IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

J.P. Devadhar, K.K. Tated & M.S. Sanklecha, JJJ.

Reserved on : 6th July 2012

Pronounced on : 19th July 2012

WRIT PETITION NO.7122 OF 2011

M/s.Delta Logistics, A partnership firm having its office at C401, Bharat Ark, Azad nagar, Veera Desai Road, Andheri (West), Mumbai – 400 058 ..Petitioner.

Versus

1) Union of India, (Through the Secretary, Ministry of Law & Justice, Department of Legal Affairs, Branch Secretariat, Aaykar Bhavan Annexe, 2nd Floor, New Marine Lines, Mumbai – 400 020

2) The Commissioner of Customs (G), New Custom House, Ballard Estate, Mumbai – 400 038 ..Respondents

Mr.V N Ansurkar with Mr D H Nadkarni i/by Legal Solutions for the petitioner.

Mr.Pradeep S Jetly for the respondents.

ORAL JUDGMENT :

(Per J.P. Devadhar, J.)

1. A Division Bench of this Court finding it difficult to agree with the views expressed by another Division Bench of this Court in the case of Commissioner of Customs (General) V/s. Rajan Virji & Company in Customs Appeal No.25 of 2006 decided on 27th January 2010 has by its order dated 14th September 2011 passed in the aforesaid Writ Petition referred two questions to the learned Chief Justice for being considered by a Larger Bench. Accordingly, the learned Chief Justice has constituted this larger Bench for considering the said two questions which read thus :

(i) Under the provisions of Regulation 22 of the Custom House Agents Licensing Regulations, 2004, is the Commissioner of Customs entitled to differ with the findings which have been arrived at by the Deputy Commissioner of Customs or, as the case may be, the Assistant Commissioner of Customs in the report submitted under clause (5) of the Regulation ?

(ii) Is it a correct proposition of law that under Regulation 22 no power or authority has been vested with the Commissioner of Customs to disagree with the report of the Inquiry Officer ?

2. The relevant facts are that the petitioner has been carrying on business as a Customs House Agent ('CHA' for short), by obtaining a license under the Customs House Agents Licensing Regulations, 2004 ('2004 Regulations' for short). The said license was suspended by the Commissioner of Customs on 22nd December 2008. On 29th October 2009, a chargesheet was issued to the petitioner. On the same day i.e. 29th October 2009 itself, the Commissioner of Customs appointed Shri Y S Reddy, Assistant Commissioner of Customs to inquire into the charges levelled against the petitioner and to submit his report to the Commissioner. Accordingly, the Inquiry Officer conducted the inquiry and submitted his report to the Commissioner on 23rd December 2010. As per the inquiry report, none of the charges levelled against the petitioner were proved beyond doubt.

3. After forwarding a copy of the inquiry report and calling for objections, the petitioner was heard by the Commissioner of Customs and by an orderinoriginal dated 7th July 2011, the Commissioner of Customs revoked the CHA license granted to the petitioner under Regulation 22(7) of the 2004 Regulations. Challenging the aforesaid order, the petitioner filed the aforesaid Writ Petition No.7122 of 2011 inter alia on the ground that under 2004 Regulations, the Commissioner had no power or authority to disagree with the report of the Inquiry Officer. In support of the above contention, the petitioner relied on a decision of this Court in the case of Rajan Virji & Company (supra). As the Division Bench hearing the above Writ Petition found it difficult to agree with the ratio laid down by a Division Bench of this Court in the case of Rajan Virji & Company(supra) referred the questions framed by it for being considered by a Larger Bench. Accordingly, the present Larger Bench is constituted.

4. Regulation 22 of the 2004 Regulation reads thus :

“Regulation 22. Procedure for suspending or revoking licence under Regulation 20. ( 1) The Commissioner of Customs shall issue a notice in writing to the Customs House Agent stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said Customs House Agent to submit, within such time as may be specified in the notice, not being less than fortyfive days, to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs House Agent desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs.

(2) The Commissioner of Customs may, on receipt of the written statement from the Customs House Agent, or where no such statement has been received within the timelimit specified in the notice referred to in subregulation (1), direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs to inquire into the grounds which are not admitted by the Customs House Agent.

(3) The Deputy Commissioner of Customs or Assistant Commissioner of Customs shall, in the course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the inquiry in regard to the grounds forming the basis of the proceedings, and he may also put any question to any person tendering evidence for or against the Customs House Agent, for the purpose of ascertaining the correct position.

(4) The Customs House Agent shall be entitled to crossexamine the persons examined in support of the grounds forming the basis of the proceedings, and where the Deputy Commissioner of Customs or Assistant Commissioner of Customs declines to examine any person on the grounds that his evidence is not relevant or material, he shall record his reasons in writing for so doing.

(5) At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs shall prepare a report of the inquiry recording his findings.

(6) The Commissioner of Customs shall furnish to the Customs House Agent a copy of the report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, and shall require the Customs House Agent to submit, within the specified period not being less than sixty days, any representation that he may wish to make against the findings of the Deputy Commissioner of Customs or Assistant Commissioner of Customs.

(7) The Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if any, made by the Customs House Agent, pass such orders as he deems fit.

(8) Any Customs House Agent aggrieved by any decision or order passed under regulation 20 or subregulation (7) of regulation 22, may prefer an appeal under section 129A of the Act to the Customs, Central Excise and Service Tax Appellate Tribunal established under subsection (1) of section 129 of the Act.”

5. It is argued on behalf of the petitioner, firstly, that under Regulation 22(6), the CHA is required to make representation only against the findings in the inquiry report i.e. only where the findings are against the CHA. Therefore, if the findings in the inquiry report are in favour of the CHA, there is no question of making any representation and consequently there would be no question of passing any order against the inquiry report. Secondly, by relying upon rule 15(2) of the Central Civil Services (Classification, Control & Appeal) Rules, 1965, it is argued that wherever the rule making authority thought it fit to permit the Disciplinary Authority to disagree with the findings in the inquiry report, the rule making authority has specifically provided that the Disciplinary Authority shall record its own reasons for disagreeing with the report of the Inquiry Authority and forward the same to the charged person for his comments. Regulation 22 of the 2004 Regulations does not provide any such power to the Commissioner of Customs and, therefore, in the absence of any power to disagree with the findings in the inquiry report, the Commissioner of Customs would be bound by the findings in the inquiry report. Thirdly, by relying upon a Division Bench judgment of this Court in the case of Rajan Virji & Company (supra), it is submitted that since it is mandatory for the Commissioner under Regulation 22(6) to furnish a copy of the inquiry report to the CHA, even if the report is in favour of the CHA, it has to be presumed that the Commissioner is bound by the report and has no power or authority to disagree with the report of the Inquiry Authority.

6. On behalf of the Revenue, it is contended that the decision of this Court in the case of Rajan Virji & Company (supra) has not been accepted and the matter is pending before the Apex Court. It is further argued that the inquiry officer being subordinate to the Commissioner, it cannot be said that the Commissioner is bound by the report of the inquiry officer.

7. We have carefully considered the rival submissions.

8. There can be no dispute that the rank of the Commissioner of Customs is higher than the rank of Assistant Commissioner of Customs / Deputy Commissioner of Customs. Under Regulation 22(1), it is the Commissioner who is empowered to issue notice to the CHA setting out the grounds on the basis of which he proposes to suspend or revoke the CHA license and require the CHA to submit his written statement of defense to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by the Commissioner of Customs. Under Regulation 22(2), the Commissioner is empowered to direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs to inquire into the grounds which are disputed by the CHA. Regulation 22(3) to Regulation 22(5) set out the mode and the manner in which the inquiry is to be conducted by the inquiry officer and submit the report to the Commissioner. Regulation 22(6) requires the Commissioner to furnish to the CHA a copy of the inquiry report and require the CHA to give his representation against the findings of the Inquiry Authority. Regulation 22(7) requires the Commissioner to consider the inquiry report and the representation if any made by the CHA and pass such orders as he deems fit.

9. Thus, under Regulation 22 it is the Commissioner who is empowered to issue showcause notice to the CHA to suspend or revoke the CHA license and it is the Commissioner who is empowered to pass 'such orders as he deems fit' after considering the inquiry report and the representation of the CHA, if any. Therefore, whether the inquiry report is in favour of the CHA or not, it is the Commissioner who has to pass the final order as he deems fit on the showcause notice issued by the Commissioner. The words 'such orders as he deems fit' in Regulation 22(7) leave no manner of doubt that it is entirely at the discretion of the Commissioner, whether to agree or disagree with the inquiry report and pass such orders as he deems fit on the showcause notice. Where the Commissioner disagrees with the inquiry report, should he record the reasons for such disagreement and forward the same to the CHA for his comments before passing the final order is a totally different question to be addressed while considering the merits of the order passed by the Commissioner. But when Regulation 22(7) expressly empowers the Commissioner to pass such orders as he deems fit, it would not be possible to hold that if the inquiry report is in favour of the CHA, the Commissioner cannot pass an order against the CHA even if the Commissioner disagrees with the inquiry report.

10. The argument that under Regulation 22(6), the CHA is required to make representation only to the extent the findings in the inquiry report that are against the CHA cannot be accepted. Even if the inquiry report is in favour of the CHA, it is open to the CHA to make representation if the CHA considers that some of the view points putforth by the CHA have not been properly appreciated by the inquiry officer. Therefore, the regulation 22(6) requires the CHA to make representation against the inquiry report irrespective of the fact as to whether the report is in favour of the CHA or not. In any event, whatever may be the representation of the CHA on the inquiry report, the final decision on the showcause notice shall be that of the Commissioner as he deems fit and not that of the inquiry officer.

11. Reliance placed by the counsel for the petitioner on rule 15(2) of the Central Civil Services (Classification, Control & Appeal) Rules, 1965, is in our opinion, misplaced. No doubt that the said rule requires the Disciplinary Authority to record its tentative reasons for disagreeing with the findings of the Inquiry Authority, whereas, no such provisions are to be found in the 2004 Regulations. But in the absence of such provisions in the 2004 Regulations, it cannot be inferred that the Commissioner is bound by the findings recorded in the inquiry report if the said findings are in favour of the CHA, especially when the Regulation 22(7) specifically empowers the Commissioner to pass such orders as he deems fit, inter alia, after considering the inquiry report. Whether, failure on the part of the Commissioner to communicate the reasons for his disagreeing with the inquiry report has led to miscarriage of justice is a question to be considered while considering the merits of the order passed by the Commissioner. The fact that Regulation 22(7) provides that the Commissioner shall pass an order after considering the inquiry report and the representation of the CHA, if any, it cannot be said that the Commissioner while passing the final order is not required to consider the grounds set out in the showcause notice, written statement of defense and other evidence on record. In other words, under Regulation 22(7) the Commissioner is required to pass such orders as he deems fit after considering all the relevant facts including the inquiry report and, therefore, it is not possible to accept the contention of the petitioner that the Commissioner is bound to pass an order in favour of the CHA if the inquiry report is in favour of the CHA.

12. The Division Bench of this Court in the case of Rajan Virji & Company (supra), in our opinion, committed an error in holding that the regulation 22 has been framed on the presumption that the inquiry report under Regulation 22(5) would be implicating the CHA and, therefore, in Regulation 22(6) no provision has been made for the Commissioner to disagree with the inquiry report. Based on the above presumption, the Division Bench in the case of Rajan Virji & Company (supra) has held that there is no power or authority with the Commissioner to disagree with the inquiry report. Such an interpretation given by the Division Bench, in our opinion, runs counter to the express words used in Regulation 22(7) to the effect that the Commissioner shall after considering the inquiry report pass such orders as he deems fit. If the Commissioner is empowered under the Regulation to pass such orders as he deems fit after considering the inquiry report, it obviously means that the Commissioner is empowered to take decision contrary to the inquiry report and if the CHA is aggrieved by the decision of the Commissioner, there is remedy of filing an appeal against the order of the Commissioner provided under Regulation 22(8) of the 2004 Regulations.

13. For all the aforesaid reasons, we hold that under Regulation 22 of the 2004 Regulations, the Commissioner is empowered to disagree with the findings recorded in the inquiry report and pass such orders as he deems fit and if the CHA is aggrieved by the order of the Commissioner, he is entitled to challenge the said order by filing an appeal.

14. The reference is disposed off accordingly by answering the questions referred to us in the above terms with no order as to costs.

15. The registry is directed to place the Writ Petition before the regular bench for disposal in accordance with law.