TMI Blog1961 (8) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... r temporary, were issued under s.202 of the Sea Customs Act, 1878, prior to its amendment by the Sea Customs 'Amendment) Act, 1955 (Act 21 of 1955). They were issued after a brief enquiry and subject to the fulfilment by the applicant of the following conditions : (1) He must produce at least 2 certificates of character each from a Justice of Peace or other persons of known respectability. (2) He must certify that he has not been convicted of any criminal offence. (3) He must declare that he will have no claim to any accommodation in the Custom House. (4) He must also give a security of ₹ 2000 in cash or Government paper having an equivalent market value and execute a Bond for ₹ 2000 on It fifteen rupees Stamp Paper in the attached form. In 1955, by the amending Act, s.202 was substituted by another section. The section now reads : 202. (1) With effect from such date as the Central Government may, by notification in the Official Gazette specify, no person shall act as an agent for the transaction of any business relating to the entrance or clearance of any vessel or the import or export of goods or baggage in any Custom-house unless such person holds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adams and (4) Baggage Clearing Agents. According to the petitioners, there were, 100 licensed Clearing Agents, 200 licensed Dalals, 270 Muccadams and about 15 Baggage Clearing Agents. The duties and functions of these four classes of agents were different. Whether these distinctions were always maintained and whether they grew out of regulations or usage is hardly necessary to enquire. By the Rules of 1960, these classes were merged into one, and all licensed agents were placed on an equal footing. In other words, there is to be hereafter one class of agents' Though the petitioners holding permanent' licences and the petitioners holding 'temporary licences with a term to run out have relied upon the fact that their licences are still valid, there was no serious attempt to deny that under s. 202(1) they would be rendered ineffective after the date to be fixed by Government. The permanent' licences also are not in a favourable position in this regard. If the first sub-section requires that fresh licences to work as Custom House Agents be obtained, the distinction between permanent and temporary licences ceases to be material. No part of s.202 was challenged as bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by s. 9 to make rules consistent with the Sea Customs Act 'generally to carry out the provisions of this Act . The power to make rules under s. 202 is not the only power which the Chief Customs-authority can exercise, and it is only too clear that power can also be derived from S. 9, if there be need. Thus, if it is necessary that the agents must carry out certain provisions of the Act, a rule can be made in the exercise of the two powers together. Though the impugned Rules are headed as framed under s.202 of the Sea Customs Act., they cannot be questioned, if they carry out not only the special purposes of s.202 but also certain other purposes of the Act, because the two powers will concur to sustain them. It is only when a rule or rules are pointed out, which subserve neither the special purpose of the section nor the general purposes of the Act that they can be successfully questioned. In short, therefore, the petitioners' case on the individual Rules alone remains to consider. The first contention is that under the impugned Rules, the number of licences to be granted at the Customs House can be limited by the Customs. collector, and that applications can only be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c), which require the applicant to furnish to the Customs-collector satisfactory evidence as to his respectability, reliability and financial status, and that he would be in a position to muster sufficient clientele and business in the event of his being granted the licence. The applicant has also to furnish an income-tax clearance certificate. These conditions are challenged as being unreasonable restrictions upon the right to carry on a profession or avocation. Serious attempt was not made to establish that the condition about respectability and reliability was unconstitutional. It was, however, pointed out that evidence about financial status created a class barrier between the rich and the poor and only the rich were to be preferred. By the words financial status is not meant that the applicant must be a wealthy person; what is required is that he should not be financially embarrassed, and proof that he is in easy circumstances. It is obvious that the agents under the Act deal with vast sums of money and valuable articles, and it may be necessary to scrutinise the financial position the applicant to find out whether or not he would be exposed to temptations. A person heavily i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8A. insistence upon the production of the certificate is, in our opinion, connected with the enquiry into his respectability and financial status. to find out if he can be trusted with other persons' money and goods. The next Rule which is questioned is r. 9, which provides for an examination of the applicant. This examination follows a scrutiny of the application under the other Rules, and embraces questions on various subjects. The duties of the agents require them to handle goods, and the examination is designed to find out whether a candidate knows the elements of the law relating to the arrival, entry and clearance of vessels and goods. Objection is not raised to the examination as a whole but only to cl. (p) of r. 9 (2) under which a candidate is supposed to know the procedure in the matter of refund of claims, appeals and revision petitions under the Sea Customs Act. It is contended that these are matters in which an agent is not interested as an agent, but are matters for the owner and the Castoms- authorities to know. It is true that the curriculum for the examination is somewhat extensive ; but it is also, clear that what is expected of the candidate is knowledge, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the respectability, reliability and financial status of the candidate. Then. follows an examination, If a' candidate satisfies 'all the above condition's, there would hardly be any ground left. for rejecting his application, except probably his physical unfitness to. do. the work, The Rule which: is framed is so gel general that it leaves to discretion of the Customs-collector to reject a. candidate for a trumpery reason (which he need not state), even though the candidate may be otherwise suitable. In out opinion, if a candidate is found fit under the other Rules and has successfully passed the examination, he should only be rejected under a rule which requires the Customs-collector to state his. reasons for the rejection, and the rules must provide for an appeal against that order, as they do in the other cases. As the Rule stands, it cannot be considered to be a reasonable restriction upon the right of the successful candidate to carry on his avocation. The next Rule which is questioned is r. 11, which enjoins the payment of a fee of ₹ 50 both for a fresh application as well as renewal of the licence. In so far as the fee for the grant of a licence in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assurance,, in the minds of the prospective clients, and the Rule is designed to ensure that the monies which the agents handle are properly accounted for. In our opinion, these Rules are salutary, and further the control over the agents, who stand in a fiduciary capacity both in regard to their own clients and the Government. Rule, 17, which enjoins upon a firm which acts as a licensee to report to the Customs collector as early as possible and, in any event, within a period of three days of a change in the constitution of the firm, is next challenged. It is said that the period of three days is too short ; but it must be remembered that 'a large number of transactions may go through without the licensing authority being aware that the constitution of a firm has changed. The Rule is designed to bring promptly to the notice of the Customs-collector the change in the constitution of the firm, so that he may be in a position to decide for himself whether the licence in the changed circumstances should be allowed to operate or be suspended or revoked. In our judgment, this Rule, cannot be questioned. Mr. Porus Mehta who argued the case on behalf of the Clearing Agents, state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spension or revocation of the licence would be merited. Lastly, it is contended that the Rules control a licensed agent in a manner which makes him an unpaid servant' of the Customs-authorities. This is one way of looking at the matter. The right way to look at it is that a profession is being regulated, and the profession is one in which an agent deals with the property of another and by the law is deemed to be owner of the property. A person in such a high fiduciary position must, of necessity, be subjected to strict control, and the licensing authority in holding him forth to the prospective principals as a reliable and trustworthy person must see that persons acting on the faith of the assurance of the licence are in no way damning. The Rules, therefore, subserve a very salutary and necessary principle, and, in our judgment, are designed to advance public interest and cannot be questioned, unless a person wishes to act, dishonestly and wants to avoid control. It is wellknown that many underhand practices are common at Customs Houses, and 'the Customs-authorities have to be vigilant in preventing them. They must, therefore, see that they do not license the wrong type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,000 had been considered adequate, and from 1937 onwards, that security alone was demanded. They also contend that as Dalals they are only required, to present the shipping bills and the assessment or appraisement of the customs duty is the function of the Customs Officer. If any mistakes are made, due to an error on the part of the Customs-authority, or even due to a wrong declaration of the real value of the goods by the importer, the collection of duty should be made from the owner of the goods and not from them. They also contend that this is the meaning and intent of s. 39, which, in terms, makes the owner of the goods liable to make up for the short collections and puts no responsibility on the agents. They further. contend that the last clause of the bond, quoted earlier, makes the agent liable for payment of the balance of the duty before any attempt is made to recover it from the owner or importer. The last point need not detain us long, because it is raised on the existence of the' word 'even in the clause even after issue of demands under section 39 of the Sea Customs Act . The word even does not mean that the agent's security can be touched before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rization is approved by the Customs- collector, such person shall, for such purposes be deemed to be the owner of such goods. , One of the duties of the' owner of the goods is to make a declaration of the real value of the goods in a bill of entry or shipping bill. Under s. 29, on the importation into, or exportation from, any customs-port of any goods, whether liable to duty or not, the owner of such goods must, in his bill of entry or shipping bill as the case may be, state the real value, quantity and description of such goods to the best of his knowledge and belief, and must subscribe a declaration of the truth of such statement at the foot of such bill. Under the same section, the Customs-collector may require the production of invoices, broker's note, policy of insurance or other document to satisfy himself about the real value, quantity or description of such goods. The Customs-Collector is also authorized to inspect the goods for the same purpose. Under ss. 29A and 29B, there may be an assessment of duty prior to the examination of the goods and a provisional assessment of duty and its payment even prior to, the production of the documents above mentioned or the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners is that although in the first paragraph of s. 39(1) the word owner may comprehend an agent who is deemed to be an_owner, if authorised under the Act, the, section does not use the word owner in the latter part, and speaks of the person chargeable with the duty , meaning thereby a change over to the real owner of the goods in contradistinction to the agent. They urge that this is even more apparent from the words of the fourth paragraph of the first sub,section which authorises the Customs-collector to refuse to pass any goods belonging to ,such person which must mean the goods belonging to the real owner, who is properly chargeable with the duty. It is contended, therefore, that as the agent is not within the reach of s.39, the demand of duty from him cannot be made, and that the provisions of the bond by which the agent and his security are made liable, are beyond the provisions of s. 39 and thus invalid. One, thing is clear that the Customs-authorities may have no dealing with the real owner of the goods where the agent has been authorised to deal with them for the purposes of the Sea Customs Act or any of its provisions. Section, 4 clearly lays down a fiction, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances in which the agent makes a declaration with authorisation from the real owner, the agent is the person chargeable with the duty. Otherwise, for the duty chargeable in the first instance the agent would be the person charge able with the duty and 'for any short payment he would cease to be such a person and the Customs- authorities would have to deal with the real owner, who made no declaration or payment. The words the person chargeable with the duty... , therefore, have advisedly been used not to exclude the agent but to describe in a neutral way the person from whom such a demand can be made. They are wide enough in their ambit to take in, not only the real owner but also a deemed owner under the Act. So far, there is no difficulty, and the objection of the learned counsel for the petitioners that a simpler method would have been to use the word 'owner in this part of the section ,is without substance, because the legislature may express its meaning and intention in different ways. The critical argument, however, is, on the. fourth paragraph of s. 39(1). There, it is provided that if the excess charge is not paid, the Customs-collector may refuse to Pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that client of which the agent is also the deemed owner, are exposed to the. penalty of detention. It must be remembered that the Act makes the 'goods' liable to duty and the payment of duty by owners clears the goods. The law goes further, and says that other goods of the owner are also liable for an deficit, if the liable to duty are 'cleared.' before the full duty has been paid. The condition in the bond is limited by the operation of s.39 to the transactions of one constituent at a time, and the for feature of security is also limited to the constituent in default. The bond prescribes for recouping of the deficiency in the customs duty or charges from the security, even after notice is given. This notice must be given within three months from the relevant date as demand in the section. The limit of three months also applies to the agent as the deemed owner in the same way as it does to the real owner. If no notice. is given, then the bond, on its own terms, cannot be enforced. In our opinion, the contentions of the petitioners are not, sustainable. In the result, the petitions must fail except to the extent that we declare r. 10(c) to be an unreasonable r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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