CESTAT restores Suspended License of CHA in absence of Proof for Violation of CBLR [Read Order]

In a recent case, the Chennai bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside the order suspending Customs House Agent ( CHA )‘s license in absence of proof for violation of Customs Broker Licensing Regulations ( CBLR ), 2018 and directed to restore the suspended license.

M/s.V.J.P. Shipping India Pvt. Limited, M/s.K.Y.P. Logistics India Pvt. Limited, the appellants filed the appeal against Order by the Principal Commissioner of Customs (General), Chennai Custom House, Chennai, whereby the Principal Commissioner has ordered the “continuation of suspension of license issued under Regulation 16 (2) of Customs Broker Licensing Regulations ( CBLR ), 2018”.

The imports were in October and November 2022 wherein the violation/s were alleged, but the first order of suspension was passed on 23.04.2024 which itself is beyond the time frame provided under Regulation 17 of CBLR. The first show cause notice dt. 05.10.2023 issued under Regulation 17 (1) ibid does not whisper about any offence report.

Even before conducting the investigation required by Regulation 10 ibid, the Commissioner came to the conclusion in the contested order that the appellants had broken a number of its sub-regulations. Regarding the second appellant, they did not even submit a Bill of Entry, therefore the contested ruling is obviously without merit. The livelihood of the appellants, including the employees and their families, has been impacted by the contested order. Because the Revenue has not yet provided an inquiry report, the contested order to continue the suspension is improper and illegal. 

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On the other hand, Smt. O.M. Reena, A.R. endorsed the conclusions in the contested order. She also submitted a written argument, primarily focusing on merits.  Shri N. Viswanathan argued that the Revenue had issued a second show-cause notice in which the Principal Commissioner reiterated the accusations from the previous SCN dt. 05.10.2023. He further argued that the appellant was being treated harshly by the continued license suspension without any resolution to the proceedings as outlined in the CBLR. 

The court found that the proceedings before the lower authorities is in a preliminary stage and hence, we do not propose to get into the merits of the case and give any finding on merits.  The only issue that we could decide is, “whether the impugned order dt. 21.05.2024 whereby the continuation of suspension was ordered, is sustainable ?”

The documents that are on file do not include the dates of the imports or bills of entry.  Paragraph 3 of the SCN, however, states that Ms. Starlina's statement was recorded on 11.01.2023 during the course of the investigation. According to the accompanying letter, a copy of the Assistant Commissioner's inquiry report, which was dated July 3, 2024, was given to the appellant on July 24, 2024.  According to Regulation 17(7), the Principal Commissioner or the Commissioner of Customs, as the case may be, may issue orders rescinding the license suspension or rescinding the Customs Broker's license. 

The Appellant claims to have suffered both personally as well as in its business. The CBLR prescribes a time-frame within which, prescribed authority should take action for any alleged violation/s of any of the Regulation/s under the same.

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The  Appellant stated that for an alleged violation of the import made in October/November 2022, the authorities should have completed the proceedings within the permissible 90+90+90 days, however, it has been more than nearly 2 years and the only action taken by the authority is the suspension of license which has seriously affected the livelihood of not only the appellant, but also the employees working under the appellants and that the continuation thereof of the suspension of licenses has only aggravated their misery.

The bench viewed that the revenue may be having in its possession some documents/evidences regarding or indicating the history of similar violations by the appellants but, nevertheless, such infringements or violations has not culminated in any action by way of punishment as prescribed under the CBLR and hence, the alleged background/history stands not proved. Therefore, such a background or history of the appellants, as long as ‘not proved’ would not be of any avail or of any consequence insofar as the present – alleged violations are concerned. 

The Tribunal viewed that the appellants before us cannot be left remedy-less because of the reason of inaction, for various reasons, known only to the Revenue. It may be that the CHA before us has a case since the time-frame has not been adhered to by the authorities, but in any case, that is not the issue before us now in this Appeal.

If the version of the appellants is correct, then they may have a statutory remedy. Further, from the very facts placed on record, though the bench found that there is something more than what meets the eye since, admittedly, the Revenue has chosen to be inactive in not pursuing with or adhere to the CBLR insofar as the periods of limitation are concerned, but again, that is not the issue before us.

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It was viewed that the balance of inconvenience is clearly with the appellants and hence, the Revenue would not in any way be affected if the order of suspension of their license set aside, thereby permitting them to continue with their business.

Accordingly, a two member bench of  P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) set aside the order suspending the license of the appellants.  The authority below can always go ahead since there has been an initiation of a proceedings, and conclude the same in accordance with law thereafter.

To Read the full text of the Order CLICK HERE

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