Tnt India Pvt Ltd vs Principal Commissioner Of ...
2015 Latest Caselaw 423 Bom

                                                                            WPL.2876.2015.157.doc


              IN  THE  HIGH  COURT  OF  JUDICATURE  AT  BOMBAY
                    ORDINARY ORIGINAL CIVIL JURISDICTION
                          WRIT PETITION (L) NO. 2876 OF 2015




                                                                                   
     TNT India Private Limited                      }       Petitioner




                                                           
           versus
     Principal Commissioner of                      }
     Customs (II) and Ors.                          }       Respondents




                                                          
     Mr.   Pradeep   Sancheti-Senior   Advocate   with 
     Dr. Birendra Saraf, Mr. Sairam Subramaniam, 
     Mr.   Chakrapani   Misra,   Mr.   Ayush   Mehrotra, 




                                             
     Mr.   Vaisakh   Shaji   and   Ms.   Natasha   Kachalia 
     i/b. M/s. Khaitan and Co. for the Petitioner.
                             
     Mr. Pradeep S. Jetly for the Respondents.
                            
                                    CORAM :- S. C. DHARMADHIKARI &
                                             B. P. COLABAWALLA, JJ.

DATED :- OCTOBER 12, 2015

ORAL JUDGMENT :- (Per S.C.Dharmadhikari, J.)

Rule. Respondents waive service. By consent, Rule made

returnable forthwith.

2) We had heard both sides at length on the earlier occasion.

The matter was placed today only to enable Mr. Jetly to take

instructions. However, Mr. Jetly submits that the concerned officials are

of the view that it would be better if the Court passes an order and with

regard to the legality and validity of the suspension effected by the

communication/order dated 1st October, 2015. It is in these

circumstances that we are required to pass a brief order.

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3) The Petitioner before us is a private limited company

incorporated and registered under the Indian Companies Act, 1956. It

is a subsidiary of M/s. TNT Express N V. It is claimed that this global

entity operates in about 200 countries.

4) The Respondents to this Writ Petition are the Union of India

and the Department of Customs and their senior officials, who are

posted at the Mumbai Airport.

5) The case of the Petitioner is that the freights and parcels

are distributed by it. The Petitioner is in this business since 1993 and

has large turnover. Operations are carried out after the Petitioner has

obtained authorisation/registration as authorised courier under the

Courier Imports and Exports (Clearance) Regulations, 1998. Such a

registration, in favour of the Petitioner, is for various airports, including

Metro Cities.

6) The Petitioner claims that in the last financial year 2014-

15, the Mumbai office of the Petitioner handled 7 lakh consignments

and contributed Customs Duty of about 101,97,47,402/-. None of the

consignments out of the above mentioned 7 lakh were detained or

seized by the Customs Department. The Petitioner thus claims that they

have been duly following the Regulations and abide by all the clauses

and stipulations thereof.

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7) However, on 8th September, 2015, the Special Investigation

and Intelligence Bureau of the Airport Security Customs received

information of a case of gold smuggling. That is how they visited the

courier cell on 9th September, 2015. An import consignment bearing the

name and address of certain entity styled as importer and set out in the

Petition in para 5(f) was found to be imported into India. In terms of

the accompanying documents, this consignment was declared to be

containing "spare piston rings". However, on scrutiny and examination

of it in detail, the disputed consignment was found to be containing

parts weighing 2620 grams made by gold and covered in silver cover.

The Petitioner was found to have presented the relevant documents,

including the bill of entry in relation to this consignment. The

Petitioner had obtained the "Know Your Customer" (KYC) documents

from Mr. Nilesh Phapale, the proprietor of the importer proprietorship

firm. The relevant documents were also scrutinized and it was found

that certain addresses were given of Mumbai and Thane Districts. The

search team of the Customs was sent to these addresses, but it was

found that the premises do not belong to the proprietor of the importer

firm. We are not concerned with the details of this scrutiny and

verification.

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8) However, the Petitioner states that for similar case and for

detention of the goods in the month of May, 2015, a show cause notice

dated 20th May, 2015 came to be issued and the allegations in the notice

have been duly replied on 22nd July, 2015. There was a personal

hearing held before Respondent No. 1, but though such personal

hearing was held in August, 2015, no order was passed in pursuance of

this show cause notice.

9) Now, for the subject violation and breach and of September,

2015, the impugned suspension order has been passed. That has been

passed on 1st October, 2015 and according to Mr. Sancheti, the learned

Senior Counsel appearing for the Petitioner, the order of suspension

invokes Regulation 14 of the 1998 Regulations as amended. The

Principal Commissioner states that he ordered an inquiry to determine

whether the registration of the authorized courier should be revoked

and if so, the ground for the same. Pending the completion of the said

inquiry, the registration of the Petitioner has been suspended.

10) The only contention raised before us by Mr. Sancheti is that

the order invokes Regulation 14, copy of which is at page 47 of the

paper book.

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11) Mr. Sancheti would submit that the power of suspension is

to be exercised provided the Principal Commissioner of Customs decides

to revoke the registration of an authorized courier and order forfeiture

of the security on the ground inter alia of misconduct on the part of the

authorized courier whether within the jurisdiction of the Principal

Commissioner or the Commissioner or anywhere else and which in the

opinion of the Principal Commissioner or the Commissioner renders him

unfit to transact any business. Inviting our attention to the first proviso

it is submitted by Mr. Sancheti that the revocation cannot take place

unless a notice has been issued to the authorized courier informing him

the ground on which it is proposed to revoke the registration and giving

an opportunity of making representation in writing and a further

opportunity of being heard in the matter if so desired. Thus, the

contention is that if the notice proposing revocation has been issued on

any of the grounds enumerated in Regulation 14 sub-Regulation (1)

clauses (a) to (c), then in terms of the second proviso and if the

Commissioner is of the opinion that the grounds shall not be established

prima facie without inquiry of the matter, he would conduct an inquiry

to determine the ground and in the meanwhile, pending the completion

of such inquiry, may suspend the authorisation/registration. If no

ground is established, the registration so suspended shall be restored.

Inviting out attention to sub-Regulation (2) of Regulation 14, it is

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submitted that the opportunity contemplated thereby of a

representation can never be said to be efficacious simply because after

suspending all operations of the courier agency like the Petitioner, the

authorities have adversely affected the interest of those importers who

have engaged the Petitioner as their courier. Several such entities

would suffer and the consignments would not be cleared simply

because of the drastic action. Even otherwise, this drastic action was

unjustified in the case of the Petitioner, as the Principal Commissioner

has yet to pass an order in furtherance of the show cause notice dated

20th May, 2015, though personal hearing was held long time back. Now,

there is no notice issued proposing revocation and for the incident of

September, 2015. In any event, similar incidents are alleged to have

taken place earlier and the Petitioner faulted therefor in the earlier

show cause notice of May, 2015. Thus, there was no warrant for

passing an order of suspension and without compliance with the

Regulations. For these reasons, it is submitted that the order of

suspension shall be set aside.

12) Mr. Jetly appearing for the Respondents, apart from urging

that there is an alternate remedy of a representation under sub-

Regulation (2) of Regulation 14, would submit that the allegations are

too serious. This is not the first time that the Petitioner is found to be

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actively smuggling gold in the garb of seeking clearance of

consignments such as blood pressure machines and in the present case,

the consignment details were not completely and properly set out. This

time also an attempt was made to smuggle gold. In these

circumstances, if drastic order was required to be passed to stop the

incidents of this nature, then, the discretion exercised cannot be termed

as arbitrary or unreasonable much less capricious, calling for

intervention in Writ Jurisdiction. Now, the Principal Commissioner will

hold the requisite inquiry and take a final decision within the period

stipulated by this Court. For these reasons, the Petition should be

dismissed.

13) We are concerned with Regulation 14 of Courier Imports

and Exports (Clearance) Regulations, 1998 . Regulation 14 reads as

under:-

"14. Deregistration. - (1) The Commissioner of Customs may revoke the registration of an Authorised Courier and also order forfeiture of security on any of the following grounds namely:-

(a) failure of the Authorised Courier to comply with any of the conditions of the bond executed by him under regulation 11;

(b) failure of the Authorised Courier to comply with any of the provisions of these regulations;

(c) misconduct on the part of authorised courier whether within the jurisdiction of said Commissioner of anywhere else, which in the opinion of the Commissioner renders him unfit to transact any business in the Customs Station:

Provided that no such revocation shall be made unless a notice has been issued to the Authorised Courier informing him the grounds on which it is proposed to revoke the registration

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and he is given an opportunity of making a representation in writing and further opportunity of being herd in the manner, if so desired:

Provided further that, in case the Commissioner of Customs considers that any of such grounds against an Authorised Courier shall not be established prima facie without an

inquiry in the matter, he may conduct the inquiry to determine the ground and in the meanwhile pending the completion of such inquiry, may suspend the registration of the Authorised Courier. If no ground is established against the Authorised Courier, the

registration so suspended shall be restored.

(2) Any Authorised Courier or the officer of the Customs authorised by the Chief Commissioner of Customs in this behalf, if aggrieved by the order of the Commissioner of Customs passed under sub-regulation (1), may represent to the Chief

Commissioner of Customs in writing against such order within sixty days of communication of the impugned order to the

Authorised Courier and the Chief Commissioner of Customs shall, after providing the opportunity of being heard to the parties concerned, dispose of the representation as may be possible."

14) A bare perusal thereof would indicate that it deals with de-

registration. It is the Principal Commissioner who has the discretion to

revoke the registration of an authorised courier and also order forfeiture

of security on any of the grounds, namely, (a), (b) and (c) set out

above. The first proviso requires the Principal Commissioner to issue a

notice of such revocation setting out the grounds on which it is

proposed to revoke the registration and give an opportunity of making

representation in writing and a further opportunity of being heard in

the matter, if so desired. The second proviso, which follows the first

proviso states that if the Principal Commissioner of Customs or the

Commissioner, as the case may be, considers that any of such grounds

against an authorised courier shall not be established prima facie

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without an inquiry in the matter, he may conduct the inquiry to

determine the ground and in the meanwhile pending the completion of

such inquiry, may suspend the registration of the authorised courier. If

the ground is not established, the suspension shall stand set aside and

the registration restored.

15) In the present case, on the own showing of the

Respondents, for the second incident of smuggling of gold and allegedly

on 8th September, 2015, there is no show cause notice or notice

proposing revocation within the meaning of Regulation 14. The first

proviso, thus, is not complied with. There is thus no communication

informing the ground on which it is proposed to revoke the registration.

Rather, there is no proposal presently to revoke the registration.

Without any such proposal before the Commissioner nor he directing

issuance of any notice within the meaning of the first proviso, he has

chosen to suspend the authorisation/registration of the Petitioner. We

do not see why if the incident is so clear and if all the details are

allegedly obtained and the breach or violation of the Petitioner is

apparent to the Principal Commissioner that no notice has been issued.

Possibly, the reason is that the notice proposing revocation and which

was for the earlier violation is yet to be taken to its logical end. In the

meanwhile, the second incident occurred and it is also equally serious.

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If that is serious, then, an independent notice and based on the incident

of 8th September, 2015 could have been issued. If that notice proposes

the grounds and enumerated in clauses (a) to (c) of sub-Regulation (1)

of Regulation 14, then, nothing prevented the Commissioner from

recording his satisfaction that such grounds or any of them shall not be

established prima facie without any inquiry. Pending such inquiry and

to avoid such incidents as well, he could have then issued a suspension

order. We do not find any such step or measure taken in this case. We

do not think that in the given facts and circumstances and after having

kept the earlier show cause notice pending and passing no orders

thereon, was the Principal Commissioner justified in suspending the

registration of the Petitioner. That is patently unsustainable being

contrary to the plain language of Regulation 14. We are of the view

that on this short ground alone the Writ Petition must succeed.

16) We clarify that we are not required to express any opinion

on the conduct of the Petitioner and the incident of 8 th September,

2015/the proceedings of 9th September, 2015 and any involvement or

extent of complicity of the Petitioner therein. The authorities are free to

take a decision based on the incident and involvement of the Petitioner.

The authorities are also free to issue an independent show cause notice

and take steps within the meaning of Regulation 14 or such other

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Regulation which is applicable. Having found that the order of

suspension, impugned in this Petition is illegal and unsustainable, we

proceed to quash and set aside the same. The Petition is allowed in

these terms, but without any order as to costs. Rule made absolute

accordingly.

(B.P.COLABAWALLA, J.) (S.C.DHARMADHIKARI, J.)

J.V.Salunke,PA