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2025 (6) TMI 1518 - HC - CustomsMaintainability of petition - availability of laternative remedy - levy of penalty u/s 28(4) of CA 1962 on petitioner no. 1 customs broker initially authorised by the importer for the illegal diversion and clandestine removal of imported goods after the petitioner had issued a no objection letter and ceased to be the authorised customs broker - HELD THAT - The petitioner no. 1 was appointed as a custom broker by the importer. The petitioner no. 1 was also involved in clearance of goods declared as Black Pepper and had accordingly filed two warehouses (Into Bond). It was only after the goods reached the CWC Garden Reach Kolkata that the importer had sought for no objection from the petitioner no. 1 and the petitioner no. 1 did issue and consent to the same whereupon the importer had appointed another customs broker upon compliance of due procedure. It is found that the Tribunal by proceeding on the premise that post 5th November 2018 the petitioner no. 1 had no role to play has set aside the order of revocation of licence. The fact also cannot be ignored that on the basis of intelligence available with the customs authority a proceeding under section 28(4) of the said Act had been initiated. It is also an admitted position that the imported goods had been removed illegally and diverted from its original location to somewhere in Delhi by the importer/mastermind and the involvement of the petitioner no. 1 was notified in the show-cause based on which the penalty has been imposed. It would be prudent for this Court not to entertain the petition and leave the petitioner to pursue its statutory remedy - Petition dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court were: - Whether the petitioner no. 1, a customs broker initially authorised by the importer, could be held liable and penalised under section 28(4) of the Customs Act, 1962 for the illegal diversion and clandestine removal of imported goods after the petitioner had issued a 'no objection' letter and ceased to be the authorised customs broker. - Whether the revocation of the petitioner no. 1's customs broker licence under Regulations 10(m) and 10(n) of the Customs Brokers Licensing Regulation, 2018 (CBLR, 2018) was justified, and the implications of the appellate authority's decision setting aside that revocation on the penalty imposed under the Customs Act. - The extent to which the Court in its writ jurisdiction can interfere with findings of fact and adjudications made by the customs authorities, especially in the presence of alternative statutory remedies such as appeals under section 129A of the Customs Act. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Liability of the petitioner no. 1 under section 28(4) of the Customs Act for illegal diversion of goods after disassociation Relevant legal framework and precedents: Section 28(4) of the Customs Act, 1962 empowers the customs authorities to issue show cause notices and impose penalties on persons involved in violations related to imported goods, including illegal removal or diversion from customs bonded warehouses. The Customs Brokers Licensing Regulation, 2018 governs the licensing and conduct of customs brokers and includes provisions for revocation of licenses under Regulations 10(m) and 10(n). Court's interpretation and reasoning: The Court noted that the petitioner no. 1 was initially authorised by the importer to handle the importation and clearance of the goods declared as Black Pepper. The petitioner filed two Warehouse (Into Bond) Bills of Entry and the goods were warehoused at the Customs bonded warehouse at CWC, Garden Reach, Kolkata. Subsequently, the importer requested the petitioner no. 1 to issue a 'no objection' letter to enable appointment of another customs broker. The petitioner issued such a letter dated 5th November 2018, effectively disassociating itself from further clearance of the goods. Despite this disassociation, a show cause notice was issued under section 28(4) alleging the petitioner's involvement in the illegal diversion of the goods en route to their destination warehouse at CWC, Panki, Kanpur. The customs authority relied on intelligence and enquiry findings to conclude the petitioner's involvement. Key evidence and findings: The petitioner's issuance of the 'no objection' letter and the appointment of a new customs broker were undisputed. The Tribunal had earlier held that the petitioner no. 1 was no longer the authorised representative after 5th November 2018 and could not be held responsible for offences committed by the subsequent customs broker. However, the customs authority's enquiry under section 28(4) was based on separate intelligence indicating the petitioner's involvement. Application of law to facts: The Court observed that the parameters for adjudication under section 28(4) of the Customs Act and revocation proceedings under CBLR, 2018 are different. While the Tribunal set aside the revocation of the petitioner's licence on the ground of disassociation, the enquiry under section 28(4) focused on the petitioner's alleged involvement in the illegal diversion of goods. The Court recognized that the petitioner's liability under section 28(4) is a distinct issue from the licensing matter. Treatment of competing arguments: The petitioner argued that penalty imposition was unjustified as it had ceased to be the authorised customs broker post 5th November 2018. The customs authority contended that the enquiry and penalty were based on intelligence and independent of the licensing issue. The Court acknowledged the petitioner's disassociation but also the customs authority's right to investigate and penalise based on evidence of involvement. Conclusions: The Court found that the petitioner's liability under section 28(4) could not be summarily dismissed on the basis of disassociation alone. The enquiry and penalty related to a separate factual and legal domain. Therefore, the Court declined to interfere with the penalty order in writ jurisdiction. Issue 2: Validity of revocation of customs broker licence under CBLR, 2018 and its impact on penalty proceedings Relevant legal framework and precedents: Regulations 10(m) and 10(n) of the CBLR, 2018 provide grounds for revocation of customs broker licences. Appeals against such revocation orders lie before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). Section 129A of the Customs Act provides for appeal against certain orders passed by customs authorities. Court's interpretation and reasoning: The petitioner's licence was revoked on 11th July 2024 for alleged violations of the CBLR, 2018. The petitioner challenged the revocation before CESTAT which allowed the appeals on 7th November 2024, holding that the petitioner was no longer authorised after 5th November 2018 and could not be held responsible for acts of the subsequent customs broker. The revocation order was set aside. The Court emphasized that the parameters for adjudication of revocation of licence and enquiry under section 28(4) are different. The Tribunal's decision on revocation did not preclude the customs authority from proceeding under section 28(4) based on intelligence pointing to the petitioner's involvement in illegal diversion. Key evidence and findings: The Tribunal's order was based on the petitioner's disassociation and lack of authorisation after 5th November 2018. The customs authority's enquiry relied on intelligence and evidence of involvement in illegal diversion. These were distinct proceedings with separate legal consequences. Application of law to facts: The Court recognized that setting aside the revocation order restored the petitioner's licence but did not absolve the petitioner from liability under section 28(4). The two proceedings addressed different issues - licensing compliance versus involvement in illegal activities. Treatment of competing arguments: While the petitioner relied on the Tribunal's order to argue against penalty, the customs authority maintained that the penalty was independent and based on separate findings. The Court agreed with the customs authority's position. Conclusions: The Court held that the revocation and penalty proceedings are independent, and the Tribunal's decision on revocation does not bar the customs authority from imposing penalty under section 28(4). Issue 3: Jurisdiction of the High Court to entertain the writ petition challenging the penalty order Relevant legal framework and precedents: Section 129A of the Customs Act provides a statutory remedy of appeal against orders passed by customs authorities. The High Court's writ jurisdiction is generally not exercised where an alternative efficacious remedy exists. Court's interpretation and reasoning: The Court noted that the impugned penalty order under section 28(4) is appealable under section 129A. The petitioner had not availed of the statutory appeal remedy before approaching the High Court. The Court expressed reluctance to interfere in the writ jurisdiction in the presence of an alternative remedy. Key evidence and findings: The petitioner's appeals against revocation were allowed by the Tribunal, but the penalty order remained unchallenged through appeal. The Court observed that the time for appeal had expired during pendency of the writ petition but granted liberty to file appeal within three weeks. Application of law to facts: The Court applied the principle that writ jurisdiction is discretionary and should not be exercised where an alternative statutory remedy exists and is available. The Court declined to entertain the writ petition on this ground. Treatment of competing arguments: The petitioner urged interference to prevent injustice, citing disassociation and lack of fault. The customs authority stressed availability of appeal and the factual nature of the enquiry. The Court sided with the latter. Conclusions: The Court dismissed the writ petition on the ground of availability of alternative remedy and allowed the petitioner to file appeal within a limited time. 3. SIGNIFICANT HOLDINGS - "The parameters for adjudication of an order of revocation of licence under CBLR, 2018 and a proceeding under section 28(4) are entirely different." - "The petitioner no. 1 was no longer the authorised representative for clearance of the goods after 5th November 2018 and could not be held responsible for any offence committed by the subsequent customs broker appointed by the importer." (As held by the Tribunal in appeal against revocation) - "It is also an admitted position that the imported goods had been removed illegally and diverted from its original location ... and the involvement of the petitioner no. 1 was notified in the show-cause based on which the penalty has been imposed." - "This is not a case of any jurisdictional error, if the adjudicating authority has committed an error of fact, the same cannot be corrected by this Court in exercise of its extraordinary writ jurisdiction." - "In view of the peculiar facts noted above it would be prudent for this Court not to entertain the petition and leave the petitioner to pursue its statutory remedy." - The Court granted the petitioner liberty to file appeal within three weeks despite the expiry of the statutory period during pendency of the writ petition.
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