Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

M/s. Saro International Freight System Versus The Commissioner of Customs

2015 (12) TMI 1432 - MADRAS HIGH COURT

Suspension of the Customs Broker Licence of the Petitioner - Petitioner is under invoicing the imports and thus, is evading payment of customs duty - Forfeiture of security - Bar of limitation - Held that:- Customs Broker Licensing Regulations, 2013 were promulgated in exercise of powers conferred under Sub-Section (2) of Section 146 of the Customs Act,1962. It is only under the regulations, the licence is granted and the regulations also contain various provisions to regulate the affairs of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be considered is the object of the enactment in prescribing a period for the performance of such public duty. - an independent right is issued to the Commissioner to initiate action dehors the enquiry under other Regulations and the Customs Act. The regulations does not only contemplate action against the erring Brokers, but also contemplates timely action. No doubt that action is to be initiated against the erring brokers as laid down by this Court in the case of Kamatchi Agencies cited 2000 (1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

edings from the date of knowledge of the offence. It is only if the time limit is strictly followed, swift action can be initiated against the Customs Brokers and the authorities can also be made accountable. The Regulations only contemplate initiation of proceeding by issuance of notice within 90 days. While, making out a prima facie case, the respondents ought to have, without any shadow of doubt, treated the word shall in Regulation 11 as mandatory and not directory . Therefore, when a time l .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a notification dated 08.04.2010, amendments prescribing time period for initiating action and completing proceedings was made. The same was given effect by notification dated 20.01.2014. - Impugned show cause notice dated 13.7.2015 has been issued after 90 days from the date of the suspension order dated 27.3.2015 and the report of the investigating agency dated 17.3.2015 or in other words, from the date of knowledge of the offence. - court is of the view that the impugned show cause notice .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

13.7.2015, ordering for continuation of suspension of the Customs Broker Licence of the Petitioner and the show cause notice dated 13.7.2015, issued under Regulation 20 of the Customs Brokers Licensing Regulations, 2013 (hereinafter referred to as the Regulations). 2. The case of the Petitioner is that the Petitioner was granted a licence during 1999 to operate as a Customs House Agent. Based on intelligence that the Petitioner is under invoicing the imports and thus, is evading payment of cust .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tted a detailed written submissions on 5.5.2015, denying the allegations. However, the respondent passed the impugned order dated 13.7.2015, ordering continuation of the suspension order in terms of Regulation 19(2) of the Regulations. Along with the said order, the Respondent also issued the impugned show cause notice dated 13.7.2015, calling upon the Petitioner to show cause as to why the license issued to the Petitioner should not be revoked and security deposited by them should not be forfei .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by the Respondent and the brief contents of the same are as follows:- a. The Petitioner is a holder of Customs Broker Licence No.R-634/CHA. The Petitioner had acted as the Customs Broker for clearance of lights and light fixtures, imported by M/s.Spark Lites through Chennai Seaport. Based on specific intelligence that said importer had been importing the said goods in the name of M/s.Spark Lites and M/s.Suraj Impex, by misdeclaring the transaction value, thereby evading payment of customs dutie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ported goods to Customs and thereby had cleared the said imported goods without payment of appropriate customs duty. Shri Rajesh Jain so fair paid ₹ 2 crores towards differential duty liability. b. The Petitioner appear to have been aware of the undervalued transactions in the name of M/s.Spark Lites and activly connived with Shri Rajesh Jain, in misdeclaring the value of the imported goods to customs by way of manipulating it, which resulted in huge evasion of customs duty, which would am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

spension of the customs broker licence of the petitioner. For non complilance of the provisions of CBLR, 2013, the Customs Broker is liable to be punished by way of revocation of license. Hence, the impugned show cause notice dated 13.7.2015 has been issued for conducting enquiry proceedings under CBLR, 2013. The Petitioner cannot challenge the very same proceedings, when the same were already challenged in a Writ Petition, which was dismissed as withdrawn. In such facts, these Writ Petitions ar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

licence, is also not in confirmity with the provisions of Regulation 19(2) of CBLR, 2013 and barred by limitation, inasmuch the same was passed beyond 15 days from the date of hearing i.e. 11.06.2015. The learned counsel for the Petitioner further contended that Regulation 19(1) clearly stipulates that only in appropriate cases where immediate action is necessary, licence is to be suspended and that inasmuch as the Petitioner disputed the statements given by the importer, the same are required .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

license to perform the duties of the Customs department, had misused the license. The report dated 17.3.2015 was received on 19.3.2015 and the show cause notice was issued on 13.7.2015 within 80 working days (excluding Saturdays, Sundays and National Holidays) and hence, there is no time delay as alleged by the Petitioner. The period of 90 days, prescribed in Regulation 20 is only directory and not mandatory and that from the various statements obtained during the enquiry, the commission of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

record. 7. It is the specific case of the Petitioner that the impugned show cause notice has been barred by law of limitation, as the time period prescribed in Regulation 20 (1) is mandatory and hence, the writ jurisdiction under Article 226 can be invoked. Per contra, on the side of the respondents, it is contended that the period prescribed is only directory and not mandatory and that when there is an alternative remedy available, the Writ Petitions are not maintainable. 8. In 1975 1 SCC 559 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the legislature by carefully attending to the whole scope. Such intention of the legislature is therefore to be ascertained upon a review of the language, subject matter and importance of the provision in relation to the general object intended to be secured, the mischief, if any, to be prevented and the remedy to be promoted by the Act . 9. In AIR 1999 SC 1281 (Babu Verghese and others Vs. Bar Council of Kerala), it has been held as under:- 31. It is the basic principle of law long settled th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Commissioner of customs, Chennai Vs. CESTAT and others), it has been held as under:- 25. As per the notification and instruction dated 20.01.2014, time limit has been prescribed in respect of the procedure contemplated under Regulation 22 and as per sub-regulation (1) of Regulation 22, the Commissioner of Customs shall issue a notice in writing to CHA within 90 days from the date of receipt of offence report, stating the grounds on which it is proposed to suspend or revoke the licence and requi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bunal has noted the fact that though the order of suspension came to be passed on 23.06.2011 in C.M.A.Nos.1422/2014 in respect of M/s.Manjunatha Shipping Services Limited, which was ordered to continue, vide order dated 02.09.2011 and in respect of C.M.A.Nos.1423 to 1426/2014, the original orders of suspension came to be passed on 25.04.2012, which was ordered to continue, vide order dated 23.05.2012, the appellant did not take any steps to issue notice under Regulation 22(1). In terms of the no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

een observed that law which creates public duties is directory, but if it confers private rights, it is mandatory. Relevant passage is quoted below:- It is well settled that generally speaking the provisions of the statute creating public duties are directory and those conferring private rights are imperative. When the provision of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r a provision is mandatory or directory, would, in the ultimate analysis, depend upon the intent of the law maker and that has tobe gathered not only from the phraseology of the provision but also by considering its nature, its design and the consequence which would follow from construing it in one way or the other. 14. In 2003-8-SCC-498 (P.T.Rajan Vs. TPM Sahir), it has been held that test of mandatory or directory, context, purport and object of the statue are to be ascertained. Procedural pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted as mandatory or directory. It is well settled that the use of expression shall or may is not determinative of the fact whether the provision is directory or mandatory. There is no general rule in respect of as to when a provision is to be treated as directory or mandatory, but in every case the object of statute must be looked. 16. In AIR-1957-SC-912 (State of UP Vs. Manbodhan Lal Srivastava), it has been held as under:- The question as to whether a statute is mandatory or directory depends .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for deciding whether any particular provision in a statute is mandatory, meaning thereby that non observance thereof involves the consequence of invalidity or only directory, i.e. a direction the non observance of which does not entail the consequence of invalidity, whatever other consequences may occur. But, in each case, the court has to decide the legislative intent. The courts have to consider not only the actual words used, but the scheme of the statute, the intended benefit to public of w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Constitution Bench of the Supreme Court held that the question whether a particular provision is mandatory or directory, cannot be resolved by laying down any general rule and that it would depend upon the facts of each case. The Court has to consider the purpose for which the provision had been made, its nature, the intention of the legislature in making the provision, the serious general inconvenience or injustice to persons resulting therefrom when the provision is read one way or the other, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

condemned unheard, that decision should not be reached behind their back, that proceedings that affect their lives and properties should not continue in their absence and that they should not be precluded from participating in them. 58. In Sharif-Ud-Din vs. Abdul Gani Lone [AIR 1980 SC 303], the Supreme Court indicated that the question whether a provision of law is mandatory or not depends upon its language, the context in which it is enacted and its object. The Court made an important observat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

act done in disregard of that provision causes serious prejudice to those for whose benefit it is enacted and at the same time who have no control over the performance of the duty, such provision should be treated as a directory one. " 63. Another simple test to determine whether a time limit stipulated in a rule is directory or mandatory, is to see whether there is any indication in the Rule itself about the consequences of non compliance with the same. If a statutory provision contains a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l be created to innocent persons of general public without much furthering the object of the enactment, the same should be considered as directory as to whether a provision is mandatory, would in the ultimate analysis depend upon the intent of the law maker and that has to be gathered not only from the phraseology of the provision but also by considering its nature, it s design and the consequence which would follow from construing it in one way or the other. The Honourable Supreme Court in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

toms, Chennai), this Court has elaborately discussed the role of CHA/Customs Broker in the clearance of goods for import/export, which reads as under:- The very purpose of granting a licence to a person to act as Custom House Agent is for transacting any business relating to the entry or departure of conveyance or the import or export of goods at any customs station. For that purpose, under Regulation 9 necessary examination is conducted to test the capability of the person in the matter of prep .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ting to the entry or departure of conveyance or the import or export of goods at any customs station, he should also ensure that he does not act as an Agent for carrying on certain illegal activities of any of the persons who avail his services as Custom House Agent. In such circumstances, the person playing the role of Custom House Agent has got greater responsibility. The very prescription that one should be conversant with the various procedures including the offences under the Customs Act to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xit of conveyances or the import or export of the goods. In such circumstances, great confidence is reposed in a Custom House Agent... 20. In 2015 (318) ELT 116 (Mad) (Float Glass Centre Vs. Union of India), this court has held as follows:- 56. Generally, time limits prescribed, especially in subordinate legislation, can be taken only to be directory and not mandatory. Otherwise, a subordinate legislation may even destroy the Parent legislation, by default. 57. In Raza Buland Sugar Co. Ltd v. Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rovision is read one way or the other, the relation of the particular provision to other provisions dealing with the same subject as well as other considerations which may arise on the facts of a particular case, including the language of the provision. The said decision of the Constitution Bench was followed in Salem Advocate Bar vs. Union of India [2005 (6) SCC 344]. While doing so, the Supreme Court pointed out therein that our laws on procedure are grounded on a principle of natural justice .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. The Court made an important observation, which will resolve the problem for us and hence it is extracted as follows:- "In order to find out the true character of the legislation, the Court has to ascertain the object which the provision of law in question is to subserve and its design and the context in which it is enacted. If the object of a law is to be defeated by non-compliance with it, it has to be regarded as mandatory. But when a provision of law relates to the performance of any p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the case of the latter, substantial compliance may be sufficient to achieve the object regarding which the rule is enacted. Certain broad propositions which can be deduced from several decisions of courts regarding the rules of construction that should be followed in determining whether a provision of law is directory or mandatory may be summarised thus: The fact that the statute uses the word 'shall' while laying down a duty is not conclusive on the question whether it is a mandatory o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dice to those for whose benefit it is enacted and at the same time who have no control over the performance of the duty, such provision should be treated as a directory one. Where however, a provision of law prescribes that a certain act has to be done in a particular manner by a person in order to acquire a right and it s coupled with another provision which confers an immunity on another when such act is not done in that manner, the former has to be regarded as a mandatory one. A procedural ru .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ficult to hold that the requirement is not mandatory and the specified consequence should not follow. 22. In 1998-7-SCC-123 (N.Balakrishnan Vs. M.Krishnamurthy), it has been held as under:- 9. It is axiomatic that condonation of delay is a matterof discretion of the court Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes del .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ut it is a different matter when the first cut refuses to condone the dela. In such cases, the superior cut would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammeled by the conclusion of the lower court. 23. Upon consideration of the above judgments, the ratio that emerges are that (i) any time limits prescribed in a sub-ordinate legislation can only be termed as directory, (ii) a provision as to whether it is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e the affairs of the customs broker including the revocation of the licence. The Regulations contemplates action against the customs broker dehors the provisions under the Customs Act. Therefore, the regulations cannot be treated as sub-ordinate legistlation. Moreover, every implementing authority of any fiscal statute is only performing a public duty. Therefore, it cannot be said that the provision is to be termed as directory just because its adherence is in the nature of performance of a publ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ty:- (1) The Commissioner of Customs shall issue a notice in writing to the Customs Broker witin a period of ninety days from the date of receipt of an offence report, stating the grounds on which it is proposed to revoke the licence or impose penalty requiring the said Customs Broker to submit within thirty days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defence and also to specify in the said statement whether the Customs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aid down by this Court in the case of Kamatchi Agencies cited supra, but the same has to be in strict compliance with the provisions. The law of limitation is common to both the parties. The provision not only enables the respondent to levy penalty, but also empowers the respondent to revoke the license, which is an extreme step curtailing the right to carry on any trade or profession as guaranteed by the Constitution of India. The object behind such a provision can only imply the following: (a) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ty. The interpretation of a statute must always be to give a logical meaning to the object of the legislation and the aim must be to implement the provisions rather than to defeat it. As laid down by the Apex Court in the judgments relied upon by the learned counsel for the petitioners, when a statue prescribes a thing to be done in a particular manner, it must be performed in such a manner. Also, the use of the language shall in the regulation cannot be termed as directory as one of the consequ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

toms or Assistant Commissioner of Customs, as the case may be; (b) transact business in the Customs Station either personally or through an employee duly approved by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; (c) not represent a client in any matter to which the Customs Broker, as a former employee of the Central Board of Excise and Customs gave personal consideration, or as to the facts of which he gained knowledge, while in Government service; .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nce of cargo or baggage issued by the Commissioner of Customs, from a client who is entitled to such information; (g) promptly pay over to the Government, when due, sums received for payment of any duty, tax or other debt or obligations owing to the Government and promptly account to his client for funds received for him from the Government or received from him in excess of Governmental or other charges payable in respect of the clearance of cargo or baggage on behalf of the client; (h) not proc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ue; (j) not refuse access to, conceal, remove or destroy the whole or any part of any book, paper or other record, relating to his transactions as a Customs Broker which is sought or may be sought by the Commissioner of Customs; (k) maintain upto date records such as bill of entry, shipping bill, transshipment application, etc. and all correspondence and other papers relating to his business as Customs Broker and also accounts including financial transactions in an orderly and itemised manner as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ndependent, authentic documents, data or information; and (o) inform any change of postal address, telephone number, e-mail etc. to the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be within one month of such change. 28. It is also to be noted that every act of breach by the Broker would entitle the authorities to initiate proceedings from the date of knowledge of the offence. It is only if the time limit is strictly followed, swift action can be initiated .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

shall cannot be termed as directory . It is pertinent to mention here that the CBLR, 2013 have replaced the CHA Regulations. The CHA regulations did not have any time limit to complete the proceedings. Therefore, by a Circular 09/2010 dated 08.04.2010, the necessity to include a time limit for initiating action was addressed by the Board after field inspection and by a notification dated 08.04.2010, amendments prescribing time period for initiating action and completing proceedings was made. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rule can only be termed as Mandatory. 29. In the case on hand, the impugned show cause notice dated 13.7.2015 has been issued after 90 days from the date of the suspension order dated 27.3.2015 and the report of the investigating agency dated 17.3.2015 or in other words, from the date of knowledge of the offence. In this regard, the learned counsel for the respondents have raised the following objections, viz. (a) the Saturdays, Sundays and national holidays have to be excluded, (b) the period .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version