Customs Brokers Licensing Regulations | Offence Report Need Not Carry Penal Element; 90-Day Limitation Commences Only Upon Receipt of Report: Madras High Court
Isabella Mariam
The Madurai Bench of the Madras High Court, Single Bench of Justice G.R. Swaminathan, quashed the Commissioner of Customs, Tuticorin’s order revoking a customs broker’s licence, holding that the action was barred by limitation under Regulation 17(1) of the Customs Brokers Licensing Regulations, 2018. The Court held that an offence report under the Regulation need not carry a penal implication and that the 90-day limitation period commences only from the date the licensing authority receives such report, not from when it gains knowledge of the alleged misconduct. Applying this interpretation, the Court found the proceedings time-barred and set aside the revocation order.
The petitioner, M/s. ACS Shipping & Logistics, a licensed customs broker operating out of Tuticorin, approached the High Court challenging the order of the Commissioner of Customs dated 25 February 2022. By the impugned order, the respondent authority had revoked the petitioner’s licence, forfeited the security deposit, and imposed a penalty of Rs. 50,000. The action stemmed from allegations that the petitioner had acted as a customs broker for an exporter, M/s. J. Tex India, which had allegedly availed ineligible Integrated Goods and Services Tax (IGST) refunds, drawbacks, and rewards using a bogus GST registration.
It was stated that the petitioner, in their capacity as customs broker, had filed seven shipping bills on behalf of the exporter. The Directorate of Revenue Intelligence (DRI) initiated an investigation upon discovering the alleged fraud. The exports had been affected through the Mumbai Customs Commissionerate, which subsequently prohibited the petitioner from operating within its jurisdiction by an order dated 18 November 2020. A copy of this order was also marked to the Commissioner of Customs, Tuticorin. However, according to the petitioner, no further action was taken by the Tuticorin Customs authorities within the ninety-day period mandated under Regulation 17(1) of CBLR, 2018.
The petitioner argued that the show-cause notice issued on 14 September 2021 and the subsequent order dated 25 February 2022 were issued well beyond the statutory period of limitation and were therefore invalid. It was contended that the respondent’s claim of having received the offence report only in June 2021 was unsupported by any documentary proof. The petitioner maintained that the proceedings were unsustainable in law as they violated the mandatory procedure and timeline prescribed under Regulation 17 of CBLR, 2018.
The respondent, through a detailed counter affidavit, defended the impugned order and argued that the action was valid and within the period of limitation. The Standing Counsel for the respondent also contended that the petitioner had an alternative remedy and that the order was passed after due process.
The Court reproduced Regulation 17(1), which mandates that "The Principal 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." The Court noted that the regulation clearly sets a limitation period of ninety days for initiating revocation or penalty proceedings following the receipt of an offence report.
Referring to the explanation appended to the regulation, the Court recorded that an "offence report means a summary of investigation and prima facie framing of charges into the allegation of acts of commission or omission of the Customs Broker... which would render him unfit to transact business under these regulations." Justice Swaminathan observed that this definition clarified the ambiguity present in earlier versions of the regulations and that "an offence report need not necessarily have a penal connotation. Any official communication or proceeding or order or notice setting out the misconduct committed by the customs broker in any customs station would qualify to be an offence report."
The Court further recorded that "The offence report must be received by the office of the licensing authority and the limitation period will start running only from the date of its receipt. Even if the licensing authority can be attributed with knowledge in this regard, that would not count for the purpose of limitation." Justice Swaminathan added that this interpretation was in consonance with the statutory text and supported by precedent.
Examining the facts, the Court noted that the prohibitory order dated 18 November 2020, issued by the Mumbai Customs Commissionerate, "extensively deals with the investigation report dated 22 July 2020" and clearly identified the petitioner’s role, observing that the petitioner "did not exercise due diligence in discharging their obligations as required under Regulation 10(n) of the CBLR, 2018." Based on this, the Court held that "the prohibitory order dated 18.11.2020 issued by the Principal Commissioner of Customs (General), Mumbai Zone – I undoubtedly qualifies to be an offence report."
The Court applied the presumption that official acts are performed regularly and stated that "it can therefore be safely concluded that the respondent herein received a copy of the said report in normal course." The Court observed that it was incumbent upon the respondent to prove when the offence report was actually received by his office, noting that "this burden lies entirely on the respondent and it cannot be shifted to the writ petitioner."
The Court held: "The impugned proceeding is time-barred and I quash the same." The writ petition was allowed, and the connected miscellaneous petition was closed. The Court did not award any costs.
Advocates Representing the Parties:
For the Petitioner: Mr. S. Baskaran, Advocate
For the Respondent: Mr. R. Gowrishankar, Standing Counsel
Case Title: M/s. ACS Shipping & Logistics v. The Commissioner of Customs, Tuticorin
Case Number: W.P (MD) No. 4416 of 2022
Bench: Justice G.R. Swaminathan
