribed in Regulation 22 has to be complied with. In framing the Regulations, Central Board of Excise and Customs imposed a time limit of 15 days for immediate suspension proceeding on the basis that if there was such immediacy or expediency for immediate suspension, the order of suspension would be issued within 15 days and thereafter the other requisites of the Section including the requirement to give up a post-decisional hearing within 15 days from the date of issuance of order of suspension would be adhered to. If the concerned authorities took 14 days to get an order finally typed out and signed, it cannot be said that there was such immediate urgency for suspension as to dispense with the requirement of Regulation 22. The impugned order of suspension which is on its face dated August 21, 2012 and which on its face had been issued almost one month after date of intimation from the investigating agency cannot be sustained and the same is set aside and quashed.

It is well settled that pre-decisional hearing is the rule and post-decisional hearing is an exception to which recourse can be taken only in cases of exceptional urgency. Where there is no such urgency for immediate suspension, the requirement of pre-decisional hearing cannot be dispensed with.

The initial suspension having been set aside the order of this Court confirming the suspension is also set aside and quashed. This order will not, however, prevent the Customs Authorities from initiating such proceedings as they may deem, fit and proper in compliance with Regulation 22 of 2004 CHALR. Customs Authorities and all parties are to act on a signed photocopy of this order on the usual undertakings.