ORDER
S.L. Peeran, Member (J)
1. This appeal challenges the order of Suspension issued under Regulation 20(2) of Custom House Agents Licensing Regulation, 2004, dated 24-3-2004. The submission of the appellant is that he has been a CH Agent for over 40 years with impeccable record and there was no immediate cause for taking ‘immediate action’ as necessary to suspend the licence in terms of Regulation 20(2) of the CHA dated 24-3-2004. It is stated that the cause of action took place on the appellant filing Bill of Entry No. 134994, dated 17-11-2003 for the clearance of a Jaguar Motor Vehicle owned by one Shri Mohammed Ibrahim Kanyana which was allowed to be cleared provisionally under Section 18 of the Customs Act pending further enquiries as there was doubt about the rate of duty applicable and the declaration given regarding the registration of the car prior to import. On preliminary investigation, it was found that the importer is not entitled to import a passenger car through Kochi without a licence and the documents relating to the registration of the imported vehicle made it amply clear that the CHA could not have been unaware of the ownership and possession of the imported vehicle as well as the absence of any connection between the importer and the imported vehicle. It was alleged that CHA should not have knowingly been responsible for filing declaration which were incorrect and intended to abet any person in importing a car contrary to any restrictions or prohibitions imposed in terms of the Foreign Trade (Development and Regulation) Act, 1992 by the statutory authority and in filing incorrect declaration in order to evade paying the duty leviable under the Customs Act, 1962. It is also alleged that the preliminary investigation revealed the role of the CHA agent and his acts of omissions and commissions warrant initiation of action under Regulation 20(1) of the Custom House Agents Licensing Regulations (CHALR in short). It was stated that the investigation was yet to be completed and the procedure under Regulation 22, which is an essential requirement for action under Regulation 20(1) can be commenced only thereafter. Hence, it was stated that in terms of Regulation 20(1) an immediate action was necessary to be initiated by the Commissioner of Customs to suspend the licence to prevent recurrence of failure to fulfil obligations during pendency of investigations. The stay application was initially heard and interim stay was granted staying the operation of this order, as the same was not complied. The appellants have complained to the Tribunal by filing a misc. application for a direction to the Commissioner to implement the order. However, the appeal has been listed for hearing and as such the matter was heard.
2. Both sides submitted their side of the case and filed the citations.
3. The question that arises for consideration is as to whether there was any preliminary evidence available for suspending the licence of CHA?. The appellants’ grievance is that there has been violation of principles of natural justice in placing him on suspension and there was no immediate cause and for immediate action to suspend the licence. It is submitted that the cause of action rose on the Bill of Entry filed on 17-11-2003 and when the suspension was issued on 24-3-2003, there was a long lapse of time. In the suspension order, no evidence has been brought out against the CHA and only a doubt has been raised in para 5 to the extent that the CHA agent “should not have knowingly been responsible for filing declaration which are incorrect and intended to abet any person in importing a car contrary to any restrictions or prohibitions imposed in terms of the Foreign Trade (Development and Regulation) Act, 1992 by the statutory authority and in filing incorrect declaration in order to evade paying the duty leviable under the Customs Act, 1962”.
4. Para 6 of the suspension order speaks about the alleged role of the CHA, but does not bring out in what manner he has acted and committed the acts of omissions and commissions. The CHA Agent has submitted that he has credible and unimpeachable record and without disclosing of the evidence or semblance ‘thereof, there was no ground for taking such immediate step and the delayed issue of suspension order cannot be considered as falling within the ambit of the terms used in Regulation 20(2) of the CHA licence.
5. We have carefully considered the submissions and find substance in the plea raised by the CHA, As noted, the immediate cause was not there when the Bill of Entry was filed. There is a lapse of four months and the suspension order does not disclose the details of omissions and commissions. The suspension order should be clear and specific and the offence alleged should be of such a nature that it should lead to a conclusion of taking immediate steps to stop the CHA from operating his licence, however such a criteria has not been brought out.
It is seen that the Tribunal, in the case of N.G. Bhanushali and Company v. CC, Kandla – 2003 (151) E.L.T. 544 (Tri. – Mumbai) has noted the Apex Court judgment rendered in the case of Menaka Gandhi v. UOI -1978 (1) SCC 248 (SC) and that of Larger Bench judgment rendered in the case of Freightwings and Travels Ltd. v. Commissioner – 2001 (129) E.L.T. 226 (Tribunal – LB), and held the action of placing the CHA under suspension was violative of principles of natural justice. The Tribunal directed the Commissioner to follow the directions given by the Larger Bench in para 5.4 of the judgment.
A similar order was passed in the Vega Shipping and Transport Pvt. Ltd. v. CC, Mumbai – 2003 (153) E.L.T. 587 (Tri. – Mumbai). It was found that there was a distinct time lag between the case adjudicated and the order of suspension. Therefore, the matter was directed to be re-considered and to pass a speaking order on the question whether suspension of licence should continue or not. It was directed that ‘such order shall be passed within a period of four weeks from the date of receipt of the order. It was also held that in the event of the Commissioner failing to pass such order within the stipulated period, the impugned order will stand vacated on expiry of such period’.
In the case of. D.H. Patkar and Co. v. CC (G), Mumbai – 2002 (150) E.L.T. 1168 (Tri. – Mumbai), the Tribunal set aside the order of suspension on the plea that when the enquiry was under way, then the orders could be made either for suspension or revocation. But while the enquiry is in progress, the learned Commissioner chose to use his powers under Regulation 21 to place the licence under suspension. The Tribunal, noted the judgment rendered in the case of N.D. Oza and Sons v. Commissioner – 1999 (106) E.L.T. 412 (Tribunal), wherein it had been observed that any delay in completion of enquiry against CHA is detrimental to his commercial interest. Therefore, the Tribunal, by adopting the same logic, revoked the order of suspension.
Likewise, the Tribunal, in the case of Mhatre and Sons v. CC, Mumbai – 2002 (147) E.L.T. 718 (Tri. – Mumbai) set aside the order of suspension passed under Regulation 21(2) of the CHALR. It was observed that “The rightful avocation of carrying on the business should not be unnecessarily hampered by the executive. This is a case where the Custom House has not taken proper care, devotion and attention which the case deserves. We, therefore, allow the appeal and set aside the impugned order”.
The Calcutta High Court in the case of N.C Singha and Sons v. UOl – 1998 (104) E.L.T. 11 (Cal.) struck down the order of suspension on the ground that action was not within the ambit of “immediate action” as contemplated in the provisions of the Regulation 21(2), in view of the delay in issuing the suspension order.
Likewise, the Hon’ble Madras High Court in the East West Freight Carriers (P) Ltd. v. CC, Madras – 1995 (77) E.L.T. 79 (Mad.) also held that ‘the power to suspend the licence is to be exercised where immediate action is necessary’. The Court noted that ‘a plain reading of the impugned order does not show that the Collector applied his mind to consider whether immediate action was necessary in the case’. The ratio of this judgment also clearly applies to the facts of the present case.
The Delhi High Court also set aside the order of suspension in the case of Rajinder Kumar Goyal v. Collector of Customs -1995 (79) E.L.T. 54 (Del.) when the order was found to be not within the terms of “immediate action for suspension of licence” in terms of Regulation 21(2) of CHALR. We find that in the present circumstance also, the facts could not come within the ambit of the terms noted in Regulation 21(2) of CHALR.
In the case of Trinity Forwarders v. CC, Madras – 2002 (140) E.L.T. 203 (Tri. – Chennai) also, the suspension order, without hearing the CHA, has been held to be bad and violative of principles of natural justice. The Tribunal has noted a large number of judgments including Larger Bench judgment and that of the judgment rendered in the case of K.P.S. and Co. v. Commissioner – 2001 (129) E.L.T. 128 (Tribunal), to pass the order.
In the case of Venkateswara Clearing and Forwarding Agent v. CC, Chennai -2001 (138) E.L.T. 615 (Tri. – Chennai), the Tribunal noted that there was no emergent situation requiring dispensation of notice for suspension and the same had not been brought out in the suspension order. Therefore, following the ratio of the judgment rendered in the case of K.P.S. and Co. v. Collector – 2001 (129) E.L.T. 128, the order of suspension was set aside on the plea of violation of principles of natural justice.
The Calcutta High Court in the case of Jeena and Co. v. Collector of Customs and Anr. – 1987 (28) E.L.T. 223 (Cal.) struck down the order of suspension as invalid for not complying with the principles of natural justice as such action entails grave civil consequences and must not be jettisoned except in very exceptional circumstances where compulsive necessity so demands.
In the present case also the Bill of Entry was filed and the same had been assessed provisionally. A presumption has been drawn that the CHA must have been acted in collusion with the owner of the car. It is a presumption and there is no exceptional grave circumstances brought out for setting an immediate action. Furthermore, there was a delay also in the suspension. Thirdly, the suspension order has not been passed by the Commissioner of Customs himself as is required under the law.
We notice that the Tribunal in the case of P.S. Bedi and Co. v. CC -1992 (59) E.L.T. 293 (Tribunal), after noting large number of judgments including the Apex Court judgments upheld the power of issue of suspension order, but, however, took note that it has to be only where the need for taking urgent action so demands. The Tribunal laid down that the suspension order must record reasons and the authority’s satisfaction regarding existence of the need to take immediate action. It has been held that suspension order is vitiated if based on stale material and by unexplained unordinate delay in passing it. The said order of suspension had been passed by the Collector of Customs in that case which was also found to be defective and was set aside. The Tribunal clearly noted that the authority’s satisfaction has to be brought out in the suspension order as noted, the authority being Commissioner of Customs, has not signed the order. Therefore, it was held that it cannot be said that he has personally applied his mind and has satisfied himself regarding the existence of the need to take immediate action. For this reason also the suspension order is required to be set aside.
6. We also notice that the order of suspension dated 24-3-2004 was issued by the Assistant Commissioner of Customs (I & B), and he cannot be the authority to pass the suspension order, as the Regulation 20 empowers only the Commissioner of Customs to place the CHA under suspension. It follows that the suspension order has to be signed only by the Commissioner of Customs and Assistant Commissioner of Customs cannot mention that he has been directed to place the CHA under suspension by the Commissioner of Customs again. This ground itself is sufficient to set aside the order of suspension. The order of suspension has to be signed by the Commissioner of Customs alone as contemplated under Regulation 20 of the CHA, after due application of mind and after due satisfaction of the material on record.
7. In view of the above noted judgments and the facts of the case falling within the ambit of several judgments already noted, we find merit in this appeal and, therefore, the order of suspension is set aside by allowing the appeal. The Commissioner of Customs is at liberty to take appropriate action for any such violation in terms of Customs Act against the CH Agent if there is any cause for the same or under the CHA Regulation Act after following the principles of natural justice and in terms of CHALR licence. The appeal is allowed.