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Innovative Cargo Services v. Commissioner of Customs (General) - (High Court of Delhi) (23 May 2017)

CESTAT had no jurisdiction to extend time already set down in Customs Broker Licensing Regulations, 2013



In fact of present case, Appellant is a Customs Broker holding Customs Broker Licence valid till 2018. Appellant is engaged in customs clearance work within in jurisdiction of Delhi Commissionerate and adjoining Inland Container Deport (ICD), Tughlakabad. In March 2016, Directorate of Revenue Intelligence ("DRI") initiated an investigation into exports effected by one Mr. Ramesh Wadhera and his son Mr. Rahul Wadhera on ground that, they indulged in fraudulent availment of drawback by exporting inferior and sub-standard quality readymade garments of different kinds through various bogus firms and by resorting to over invoicing of goods.

In course of search on premises of Mr. Ramesh Wadhera and Mr. Rahul Wadhera on 18th March 2016 by DRI, details emerged of various CHAs who had filed shipping bills for them, and this included Appellant. Five months later, DRI by a letter dated 24th August 2016 forwarded a report to Commissioner of Customs (General), New Delhi, Respondent. On basis of said report, Respondent by impugned order ordered immediate suspension of Appellant's licence for alleged violation of Regulations 11(a), (d), (e) and (n) of CBLR 2013. This suspension order was later confirmed by Order-in-Original. In interregnum, on basis of investigation of DRI, Commissioner of Customs (Export), ICD, Tughlakabad, New Delhi issued to exporters a SCN dated 16th September 2016 proposing confiscation of alleged over-invoiced goods. Name of Appellant was also included in SCN for purpose of imposition of penalty in respect of exports of six exporters.

Aggrieved by suspension of its licence, Appellant filed an appeal under Section 129A of Act read with Regulation 21 of Customs Broker Licensing Regulations 2013 ("CBLR 2013"). CESTAT directed concerned authorities to issue show cause notice within 15 days and complete proceedings within prescribed time limit of three months thereafter by passing a speaking and reasonable order.

In its rejoinder, Appellant pointed out that, after confirmation of suspension order dated 27th September 2016, Respondent took no action under Regulation 20 and thereby contravened time limits set under CBLR 2013. It was further stated that, Circular No. 9/2010, dated 8th April 2010 which was issued in context of Custom House Agents Licensing Regulation, 2004 (CHLR 2004) equally applied to CBLR 2013 which replaced it. It is submitted that, CESTAT travelled beyond its jurisdiction under Section 129B of Act, in granting time to Respondent to complete investigation. It is further pointed out that, Respondent received intimation qua the offence report on 24th August 2016 and, therefore, that should be date of communication of offence report and not the letter dated 11th April 2017 subsequently written.

After suspension order was affirmed in terms of Regulation 19 of the CBLR 2013 by order dated 27th September 2016, no steps were taken by Respondent in terms of Regulation 20 of CBLR 2013. This required a SCN to be issued within 90 days from date of receipt of offence report. In present case, SCN was issued only subsequent to impugned order of CESTAT on 30th April 2017.

Court is unable to accept contention of Respondent that, letter dated 11th April 2017 received from ICD, Tughlakabad enclosing therewith a copy of earlier SCN dated 16th September 2016 issued by exporter as well as Appellant should be taken as receipt of "final offence report". This is a plain misreading of facts. As rightly pointed out by Appellant, if at all, date has to be ascertained for communication of "offence report" it has to be letter dated 24th August 2016 on which date received from DRI regarding alleged illegal export.

CESTAT had no jurisdiction to extend time already set down in CBLR 2013. Those time limits are sacrosanct as explained by Court in several decisions including Indair Carrier Private Limited v. Commissioner of Customs (General), Commissioner v. S.K. Logistics and Overseas Air Cargo Services v. Commissioner of Customs (General), New Delhi.

Above legal position was reiterated recently by Court in its order dated 9th May 2017 (M/s. A.P. Enterprises v. The Commissioner of Customs (General)) where in similar circumstances, Court sets aside order of CESTAT granting three months time to Department to complete investigation. Accordingly, it is held that, CESTAT was in error in directing authorities to issue SCN within 15 days and complete investigation within a further period of three months thereafter contrary to CBLR 2013. Impugned order of CESTAT is accordingly set aside and appeal is allowed.

Relevant : Indair Carrier Private Limited v. Commissioner of Customs (General)MANU/DE/1146/2016 : 2016 (337) ELT 41 (Del), Commissioner v. S.K. Logistics MANU/DE/1552/2016: 2016 (337) ELT 39 (Del) and Overseas Air Cargo Services v. Commissioner of Customs (General), New Delhi MANU/DE/1698/2016(340) ELT 119 (Del)


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