CUSAA 8/2020 Page 1 of 29

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on: 23.05.2022

Judgment pronounced on: 28.07.2022

+ CUSAA 8/2020 & CM APPLs.34414/2020 & 13447/2021

M/S LEO CARGO SERVICES THROUGH ITS DIRECTOR

SH. SANJEEV MAGGU ..... Appellant

Through : Mr Akhil Krishan Maggu and

Mr Ashish Batra, Advs.

versus

COMMISSIONER OF CUSTOMS, AIRPORT AND GENERAL,

NEW CUSTOM HOUSE, NEW DELHI ..... Respondent

Through : Mr Harpreet Singh, Sr Standing

Counsel with Ms Suhani Mathur

and Mr Jatin Kumar Gaur, Advs.

CORAM:

HON'BLE MR JUSTICE RAJIV SHAKDHER

HON'BLE MS JUSTICE TARA VITASTA GANJU

[Physical Court Hearing/ Hybrid Hearing (as per request)]

JUDGMENT

TARA VITASTA GANJU, J.:

CM APPL. 13447/2021 [for placing additional document on record] & CM

APPL. 34414/2020 [for placing on record judgment in the context of the

appeal filed on 21.12.2020]

1. No objection to this application has been made by the Respondent and

in any event these are relevant citations in the matter. Hence, these

CUSAA 8/2020 Page 2 of 29

applications are allowed.

CUSAA 8/2020

2. The present appeal has been filed against the order dated 01.10.2019

passed by the Customs, Excise and Service Tax Appellate Tribunal

(hereinafter referred to as the „CESTAT‟).

3. By an order dated 29.03.2022, this Court framed the following

questions of law: -

“(i) Whether the Customs, Excise & Service Tax Appellate

Tribunal (CESTAT) misdirected itself in law by holding that

the timeline prescribed under Regulation 20(5) of the

Customs Brokers Licensing Regulations, 2013 is directory?

(ii) Whether the revocation of the Appellant‟s Licence was

vitiated on account of the failure to afford him the opportunity

to cross-examine the persons, based on whose statements, his

licence was revoked?”

4. We were informed by the counsel for the Appellant on 23.05.2022 that

the Appellant does not wish to press the second question of law framed

above. Therefore, this judgment is confined to only the following

question: -

“(i) Whether the Customs, Excise & Service Tax Appellate

Tribunal (CESTAT) misdirected itself in law by holding that

the timeline prescribed under regulation 20(5) of the Customs

Brokers Licensing Regulations, 2013 is directory?”

5. The brief facts relevant for the purpose of this judgment are as follows:-

5.1 Information was received by the Office of Commissioner of Customs

(Airport and General)/Respondent herein from Additional Director,

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DRI, HQ, New Delhi which stated that one Sh. Sanjeev Maggu,

Director of the Appellant Company/Appellant herein, along with one

other person (Sh. Ramesh Wadhera) were engaged in evasion of

Customs Duty by way of diverting the goods stored in Custom Bonded

warehouses, into domestic market, without payment of customs duty

and, further, that documents to show re-export of warehoused goods

were also being forged/fabricated by the said persons. It was averred

that for the purpose of evasion, allegedly fictitious firms were created

by the Appellant and one Shri Ramesh Wadhera, and Import Export

Codes (IEC‟s) were obtained in the name of:-

(i) M/s Accturists (OPC) Pvt. Ltd (IEC: 0517503581);

(ii) M/s Sparx Exports (IEC: 0516517803);

(iii) M/s Shree Shyam Enterprises (IEC: 0516966839); and

(iv) M/s Horrens Exim (IEC: 0516516299).

5.2 The information further added that the Appellant and Shri Ramesh

Wadhera had also obtained bonded warehouse(s) in the names of their

employees with fictitious residential addresses, which were used for

diversion of warehoused goods into the domestic market without

payment of customs duty. It was further averred that the aforesaid

persons were utilizing the services of other customs brokers for the

clandestine removal of goods. It was also alleged that the Appellant was

the mastermind and Sh. Ramesh Wadhera was the financier behind the

aforesaid illegal activities.

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5.3 Based on the above information, various simultaneous searches were

conducted at the residential premises of the Appellant and at the office

premises of the aforementioned entities, wherein various documents

were seized by the officers of the DRI. The statements of all concerned

persons, including statements of the public bonded warehouse keepers,

various employees of other Customs Brokers and the alleged fictitious

firms, and also statements of Inspector IGI Airport, Inspector Bond

Section, TA Bond Section and other officials were recorded by Customs

officers under the provisions of Section 108 of the Customs Act, 1962

(Customs Act).

5.4 Pursuant to the said investigations, a show-cause notice dated

10.08.2018 was issued to the Appellant, asking him to show-cause as to

why they should not be held responsible for contravention of

Regulations 10(d), (g) and (q) of the Custom Broker Licensing

Regulations, 2018 (CBLR 2018) read with erstwhile CBLR 2013 and be

made liable for action under Regulation 14 read with Regulation 17 and

18 of the said Regulations for revocation of their Custom Broker

Licence, forfeiture of part or whole security and penalty.

5.5 The show-cause notice dated 10.08.2018 (SCN) further stated that

Ms. Anamika Singh, Deputy Commissioner, ACC Import was

appointed as the Inquiry Officer and asked the Appellant to reply within

30 days from the issuance of the show-cause notice.

5.6 The Appellant sent a written statement of defence dated 05.10.2018 to

the Inquiry Officer. In the written statement, it is stated by the Appellant

CUSAA 8/2020 Page 5 of 29

that though the charge against him is that he diverted goods from a

customs bonded warehouse, he is neither an importer and/or owner of

the goods, nor the CHA, and the entire allegation against him is based

on uncorroborated statements of witnesses and certain persons. The

Inquiry Officer granted a personal hearing to the Appellant herein and

the same was attended on 30.11.2018. Thereafter, the Inquiry Officer

submitted its Inquiry Report dated 06.12.2018, which was received by

the Appellant on 14.12.2018.

5.7 The Inquiry Officer in her Inquiry Report while discussing personal

hearing, mentioned the reason for the delay in issuing the Inquiry report

beyond the prescribed period of 90 days from the issuance of show

cause notice at Annexure-F as under:

“….13. Record of Personal Hearing and Submissions of the

CB:

In terms of Regulation 17(1) of CBLR, 2018 (read with

erstwhile CBLR, 2013), the undersigned was appointed as

Inquiry Officer in the case. However the SCN could not reach

to the enquiry officer and the undersigned could only came to

know about it when she received the reminder dated

13.11.2018. The undersigned immediately informed about the

same vide letter dated 19.11.2018 to the policy wing

(Annexure VIII) and on the same date a letter was issued to

the CB to appear before Enquiry Officer......”

5.8 After submission of the Inquiry report, Commissioner Customs

(Respondent herein) granted a personal hearing to the Appellant on

16.01.2019, which was unattended and thereafter another hearing was

granted on 28.01.2019, which was attended by the counsel for the

CUSAA 8/2020 Page 6 of 29

Appellant. During this personal hearing, it was submitted by the

Appellants that the Inquiry Officer submitted the Inquiry Report after

the expiry of 90 days from the date of issuance of the show-cause notice

and therefore it is beyond the period of limitation as prescribed under

the CBLR Regulations.

5.9 Thereafter, the Commissioner Customs passed the Order-in-Original

dated 04.02.2019 inter-alia directing as follows:-

“In view of the above, I conclude that all the allegations of

contravention of Regulation 10(d), 10(g) & 10(q) of CBLR,

2018 (erstwhile 11(d), 11(g) and 11(o) of CBLR, 2013, as

amended) against the noticee are proved & confirmed in the

present case and accordingly, I pass the following order:-

ORDER

In exercise of powers conferred in terms of Regulation 14 &

18 read with Regulation 17(7) of CBLR, 2018 (erstwhile

Regulation 18 & 22 read with Regulation 20(7) of CBLR,

2013), I hereby revoke the CB Licence No. R-24/03 (PAN:

AAACL9453B) of M/s Leo Cargo Services Pvt. Ltd. I also

order for forfeiture of the whole amount of security deposit of

Rs. 75,000/- (Rupees Seventy Five Thousand only) furnished

by them. I also impose penalty of Rs. 50,000/- on M/s Leo

Cargo Services Pvt. Ltd.”

No finding on the issue of limitation as raised by the Appellant was set

forth in the order.

5.10 The Appellant preferred an appeal against the Order-in-Original before

the CESTAT, New Delhi. The CESTAT passed an order dated

01.10.2019 in which it is stated that the Appellant contended the

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following as his defence:-

“3. It is submitted that the grounds of defence of the appellant

have not been considered by the adjudicating authorities

below. It is impressed upon that the findings about violation

of Regulations of CBLR 2018/2013 on the part of the

Appellant are liable to be set aside on the ground of

limitation alone as the enquiry report was submitted after

expiry of 90 days of the issuance of show cause notice and the

same was not submitted as per the provisions carried out

under Regulations 20(5) of CBLR, 2013. However, the said

ground has not been considered by the Commissioner. Thus,

the Order is liable to be set aside on this score only.

With respect to merits, it is submitted that there is no evidence

on record except mere statements of various people without

any corroboration thereto. Those statement makers were

never allowed to be cross-examined by the respondent.

Hence, on merits also, the Order under challenge is liable to

be set aside…….”

5.11 As per the CESTAT order dated 01.10.2019, the Revenue during the

hearing has contended as follows:-

“4. Per contra, it is submitted on behalf of the Department

that after receiving the information from Additional

Directorate, DRI Headquarters, vide letter dated 10.05.2018,

that a meticulous investigation in the form of conducting

searches at various premises, in the form of recording of the

statements of various people who were found the IEC Holders

of the fictitious Companies as allegedly created by Shri

Ramesh Wadhera and Shri Sanjeev Maggu, the Director of

the Appellant Company was called. It is impressed upon that

the Director of the Appellant was the master mind of diverting

the warehoused goods to the domestic market. The statements

being given to the Customs officers under Section 108 of the

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Customs Act are well admissible into evidence. Thus, there is

sufficient evidence on record as a proof for the alleged illegal

act on the part of the Appellant. Hence, there is no infirmity

in the Order under challenge.

It is impressed upon that the impugned show cause notice

cannot even be held to be barred by time as alleged. It is

impressed upon that the time limit under Regulation 20(5) of

CBLR, 2013 is mere directory and not mandatory in nature.

Learned AR has relied upon decision of Hon'ble Apex Court

in the case of Commissioner of Customs Vs. Candid

Enterprises reported in 2001 (130) E.L.T. 404 (S.C.) to

emphasise that even if there is delay on the part of the public

authorities the same is condonable when the element of fraud

is involved….”

[Emphasis is ours]

5.12 Vide order dated 01.10.2019, the CESTAT, while discussing both the

concerns of limitation and the merits of the Appellant's challenge,

reached the conclusion that the time limit as prescribed under

Regulation 20 of CBL, 2013 need not be so strictly adhered and further

held that the time limit needs to be considered in view of the principles

of fairness and equity. The CESTAT in its said order has concluded as

follows:-

“12. In the light of the entire above discussion, when facts of

this case are looked into, we observe that after the show cause

notice was served upon the appellant he tried to delay

investigation by not joining the investigation. It is also

observed that vide his letter dated 30.10.2017, Shri Sanjeev

Maggu had stated that no firm in the name of M/s. Leo Cargo

Services ever existed at the address on which the hearing

notices were served. Thus, the malafide intentions to not to

CUSAA 8/2020 Page 9 of 29

enable the DRI officials to unearth the modus operandi of

committing the alleged illegal act were very much apparent on

the record. These reasons are sufficient to hold that the

Inquiry officer could not maintain the time line of 90 days for

submitting the report. Accordingly, we are of opinion that the

customs house agent cannot be permitted to take benefit of his

own wrong, on the ground that the process is not completed

within the stipulated period. In such circumstances, if the

provision is construed in such a rigid form and no flexibility is

allowed, though it results into declaration of the entire action

of the revenue as illegal, it would not ensure justice rather

shall defeat it? Thus, we answer the question framed, as

above, as follows:

In view of the above noticed intention of CB to not to

enable the Department to adhere to the impugned time limit

despite that the illegal act of diverting the warehoused goods

to domestic market was alleged against the said CB, the time

line of Regulation 20(5) CBLR. 2013 is mere directory in

nature and the non-compliance thereof shall not vitiate the

action taken against the defaulting CB.”

[Emphasis is ours]

5.13 On the merits of the matter, the CESTAT upheld the cancellation of the

Appellant‟s licence with the forfeiture of security deposit and

imposition of a penalty. The CESTAT, accordingly, by its order dated

01.10.2019 dismissed the appeal filed by the Appellant and upheld the

Order-in-Original, which has led to the filing of this appeal.

6. The Appellant has challenged the impugned order of CESTAT dated

01.10.2019 inter-alia on the following grounds:-

(i) The impugned order has been passed by the Tribunal in

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contravention of the principles of natural justice. No opportunity under

Regulation 17(4) was granted to the Appellant for cross-examination of

the persons on whose statements the licence of the appellant was

revoked.

(ii) That the action taken by the Respondent was time barred as the

Inquiry Report issued by the Investigating Officer was beyond the

mandatory period of 90 days as stipulated under Regulation 17(5) of the

CBLR 2018.

6.1 As noticed in paragraph 4 above, since the Appellant does not wish to

press the issue of denial of right to cross-examination, we do not

propose to deal with this issue in the judgment.

7. The Respondent filed his reply through an affidavit of the Assistant

Commissioner of Customs dated 08.02.2021. The said reply inter-alia

states that both the orders, i.e., the Order-in-Original passed by the

Commissioner of Customs, dated 04.02.2019 as well as the CESTAT

order dated 01.10.2019 are legal, well-reasoned orders and are passed

following the principles of natural justice.

7.1 The reply affidavit filed by the Respondent additionally asserts that,

pursuant to paragraph 7.1 of CBIC Circular No. 09/2010, dated April 8,

2010, the timeframe for proceedings under CHALR (now CBLR) shall

be completed within nine months of the date of receipt of an offence

report. The offence report, in the form of DRI's Investigation report

dated 10.05.2018, was received in the Respondent's office on

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18.05.2018. Proceedings under the Custom Broker Licence Regulations,

2018 (erstwhile CBLR 2013) in the said case by the issued SCN No.

23/MK/Policy/2018 dated 10.08.2018; Inquiry report submitted on

06.12.2018 and considering all the facts, final order has been passed by

the Competent Authority vide Order-in-Original No.

05/MK/Policy/2019 dated 04.02.2019. Therefore, the proceedings in the

said case under the CBLR have been completed well within the “over

all” time limit prescribed as per the above-mentioned CBIC Circular

dated 08.04.2010.

7.2 It is further explained in the reply affidavit that the denial of the right to

cross-examination is valid in law as the Petitioners were not able to

produce on record any document that denied the charges. Since the

Appellant does not wish to press the second question of law i.e.

“(ii) Whether the revocation of the Appellant‟s Licence was

vitiated on account of the failure to afford him the opportunity

to cross-examine the persons, based on whose statements, his

licence was revoked?”

We do not propose to deal with the issue of denial of the right of cross-

examination in the judgment.

7.3 It was further stated in the reply that the Adjudicating Authority had

revoked the Appellant‟s Customs Brokers Licence by Order-in-Original

dated 04.02.2019 after finding that the Appellant had grossly violated

the provisions under Regulations 10 (d) (g) and 10 (q) of the Customs

Brokers Licensing Regulations, 2018 (CBLR 2018) and the same has

CUSAA 8/2020 Page 12 of 29

been affirmed by the CESTAT in the impugned order.

8. By Order dated 29.03.2022, this Court had directed the parties to file

their brief written submissions. Written submissions were filed on

behalf of the Appellant only on 10.05.2022.

9. The Appellant has in his written submissions inter-alia submitted that

the time limit(s) prescribed under the Custom Broker Licensing

Regulations, 2013 (CBLR, 2013) is mandatory and not directory. This

Court, in a plethora of judgments, has also repeatedly held the same.

However, the Tribunal has taken a contrary view to the binding

precedents.

9.1 The Appellant has further averred that each of the various time limits

prescribed under the CBLR is mandatory in nature. As per Regulation

17(5) of CBLR, 2018, the Inquiry Officer has to submit its Inquiry

report within 90 days of the issuance of the show-cause notice. The

Appellant avers that the show-cause notice was issued on 10.08.2018

and the period of 90 days prescribed under Regulation 17(5) expired on

08.11.2018. The enquiry report submitted on 06.12.2018 was beyond

the prescribed period.

9.2 The Appellant inter-alia seeks to rely on the following judgments

passed by Coordinate Bench(s) of this Court, which have directly dealt

with the subject issue involved in the present appeal:

(i) Overseas Air Cargo Services versus Commr. Of Cus.

(General), New Delhi reported as 2016 (340) E.L.T. 119 (Del.);

(ii) Impexnet Logistic Versus Commissioner of Customs

CUSAA 8/2020 Page 13 of 29

(General) reported as 2016 (338) E.L.T. 347 (Del.);

(iii) Indair Carrier Pvt. Ltd. Versus Commissioner of Customs

(General) reported as 2016 (337) E.L.T. 41 (Del.); and

(iv) Sunil Dutt versus Commissioner of Cus. (General), NCH

reported as 2016 (337) E.L.T. 162 (Del.).

9.3 The Appellant has also placed on record the judgment of the Bombay

High Court in a case titled The Principal Commissioner Customs V.

Unison Clearing Pvt. Ltd. reported as 2018 SCC Online Bom 753. The

view of the Bombay High Court is contrary to the aforesaid judgments

as mentioned in para 9.2 above.

9.4 The Appellant in his Written Submissions also relies upon two orders of

CESTAT :

(i) M/s RP Cargo, Handling Services vs. Commissioner of Customs;

and

(ii) M/s D.S.Cargo Agency vs. Commissioner of Customs (interim);

wherein, the Revenue itself has held that the time frame under the

Customs Broker Licensing Regulations, 2013 is mandatory and non-

compliance thereof would be fatal to the proceedings.

10. Despite being given an opportunity, the Respondent did not file any

Written Submissions.

11. It is necessary to set forth the relevant statutes and regulations

applicable to the present case. CBLR 2018 has been notified on

16.05.2018. The SCN in this matter was issued by the Respondent under

Regulation 17 (1) of CBLR, 2018 read with CBLR 2013 on 10.08.2018,

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based on information received by the office of the Commissioner of

Customs on 10/18.05.2018. Regulation 17 of CBLR 2018 is pari

materia to Regulation 20 of CBLR 2013.

11.1 The procedure for revoking a Custom Broker‟s Licence or for imposing

a penalty is governed by Regulation 17 of CBLR 2018, the relevant

extract is set forth below: -

“17. Procedure for revoking licence or imposing penalty. —

(1) The Principal Commissioner or Commissioner of

Customs shall issue a notice in writing to the Customs Broker

within a period of ninety days from the date of receipt of an

offence report, stating the grounds or which it is proposed to

revoke the license or impose penalty requiring the said

Customs Broker to submit within thirty 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

Broker desires to be heard in person by the said Deputy

Commissioner of Customs or Assistant Commissioner of

Customs.

(2) ……

(3) The Deputy Commissioner of Customs or Assistant

Commissioner of Customs, as the case may be, 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 Broker, for the

purpose of ascertaining the correct position.

CUSAA 8/2020 Page 15 of 29

(4) ……

(5) At the conclusion of the inquiry, the Deputy

Commissioner of Customs or Assistant Commissioner of

Customs, as the case may be, shall prepare a report of the

inquiry and after recording his findings thereon submit the

report within a period of ninety days from the date of issue of

a notice under sub-regulation (1).

(6) …...

(7) The Principal Commissioner or Commissioner of

Customs shall, after considering the report of the inquiry and

the representation thereon, if any, made by the Customs

Broker, pass such orders as he deems fit either revoking the

suspension of the license or revoking the license of the

Customs Broker within ninety days from the date of

submission of the report by the Deputy Commissioner of

Customs or Assistant Commissioner of Customs, under sub-

regulation (5):

Provided that no order for revoking the license shall be

passed unless an opportunity is given to the Customs

Broker to be heard in person by the Principal

Commissioner of Customs or Commissioner of Customs, as

the case may be.

(8) ……”

11.2 These guidelines are comprehensive and there are timelines set forth for

each step that the Customs Broker and Revenue authority take during

such proceedings. In terms of Regulation 17 (1), a show cause notice is

to be issued within 90 days from the date of receipt of the offence

report. Regulation 17 (5) prescribes a time limit of 90 days from the

CUSAA 8/2020 Page 16 of 29

date of issue of show cause notice for submission of an Inquiry Report.

Sub-regulation (7) of Regulation 17 once again prescribes that within

90 days from the date of the submission of the Inquiry Report and after

consideration thereof, the Principal Commissioner/Commissioner shall

pass orders either revoking the suspension of licence or revoking the

licence of the customs broker.

11.3 Although the said Regulation does not prescribe an overall time limit

for an inquiry, Circular No. 09/2010-Customs dated 08.04.2010 issued

by the Central Board of Excise and Customs, Department of Revenue,

Ministry of Finance, Government of India inter-alia prescribed time

limits for procedures governing the suspension/revocation of CB

licences. Para 7.1 of the said circular, inter alia, states that there shall

be an overall limit of nine (9) months from the date of receipt of the

offence report for the passing of the final order as follows:

“7.1. The present procedure prescribed for completion of

regular suspension proceedings takes a long time since it

involves inquiry proceedings, and there is no time limit

prescribed for completion of such proceedings. Hence, it has

been decided by the Board to prescribe an overall time limit

of nine months from the date of receipt of offence report, by

prescribing time limits at various stages of issue of Show

Cause Notice, submission of inquiry report by the Deputy

Commissioner of Customs or Assistant Commissioner of

Customs recording his findings on the issue of suspension of

CHA license, and for passing of an order by the

Commissioner of Customs. Suitable changes have been made

in the present time limit of forty-five days for reply by CHA to

the notice of suspension, sixty days‟ time for representation

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against the report of AC/DC on the grounds not accepted by

CHA, by reducing the time to thirty days in both the cases

under the Regulations.”

12. From a perusal of the record, the following facts are evident.

An Offence Report dated 10.05.2018 was received in the office of the

Commissioner of Customs on 18.05.2018, on the basis of which the

show-cause notice dated 10.08.2018 was issued by the Respondent.

Although, a copy of the Offence Report was not filed, the show cause

notice states that the Offence Report dated 10.05.2018 was received in

the office of Respondent on 18.05.2018; causing an eight days‟ internal

delay which is not attributable to the Appellant. Regulation 17(1) sets

forth that the notice “shall” issue within “ninety days from the date of

receipt of offence report.” If calculated from 10.05.2018, the SCN

would have been delayed, however, since the show cause notice states

that the document was received only on 18.05.2018, the SCN issued on

10.08.2018 is stated to have been issued within time.

12.1 Once an Offence Report is issued, the time period as provided in the

CBLR commences. The scheme of these Regulations is such that even a

delay in one or more sub-regulation(s) of Regulation 17 of CBLR, 2018

will have a cascading effect on the subsequent timelines, causing a

consequential delay at each stage.

12.2 The Inquiry Report submission under sub-regulation (5) of Regulation

17 was to be done within 90 days of the date of issue of SCN i.e. within

90 days from 10.08.2018. However, the Inquiry Report was delayed and

CUSAA 8/2020 Page 18 of 29

only issued beyond the period of 90 days, on 06.12.2018. Hence, there

was a delay of 28 days under Regulation 17(5). The proceedings that

commenced from 18.05.2018, i.e., the date of receipt of the Offence

Report, culminated in the passing of a final order dated 04.02.2019 of

cancellation of the customs broker licence of the Appellant.

12.3 We would like to state here that the provisions of sub-Regulation (4) of

Regulation 17 were given a complete go-by, by not allowing the

customs broker any opportunity to cross examine the persons examined

in support of the grounds forming the basis of these proceedings.

The Inquiry Officer has declined the cross examination of the witnesses

by the customs broker on an incorrect understanding of Regulation

17(4) of CBLR 2018. In view of the fact that the Appellant is not

pressing this question of law, we do not propose to say anything further

in this regard.

13. The issue of timelines under Regulation 17, CBLR 2018, which is pari

materia to Regulation 20, CBLR 2013 are no longer res integra. This

has been dealt with in a catena of judgments passed by this Court. In the

matter titled Overseas Air Cargo Services V. Commissioner of Customs

reported as 2016 SCC Online Del 4015, the show cause notice was

issued after the lapse of ninety days from the date of receipt of the

offence report and the Inquiry Report was submitted more than three

years after the show cause notice was issued. While citing a decision in

Indair Carrier Pvt. Ltd. V. Commissioner of Customs (General)

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reported as 2016 SCC Online Del 2893, this Court in Overseas Air

Cargo (supra) held as follows: -

“16. In Indair Carrier Pvt. Ltd. v. Commissioner of Customs

(General) (supra) the Court emphasised the mandatory

nature of the CHALR as regards the time limits as under:

“6. The time limits in the CHALR 2004 for issuance

of the SCN to the CHA licence holder and

completion of the inquiry within 90 days of issuance

of such SCN are sacrosanct. The aforesaid time

limits were engrafted into Regulation 22 of the

CHALR, 2004 by a Notification No. 30/2010-

Cus.(N.T.): dated 8

th

April, 2010. Simultaneously, the

CBEC issued Circular No. 9/2010 dated 8

th

April

2010 clarifying the procedures governing the

suspension and revocation of CHA licence. In para

7.1 of the said Circular, it was noted as under:

“7.1 The present procedure prescribed for

completion of regular suspension proceedings takes

a long time since it involves inquiry proceedings,

and there is no time limit prescribed for completion

of such proceedings. Hence, it has been decided by

the Board to prescribe an overall time limit of nine

months from the date of receipt of offence report, by

prescribing time limits at various stages of Issue of

Show Cause Notice, submission of inquiry report by

the Deputy Commissioner of Customs or Assistant

Commissioner of Customs recording his findings on

the issue of suspension of CHA license, and for

passing of an order by the Commissioner of

Customs. Suitable changes have been made in the

present time limit of forty five days for reply by CHA

to the notice of suspension, sixty days time for

CUSAA 8/2020 Page 20 of 29

representation against the report of AC/DC on the

grounds not accepted by CHA, by reducing the time

to thirty days in both the cases under the

Regulations.”

7. This Court has consistently emphasised the mandatory

nature of the aforementioned time limits in several of its

decisions. These include the decision in Shankar Clearing &

Forwarding v. C.C. (Import & General): 2012 (283) E.L.T.

349(Del.), the order dated 25 April, 2016 passed by this

Court in Customs Appeal No.14/2016 (Commissioner of

Customs (General) v. S.K. Logistics) and the order dated 29

th

April, 2016 in W.P.(C) No. 3071/2015 (Sunil Dutt v.

Commissioner of Customs General) New Customs House).

The same position has been reiterated by the Madras High

Court in Sanco Trans Ltd. v. Commissioner of Customs,

SeaPort/Imports, Chennai: (2015) 322 E.L.T. 170 (Mad.) and

Commissioner v. Eltece Associates 2016 (334) E.L.T. A50

(Mad.).”

[Emphasis is ours]

It was consequently held that the order revoking the licence of the

Appellant to be unsustainable in law.

13.1 In Impexnet Logistics v. Commissioner of Customs (General) reported

as 2016 SCC OnLine Del 6703, where the show cause notice was issued

beyond the period of 90 days from the date of receipt of offence report

in contravention of Regulations 20(1) CBLR 2013, a coordinate bench

of this Court has held :

“6. It is plain that in the case there has been a violation of the

time limits set out in regulation 20 of the Customs Brokers

Licensing Regulations, 2013 (corresponding to regulation 22 of

the Customs House Agents Licensing Regulations, 2004). In the

decision dated May 12, 2016 (Indair Carrier P. Ltd. V.

CUSAA 8/2020 Page 21 of 29

Commissioner of Customs, (2016) 40 GSTR 81 (Delhi) this

court held (page 84): ....

........

7. This Court has consistently emphasised the

mandatory nature of the aforementioned time limits in

several of its decisions. These include the decision in

Schankar Clearing and Fomarding v. Commissioner

of Customs, (2013) 23 GSTR 114 (Delhi); (2012) 283

ELT 349 (Delhi), the order dated April 25, 2016

passed by this court in Customs Appeal No. 14 of

2016 (Commissioner of Customs v. S.K. Logistics,

(2016) 40 GSTR 72 (Delhi)) and the order dated April

29, 2016 in Writ Petition (C) No. 3071 of 2015 (Sunil

Dutt v. Commissioner of customs, (2016) 40 GSTR 75

(Delhi)). The same position has been reiterated by the

Madras High Court in Sanco Trans Ltd. v.

Commissioner of Customs, Sea Port / Imports

Chennai (2015) 322 ELT 170 (Mad) and

Commissioner of Customs v. Eltece Associates, (2016)

334 ELT A50 (Mad).”

7. Recently by an order dated April 24, 2016 in Writ Petition

(C) No. 1734 of 2016 (HLPL Global Logistics P. Ltd. v.

Commissioner of Customs, (2016) 40 GSTR 86 (Delhi)) this

court reiterated that the time limits in regulation 20 of the

Customs Brokers Licensing Regulations 2013/regulation 22 of

the Customs House Agents Licensing Regulations, 2004 are

sacrosanct.

8. Admittedly, the SCN under the CHALR/CBLR in the present

case was issued only on 9th December 2013, i.e., beyond the

mandatory period of 90 days from the date of receipt of the

offence report by the Respondent, i.e., 31st January, 2013.

Consequently, all proceedings pursuant thereto are held to be

invalid. Further, even the enquiry report was not submitted

CUSAA 8/2020 Page 22 of 29

within a period of 90 days of the issuance of the SCN.”

[Emphasis is ours]

13.2 A similar issue came up for consideration before one of us (Rajiv

Shakdher, J) sitting in the Division Bench of Madras High Court in a

matter titled Santon Shipping Services Vs. The Commissioner of

Customs reported as 2017 SCC OnLine Mad 7084. The Court held as

follows :-

“37. That apart, atleast in two Judgments of this Court,

where a similar issue came up for consideration, before one

of us sitting singly (Rajiv Shakdher,J), a similar view was

taken. The first Judgment is dated 15.12.2016, which was

passed in W.P.No.37796 of 2016, in the matter of M/s.

Sowparnika Shipping Services Vs. The Commissioner of

Customs, Chennai and another wherein, the Judgments

referred to hereunder were noticed and followed:

i) A.M.Ahamed & Co. V. Commissioner of Customs

(Imports), Chennai- 2014 (309) E.L.T. 433 (Mad)

ii) Masterstroke Freight Forwarders P. Ltd., V.

Commissioner of Customs (I), Chennai - 2016 (332)

ELT 300 (Mad.)

(iii) Sunil Dutt V. Commissioner of Customs (General),

NCH - 2016 (337) ELT 162 (Del.)

iv) Impexnet Logistics V. Commissioner of Customs

(General) - 2016 (338) ELT 347 (Del.)

v) Overseas Air Cargo Services V. Commissioner of

Customs (General), New Dekgu- 2016 (340) ELT

CUSAA 8/2020 Page 23 of 29

119 (Del.)

38. Ultimately, the Court held that the show cause notice

issued beyond the limitation period was not sustainable.

39. Following the said Judgment in M/s. Sowparnika

Shipping Services Vs. Commissioner of Customs, Chennai

and another, one of us (Rajiv Shakdher, J) allowed yet

another writ petition i.e., W.P.No.44344 of 2016, in the

matter of M/s. Patriot Freight Logisitics System Vs.

Commissioner of Customs, Commissionerate - VIII, Chennai

and two others vide Judgment dated 03.02.2017.

40. Also, another learned Judge of this Court (R.Mahadeven,

J) in 2016 332 E.L.T. 300 (Mad.) in the matter of

Masterstroke Freight Forwarders P. Ltd. Vs. CC (1),

Chennai-1 after having considered a number of Judgments,

has ultimately, concluded as follows:

“50. It is also to be noted that every act of breach by

the Broker would entitle the authorities to initiate

proceedings from the date of knowledge of the

offence. It is only if the time limit is strictly followed,

swift action can be initiated against the Customs

Brokers and the authorities can also be made

accountable. The Regulations only contemplate

initiation of proceeding by issuance of notice within

90 days. While, making out a prima facie case, the

respondents ought to have, without any shadow of

doubt, treated the word shall in Regulation 11 as

mandatory and not directory. Therefore, when a time

limit is prescribed in Regulations, which empowers

action in Regulation 18 and procedure in Regulation

20 (1), the use of the term shall cannot be termed as

directory. …. Therefore, by a Circular 09/2010 dated

08.04.2010, the necessity to include a time limit for

CUSAA 8/2020 Page 24 of 29

initiating action was addressed by the Board after

field inspection and by a notification dated

08.04.2010, amendments prescribing time period for

initiating action and completing proceedings was

made. The same was given effect by notification dated

20.01.2014. Whereas, under the CBLR, 2013 having

found the necessity to prescribe a period, the Central

Board, the statutory authority had included the same

in the Regulations itself, when they were brought into

force. Therefore, when a time limit is prescribed in

Regulations, which empowers action under

Regulation 18 by following the procedure in

Regulation 20 (1), the use of the term ”shall” cannot

be termed as directory. Under such circumstances, the

rule can only be termed as Mandatory.”

41. In view of the aforesaid Judgments, in our opinion, the

issue as to whether the limitation prescribed i.e., 90 days

period, under Regulation 22(1) of CHALR 2004, is mandatory

or not, is no more res integra.

42. Once the limitation prescribed is mandatory, as has been

declared by the courts of law, it cannot be stated that,

because of the other issues, that is the merit of the case, this

mandatory requirement of the limitation can be ignored.

43. It is not the case of the 1

st

respondent that the 90 days

limitation contemplated under Regulation 22(1), is directory.

It is also not the case of the 1

st

respondent that the show

cause notice was issued within the limitation period of 90

days from the date of offence report.

44. Since the offence report was dated 22.9.2010 and the

show cause notice, admittedly, was issued only on

18.11.2011, there can be no doubt that the said show cause

CUSAA 8/2020 Page 25 of 29

notice was issued well beyond the period of limitation of 90

days.

45. Whatever be the claim and counter claim on the merits, in

this appeal can, in our view, they get shadowed by the failure

on the part of the revenue in not acting in time, by issuing the

show cause notice, within the period as contemplated under

Regulation 22(1) of CHALR, 2004.

46. Therefore, we are of the considered view, and in fact have

no hesitation to hold so that, the Revenue has not issued the

show cause notice dated 18.11.2011 within the period of

limitation prescribed under Regulation 22(1) CHALR, 2004

and thus, the consequent proceedings involving revocations of

the appellant‟s CHA license and forfeiture of its security

deposit, is unlawful…”

[Emphasis is ours]

13.3 A Coordinate Bench of this Court in Sh. Harjeet Singh Johar V. The

Commissioner of Custom reported in 2018 SCC Online Del 6650, while

following the earlier decisions passed by this Court has held that the

time limits have to be understood as strict time schedules and construed

accordingly. It held that:-

“5. The Delhi High Court in Overseas Air Cargo Service v.

Commissioner of Customs,2016 (340) ELT 119 (Del.), Indair

Carrier Pvt. Ltd. v. Commissioner of the Customs (General)

2016 (337) ELT 41 (Del.) and Commissioner of Customs v.

S.K. Logistics 2016 (337) ELT 39 (Del.), has held that the

time period of 90 days mentioned in Regulation 20(1) of the

2013 Regulations is mandatory and sacrosanct. A show cause

notice issued after 90 days of receipt of the offence report, is

CUSAA 8/2020 Page 26 of 29

invalid. In other words, if the show cause notice was not

issued within a period of 90 days from the date of receipt of

the offence report, the proceedings under Regulation 20

would be null and void. We are bound by these decisions

passed by co-ordinate Division Benches of this Court.

…………

10. Decision in A. M. Ahamed (supra), relates to Regulation

20 of the Customs House Agent License Regulations 2004

(„2004 Regulations‟, for short) which were applicable prior

to enactment and enforcement of 2013 Regulations…

“20. The time limit prescribed in Regulation 22(1) has

to be understood in the context of the strict time

schedule prescribed in various portions of the

Regulations. Regulation 20(2), for instance, entitles

the Commissioner, to suspend the licence of an agent,

in appropriate cases where immediate action is

necessary. Regulation 22(3) prescribes a time limit of

15 days. Regulation 22(1) prescribes a time limit

within which action is to be initiated. It also

prescribes the time limit under Regulation 22(5).

Therefore, considering the fact that the whole

proceedings are to be commenced within a time limit

and also concluded within a time frame, I am of the

view that the show cause notice issued to the

petitioner on 08.05.2010 with a copy marked to the

first Respondent should be taken as the date of receipt

of the offence report. Consequently, the period of 90

days should commence only from that date. If so

calculated, the impugned proceedings have obviously

been initiated beyond the period of 90 days.”

17. In view of the aforesaid position, we record that the

suspension order dated 31.03.2017 was based upon the

CUSAA 8/2020 Page 27 of 29

offence report, and therefore the show cause notice under

Regulation 20, dated 14.07.2017, would be clearly barred by

the limitation as it was issued more than 90 days after the

offence report was submitted.”

[Emphasis is ours]

13.4 It has been similarly held by this Court that orders of the CESTAT are

unsustainable in law if the time limit stipulated in the CBLR

Regulations has not been complied with. Reliance is placed upon Sunil

Dutt V. Commissioner of Customs(General) reported as 2016 SCC

Online Del. 6687 and Commissioner of Customs (SeaPort/ Import),

Chennai V. Sancos Trans Ltd reported as 2016 (334) E.L.T. 274 (Mad.).

13.5 As stated in para 9.3 above, the Appellant has also placed on record the

judgment of the Bombay High Court in Principal Commissioner of

Customs V. Unison Clearing Pvt. Ltd. reported in 2018 SCC OnLine

Bom 753, wherein while deciding a batch of petitions held that the time

limit contained in Regulation 20 of CBLR 2013 is directory and cannot

be held to be mandatory. The Court further observed that in a case

where strict adherence to the timeline cannot be ensured, the principles

of fairness would require that delay must be justified by giving reasons

as to why the time limit was not adhered to.

14. It can be seen that the timelines as prescribed under various Regulations

in CBLR 2018, have been consistently held by the Courts as mandatory

in nature. Each timeline is sacrosanct, and the idea of prescribing a time

limit by statute becomes redundant if not adhered to. Therefore, it is not

CUSAA 8/2020 Page 28 of 29

just the overall timeline of 270 days (as set forth in the Circular No.

09/2010 dated 08.04.2010) that needs to be followed, but also each and

every timeline as prescribed in the CBLR 2018.

14.1 Timelines cannot be overlooked by Revenue by citing reasons on

merits. We are bound by the decisions, as discussed above, passed by

the coordinate benches of this Court and other High Courts, which state

that each timeline is sacrosanct.

14.2 We are unable to persuade ourselves to agree with the decision of the

Bombay High Court in the Principal Commissioner of Customs V.

Unison Clearing Pvt. Ltd (supra) that where a reasonable explanation is

given for such delay and were accounted for, the delay may be

condoned. In any event, in the present case, the facts are

distinguishable. The Revenue has nowhere in their pleadings before the

CESTAT and neither in their Reply affidavit filed in this present appeal

given any reasonable explanation for the delay or non-compliance of the

timeline prescribed under sub-regulation (5) of Regulation 17 of CBLR

2018. Revenue is bound to follow the settled law and statutory

provisions, including their timelines. Once the limitation is prescribed

clearly therein, it cannot be stated that because of other issues, this

mandatory requirement can be ignored.

14.3 In view of the aforegoing discussion and having regard to the consistent

view of the Courts across the Board, we are not inclined to take a

contrary view. The surviving question of law as framed as set forth in

paragraph 3(i) herein is answered in favour of the Appellant and against

CUSAA 8/2020 Page 29 of 29

the Respondent.

15. Accordingly, we allow the appeal and set aside the impugned order

dated 01.10.2019 passed by the CESTAT. Consequently, the

proceedings involving revocation of the appellant‟s custom broker

license, forfeiture of its security deposit and imposition of penalty, will

also stand set aside.

15.1 The Appellant‟s customs broker licence is stated to have expired in the

meantime and has not been renewed. Resultantly, the Respondent will

be required to process the Appellant‟s application for renewal of their

licence in accordance with the law.

15.2 In light of the above discussion, there shall be no order as to costs.

(TARA VITASTA GANJU)

JUDGE

(RAJIV SHAKDHER )

JUDGE

JULY 28, 2022