IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 4TH DAY OF DECEMBER 2019 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR. JUSTICE ASHOK S. KINAGI CSTA NO.3 OF 2015 BETWEEN:
COMMISSIONER OF CUSTOMS C.R.BUILDING, QUEENS ROAD BENGALURU – 560 001 ….APPELLANT (BY SRI. JEEVAN J. NEERALGI, ADVOCATE) AND:
KOUSHIK CARGO PVT. LTD. No.390, MORSEY MANOR, 3RD FLOOR, AIRPORT EXIT ROAD BENGALURU-560 017 ….RESPONDENT (BY SRI. MAHANTESH SHETTAR, ADVOCATE - ABSENT) THIS CSTA IS FILED UNDER SECTION 130(A) OF THE CUSTOMS ACT, PRAYING TO ALLOW THE APPEAL BY ANSWERING THE SUBSTANTIAL QUESTIONS OF LAW IN FAVOUR OF THE APPELLANT AND SET ASIDE THE FINAL ORDER No.21886/2014 DATED 15.10.2014; AND ETC.
THIS CSTA HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 07.11.2019, COMING ON FOR PRONOUNCEMENT THIS DAY, ASHOK S. KINAGI J, DELIVERED THE FOLLOWING:
JUDGMENT The appellant-Revenue has filed the present appeal against the order dated 15.10.2014, passed in Final Order 21886 of 2014, wherein the Appellate Authority has rejected the appeal filed by the Revenue on the ground that no appeal can be filed against the order passed by the Commissioner under CHA license regulations.
2. Brief facts of the case are as under:
The respondent is the holder of Custom House Agent’s license issued under the provisions of Customs House Agents Licensing Regulations, 2004 (CHALR)/Customs Broker Licensing Regulations.
Respondent was acting as a Custom House Agent (CHA) for M/s. Lakshmi Traders for import of goods declared as “Sodium Sulphate” under the Bill of Entry No.3353 dated 16.04.2004. Based on specific information that the said M/s. Lakshmi Traders were attempting to smuggle some expensive chemical, by concealing the same in sodium sulphate bags and mis-declaring the same as sodium sulphate with an intention to evade customs duty and possible anti dumping duty, the officers of the Custom Headquarters Preventive (CIU), intercepted the Container No.HLXU-2255933 on 29.04.2004, and verified the cargo contained therein.
CHA has not fulfilled the requirement of CHALR and violated the provisions of Regulation 13(a) and 13(d) of CHALR 2004 on the following grounds:
(1) Regulation 13(a) of CHALR 2004 inasmuch as the CHA has not taken precaution to check whether the outstation importer existed and had also not obtained an authorization from Shanmugathai, the proprietrix of M/s. Lakshmi Traders.
(2) Regulation 13(d) of CHALR 2004 inasmuch as they failed to advise his client to comply with the provisions of the Customs Act (regarding mis- declaration of the content of goods and suppression of real invoices) and also failed to bring the said non-compliance thereof to the notice of the department.
The Commissioner of Customs, Bengaluru issued a show-cause notice to the respondent on 19.10.2006, vide Annexure-B. Respondent submitted a reply dated 10.07.2007, pointing out to the findings of the inquiry officer that lapses were on the part of the CHA and sought for dropping the proceedings. The Commissioner of Customs, Bengaluru by assigning reasons, dropped the proceedings instituted against the respondent vide order dated 15.07.2008. The review committee by its order dated 19.08.2008, directed to file an appeal before the Customs, Excise and Service Tax Appellate Tribunal, Southern Bench, Bengaluru.
The petitioner preferred an appeal challenging the order dated 10.07.2008 passed by the Commissioner of Customs (Appeals), Bangalore, before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru. The Appellate Tribunal passed a Final Order 21886/2014 in Appeal No.C/632/2008-DB, vide order dated 15.10.2014, rejected the appeal on the ground that no appeal can be filed by the Revenue against the order passed by the Commissioner under CHA license regulations.
The petitioner aggrieved by the Final Order No.21886/2014 dated 15.10.2014, passed by CESTAT, Bengaluru, in Appeal No.C/632/2008-DB, has filed the present appeal.
3. Heard arguments of the learned counsel for the appellant.
4. This court, by order dated 30.07.2015, admitted this appeal on the following substantial questions of law:
(a) Whether, the CESTAT is right in law in holding that no appeal can be filed by the Department against the order passed by the Commissioner under the provisions of the Customs House Agents Licensing Regulations, 2004?
(b) Whether the provisions contained in Regulation 22(8) of the CHALR, 2004 restrict the right of appeal by the Department overriding the provisions contained in Section 129A and 129D of the Customs Act, 1962?
(c) Whether in the facts and circumstances of the case, the CESTAT ought to have heard and decided the appeal on merits?
5. Before considering the case on merits, it is appropriate to quote the relevant provisions of the Acts and Regulations of 2013:
“ 2. Definitions:
In this Act, unless the context otherwise requires – (1) “adjudicating authority” means any authority competent to pass any order or decision under this Act, but does not include the Board, Commissioner (Appeals) or Appellate Tribunal;
122-A. Adjudication Procedure:
(1) The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires.
(2) The adjudicating authority may, if sufficient cause is shown at any stage of proceeding referred to in sub- section (1), grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing:
PROVIDED that no such adjournment shall be granted more than three times to a party during the proceeding.
129-A. Appeals to the Appellate Tribunal:
(1) Any person aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order-
(a) a decision or order passed by the [Principal Commissioner of
(b) an order passed by the [Commissioner (Appeals)] under section 128A;
(c) an order passed by the Board or the [Appellate Commissioner of Customs] under section 128, as it stood immediately before the appointed day;
(d) an order passed by the Board or the [Principal Commissioner of Customs or Commissioner of Customs], either before or after the appointed day under section 130, as it stood immediately before that day:
146. Licence for Customs Brokers:
(1) No person shall carry on business as a customs broker 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 such licence;
(b) the form of the licence and the fees payable therefor;
(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 a customs broker;
(d) the manner of conducting the examination;
(e) the restrictions and conditions (including the furnishing of security by the licensee) subject to which a licence may be granted;
(f) the circumstances in which a licence may be suspended or revoked; and (g) the appeals, if any, against an order of suspension or revocation of a licence and the period within which such appeal may be filed.
CUSTOMS BROKERS LICENSING REGULATIONS, 2013 Regulation 18. Revocation of licence or imposition of penalty. – The Commissioner of Customs may, subject to the provisions of regulation 20, revoke the licence of a Customs Broker and order for forfeiture of part or whole of security, or impose penalty not exceeding fifty thousand rupees on a Customs Broker on any of the following grounds, namely:-
(a) failure of to comply with any of the conditions of the bond executed by him under regulation 8;
(b) failure to comply with any of the provisions of these regulations, within his jurisdiction or anywhere else;
(c)committing any misconduct, whether within his jurisdiction or anywhere else which in the opinion of the Commissioner renders him unfit to transact any business in the Customs Station;
(d) adjudicated as an insolvent;
and (e) of unsound mind;
(f) has been convicted by a competent Court for an offence involving moral turpitude:
Provided that the imposition of penalty or any action taken under these regulations shall be without prejudice to the action that may be taken against the Customs Broker or his employee under the provisions of the Customs Act, 1962 (52 of 1962) or any other law for the time being in force.
Regulation 19: Suspension of licence -
(1) Notwithstanding anything contained in regulation 18, the Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the licence of a Customs Broker where an enquiry against such agent is pending or contemplated.
(2) Where a licence is suspended under sub-regulation (1), the Commissioner of Customs shall, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs Broker whose licence is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs Broker:
Provided that in case the Commissioner of Customs passes an order for continuing the suspension, the further procedure thereafter shall be as provided in regulation 20.
Regulation 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 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 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 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.
Regulation 21: Appeal by Customs Broker. – A Customs Broker, who is aggrieved by any order passed by the Commissioner of Customs under these regulations, may prefer an appeal under section 129A of the Act to the Customs. Central Excise and Service Tax Appellate Tribunal established under sub-section (1) of section 129 of the Act.
22. Penalty. – A Customs Broker, who contravenes any provisions of these regulations or who fails to comply with any provision of these regulations shall be liable to a penalty which may extend to fifty thousand rupees.
23. Prohibition. – Notwithstanding anything contained in these regulations, the Commissioner of Customs may prohibit any Customs Broker from working in one or more sections of the Customs Station, if he is satisfied that such Customs Broker has not fulfilled his obligations as laid down under regulation 11 in relation to work in that section or sections.”
6. As could be seen Section-129A of the Customs Act, provides for a substantial right of appeal. The right of appeal cannot be taken away or curtailed, since the Regulations have been framed under the Act. The Regulations cannot stipulate conditions or procedures contrary to those stated in the Act. The Regulations are intended only to instruct on the applicability of the Act. It cannot grant or reduce what has been granted or otherwise by the Act. Even otherwise, the Regulations for the Customs Act, does not speak about the applicability or otherwise of Section-129A of the Customs Act. Therefore, the provisions contained under Section-129A of the Customs Act must prevail over the Regulations. Even otherwise, the Regulations do not prohibit the Revenue from challenging the order.
7. This court while dealing with a similar order under Regulation 23 in the case of M/S. CAPRICORN LOGISTICS PVT. LTD. VS. COMMISSIONER OF CUSTOMS, decided on 21.11.2017, and in the case of M/S. CARGOMAR VS. UNION OF INDIA AND ANOTHER, decided on 06.02.2018, has held that orders passed under Regulation 23 of the Regulations of 2013 would be appealable before the Appellate Tribunal, under Section 129A of the Act, read with Regulation 21 of the Regulations of 2013. This court has already laid a law in the aforementioned judgments that the impugned order under Regulation 23 is an appealable order before CESTAT under Section 129A of the Act read with Regulation 21.
8. When this court has already taken a view that the order passed under Regulation 23 of the Regulations of 2013 is an appealable order under Section 129A of the Act read with Regulation 21 of the Regulations of 2013, the Appellate Authority, without considering the law laid down by this court in the aforesaid judgments, has committed an error in rejecting the appeal on the ground that no appeal can be filed by the Revenue against the order passed by the Commissioner of Customs. The findings of the Appellate Authority is contrary to the law laid down by this court in the aforesaid judgments.
9. In view of the above said reasons, we are of the considered opinion that the appeal filed by the Revenue is maintainable under Section 129A of the Act read with Regulation 21 of the Regulations of 2013. Accordingly, the substantial questions of law are answered in favour of the Revenue.
10. Hence, we proceed to pass the following:
Order The appeal is allowed.
The Final Order 21886/2014 dated 15.10.2014, passed by the CESTAT, Bengaluru in Appeal No.3-632/2008 is set aside. The appeal is restored on the file of CESTAT and is directed to consider the appeal and decide the matter on merits in accordance with law.
Ordered accordingly.
Sd/- JUDGE Sd/- JUDGE RD