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TMI Blog2011 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... candidates who have passed the examination conducted under Regulation 9 of the earlier Regulations of 1984, but were not granted licenses under the earlier regulations can be required under the new Regulations of 2004 to appear for certain additional subjects in order to obtain a licence after the enforcement of the new regulations. According to the Petitioners, a candidate upon passing the examination held under the 1984 Regulations, had a vested right to obtain a licence even though as a matter of fact no licence was issued or granted until the new regulations came into force in 2004. On the other hand, according to the Respondents the mere passing of the examination held under the erstwhile regulations did not confer a vested right to obtain a licence. Once new statutory regulations have been framed in 2004 following the decision of an expert committee which recommended steps to upgrade the skills and competencies of Customs House Agents, an application for a fresh licence must comply with the new regulations insofar as they require inter alia the passing of an examination in certain additional subjects. 2. Section 146 of the Customs Act 1962 provides that no person shall carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of value for assessment; (e) conversion of currency; (f) nature and description of documents to be filed with various kinds of bills of entry and shipping bills; (g) procedure for assessment and payment of duty; (h) examination of merchandise of the Customs stations; (i) provisions of the Trade and Merchandise Marks Act, 1958 (43 of 1958); (j) prohibitions on import and export; (k) bonding procedure and clearance from bond; (l) reimportation and conditions for free reentry; (m) drawback; (n) offences under the Act; (o) the provisions of allied Acts including Imports and Exports (Control) Act, 1947 (18 of 1947), Foreign Exchange Regulation Act, 1973 (46 of 1973), Indian Explosives Act, 1884 (4 of 1884), Arms Act, 1959 (54 of 1959), Opium Act, 1878 (1 of 1878), Drugs and Cosmetics Act, 1940 (23 of 1940), Destructive Insects and Pests Act, 1914 (2 of 1914), Dangerous Drugs Act 1930, (2 of 1930) insofar as they are relevant to the clearance of goods through customs. (p) procedure in the matter of refund of duty paid, appeals and revision petitions under the Act." 3. Under Regulation 10 the Commissioner was empowered to grant a regular licence to the holder of a temporary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant referred to in clause (b) of subregulations (2) and (3) of regulation 5, as the case may be, or a person who has passed the examination referred to in regulation 8, shall prove to the satisfaction of the Commissioner of Customs, that - (a) the applicant, or his authorized employee, is a graduate from a recognized University and possesses a professional degree viz. C.A./ M.B.A. / LL.B. / Diploma in Customs Clearance work from any Institute or University recognized by the Government with a working knowledge of computers and customs procedures, or is a graduate having at least three years' experience in transacting Custom House Agent work as a GCard holder, or a person who has passed the examination referred to in regulation 8, or is a retired Group 'A' officer from the Indian Customs and Central Excise Service (IC&CES) having a minimum of ten years' experience in Group 'A'; (b) the applicant has financial viability supported by a certificate issued by a Scheduled Bank or such other proof acceptable to the Commissioner of Customs evidencing possession of assets of value of not less that Rs.2 lakhs; (c) the applicant is a citizen of India." 5. Regulation 8 provides for an exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stipulated that where the applicant in question is a proprietary concern, the applicant must be a person who has passed the examination under Regulation 8. Similarly, in the case of a firm or company, the partner, director, manager or duly authorized employee who would actually be engaged in the clearance of goods or conveyance through customs, was required to have passed the examination under Regulation 8. 8. These proceedings have been instituted in order to challenge the requirement which is embodied in the regulations of 2004 to the effect that a person who has passed the examination conducted under Regulation 9 of 1984 regulations, but has not yet been granted a licence would be deemed to have passed the examination under Regulation 8 of the 2004 regulations, upon passing a written examination conducted in certain additional subjects. 9. Counsel appearing on behalf of the Petitioners submitted that (i) A candidate would stand declared as a CHA immediately upon passing the examination under Regulation 9 of the 1984 regulations; (ii) Such a candidate could be engaged by any company or firm to carry on the business of a CHA; (iii) The right of such a candidate to obtain a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsee However, if a candidate who has passed the examination under the regulations of 1984 chooses to obtain a fresh licence in his own name, there is nothing arbitrary about requiring him to pass the examination under the 2004 regulations in certain additional subjects; (iv) The right to carry on business as a CHA has not been abrogated. In any event consistent with the provisions of Section 146(2) conditions can be imposed reasonably and in the public interest to prescribe the qualifications for persons who may apply for a licence and for qualifications of persons to be employed by a licensee to assist him in his work. 11. The rival submissions now fall for consideration. 12. Under the earlier regulations of 1984, the procedure envisaged contemplated the grant of temporary licences initially for a period of one year under Regulation 8. The holder of a temporary licence in the case of an individual and the person or persons who would actually be engaged in the work of clearing goods through customs on behalf of a firm or a company holding a temporary licence were required to qualify in an examination under Regulation 9 within the stipulated period. Upon qualifying for the examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lify under the new regulations subject to passing in certain additional subjects. The rationale for introducing this requirement has been explained in the affidavit filed on behalf of the Respondents. In the affidavit in reply it has been stated that the Kelkar Committee recommended a review of the technical qualifications of Customs House Agents. The decision of the Central Board of Excise and Customs to require candidates who had passed the earlier examination under the 1984 regulations to qualify in additional subjects was based upon the need to ensure the same competence and knowledge levels among successful applicants under both sets of regulations. The requirement of passing an examination in additional subjects cannot, in our view, be held to be arbitrary or lacking a reasonable nexus with the object sought to be achieved. The object underlying the requirement of passing an examination under Regulation 8 is to ensure that a person who comes to carry on business as a CHA has a basic level of competence and knowledge. Persons who had passed the earlier examination held under the regulations of 1984 had no vested right to obtain a licence. As a matter of fact, such persons who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. His contract of employment is not affected by the new regulations of 2004. Where, however, a person who has passed the examination held under the 1984 regulations seeks to obtain a fresh licence in his own name under the regulations of 2004, the regulations mandate the passing of an examination in certain additional subjects. There being no vested right to obtain or acquire a licence, it was open to the Central Board of Excise and Customs as a delegate of the legislature to prescribe reasonable conditions which must be fulfilled before a licence can be granted. 15. One of the submissions which has been pressed in aid before the Court is that licences are being granted by certain Commissionerates even after the enforcement of the regulations of 2004 to persons who had passed the examination under the 1984 regulations. In order to deal with the submission, further affidavits in reply have been filed on behalf of the Respondents. In the affidavit of the Deputy Commissioner of Customs dated 26 August 2011 it has been stated that the Commissionerates of Customs at Jamnagar, Ahmedabad, and Vishakhapattanam have clarified that no persons qualified under Regulation 9 of 1984 regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt reiterated the twin tests of reasonable classification: (1) that the classification ' is founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (2) the differentia must have a rational relation to the object sought to be achieved by the impugned provision.' Id. at 301. In Comptroller and Auditor General v. Kamlesh Vadilal Mehta (2003) 2 SCC 349, the Supreme Court held that the Comptroller and Auditor General while appointing auditors for government corporations and PSUs must exercise his statutory authority reasonably. The court there upheld the judgment of the Gujarat High Court which held that the actions of the appellant authority were antithetical to Article 14, being unreasonable and arbitrary. There, the Comptroller and Auditor General exercised his powers under the Companies Act arbitrarily to differentiate between a single chartered accountant and a partnership of chartered accountants for the purposes of the above appointments. The Supreme Court struck down the impugned notification as violative of Article 14. In General Manager, S.C. Railway v. Siddhantti (1974) 4 SCC 335, the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those who had obtained licenses prior to the regulations of 2004 and those who on account of the failure of the concerned Commissionerate to notify applications could not obtain licences before the new regulations came into force. In our respectful view the judgment delivered by the Madras High Court commends itself for acceptance. The mere passing of an examination under the 1984 regulations did not confer a vested right to the grant of a licence. Upon the enforcement of the regulations of 2004 every applicant for the grant of a new licence must comply with the regulations which were made in the exercise of the statutory power conferred by Section 146(2). The requirement of passing an examination in additional subjects is based on an intelligible consideration which is to upgrade the skills and competencies of persons who seek to apply for a licence as CHAS. A person who seeks a licence after the enforcement of the Regulation of 2004 must therefore comply with the requirements of the new regulations. For these reasons we are of the view that no case for interference under Article 226 of the Constitution has been made out.
The Petition shall accordingly stand dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
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