Regulation 21 of the Customs House Agents Licensing Regulations, 2004 is not ultra vires the powers of the Board under Section 146(2) of the Customs Act, 1962 - The principles of natural justice are applicable to the orders of prohibition issued under Regulation 21 of the Customs House Agents Licensing Regulations, 2004, but in appropriate cases, post-decisional hearing would satisfy the principles of natural justice.

Headnote:
CUSTOMS HOUSE AGENTS LICENSING REGULATIONS, 2004 - Regulation 21 - Prohibition - Validity - Principles of natural justice - Applicability - Held, Regulation 21 is not ultra vires the powers of the Board under Section 146(2) of the Customs Act, 1962 - Regulation 21 is essentially that of a preventive measure - In the appropriate case, passing of order without pre-decisional hearing cannot be considered illegal or bad on that count alone; and in such a case, post-decisional hearing remains a valid method to ensure adherence to the requirements of extending opportunity of hearing to the person adversely affected.
Fact of the Case:

The petitioners, who had been granted license to function as Customs House Agent [‘CHA’], have been prohibited from functioning as such, by way of similar nature orders of prohibition, issued under Regulation 21 of the Customs House Agents Licensing Regulations, 2004 [‘the Regulations’/’the Regulations of 2004’], which have been framed under Section 146(2) of the Customs Act, 1962 [‘the Act’/’the Act of 1962’]. The petitioners submit that such prohibitory orders, which entail civil and evil consequences, have been passed in utter disregard to the principles of natural justice.
Finding of the Court:

Regulation 21 is not ultra vires the powers of the Board under Section 146(2) of the Customs Act, 1962 - Regulation 21 is essentially that of a preventive measure - In the appropriate case, passing of order without pre-decisional hearing cannot be considered illegal or bad on that count alone; and in such a case, post-decisional hearing remains a valid method to ensure adherence to the requirements of extending opportunity of hearing to the person adversely affected.
Issues: Whether Regulation 21 of the Customs House Agents Licensing Regulations, 2004 is ultra vires the powers of the Board under Section 146(2) of the Customs Act, 1962? Whether the principles of natural justice are applicable to the orders of prohibition issued under Regulation 21 of the Customs House Agents Licensing Regulations, 2004?
Ratio Decidendi: The powers in case of fault, default, failure, misconduct and non-fulfilment of obligations have been provided in different manner with reference to different eventualities - In the matters covered under Regulation 20, the procedure per Regulation 22 is followed, which is akin to a departmental inquiry - Such inquiry is contemplated in the cases where license is proposed to be revoked or even suspended - However, in case where immediate action is considered necessary, the license could be suspended, per Regulation 20(2), even in cases where an inquiry against agent in contemplation - Regulation 21, making the provisions for prohibition of CHA from working in one or more sections of the stations on his failure to fulfil obligations laid down in Regulation 13, in manner and effect, appears to be taking care of another emergent situation where because of CHA’s failure to fulfil his obligations, working of one or more of the sections of the Customs Station is jeopardized - This power of prohibition appears to be essentially that of a preventive measure rather than a punitive one - In our view, the powers of such a preventive measure are rather inherent in the larger powers of punitive as also preventive suspension and then, the extreme punitive measure of revocation, as are available with the Commissioner of Customs, in order to achieve the object for which the Regulations have been framed.
Final Decision: Petitions allowed in part, to the extent and in the manner indicated - The questioned orders of prohibition i.e., order dated 25-4-2013 (Annex. 7) in CWP No. 7266/2013, Order, dated 11-4-2013 (Annex. 20) in CWP No. 7896/2013; and Order, dated 17-4-2013 (Annex. 1) in CWP No. 7345/2013 are now ordered to remain operative until four weeks from the date of this order - Within this period of four weeks, it shall be required of the Commissioner concerned to extend an adequate opportunity of hearing to each of the writ-petitioners, which could include personal hearing, if so desired and then, to pass appropriate speaking order in accordance with law.

JUDGMENT

1. - Preliminary : These three writ petitions, filed on similar nature grievance of the respective petitioners and founded essentially on similar grounds, have been considered together; and are taken up for disposal by this common order.

2. Put in a nut-shell, the basic common features in these petitions are that the writ-petitioners, or the firm/company represented by them, who had been granted license to function as Customs House Agent [‘CHA’], have been prohibited from functioning as such, by way of similar nature orders of prohibition, issued under Regulation 21 of the Customs House Agents Licensing Regulations, 2004 [‘the Regulations’/’the Regulations of 2004’], which have been framed under Section 146(2) of the Customs Act, 1962 [‘the Act’/’the Act of 1962’]. The petitioners submit that such prohibitory orders, which entail civil and evil consequences, have been passed in utter disregard to the principles of natural justice. Though the said Regulation 21 has also been questioned in these petitions as ultra vires but, for the Union of India having not been joined as party, the learned counsel appearing for the petitioners in CWP Nos. 7266/2013 and 7896/2013 did not press much on this issue of vires during the course of submissions. However, the learned counsel appearing in CWP No. 7345/2013 has pressed on the issue of vires too.Background aspects and stand of the respective petitioner :

3. Looking to the subject-matter of these writ petitions and the issues raised, dilatation on all the factual aspects does not appear necessary. In brief, the background aspects, so far relevant for the present purpose; and the stand of the respective writ-petitioners could be taken note of in relation to each of these petitions as follows:CWP No. 7266/2013 :

4. In this petition, the petitioner-company is aggrieved of the prohibition order dated 25-4-2013 (Annex. 7) issued against it in terms of Regulation 21 by the Commissionerate of Customs (Preventive), Jodhpur for the alleged contravention of the provisions of Regulation 13(d), (e) and (o) of the Regulations of 2004 following seizure of 1036 Logs of Red Sanders by the Directorate of Revenue Intelligence, Gandhidham on 1-10-2012.

5. It has been alleged that as per the investigation revelations, the seized prohibited goods were being exported by one M/s. Ritu Corporation, 33, Gol Building, Jalori Gate, near Thar Handloom, Jodhpur, under the guise of “Indian Handicrafts Furniture Items of Marble & Iron” and that two containers (RWAU2404850 & RWAU2404464) stuffed with the prohibited items had been cleared for export as “Polished Marble Slabs” from ICD, Thar Dry Port, Jodhpur under shipping bill Nos.15885541 & 1585524 both dated 3-9-2012 and had begun sailing to the destined port, which were called back to Mundra Port and seized. According to the department, the preliminary inquiry revealed that the said shipping bills were filed by the representative of the petitioner Shri Ajay Vyas on behalf of M/s. Ritu Corporation, the exporter; but then, the PAN card and the IEC of the exporter M/s. Ritu Corporation, had been obtained by providing fictitious names and addresses. It is alleged that per Regulation 13(o) of the Regulations, a Customs House Agent is required to verify the antecedents, correctness of Importer Exporter Code (IEC) Number, identity and functioning of his client at the declared address by using reliable, independent, authentic documents, data or information but the petitioner failed to fulfil its obligation and facilitated unauthorized transport of prohibited goods by replacement of cargo.

6. The grievance of the petitioner is that without any show cause notice or calling for any explanation, it has directly been prohibited to transact business in the jurisdiction of Commissioner, Customs, Jodhpur, by the impugned order dated 25-4-2013; and a copy of intimation of this order has been sent to the Commissioner, Customs of other Regions prompting identical action. According to

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2013 Supreme(Raj) 2187

RAJASTHAN HIGH COURTDinesh Maheshwari, Narendra Kumar Jain-II, JJ.Pinkcity Logistics Ltd. - AppellantVersusCommissioner of Customs - RespondentD.B. Civil Writ Petition Nos. 7266, 7896 and 7345 of 2013.Decided On : 29-11-2013

Cases Referred (10)

RAJASTHAN HIGH COURT
Dinesh Maheshwari, Narendra Kumar Jain-II, JJ.
Pinkcity Logistics Ltd. - Appellant
Versus
Commissioner of Customs - Respondent
D.B. Civil Writ Petition Nos. 7266, 7896 and 7345 of 2013.
Decided On : 29-11-2013