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2000 Supreme(Mad) 614
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE V.S. SIRPURKAR & THE HONOURABLE MRS. JUSTICE PRABHA SRIDEVAN
Arvind C Bhagat - Appellant
Versus
Commissioner of Customs, Chennai - Respondents
Writ Appeal No. 26 of 1999 and C.M.P. No. 119 of 1999
Decided On : 29 June 2000
The central legal point established is that a Customs House Agent's failure to honor surety commitments can justify the refusal to renew their licence.
Headnote:
Customs House Agent - Licence Renewal - Customs Act, Section 146(2), Regulations 10, 12, 14 - The judgment discusses the appellant's challenge to the rejection of his Customs House Agent Licence renewal under Regulations 10, 12, and 14 of the Customs House Agents Licensing Regulations, 1984. The court interprets Regulation 12(2)(b) and Regulation 14(g) to determine the conditions for licence renewal and the obligations of Customs House Agents. The court's decision is influenced by the interpretation of these regulations and their application to the appellant's conduct.
Fact of the Case:
The appellant challenged the rejection of his Customs House Agent Licence renewal after offering surety for importers who evaded duty. The department refused renewal based on the appellant's failure to discharge the duty liability.
Finding of the Court:
The court found that the refusal to renew the licence was justified due to the appellant's failure to honor his commitment as a surety for the payment of differential duty.
Issues: The issues revolved around the appellant's obligation as a Customs House Agent, the interpretation of Regulations 12(2)(b) and 14(g), and the justification for refusing licence renewal.
Ratio Decidendi: The court held that the appellant's failure to discharge the duty liability as a surety constituted a breach of Regulation 14(g), justifying the refusal to renew the licence.
Final Decision: The writ appeal was dismissed, upholding the refusal to renew the licence and imposing costs on the appellant.
V.S. SIRPURKAR, J.
Feeling aggrieved by the dismissal of the writ petition by the learned single Judge of this Court, the appellant has comp up in this writ appeal. In the writ petition, the appellant had challenged the order of the second respondent dated 2-9-1998 whereby his application for renewal of Customs House Agent Licence was rejected. In exercise of the powers under Section 146(2) of the Customs Act, the Central Board has formulated Regulations under the title "Customs House Agents Licensing Regulations, 1984". These regulations deal with the subject of Customs House Agents, the manner of awarding licence to the Customs House Agents and the conditions on which the licence could be given and/or renewed. The licence is granted under Regulation 10 on an application under Regulation 5. The conditions are prescribed in Regulation No. 6. Regulation 12 provides the period of validity of a licence which is for five years and also provides that it can be renewed. Regulation 12(2) specifies the conditions for such renewal. Regulation 12(2)(b) is relevant for our purpose which provides as follows :-
"12(2)(b). absence of instances of delay either in the clearance of goods or in the payment of duty for any reason attributable to such licensee and any complaints of misconduct including non-compliance of any of the obligations specified in Regulation 14."
Regulation 14 provides for the obligation of Customs House Agent. Regulation 14(g) is relevant for our purpose which runs as follows :-
"14(g). promptly pay over to the Government, which due, sums received for payment of any duty, tax or other debt or obligations owing to the Government and promptly account to his client for funds received for him from the Government or received from him in excess of Governmental or other charges payable in respect of the clearance of cargo or baggage on behalf of the client."
2.The appellant had applied for his licence on 12-2-1992 as it was due to expire on 8-3-1992. The same was renewed only for a period of six months instead of normal period of three years as an filed before the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) by the appellant relating to import of Cyclohexanone on the basis of fabricated documents and concessional duty was pending. It seems from the order that the appeal filed before the CEGAT was dismissed as not tenable and it was observed by the CEGAT that it was open to the department to take up such proceedings as are open to it in law for recovery of amounts from the appellant. It is then mentioned in the order that a separate Civil Suit has been filed by the department for the recovery of the surety amount. Under such circumstances, the Assistant Commissioner of Customs seems to have refused to renew the licence.
3.The learned single Judge has taken a view that the refusal to renew the licence was perfectly legal and valid and it is on that ground that the writ petition was dismissed.
4.A short factual background would highlight the controversy. While working as the Custom House Agent, the appellant filed two Bills of Entry for home consumption of Cyclohexanone imported by two companies viz., M/s. Magnatapa Co., Kanpur and M/s. Wellow Magnetic Tape Co., Kanpur. The value of each consignment was declared at Rs. 3, 66, 580/-. Under the rules, the importers were bound to pay concessional duty at 35% on the ground that the imported goods were required for the manufacture of ferrites, capacitors and magnetic tapes. At the time of import, the importers executed a bond that they would ultimately produce an end user certificate from the competent authority of the Excise Department or an end use affidavit to the satisfaction of the Collector that the imported material was used for the manufacture of blank tapes and on their failure, they would pay Rs. 3, 16, 175/- in each case on demand. The department demanded a surety for the said amount of Rs. 3, 16, 175/- on both the transactions and, therefore, the Pun
