Issuance Of SCN in Customs Brokers Licensing Regulations, Contemplates Dispatch Of Notice And Not Its Receipt: Delhi High Court

The Delhi High Court has ruled that the expression ‘issuance of show cause notice’ in Regulation 20(1) of the Customs Brokers Licensing Regulations, 2013 (CBLR), merely contemplates the dispatch of the notice and not its receipt by the Customs Broker, within the stipulated period. The bench of Justices Vibhu Bakhru and Amit Mahajan observed that there is a distinction between issuance of notice and service of notice and the words ‘issue’ and ‘serve’ are not synonymous. The said words may be construed as interchangeable only if the context of the statute makes it necessary to do so, the Court said. The Court noted that the procedure for revoking the custom broker’s license under Regulation 20 of the CBLR, is required to be commenced and triggered by issuing a show cause notice to the customs broker. It concluded that the question whether the procedure under Regulation 20 is triggered within time is not dependent on the customs broker receiving the notice. Regulation 20 of CBLR deals with the procedure for revoking a Customs Broker’s license or for imposing a penalty on him. As per Regulation 20(1), the Commissioner is required to issue a show cause notice in writing to the customs broker within a period of 90 days from the date of receipt of the offence report. The respondent, M/s R.P. Cargo Handling Services, is a customs broker. An investigation report– on the basis of which the proceedings were initiated against the respondent firm – was received from the Directorate of Revenue Intelligence (DRI) in the office of the Commissioner of Customs (Airport & General). It appeared that the respondent was involved in the activity of importing goods and diverting them from public bonded warehouses. The Commissioner, thereafter, issued a show cause notice to the respondent, alleging that it had failed to perform various obligations under the CBLR. Following an enquiry, the Commissioner passed an order revoking the respondent’s Customs Broker License. The respondent challenged the order before the CESTAT. Accepting the contentions of the respondent, the CESTAT held that a show cause notice under Regulation 20(1) of the CBLR is required to be received by the customs broker, against whom action under the CBLR is proposed, within a period of 90 days of the receipt of the offence report. Since, the notice was received by the respondent beyond the period of 90 days, the proceedings were barred by limitation. The CESTAT ruled that it is not sufficient that the show cause notice is sent within the said period of 90 days. The revenue department filed an appeal before the Delhi High Court against the order of the CESTAT. The respondent, R.P. Cargo Handling Services, argued before the Court that the term ‘issue’ in Regulation 20(1) of CBLR, must be read to mean ‘serve’ and thus, the notice must be received by the customs broker within the stipulated period. It added that the scheme of Regulation 20 of the CBLR makes it amply clear that the term ‘issue’ must be interpreted to mean ‘receipt’ because of the strict timelines provided under Regulation 20 of the CBLR, which commence from the date of issue of the show cause notice. The High Court observed that the procedure for revoking the custom broker’s license or for imposing the penalty under Regulation 20 of the CBLR, is required to be commenced by the Commissioner issuing a show cause notice to the customs broker. The action contemplated under Regulation 20(1) is of preparing the notice and putting it for dispatch as that is the only action that the Commissioner can directly perform, the Court said. Further, in terms of Regulation 20(1), the Commissioner has 90 days from the date of receipt of the offence report to take the necessary action to trigger the procedure under Regulation 20. Therefore, the expression ‘issue’ must necessarily be construed to mean the action of preparing the notice and despatching the same; it cannot be construed as serving the notice on the customs broker or receipt of the notice by the customs broker, the bench concluded. “The question whether the Commissioner has taken the necessary steps to commence the proceedings under Regulation 20 of CBLR – which he has to do within the stipulated period of ninety days – is not contingent on the customs broker receiving the notice,” the Court ruled. Referring to the facts of the case, the bench observed that the show cause notice was, in fact, issued within the period of 90 days as contemplated under Regulation 20(1) of the CBLR. Attempts to deliver the said notice to the respondent were also made within the said period but the notice could not be delivered by the postal authority as the premises of the respondent was found closed, it reckoned. Clearly, the question whether the procedure under Regulation 20 of the CBLR is triggered within time is not dependent on the customs broker receiving the...

Issuance Of SCN in Customs Brokers Licensing Regulations, Contemplates Dispatch Of Notice And Not Its Receipt: Delhi High Court

Parina Katyal

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Parina Katyal

Issuance Of SCN in Customs Brokers Licensing Regulations, Contemplates Dispatch Of Notice And Not Its Receipt: Delhi High Court

Parina Katyal

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INR 1099+GST

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Parina Katyal

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