By TIOL News Service

CHENNAI, DEC 21, 2015: THE Petitioners, who are holders of Customs Brokers Licences, challenged the Show Cause Notice issued under Regulation 20 of the Customs Brokers Licencing Regulations, 2013 for revoking their licences on the ground that the notices were issued beyond the period of 90 days as stipulated under Regulation 20. According to the Petitioners, the period mentioned in Regulation 20 is mandatory, but the revenue argued that it is only directory, but not mandatory.

After examining the rival contentions and referring to a number of decisions of the Supreme Court and the High Courts, the High Court held:

+ The 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 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 legislation. 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 public duty. What is to be considered is the object of the enactment in prescribing a period for the performance of such public duty.

+ 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 laid down by the Apex Court in the judgments relied upon by 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 consequence of the action is the revocation of the licence and it would also pave way for inaction by the officials breeding corruption.

+ 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 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 limit is prescribed in Regulations, which empowers action in Regulation 18 and procedure in Regulation 20 (1), the use of the term '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. Whereas, under the CBLR, 2013 having found the necessity to prescribe a period, the Central Board, the statutory authority had included the same in the Regulations itself, when they were brought into force. Therefore, when a time limit is prescribed in Regulations, which empowers action under Regulation 18 by following the procedure in Regulation 20 (1), the use of the term 'shall' cannot be termed as 'directory'. Under such circumstances, the rule can only be termed as 'Mandatory'.

In view of the above, the High Court set aside the proceedings in all the writ petitions.

(See 2015-TIOL-2847-HC-MAD-CUS)