TMI Blog2018 (4) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... procedural formality as required to be complied within the time frame prescribed in the regulation, even if it is deviated for whatsoever reason beyond the control of the revenue or the custom house agent would result into consequences of declaring the entire action invalid if the provision is construed as mandatory. The time limit contained in Regulation 20 cannot be construed to be mandatory and is held to be directory - though the time line framed in the Regulation need to be rigidly applied, fairness would demand that when such time limit is crossed, the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the time limit was not adhered to. CESTAT was not justified in setting aside the order or suspension of the Customs Brokers Licence on the ground of delay between suspension and the notice of deviation or omission and it cannot be laid down as an absolute proposition of law that delay in taking immediate action of suspension or initiation of inquiry within a period of 90 days would vitiate the action of the Commissioner. Matters are remanded to the CESTAT for fresh adjudication. - Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of law and particularly whether the inquiry report has to be submitted from the period of 90 days from the date of issue of notice under Sub regulation (1) of Regulation 20 of 2013, all the appeals were directed to be listed and heard on the same date. It was agreed by both the parties that all the appeals whether admitted, pending for admission or otherwise, can then be conveniently disposed of. Hence, all the aforesaid appeals were heard together and the parties advanced their submissions on the said point of law by referring to the distinct facts involved in each appeal. The Principal Commissioner of Customs (General), who has filed the appeals, is represented by the learned Counsel Mr. Jetley who would argue that the provision contained in Regulation 19 and 20 of the CBLR2013 is to be construed as directory, whereas, the learned counsel representing the Customs Broker Licencee respondents in the appeals, would urge the Court to construe the said provision as mandatory and prays for upholding the order passed by CESTAT, in the light of the various judgements delivered by different High Courts construing the said provisions to be mandatory. 2. For effective adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Customs shall issue a notice in writing to the Customs House Agent within ninety days from the date of receipt of offence report, stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said Customs House Agent to submit within thirty days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs House Agent desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs. Provided that the procedure prescribed in regulation 22 shall not apply in respect of the provisions contained in sub regulation (2) to regulation 20. (2) The Commissioner of Customs may, on receipt of the written statement from the Customs House Agent, or where no such statement has been received within the time limit specified in the notice referred to in sub regulation (1), direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs to inquire into the grounds which are not admitted by the Customs House Agent. (3) The Deputy Commissioner of Customs or Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing on suspension of a licence, within a period 15 days from the said suspension and thereafter passing of an order revoking the suspension or continuing it. Sub Regulation (2) and (3) which came to be inserted read thus : (2) Notwithstanding anything contained in sub regulation (1), the Commissioner of Customs may, in appropriate cases where immediate action is necessary, (within fifteen days from the date of receipt of a report from investigating authority, suspend the licence) of a Customs House Agent where an inquiry against such agent is pending or contemplated. (3) Where a licence is suspended under subregulation(2), notwithstanding the procedure specified under regulation 22, the Commissioner of Customs may, within fifteen days from the date of such suspension, give an opportunity of hearing to the Customs House Agent whose licence is suspended and may pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within fifteen days from the date of hearing granted to the Customs House Agent . 4. The CBLR 2013 was brought into force by notification dated 21st June, 2013 in exercise of powers conferred by Sub section (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd without any delay amongst other obligations. 5. In the present set of appeals we are concerned with Regulation 18, Regulation 19 and Regulation 20, which deals with revocation/suspension of licences and the procedure for doing so or for imposition of penalty. It would be useful to reproduce the said Regulations: 18. Revocation of licence or imposition of penalty The Commissioner of Customs may, subject to the provisions of regulation 20, revoke the licence of a Customs Broker and order for forfeiture of part or whole of security, or impose penalty not exceeding fifty thousand rupees on a Customs Broker on any of the following grounds, namely : (a) Failure to comply with any of the conditions of the bond executed by him under regulation 8; (b) failure to comply with any of the provisions of these regulations, within his jurisdiction or anywhere else; (c) committing any misconduct, whether within his jurisdiction or anywhere else which in the opinion of the Commissioner renders him unfit to transact any business in the Customs Station; (d) adjudicated as an insolvent; (e) of unsound mind; and (f) has been convicted by a competent cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l evidence as may be relevant or material to the inquiry in regard to the grounds forming the basis of the proceedings, and he may also put any question to any person tendering evidence for or against the Customs Broker, for the purpose of ascertaining the correct position. (4) The Customs Broker shall be entitled to cross examine the persons examined in support of the grounds forming the basis of the proceedings, and where the Deputy Commissioner of Customs or Assistant Commissioner of Customs declines to examine any person on the grounds that his evidence is not relevant or material, he shall record his reasons in writing for so doing. (5) At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall prepare a report of the inquiry and after recording his findings thereon submit the report within a period of ninety days from the date of issue of a notice under sub regulation (1). (6) The Commissioner of Customs shall furnish to the Customs Broker a copy of the report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, and shall require the Customs Brok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d continue and mere failure to adhere to the time line prescribed in the Regulation would not confer a positive benefit in favour of the customs broker. 7. In the background of the statutory provisions, we would deal with the submissions advanced on behalf of the parties. We have extensively heard Mr. Jetley appearing for the Principal Commissioner of Customs, who would finds fault with the impugned orders passed by the said CESTAT. Mr. Jetley would submit that the CESTAT has erred in holding the period prescribed in the CBLR 2013 to be imperative and in holding that there is no provision for extension of the time line prescribed for completion of proceedings. He would argue that the findings of the CESTAT that the learned Commissioner did not adhere to the time line prescribed for completion of inquiry proceedings and therefore he has no legal right to keep the customs broker licence under suspension for unlimited period, is erroneous. He would submit that reliance placed on the judgments of the Tribunal, wherein it had consistently taken a view that if inquiry proceedings are not completed within overall period of nine months, a time line prescribed in CBLR 2013, the suspensio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an attempt to prolong the inquiry beyond the prescribed period and in such case, the delay may not be attributable to the Revenue. In such circumstances, Mr. Jetly would argue that it is not permissible for the customs broker to seek restoration of his licence by taking advantage of his own wrong merely on the ground that Regulation 20 mandates that the inquiry should be concluded within 90 days. He would fairly submit that the checks and balances are to be evolved so that the inquiry and proceedings are not delayed indefinitely as it hampers the brokerages of the customs broker. At the same time, the time limit should not be so strictly adhered to, even in cases of serious lapse on the part of the customs broker and where the inquiry involves certain complicated facts. Merely because the inquiry was not completed within a stipulated period, the customs broker may not be allowed to walk free, as his suspension cannot be continued beyond the period prescribed in the Regulation and his license need not be restored. Per contra, the learned counsel for the Respondent Mr.Prakash Shah, would vehemently argue that the whole purpose of Regulation 20 is to complete the proceedings ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, 2010. The judgments of these Courts have consistently emphasised the mandatory nature of the aforesaid time limit in several of its decisions and the violation of the said time line has resulted into declaring the action of the Commissioner of Customs revoking the CHA licence to be unsustainable in law. The Hon'ble Madras High Court has also laid great emphasis on the time limit prescribed in the back drop of its object, being to curb the smuggling of goods and by considering the object of the provision, and specifically by referring to the transformation of the CHA Regulation into CBLR 2013 Regulations. The Court had held that earlier Regulation did not have time limit to complete the proceedings but by Circular No.9/10 dated 8th April, 2010, the necessity to specify the time limit for initiating action was addressed by the board after field inspection and by notification dated 8th April, 2010 prescribing the time period for initiating action and completion of the procedure was introduced and given effect to by notification dated 20th January, 2014. The Hon'ble Madras High Court has further held that under CBLR 2013 the necessity was felt to prescribe a time schedule on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000/ on a custom broker on any of the following grounds i.e. (a) failure to comply with any of the conditions of bond executed by him under Regulation 8. (b) failure to comply with any of the provisions of these Regulations, within its jurisdiction or anywhere. (c) committing any misconduct, whether within its jurisdiction or anywhere else which in the opinion of the Commissioner renders him unfit to transact the business in Customs station. (d) adjudicated insolvent, (e) is of unsound mind and (f) has been convicted by a competent court for an offence involving moral turpitude. The customs house agent have an important role to play in the entire scenario. He is the person, who acts as an agent and transact the business and has a direct access to the port since he assists the assessee covered by the Customs Act to facilitate the entry or departure of conveyance or the import or export of goods at any customs stations. Since the customs house agent has a direct access to the port, the revenue intended that there should be a regime of discipline governing such customs house agent and only a person who is qualified and in know how of the business relating to the customs would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinue the same. If the Commissioner of customs decides to continue the suspension then he would follow the procedure prescribed in Regulation 20. Regulation 20 prescribes a procedure for revoking a licence or imposing penalty. Sub clause (1) of Regulation 20 requires a Commissioner of Customs to issue notice in writing to a customs broker within a period of 90 days from the receipt of an offence report stating the grounds on which it is proposed to revoke the licence or impose the penalty to the customs broker, and permit him to submit his say within 30 days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs. If the customs broker expresses an intention to be heard in person by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, he is permitted to do so and sub Regulations (2) and (3) then sets out the procedure to be followed on receipt of the written statement or when no such written statement is received and the material that would be taken into consideration for the purposes of ascertaining the correct position. The Regulation also affords an opportunity of cross examination of the persons examined in support of the grounds form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport the Commissioner of Customs would take a final action within a period of 90 days from the date of receipt of report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs. The whole process prescribes a time limit with an intention that the proceedings initiated against the customs house agent do not continue till infinity and are concluded within a prescribed time frame since continuation of the inquiry for a prolonged period would result into deprivation of means of livelihood of the customs house agent and would keep him out of the business since the licence is under suspension. With this prime objective, the time limit have been specified in Regulation 20 and the moot question involved before us is whether the adherence to the time scheduled is so imperative that any violation or infringement or deviation there from would result into a declaration of the action as invalid. 10. The question, therefore, is whether the provision contained in Regulation 20 is mandatory or directory. The use of the word shall in normal parameters be construed as mandatory and the word shall would be required to be read as must unless and until it was essentially re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules of construction, but it may probably lead to the selection of one, rather than other, of the two reasonable interpretations. In earlier times, statutes imposing criminal or other penalties were required to be construed narrowly in favour of the person proceeded against and were more rigorously applied. The courts were to see whether there appeared any reasonable doubt or ambiguity in construing the relevant provisions right from the case of R.V. Jones, ex p Daunton, the basic principles state that even statutes dealing with jurisdiction and procedural law are, if they relate to inflation of penalties, tobe strictly construed; compliance with the procedures will be stringently exacted from those proceedings against liable to be penalised and if there is any ambiguity or doubt, it will be resolved in favour of the accused / such person. These principles have been applied with approval by different Court even in India. Enactments relating to procedure in courts are usually construed as imperative. A kind of duty is imposed on court or a public officer when no general inconvenience or injustice is caused from different construction. A provision of statute may impose an absolute o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a directory provision, omission in substantial compliance may invalidate the act or proceedings. In Govindlal Chhaganlal v. Agriculture Produce Market Committee reported in AIR 1976 SC 263 , the Supreme Court has approvingly quoted the following passage from Crawford on statutory construction as under: The question as to whether the statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which it is clothed. The meaning and the intention of the legislature must govern and this is to be ascertained not only from the phraseology of the provision, but by considering its nature, design and the consequences of which would follow from construing it one way or other . The Hon'ble Apex Court further observed : thus the governing factor is the manner and intent of the legislature which should be gathered not merely from the words used by legislature but from a variety and other circumstances and consideration. But the circumstances that the legislature has used a language of compulsive force is always of great relevance in the absence of anything contrary in the context indicating that a permissive interpretation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd a pattern in discharge of their duties and working. The regulation ensures to safe guard the right conferred on the customs house agent by conferring the minimum protection by prescribing a period of licence and once such licence is granted unless and until there is a default on part of the customs house agent, its renewal is assured. However, the default on part of the Customs House Agent needs to be inquired into before depriving the Customs House Agent of his licence. At the same time the interest of revenue is also sought to be protected by the regulation which authorises the Commissioner of Customs to revoke the licence and forfeit the part of or whole of the security or even to impose a penalty in the circumstances identified by the regulation. In order to maintain the regime of discipline, the Commissioner is also authorised to initiate an action in form of suspension of licence with immediate effect contemplating or pending an inquiry. The imminence of the action, postponement of the opportunity of hearing that Regulation 19 provides for post decisional hearing when an action is taken to suspend the licence. Thus, the regulation aims at securing interest of the customs h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, Ninth Edition 2004 Justice G.P Singh is where a statute imposes a public duty and lays down a manner in which and time within which the duty shall be performed; whether the strict adherence to the time limit results into an injustice or inconvenience and this may be a relevant factor in defining whether the provision is to be construed as mandatory or directory . In a situation where a public officer is cast with a duty and the power flowing from a statute and he is expected to perform a duty within a specific time limit, it will have to be examined that non performance of the duty within the stipulated time limit, would it render the entire action already initiated illegal, merely because the public officer was not able to adhere to the time limit. A particular statute may provide for a consequence of not deciding an application within the period stipulated therein and may contain a provision that if it is not decided within a particular time schedule, it shall be deemed to be granted. If performance of a public duty is required to be discharged within a specific time which also confers a right on a person, the provision as to time limit will still have to be held as dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndering him unfit to transact the business at customs station. However, on the other hand, it would also not be appropriate on part of the Revenue Authorities to indefinitely postpone the proceedings and deal it in a casual manner, by keeping the licence suspended for a considerably long period of time, resultantly, keeping the customs house agent out of business, which may be the only source of livelihood for him. The whole purpose of the CBLR 2013 being to frame a time line so that undue delay in the proceedings can be avoided, and the balance will have to be struck between the strict adherence to the said time schedule to such an extent that even a day s delay would prove to be fatal and render the entire action invalid and on the other hand, to grant such a discretion to the revenue to continue the said action of suspension of licence for an indefinite period depriving the customs brokers of their right to carry on business on the basis of the licence, on a spacious ground that the charges levelled against him are being enquired into. Neither of these two extreme situations are ideal and balance will have to be struck by construing that the time limit for completion of inquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther in Topline Shoes Limited Vs. Corporation Bank, in 2002(6) SCC 33, the Supreme Court did not accept the submission raised before it that the said commission constituted under the Consumer Protection Act, 1986 has no power to accept the reply beyond the stipulated period of 45 days. The Apex Court held that said provision cannot be construed as mandatory in nature though no consequences are prescribed and the wording used is not exceeding 15 days . It did not prescribe for any kind of period of limitation and hence the provision was construed to be directory in nature. Such type of provision, being procedural in nature, aimed at speedy disposal of disputes, demanded adherence to the time schedule, would fall short of creating any substantial right in favour of a party for reason of its non compliance. The provision contained in a statute which is procedural in nature that employed the word shall be held to be mandatory, if it did not cause any prejudice. The emphasis, therefore, should not be upon the language employed in the provision, but the Court will have to examine whether the provision is intended to specify certain procedure or whether it confers certain rights i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of forty five days for reply by CHA to the notice of suspension, sixty days time for representation against the report of AC/DC on the grounds not accepted by CHA, by reducing the time to thirty days in both the cases under the Regulations. 12. The said judgment has been consistently followed by the Delhi High Court, wherein the Court had taken a view that revocation of a CHA licence is bad in law since the time limit for completion of inquiry in terms of Regulation 22 (5) has not been adhered to. The Madras High Court in case of Masterstroke Freight Forwarders Pvt Ltd Vs. C.C (I) Chennai 2016 (332) ELT 300 (Madras) while dealing with the issue as to whether period of 90 days prescribed in Regulation 20(1) of CBLR, 2013 are directory or mandatory, after referring to a series of judgments held thus: The purpose for which such time limit has been prescribed is to curb the smuggling of goods and in the result to cancel the licences of the brokers if they are involved and to impose penalty. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso placed on the judgment of the said CESTAT West Zonal Bench, Mumbai delivered in Appeal No. C/87322/15 in case of M/s. Maakrupa Forwarders Pvt. Ltd Vs. Commissioner of Customs, Mumbai dated 18th October 2016. Perusal of the said judgment, would reveal that Revenue had taken 1221 days to complete the inquiry for which a period of 270 days is prescribed in CBLR, 2013 and in this backdrop, the Tribunal observed that due to inordinate delay of exceptional nature in completing the proceedings, fundamental right of work is being denied to the appellant and it was also observed that the Customs Brokers who are unscrupulous, get the advantage of the delay and people who are not guilty would continue to suffer the suspension and revocation on account of delay by revenues due to lack of responsibility. The said judgment of the CESTAT reflects a extreme situation and the data which was placed before the Tribunal revealed that inquiries had been pending for more than five years and in this back drop, the Tribunal commented about the inordinate delay. This is what precisely is to be avoided. The order passed by the CESTAT cannot be said to be erroneous by taking into consideration the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of prescribed time limit was to safe guard the interest of the custom broker and smooth import and export of goods. By relying on a celebrated principle, when a statute prescribes a thing to be done in a particular manner, it must be performed in such a manner, the use of the word shall in the Regulation has been construed as mandatory. With due respect to the finding so recorded in the judgment of the Madras Court in case of Masterstroke Freight Forwarders P. Ltd. vs. C.C.(I), Chennai I, reported in 2016 (332) E.L.T. 300 (Madras) delivered by the learned Single Judge, the parameters of construing a provision as mandatory or directory, when it deals with a discharge of a public duty and a resultant consequence has not been specifically taken into consideration. The salutary principle, whether statute imposes a public duty and lays down the manner and time within which the duty shall be performed, the injustice or inconvenience resulting from a rigid adherence to the statutory prescription, is a relevant factor for holding such provision only as directory has been completely overlooked. As observed by Justice DENMAN in CALDOW versus PIXELL (1877) 2 CPD 562, in cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l had held the Regulation is directory in nature. However, in the present judgment which is impugned before us, the CESTAT has taken a view contrary to its earlier view in Unison Clearing Pvt Ltd (supra) and after referring to certain precedents where a view was taken that the regulations are mandatory delivered by the Tribunal itself, the Tribunal was pleased to quash and set aside the impugned order being not sustainable and allowed the Appeals. It is to be noted that the Member Judicial (Ramesh Nair) who is a party to the judgment delivered by the said CESTAT in Unison Clearing Pvt Ltd Vs. Commissioner of Customs (General Mumbai). 15. In view of the aforesaid discussion, the time limit contained in Regulation 20 cannot be construed to be mandatory and is held to be directory. As it is already observed above that though the time line framed in the Regulation need to be rigidly applied, fairness would demand that when such time limit is crossed, the period subsequently consumed for completing the inquiry should be justified by giving reasons and the causes on account of which the time limit was not adhered to. This would ensure that the inquiry proceedings which are initia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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