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2009 DIGILAW 463 (KAR)

J. M. Baxi and Co. v. Commissioner of Customs

2009-07-01

RAVI MALIMATH

body2009
ORDER Ravi Malimath, J.—The Directorate of Revenue Intelligence (DRI) received specific Intelligence that M/s. Shree Renuka Sugars Limited, Belgaum have evaded customs duty by availing duty exemptions that they were not eligible for, in the import of raw cane sugar. The import having taken place through the Karwar Port during February 2004 per vessel MV MANDARIN inasmuch as the percentage of sucrose content in the raw cane sugar did not meet the Standard Input-Output Norms (SION). The test report was alleged to be tampered with, in order to bring the sucrose contents within the range specified in the SION. In pursuance of the above Intelligence, the registered office, sugar factory and the corporate office of M/s. Shree Renuka Sugars Limited as well as the petitioner's premises were searched. Consequent upon further proceedings, the second respondent issued a show cause notice vide Annexure 'C dated 31-12-2007 to M/s. Shree Renuka Sugars Limited as well as to the petitioner asking them to explain within a period of 30 days from the date of receipt of the said notice, as to why action should not be initiated on the grounds specified therein. In pursuance to the same, the first respondent issued the impugned order dated 18-1-2008, suspending the licence of the petitioner. Aggrieved by the same, the present petition is filed. 2. Shri Vivek Holla, learned Counsel for the petitioner contends that the impugned order is bad in law and requires to be set aside. He contends,- (a) that Regulation 20(2) of the Customs House Agents Licensing Regulations, 2004 would have to be met in cases where immediate action is necessary; (b) that improper importation of goods as alleged to have taken place in February, 2004 and the impugned show cause notice being issued on 31-12-2007 therefore, does not qualify for the condition imposed therein; (c) that in terms of the show cause notice, he was expected to reply to the same within a period of 30 days. But, however, the impugned order has been passed on 18-1-2008 much prior to the expiry of the said period; (d) that in pursuance to the show cause notice, an enquiry was conducted and concluded five years after the alleged act by the order dated 16-3-2009; (e) that the provisions of Regulation 20(2) of the Regulations contemplate suspension of a licence wherein an enquiry is pending or contemplated. Since the pending enquiry is concluded, he would necessarily have to face the order that has been passed and hence, the impugned order herein would not survive; (f) that the petitioner being a Customs House Agent is alien to any fraud or otherwise that may have been committed. He is neither an importer nor the final recipient of the goods. He being a Customs House Agent is not liable for any action in this case. 3. Arguments were addressed on 29-6-2009. Even today, when further arguments were advanced, the learned Counsel for the respondents remained absent. On hearing the learned Counsel for the petitioner, this Court is of the considered view that an interference is called for, for the following reasons. 4. The impugned order has been passed under Regulation 20(2) of the Customs House Agents Licensing Regulations, 2004, which reads as follows: 20. Suspension or revocation of licence: (1) .... (2) Notwithstanding anything contained in Sub-regulation (1), the Commissioner of Customs may, in appropriate cases where immediate action is necessary, suspend the licence of a Customs House Agent where an enquiry against such agent is pending or contemplated. Pursuant to the show cause notice, the enquiry has been completed and an order has been passed on 16-3-2009. The provisions of Regulation 20(2) would be applicable only in those cases where firstly, an immediate action is necessary and secondly, where an enquiry against such an agent is either pending or contemplated. The existence of the impugned order, when the enquiry has culminated in a final order is opposed to law. The power under Regulation 20(2) of the Customs House Agents Licensing Regulations, 2004 is in the nature of an interim power. Hence, the same could be enforceable only when an enquiry is pending and not thereafter. In the instant case, when the enquiry in pursuance to the show cause notice has been concluded, the impugned order herein would not survive for implementation. The petitioner would be liable to penalty or otherwise in terms of the order dated 16-3-2009 alone. The impugned order herein being an order that is enforceable only during the pendency or contemplation of an enquiry would therefore be unsustainable. 5. Learned Counsel for the petitioner contends that the alleged offence is said to have taken place in February, 2004 and the show cause notice has been issued on 31-12-2007 followed by the impugned order dated 18-1-2008. The impugned order herein being an order that is enforceable only during the pendency or contemplation of an enquiry would therefore be unsustainable. 5. Learned Counsel for the petitioner contends that the alleged offence is said to have taken place in February, 2004 and the show cause notice has been issued on 31-12-2007 followed by the impugned order dated 18-1-2008. He contends that in terms of the show cause notice, a period of 30 days was granted to him to reply to the same. Even before he could file his reply to the show cause notice, the impugned order of suspension has been passed on 18-1-2008. The said order having been passed within a period of 30 days as mentioned in the show cause notice itself, is, therefore bad in law for violating the rules of natural justice. The petitioner has not been heard in a case where time was granted to him to make his submissions. He further submits that the provision for an appeal provided under 22(8) of the Regulation would not be applicable in the instant case, in view of there being a gross violation of the rules of natural justice while passing the impugned order. The impugned order therefore is without jurisdiction in view of the fact that the same has been passed within the expiry of the period as stated in the show cause notice itself. 6. The contentions of the learned Counsel for the petitioner stands to reason. The show cause notice accorded a period of 30 days to the petitioner to reply to the same. The first respondent could not have passed the impugned order either before the expiry of a period of 30 days or without considering the say of the petitioner. These facts would therefore show that the petitioner has been condemned unheard. Consequently the impugned order requires to be set aside on this ground alone. 7. The existence of an alternate remedy is not a bar in view of the impugned order being in gross violation of the principles of natural justice. 8. The Hon'ble Supreme Court of India in the case reported in 2002 (2) SCC 269 (L.K. Verma v. HMT Ltd. and Anr.) have held at para 20 as follows: 9. 7. The existence of an alternate remedy is not a bar in view of the impugned order being in gross violation of the principles of natural justice. 8. The Hon'ble Supreme Court of India in the case reported in 2002 (2) SCC 269 (L.K. Verma v. HMT Ltd. and Anr.) have held at para 20 as follows: 9. The High Court in exercise of its jurisdiction under Article 226 of the Constitution, in a given case although may not entertain a writ petition inter alia on the ground of availability of an alternative remedy, but the said rule cannot be said to be of universal application. Despite existence of an alternative remedy, a writ court may exercise its discretionary jurisdiction of judicial review inter alia in cases where the court or the tribunal lacks inherent jurisdiction or for enforcement of a fundamental right or if there has been a violation of a principle of natural justice or where vires of the Act is in question. In the aforementioned circumstances, the alternative remedy has been held not to operate as a bar. 10. Hence in spite of the existence of an alternate remedy, the exercise of the discretionary jurisdiction of this Court under Article 226 of the Constitution of India is called for. 11. Moreover, 'Rule' has been issued by the order dated 12-2-2009. Hence the petitioner, at this stage cannot be relegated to the alternate forum. 12. It is contended that Regulation 20(2) of the Regulations contemplates that action could be taken only when the same is immediate in nature. The show cause notice having been issued almost three years after the period of alleged wrongful import is therefore not sustainable. 13. On a perusal of the show cause notice, it can be seen that the respondents had to satisfy themselves with regard to the report received with regard to the illegal importation of goods etc. It is for the respondents to be satisfied as to whether the petitioners or others have violated any provisions of the Customs Act. The same has been done after following the due procedure of holding a preliminary investigation and by scrutinizing the records, the petitioners as well as others. Immediately thereafter the show cause notice has been issued. Hence the contention of the learned Counsel for the petitioner that no immediate action is forthcoming is therefore unsustainable. The same has been done after following the due procedure of holding a preliminary investigation and by scrutinizing the records, the petitioners as well as others. Immediately thereafter the show cause notice has been issued. Hence the contention of the learned Counsel for the petitioner that no immediate action is forthcoming is therefore unsustainable. The respondents have issued the show cause notice at the earliest point of time and no delay can be occasioned to them. 14. For the aforesaid reasons, the order dated 18-1-2008 passed by the first respondent in C. No. S-21/01/2002 is hereby quashed. 15. No costs. 16. Rule made absolute.