By TIOL News Service

MUMBAI, MAY 26, 2017: THIS is a Revenue appeal against the o-in-o which revoked the suspension of the CHA licence.

The Bench after considering the grounds of appeal observed thus –

+ We do concur with the grounds of appeal that the impugned order has not accorded a conclusion to the inquiry proceedings as the findings in the said report have not been considered and a decision taken thereon. However, that ground is in contradiction with the prayer for intervention at this stage.

+ As the proceedings are yet to be concluded in accordance with the Regulations, the proper course of action would have been to await the culmination of proceedings under regulation 23. No direction is required for a statutory authority to fulfill its obligations to bring to a closure that which has been commenced.

Nonetheless, the CESTAT remarked that the propriety and legality of the review order needs to be examined because (in the words of Member (T), writing for the Bench) such appeals emanate from dropping of proceedings and its remedial efficacy, considering the elapse of time before such appeals are ordinarily listed for disposal, is questionable enough to render it a sheer waste.

After extracting section 129D(1) of the Customs Act, 1962 (containing the Review provisions), the Bench inter alia noted -

+ Custom House Agents (CHA) are licensed under, function in accordance with, and are governed by, the Custom House Agents Regulations, 1984 (or such other Regulations framed and notified by Central Board of Excise & Customs from time to time). These Regulations are framed under section 146 of Customs Act, 1962 which has been incorporated for the specific purpose of providing legal authority and, in the interest of Revenue and the trade, for regulating the operation of such agents within the framework of Customs Act, 1962. They are, therefore, in the nature of an auxiliary of the tax collection structure established under the Customs Act, 1962.

+ The Customs House Agents Licencing Regulations, 1984 is self-contained and comprehensive covering every aspect form licencing till cessation . There is no reliance or reference, other than the parent section, to any provision of Customs Act, 1962 or any of the Rules or any other Regulations framed thereunder.

+ The Regulations vest the authority to bring into being, and erase out of existence, a Custom House agent ... No higher authority is envisaged for the discharge of any function in relation to custom house agents. Even the Regulation-making authority, the Central Board of Excise & Customs (CBEC), has not retained any role-supervisory, monitorial, or regulatory – to itself in the scheme of administration of these agents. The Regulations empower the establishment of a distinctive appellate mechanism; however, the authority to frame the Regulations has, in its wisdom, empowered the Tribunal by reference to it in regulation 23.

+ The option to appeal is specifically permitted in the Regulations only to an aggrieved licencee . A harmonious reading of the penal and appellate provisions and the exclusion of any higher authority, even by mention, in the Regulations makes legislative intent very clear; that if the progenitor of the licence, the author of its being, has decided to the detriment of the licencee, such aggrieved entity may file an appeal to the Tribunal and a decision to retain the licence carries with it a finality that does not admit of any intervention under the Regulations. The licencing authority is not envisaged as an appellant under the Regulations.

+ In terms of Custom House Agents Licensing Regulations, 1984, the power to license is vested in the Commissioner of Customs. That authority is, therefore, the ‘master' to whom the agent owes its existence. It is the Commissioner of Customs who is responsible for the operation and functioning of the Customs House and any detriment to efficient functioning of the Customs House will ultimately reflect on that authority. There is no other authority more concerned with weeding out of unacceptable elements and, therefore, there is no cause for any other authority to sit in judgement on the decision of a Commissioner that, continued operation of licencee is detrimental to the functioning of the Customs House .

+ A finality in tax matters is not intended to be vested in an administrative authority because collection of the legislated tax is for the benefit of the citizens of the country and in accordance with the power to tax having been invested by the citizenry on the sovereign legislature. The adjudication and appellate orders are, for that reason, subject to scrutiny of the review authority established in the taxing statute itself as enacted by the sovereign legislature. There is no such provision for review in the Customs House Agents Licencing Regulations, 1984 .

+ We cannot countenance reading down the general provisions of review and appeal to apply to dropping of disciplinary proceedings against Customs House agents in the face of specific and deliberate non-inclusion of such contingency in Section 146 of Customs Act, 1962 and the Regulations framed thereunder.

The Revenue appeal was rejected.

Precedent in passing:

Commissioner vs. Thakkar Shipping Agency - 2014-TIOL-1250-CESTAT-MUM .

Held:

Cus - Revocation of a CHA licence or dropping of proceedings under CHALR cannot be said to be an order passed by the Commissioner as an adjudicating authority – in the absence of a specific provision in the CHALR, 1984, Revenue cannot appeal against such order before the Tribunal: CESTAT

(See 2017-TIOL-1760-CESTAT-MUM)