Dismissed

M/S. Cargo Care International v. Commissioner of Customs

Kerala HC9 Feb 2018WP(C)/1288/2018

Case brief

AI extract

What is this about?

The Court dismissed the writ petition challenging the suspension of the petitioner's Customs Broker licence. The Court held that the suspension proceedings were legal, upheld the refusal to interfere under Article 226, and directed the respondent to complete further proceedings under Regulation 20 within three months.

What did the court decide?

The writ petition was dismissed. The respondent was directed to complete proceedings under Regulation 20 within three months.

M/S. Cargo Care International Vs Commissioner of Customs — Company and Corporate | Kerala HC (2018)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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FRIDAY, THE 9TH DAY OF FEBRUARY 2018 / 20TH MAGHA, 1939

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WP(C).No. 1288 of 2018

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PETITIONER :

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M/S. CARGO CARE INTERNATIONAL 2ND FLOOR, HINA HOUSE, K.P.K. MENON ROAD, WILLINGTON ISLAND, COCHIN- 682 003 REP. BY ITS MANAGING PARTNER BENNY FRANCIS

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BY ADVS.SRI.P.A.AUGUSTIAN SRI.M.A.BABY SMT.LINDA.M.J.

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RESPONDENT :

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COMMISSIONER OF CUSTOMS CUSTOM HOUSE, WILLINGTON ISLAND, COCHIN-09

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BY SRI.THOMAS MATHEW NELLIMOOTTIL, SC, BY SREELAL N. WARRIER, SC,

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01-02-2018, THE COURT ON 09/02/2018 DELIVERED THE FOLLOWING:

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WP(C).No. 1288 of 2018 (I)

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APPENDIX

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PETITIONER(S)' EXHIBITS :

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EXHIBIT P1 TRUE COPY OF THE SUSPENSION ORDER NO. S 34/08/2017-I & B CUS DATED 22-12-2017 EXHIBIT P2 TRUE COPY OF THE SUBMISSION LETTER DATED 27-12-2017 EXHIBIT P3 TRUE COPY OF THE ORDER -IN-ORIGINAL NO.COC-CUSTM-000-COM-36/2017-18 DATED 04-01-2018 EXHIBIT P4 TRUE COPY OF THE JUDGMENT OF HON'BLE HIGH COURT OF MADRAS IN THE MATTER OF MASTERSTROKE FREIGHT FORWARDERS P LTD VS CC(I) CHENNAI-1

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RESPONDENT'S EXHIBITS : NIL.

//TRUE COPY//

P.S. TO JUDGE

SHAJI P. CHALY, J.

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W.P.(C) No.1288 of 2018

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----------------------------------------------Dated this the 9^th day of February, 2018

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JUDGMENT

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This writ petition is filed by the petitioner seeking to quash Exts.P1 and P3 orders passed by the respondent, whereby the licence of the petitioner as a Customs Broker was suspended and later affirmed. Material facts for the disposal of the writ petition are as follows:

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Petitioner is a Customs Broker and holder of regular licence issued by the Commissionerate of Customs, Cochin under Regulation 9(1) of Custom House Agent Licensing Regulations (CHALR), 2004 [hereinafter called, 'Regulations, 2004]. The said licence is valid up to February, 2019. Regulations, 2004 is superseded by Customs Brokers Licensing Regulations, 2013. According to the petitioner, with due permission from appropriate Commissionerate, petitioner had extended Customs broker activities to Chennai, Mumbai, Bangalore and Hyderabad.

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On 20.09.2016, the Directorate of Revenue Intelligence (DRI), Bangalore Zonal Unit had intercepted the

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W.P.(C) No.1288 of 2018 2

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consignment of exporters M/s. Logo Trading and M/s. Valentino, which was exported by some other customs broker and investigation commenced on that day itself. During the investigation, it is found that the said exporters had taken assistance of the petitioner also in the past for export of goods and claimed export incentives, which were released by customs by conducting due investigation. It is also the case of

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the petitioner that, during last 15 months, no responsible person of the petitioner was summoned regarding the alleged irregularity committed by the petitioner while arranging export of the goods on behalf of the above said exporters. At present, petitioner has 40 employees working all over the branches and the petitioner is spending more than Rs.5 lakhs per month towards wages and salaries, apart from other working capital expenses to maintain the office and infrastructure.

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Matters being so, on 22.12.2017, petitioner's

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licence was suspended with immediate effect as per Ext.P1 order, alleging that petitioner has not complied with “Know Your Client” (KYC) norms. Respondent extended an opportunity of personal hearing on 28.12.2017 and petitioner

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W.P.(C) No.1288 of 2018 3

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submitted a detailed submission, evident from Ext.P2. However, according to the petitioner, without taking into account any of the contentions advanced by the petitioner, Ext.P3 order is passed, directing continuance of suspension in accordance with Regulation 19 of the Licensing Regulations, 2013. It is thus challenging the said orders passed by the respondent, this writ petition is filed. It is also admitted that this writ petition is preferred, since there is no Division Bench sitting in CESTAT, Bangalore and thereupon, petitioner is not having any alternative remedy to challenge Exts.P1 and P3 orders.

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A detailed counter affidavit is filed for and on behalf of the respondent, wherein, the allegations and statements made in the writ petition are all denied. Among other contentions, it is stated that, petitioner has got an equally efficacious remedy to prefer appeal before the Appellate Authority provided under Regulation 21 of Regulations, 2013, and there are no reasons assigned by the petitioner to seek interference of this Court exercising the power of judicial review under Article 226 of the Constitution of India. That apart, it is stated that, the licence of the petitioner was

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W.P.(C) No.1288 of 2018

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suspended by the respondent in the light of grave lapses on the part of the petitioner i.e. non-verification of the activities and identity of his clients M/s. Logo Trading and M/s. Valentino Enterprises, on whose behalf he has cleared the shipping bills and DRI had also found that petitioner has not produced any written authorization from these firms on whose behalf they have filed these shipping bills as required under Regulation 11(a) of Regulations, 2013. The licence was suspended to prevent further misuse of the licence as has been done by the fraudulent exporters.

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Petitioner was extended with an opportunity of personal hearing under Regulation 19(2) of Regulations, 2013 on 28.12.2017, wherein the petitioner has made his submissions dated 27.12.2017. The competent authority had given due consideration to the submissions made by the petitioner at the time of personal hearing. The competent authority has also taken note of the fact that, despite the occurrence of this incident, petitioner has not given any evidence on the steps taken to rectify the deficiencies in the process of verifying the credentials of clients that led to the instant case and to prevent its recurrence in future, and it was

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W.P.(C) No.1288 of 2018

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thereupon, decided to continue the suspension order, in accordance with the provisions of Regulation 19 of Regulations, 2013.

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The contention with respect to the allegations made by the petitioner with regard to the limitation occurred to the proceedings in accordance with Regulation 20 of Regulations, 2013 is also met with by the respondent, and the details of the

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same are also provided to contend that there is no limitation occurred in the proceedings to be initiated by the respondent. It is also submitted that, the entire action initiated by the respondent is in accordance with law, and the contentions advanced in the writ petition against the same cannot be sustained.

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I have heard learned counsel for the petitioner and the learned Standing Counsel for the respondent. Perused the documents on record and the pleadings put forth by the respective parties.

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The thrust of the contention advanced by the petitioner is that, the proceedings initiated by the respondent is barred by limitation as is provided under Regulation 20 of Regulations, 2013. That apart, it is contended that, there was

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W.P.(C) No.1288 of 2018 6

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no immediate action necessary in order to confer jurisdiction on the respondent to suspend the licence as per Regulation 19 of Regulations, 2013. Yet another contention advanced is that, petitioner is innocent in the matter, and if at all there is any lapses on the part of the exporter, the said liability cannot be extended to the Customs Broker, since necessary enquiries as is contemplated under the Regulations and Rules were followed

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by the petitioner, and therefore, the lapses of the exporter cannot be a reason for suspending the licence of the petitioner.

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On the other hand, learned Standing Counsel submitted that, in accordance with the obligations cast upon the Customs Broker under Regulation 11 of Regulations, 2013, petitioner has to verify the antecedent, correctness of Importer Exporter Code number, identity of his client and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information, and has invited my attention to sub-regulation (n) of Regulation 11. It is also contended that, there is no limitation as is contemplated under Regulation 20. That apart, it is contended that, petitioner is left with a remedy under Regulation 21, to prefer appeal before the Customs, Central Excise and Service

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Tax Appellate Tribunal and the petitioner has not made out any ground justifying interference of this Court under Article 226 of the Constitution of India, since every opportunity was provided to the petitioner before passing the continuance of suspension order in accordance with Regulation 19.

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I have evaluated the rival contentions advanced by the respective counsel. Regulation 19 of Regulations, 2013 is relevant to the context, which read thus;

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“ 19. Suspension of licence. --

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(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.

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(2) Where a licence is suspended under subregulation (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:

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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.”

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12. Therefore, it can be seen that, initiation of action

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under Regulation 19 is notwithstanding anything contained in

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W.P.(C) No.1288 of 2018 8

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Regulation 18. Regulation 18 deals with revocation of licence

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or imposition of penalty, wherein, 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 grounds enumerated thereunder. Therefore, by virtue of the non-obstante clause contained under Regulation 19, the proceedings under Regulations 18 and 19 will have to be treated separately and distinctly. However, the proviso to Regulation 19(2) makes it clear that, whenever the Commissioner of Customs passes an order for continuing the suspension, the further procedure thereafter shall be as provided in Regulation 20.

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Therefore, in my considered opinion, the proceedings initiated and completed by respondent under Regulation 19 cannot be said to be bad or illegal. The allegation with respect to limitation to proceed under Regulation 20, in my considered opinion, is premature at this stage of the proceedings. Various factual circumstances will have to be taken into account in order to deal with the aspect

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W.P.(C) No.1288 of 2018

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of limitation raised by the petitioner, and therefore, this Court need not, at this stage of the proceedings, venture to harp upon the same. The procedure contemplated under Regulation 20 makes it abundantly clear that, petitioner will get sufficient opportunity to raise such issues when further proceedings are initiated in contemplation of Regulation 20. In my considered opinion, the continuing of suspension order was passed by the respondent, taking into account the contentions advanced by the petitioner, especially due to the fact that, sub-regulation (2) of Regulation 19 encompasses a hearing only, at the said stage of the proceedings, and the opportunity for the petitioner to adduce evidence, cross-examine witnesses etc. etc. will come into play only when the proceedings are initiated under Regulation 20. In my considered opinion, petitioner could not establish any arbitrariness, illegality, unfairness or any other legal infirmities justifying interference of this Court under Article 226 of the Constitution of India. Necessarily, the writ petition has to fail, accordingly, it is dismissed.

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However, the respondent shall take urgent steps to complete the proceedings in contemplation of the Regulations at the earliest possible time, and at any rate, within three

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W.P.(C) No.1288 of 2018

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months from the date of receipt of a copy of this judgment, after providing sufficient opportunity of participation to the petitioner, as is encompassed under Regulation 20.

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Sd/- SHAJI P. CHALY JUDGE

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St/03.02.2018

M/S. Cargo Care International v. Commissioner of Customs

Case brief

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M/S. Cargo Care International v. Commissioner of Customs

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