Regulation

Draft

Observations

1(1)

Draft

These regulations may be called the Customs Brokers Licensing and Revocation Regulations, 2017.

Existing provision

These regulations may be called the Customs Brokers Licensing Regulations, 2013.

Section 146(2) lists out, in particular, seven aspects the regulations may deal with. Licensing, and revocation are two of them. Main purpose under Section 146(1) is licensing persons to carry on business as a customs broker relating to the entry or departure of a conveyance or the import or export of goods at any customs station.

Therefore, the existing title of "Customs Brokers Licensing Regulations" sounds matter of fact and in consonance with Section 146(1).

Proposed title picks out one other aspect – a negative one – from the various other aspects in Section 146(2).

2(d) [existing regulation 2(c)]

Draft

"Customs Broker" means a person licensed under these regulations to act as an agent on behalf of the importer or an exporter for purposes of transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station including audit.

Existing provision

"Customs Broker" means a person licensed under these regulations to act as agent for the transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station.

Audit is not envisaged in section 146(1).

Therefore, the proposed inclusion of audit is ultra vires.

Moreover, it is not clear as to what exactly is meant or sought to be achieved by the proposed addition of audit in the definition.

It is also odd that a substantive terminology used in the parent Act is sought to be defined in the subordinate legislation rather than in the primary.

2(j)

Draft

"Preceding regulations" mean Custom House Agents Licensing Regulation, 1984, Custom House Agents Licensing Regulation, 2004 and Customs Brokers Licensing Regulations, 2013

1965 Regulations not mentioned.

Peaceful definition could be:

"Preceding regulations" means earlier regulations made under section 146 from time to time".

7(4)

[earlier 7(2)]

Draft

(4) A customs broker shall be eligible to transact business under these regulations at a customs station which requires intimation under the said Form C, subject to the condition that such customs broker shall be able to transact such business only after a period of two years from the date of issue of license in Form-B1 or Form-B2:

Provided that the said period of two years shall be waived in respect of a licence issued to a customs broker under the respective provisions of the preceding regulations.

Provided further that the period of two years referred to in sub-regulation (4) shall not be applicable where the intimation under the said Form C is to the Principal Commissioner or the Commissioner of Customs, as the case may be, referred to in subregulation (2) of regulation 4.

Existing provision

(2) The applicant who has been granted licence under sub- regulation (1) shall be eligible to work as Customs Broker in all Customs Stations subject to intimation in Form C to the  1 [Principal Commissioner of Customs or Commissioner of Customs, as the case may be] of the Customs Station where he intends to transact business. A copy of this intimation shall also be sent to the  1 [Principal Commissioner of Customs or Commissioner of Customs, as the case may be] who has issued the licence in Form B.

Draft 7(4) is confusing and ultra vires.

Reasons :

1. Second proviso refers to Form C in sub-regulation (2). Sub-regulation (2) does not deal with Form C.

2. Form C is mentioned in sub-regulation (3). Assuming that the second proviso refers to this Form C, then second proviso makes the entire sub-regulation (4) of no effect, as everyone operating in another customs station gives intimation in Form C under sub-regulation (3).

3. Above all, once a person is found competent to function in one customs station, how can he be considered barred in other stations? The Act does not enable geographical restriction.

4. Such restriction is impractical and unreasonable for the reason that one client (importer or exporter) may have traffic or business in different customs stations.

5. For exports, there could be exigencies of late change of load-port due to various reasons. Exports will be affected.

6. Moreover, what can be allowed after two years, can as well take place at once. The regulatory rationale or necessity is hard to find.

7. Customs can regulate the conduct of broker not his conduct of business.

14(f) [earlier 18(f)]

Draft

(f) has been convicted by a competent court for an offence involving moral turpitude or otherwise

Existing provision

(f) has been convicted by a competent court for an offence involving moral turpitude.

The addition of the words "or otherwise" is too wide and unreasonable, as even a fine for traffic violation would be attracted under this. The modification has no nexus with the object authorised and is, therefore, bad in law.

15 second proviso

Draft

Provided further that where the licence of the Customs broker is suspended as a consequence to prohibition, the time period specified in regulation 18, shall be reckoned from the date of such suspension.

Unclear, as regulation 18 has no time period mentioned in it.

17

Draft

Explanation: Offence report for the purposes of this regulation means a summary of investigation and prima facie framing of charges into the allegation of acts of commission or omission of the Customs Broker or a F card holder or a G card holder as the case may be under these regulations which would render him unfit to transact business under these regulations.

Earlier, offence report was unexplained. It was construed by courts to be date of knowledge of alleged offence to the department.

Offence report is now sought to be equated with investigation report by means of this proposed explanation. Offence report is akin to FIR, and is different from charge sheet for trial. Open-ended investigatory process would defeat the very objective of the earlier time-structured conclusion of proceedings against customs brokers.

Earlier, show cause notice under the Regulations had to be within 90 days of offence report, and enquiry report within 90 days of show cause notice. Within another 90 days final order by Commissioner was envisaged.

The new "explanation" lets loose the entire time frame. The offence report (if explained in the manner proposed) can be prepared even after 5 years or 10 years. Observation by the H.C. in A.M.Ahamed & Co - 2014-TIOL-1503-HC-MAD-CUS is pertinent to this aspect.

Offence report should, therefore, be the date of show cause notice (under the Act) indicating any commission or omission by the broker; in other cases, where such commission comes to the knowledge at an earlier date to the licensing commissioner, date of such knowledge should start the time limit.