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Commissioner of Customs (General) v/s Mukadam Freight Systems Pvt. Ltd.

    Appeals No. C/203 of 2006 in-Original No. 02 of 2005
    Decided On, 07 April 2017
    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
    For the Appellants: D.K. Sinha, Assistant Commissioner (AR). For the Respondent: N.S. Patel, Advocate.

Judgment Text
C.J. Mathew, Technical Member.

1. Appeal is filed by Commissioner of Customs (General), Mumbai against his own order no. 02/2005 dated 9th February 2005 and on the directions of Committee of Chief Commissioners constituted under section 129A (1B) of Customs Act, 1962 to exercise, in accordance with section 129D (1) of Customs Act, 1962, the power to review orders of Commissioners of Customs in the capacity of adjudicating authority. The review committee opposes the revocation of suspension of the ‘customs house agent’ licence of M/s Mukadam Freight Systems Pvt. Ltd by Commissioner of Customs (General) in the impugned order.

2. The license of M/s Mukadam Freight Systems Pvt. Ltd (CHA no. 11/246) was placed under suspension by order no. 26/2001 dated 26th June 2001 which, upon directions of the Tribunal on appeal of the licencee for disposal thereof, was confirmed vide order no. 1/2002 dated 29th December 2001. In the meanwhile, inquiry in accordance with regulation 23 of Custom House Agents Licensing Regulations (CHALR), 1994 was ordered on 6th December 2001. The inquiry report dated 8th September 2004 held all the eight charges to have been proved. The license was restored at this stage by the impugned order.

3. The reviewing committee has directed the Commissioner to seek the intervention of the Tribunal for ascertainment of the legality, the correctness and the propriety of the impugned order and for setting it aside. According to the Committee, the Commissioner appeared to have been guided by the detriment arising from non-operation of the licence rather than the gravity of the offence. It was also contended that the factual matrix of the offence in which the licencee had collaborated was far removed from the circumstances in which the ‘customs house agent’ concerned in the two decisions which rendered the revocation to be inappropriate. A last contention was that the Commissioner had not disposed off the inquiry report in the manner prescribed in the Customs House Agent Licencing Regulations, 1984.

4. We have heard the Learned Authorised Representative and Learned Counsel for respondent. In the light of the last contention, the challenge mounted by the appellant would appear to be premature and the appeal to be infructuous. We do concur with the grounds of appeal that the impugned order has not accorded a conclusion to the inquiry proceedings as the findings in the said report have not been considered and a decision taken thereon. However, that ground is in contradiction with the prayer for intervention at this stage. As the proceedings are yet to be concluded in accordance with the Regulations, the proper course of action would have been to await the culmination of proceedings under regulation 23. No direction is required for a statutory authority to fulfil its obligations to bring to a closure that which has been commenced.

5. Nevertheless, a crucial issue that must necessarily be determined is the propriety and legality of review of an order passed in exercise of powers under section 129D of Customs Act, 1962. For it is the exercise of that power that the proceedings leading to the present appeal before us has come about. Such a determination is warranted because such appeals emanate from dropping of proceedings and its remedial efficacy, considering the elapse of time before such appeals are ordinarily listed for disposal, is questionable enough to render it a sheer waste. In terms of section 129D, the Committee of Chief Commissioners is empowered to

‘Section 129 D Power of Committee of Chief Commissioners of Customs or Commissioner of Customs to pass certain orders.’

(1) The Committee of Chief Commissioners of Customs may, of its own motion, call for and examine the record of any proceeding in which a Commissioner of Customs as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal or, as the case may be, the Customs and Excise Revenues Appellate Tribunal established under section 3 of the Customs and Excise Revenues Appellate Tribunal Act, 1986 for the determination of such points arising out of the decision or order as may be specified by the Committee of Chief Commissioners of Customs in its order.

6. In the context, the role of the institution of customs house agency also needs to be recalled. Importers and exporters who are located away from specified entry points may not find it economically viable to maintain establishments at such places merely for effecting international transactions. Likewise, the maintenance of a specialised staff for completion of such procedural formalities may not be consistent with economical operations. World over, customs agents or brokers have existed to satisfy this want. Custom House Agents (CHA) are licensed under, function in accordance with, and are governed by, the Custom House Agents Regulations, 1984 (or such other Regulations framed and notified by Central Board of Excise & Customs from time to time). These Regulations are framed under section 146 of Customs Act, 1962 which has been incorporated for the specific purpose of providing legal authority and, in the interest of Revenue and the trade, for regulating the operation of such agents within the framework of Customs Act, 1962. They are, therefore, in the nature of an auxiliary of the tax collection structure established under the Customs Act, 1962.

7. The Customs House Agents Licencing Regulations, 1984 is self-contained and comprehensive covering every aspect from licencing till cessation. There is no reliance or reference, other than the parent section, to any provision of Customs Act, 1962 or any of the Rules or any other Regulations framed thereunder. The ambit of the regulations as envisaged in the parent provision

‘Section 146. Custom House agents to be licensed.’

(1) No person shall carry on business as an agent relating to the entry or departure of a conveyance or the import or export of goods at any customs-station unless such person holds a licence granted in this behalf in accordance with the regulations.

(2) The Board may make regulations for the purpose of carrying out the provisions of this section and, in particular, such regulations may provide for

(a) the authority by which a licence may be granted under this section and the period of validity of any such licence;

(b) the form of the licence and the fees payable therefore;

(c) the qualifications of persons who may apply for a licence and the qualifications of persons to be employed by a licensee to assist him in his work as an agent;

(d) the restrictions and conditions (including the furnishing of security by the licensee) subject to which a licence may be granted;

(e) the circumstances in which a licence may be suspended or revoked; and

(f) the appeals, if any, against an order of suspension or revocation of a licence, and the period within which such appeals shall be filed.

makes this abundantly clear. The penal provision in the Regulations admits of three detriments and no other. The appeal provision is specific in stipulating that

‘Regulation 23. Procedure for suspending or revoking licence under Regulation


(8) Any Custom House Agent aggrieved by any decision or order passed under regulation 21 or sub-regulation (7) of regulation 23, may appeal under section 129A of the Customs Act, 1962, to the Customs and Central Excise Gold (Control) Appellate Tribunal established under section 129(1) of Customs Act, 1962.’

8. The Regulations vest the authority to bring into being, and erase out of existence, a custom house agent in Commissioner of Customs. No higher authority is envisaged for the discharge of any function in relation to custom house agents. Even the Regulation-making authority, the Central Board of Excise & Customs (CBEC), has not retained any role ‘ supervisory, monitorial, or regulatory ‘ to itself in the scheme of administration of these agents. The Regulations empower the establishment of a distinctive appellate mechanism; however, the authority to frame the Regulations has, in its wisdom, empowered the Tribunal by reference to it in regulation 23. The option to appeal is specifically permitted in the Regulations only to an aggrieved licencee. A harmonious reading of the penal and appellate provisions and the exclusion of any higher authority, even by mention, in the Regulations makes legislative intent very clear: that if the progenitor of the licence, the author of its being, has decided to the detriment of a licencee, such aggrieved entity may file an appeal to the Tribunal and a decision to retain the licence carries with it a finality that does not admit of any intervention under the Regulations. The licencing authority is not envisaged as an appellant under the Regulations. The absurdity of the proposition of appealing against oneself canvassed on behalf of the appellant will be dealt with in due course.

9. License holders are professionals who earn their livelihood by rendering services to the import and export community. The discontinuance of a license, whether temporarily or permanently, is detrimental to the licensee, its employees and their dependents. Hence, akin to conditions of service of officers of Customs, the licensing regulations stipulate a procedure for revocation that is closely parallel to the disciplinary proceedings preceding any detriment to conditions of service. The relationship between a licensed custom house agent and the licencing authority is not much different from that of ‘master-servant.

10. It is axiomatic that in all such proceedings, culminating in termination of such a relationship or is, in any other way, detrimental to the servant, the principles of natural justice require that the power to penalise vests with the author of its being, viz., the appointing authority, that there be a code of conduct which, when violated, brings retribution in the form of a penalty, that the entity who is sought to be proceeded against is served with charges, and supporting evidence thereof, which is subject to an enquiry as a pre-requisite for imposition of penalties. There is no scope for insinuating any higher authority to exercise superintendence over the appointing authority.

11. In terms of Custom House Agents Licensing Regulations, 1984 (which we are concerned with in the present instance), the power to license is vested in the Commissioner of Customs. That authority is, therefore, the ‘master’ to whom the agent owes its existence. It is the Commissioner of Customs who is responsible for the operation and functioning of the Customs House and any detriment to efficient functioning of the Customs House will ultimately reflect on that authority. There is no other authority more concerned with weeding out of unacceptable elements and, therefore, there is no cause for any other authority to sit in judgement on the decision of a Commissioner that continued operation of licencee is detrimental to the functioning of the Customs House.

12. It cannot be said that revenue collection stands on that very footing. Levy of duties and the intent of the law relating to collection of revenue flows from legislative authority. For the purposes of tax administration, officers are commissioned to assess duty liability and to effect, wherever not levied or short-levied, recovery of duties. A finality in tax matters is not, therefore, intended to be vested in an administrative authority because collection of the legislated tax is for the benefit of the citizens of the country and in accordance with the power to tax having been invested by the citizenry on the sovereign legislature. The adjudication and appellate orders are, for that reason, subject to scrutiny of the review authority established in the taxing statute itself as enacted by the sovereign legislature. There is no such provision for review in the Customs House Agents Licencing Regulations, 1984.

13. The consequential question that begs an answer is the scope of taking recourse to the general provision in chapter XV of Customs Act, 196

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2 on the assumption that regulation 23 of the Custom House Agents Licencing Regulations, 1984 is a special provision contemplating appeal only to aggrieved licencee and that Revenue authorities cannot be discriminated against. Such a proposition does not appear to be congruent with legislative intent as the special provision itself is not warranted if general provision in section 129A of Customs Act, 1962 could have been resorted by an aggrieved licencee. On the contrary, legislative intent is abundantly clear in empowering the Regulation-making authority to provide for an appellate mechanism distinct from that enacted by the sovereign legislature in the Customs Act, 1962 and the Regulation-framing authority has, in accord with the wisdom of generations, entitled only the licencee to appeal. As the sovereign legislature has specifically empowered a separate appellate structure, the intent to deny the replication of the normal appellate remedy to the disciplinary authority against its own order is emphatic. We cannot countenance reading down the general provisions of review and appeal to apply to dropping of disciplinary proceedings against customs house agents in the face of specific and deliberate non-inclusion of such contingency in section 146 of Customs Act, 1962 and the Regulations framed there under. 14. For the above reasons, we reject the appeal.