1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CUSTOMS APPEAL NO. 25 OF 2006 The Commissioner of Customs (General), New Customs House, Ballard Estate, Mumbai. ... Appellant. V/s. M/s.Rajan Virji & Co. Custom House Agent No.11/339, Vivek Apartment, F/116, CST Road, Kalina, Mumbai- 400 098. ... Respondent. P.S.Jetly for the appellant. Prakash Shah i/b. PDS Legal for the respondent. CORAM : V.C.DAGA AND K.K.TATED, JJ. DATED : 27th January 2010. JUDGMENT : (Per V.C.Daga, J.) Heard. Perused Appeal. 2. This appeal filed at the instance of Revenue under section 130 of the Customs Act, 1962 was admitted by order 15th June, 2006 to consider the following substantial question of law: Whether the Tribunal is right in law in setting aside the order of the Commissioner of Customs (General), cancelling the CHA 2 licence and forfeiting the security deposit on account of violation of Regulation 14(d) & 20(7) of the Customs House Agents Licensing Regulations (CHALR)- 1984? Factual Matrix : 3. The factual matrix reveals that on the basis of report dated 8th June, 2001 received from the Central Intelligence Unit, New Custom House, Mumbai, the CHA licence was suspended vide order No.27/2001 and, thereafter, an enquiry was initiated to enquire into the charges framed against the respondent, a Custom House Agent ( CHA for short). 4. The enquiry officer submitted his report dated 22nd December, 2003. After receipt of the said report, the Commissioner of Customs (General) finding it difficult to agree with the report of the enquiry officer issued notice to CHA dated 20th September, 2004 recording and indicating his disagreement with the findings of the enquiry officer in respect of charge Nos.3 and 4 leading to the violation of regulations 14(d) and 20(7) of the Customs House Agent Licensing Regulations, 1984 ( CHALR, 1984 for short) and called upon the respondent- CHA to file its reply or submission, if any. 5. The respondent- CHA filed its reply contending that under CHALR, 1984 there is no provision to disagree with the findings of the enquiry officer and, consequently, the violation of regulation 14(d) and 20(7) of CHALR, 1984 cannot be pressed into service against the respondent- CHA. 6. The reply and submission filed by the respondent- CHA objecting to the disagreement notice did 3 not find favour with the Commissioner of Customs (General). With the result, he was pleased to cancel CHA licence held by the respondent- CHA with further order directing forfeiture of security amount. 7. Being aggrieved by the aforesaid order leading to cancellation of CHA licence and forfeiture of amount, respondent- CHA invoked appellate jurisdiction of the Customs, Excise and Service Tax Appellate Tribunal ( Tribunal for short). The Tribunal vide its impugned order dated 23rd August, 2005 was pleased to set aside the order of the Commissioner of Customs (General) (the Commissioner for short) holding that the order impugned before the Tribunal was in breach of principles of natural justice and for want of reasons leading to disagreement with the report of the enquiry officer. In the result, the order of cancellation of licence and forfeiture of security amount was quashed and set aside. As a matter of fact, both grounds on which the order of the Commissioner was set aside revolved around breach of principles of natural justice. 8. Being aggrieved by the aforesaid order, Revenue has invoked appellate jurisdiction of this Court under section 130 of the Customs Act, 1962 as stated in the opening part of this judgment. Rival Submissions : 9. Mr.Jetly, learned counsel appearing for the Revenue vehemently argued that the impugned order passed by the Tribunal suffers from non-application of mind apart from the fact that perversity apparent on the face of the order. He further tried to demonstrate on merits 4 as to how the respondent- CHA was involved in committing an act and omission constituting misconduct and went on to demonstrate compliance of CHALR, 1984 by the department in its true letter and spirit. He pressed into service the judgment of the Division Bench of this Court in Commissioner of Customs (Gen), Mumbai v. Raj Clearing Agency, 2006 (199) ELT 602 (Bom.) and C.C. (General), Mumbai v. East & West Shipping Agency, 2007 (218) ELT 360 (Bom.) followed by another judgment in the case of Commissioner of Customs (General), Mumbai v. Bharat Overseas Communicators, 2006 (199) ELT 800 (Bom.) in support of his submissions. 10. Per contra, Mr.Shah, learned counsel appearing for the respondent- CHA urged that the enquiry officer has recorded detailed findings on each of the charges framed against the respondent- CHA holding that not a single charge was proved. Based on this preamble, Mr.Shah further built his submission to contend that the Commissioner has no power or authority under CHALR, 1984 to disagree with the findings and report of the enquiry officer. In order to support his submission, he brought to our notice the judgment of the Tribunal in the case of Narendra Forwarders P.Ltd. v. Commissioner of C.Ex., Mumbai, 2000 (118) ELT 632 (Tri.); wherein the Tribunal held that the Commissioner of Customs was not competent to brush aside the enquiry report submitted by the enquiry officer and to order re-enquiry. Mr.Shah, thus, urged that there is no power in the Commissioner to disagree with enquiry officer issue disagreement notice. He also placed reliance in support of his submission on the order of the Tribunal in the case of Varma & sons v. Commissioner of Customs (G), Mumbai, 2009 (235) ELT 344 (Tri-Mumbai). 5 Consideration : 11. Having heard rival parties, it is necessary to observe that rules, regulations, schemes, bylaws orders made under statutory powers are all comprised in delegated legislation. . Delegated legislation permits utilisation of experience and consultation with interests affected by the practical operation of statutes. 12. Subordinate legislation is made by a person or body by virtue of the powers conferred by a statute. By- laws are made by local authorities or similar bodies or by statutory or other undertakings for regulating the conduct of persons within their areas or resorting to their undertakings. Regulations may determine the class of cases in which the exercise of the statutory power by any such authority constitutes the making of statutory rule. 13. The words rules and regulations are used in an Act to limit the power of the statutory authority. The powers of statutory bodies are derived, controlled and restricted by the statutes which create them and the rules and regulations framed thereunder. Any action of such bodies in excess of their power or in violation of the restrictions placed on their powers is ultra vires. The reason is that it goes to the root of the power of such authority and the declaration of nullity is the only relief that is granted to the aggrieved party. The regulations so framed impose obligation on the statutory authorities. The statutory authorities cannot deviate from the conditions of service. Any deviation will be enforced by legal sanction of declaration by courts to 6 invalidate actions in violation of rules and regulations. The existence of rules and regulations under statute is to ensure regular conduct with a distinctive attitude to that conduct as a standard. The statutory regulations in the case under consideration gives the respondent- CHA a statutory status and impose restrictions on the authority with no option to vary the conditions. (see Sukhdev Singh v. Bhagatram, 1975 AIR SC 1331) 14. With the above stated legal position, for appreciation of legal controversy and resolution thereof, it is necessary to turn to the relevant regulation 23, which reads as under: 23. Procedure for suspending or revoking licence under Regulation 21 1. The Commissioner shall issue a notice in writing to the Custom House Agent stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said agent to submit within such time as may be specified in the notice not being less than forty-five days, to the Assistant Commissioner of Customs or Deputy Commissioner of Customs nominated by him, a written statement of defence and also to specify in the said statement whether the Custom House Agent desires to be heard in person by the said Assistant Commissioner of Customs or Deputy Commissioner of Customs. 2. On receipt of the written statement from the Custom House Agent, or where no such statement has been received within the time- limit specified in the notice referred to in sub-regulation (1), the Assistant Commissioner of Customs may inquire into such of the grounds as are not admitted. 3. The 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 7 the basis of the proceedings and he may also put any question to any person tendering evidence, for or against the Custom House Agent, for the purpose of ascertaining the correct position. 4. The Custom House Agent shall be entitled to cross-examine the persons examined in support of the grounds forming the basis of the proceedings and where the 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 aforesaid inquiry, the Assistant Commissioner of Customs shall prepare a report of the inquiry recording his findings. 6. The Commissioner of Customs shall furnish to the Custom House Agent a copy of the report of the Assistant Commissioner of Customs and shall require the Custom 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 Assistant Commissioner of Customs. 7. The Commissioner shall after considering the report of the inquiry, and the representation thereon, if any, made by the Custom House Agent, pass such orders as he deems fit. 8. Any Custom House Agent aggrieved by any decision or order passed under the regulation 21 or sub-regulation (7) of regulation 23, may appeal under section 129A of the Customs Act, 1962, to the Customs and Central Excise Gold (Control) Appellate Tribunal established under Section 129(1) of Customs Act, 1962. 15. Regulation 21 empowers the Commissioner to suspend or revoke the licence of a CHA following the procedure given in regulation 23. Although, clause (8) of regulation 23 specifically refers to sub-regulation (7) thereof, the wording of the said regulation is wide 8 enough to make the impugned order as an order against which the appeal would lie before the Tribunal. 16. In the manner in which regulation has been framed, it would appear that the presumption was that the report referred to sub-section (5) would be implicating the CHA. On this presumption, the next rule and regulation are prescribed. Where the enquiry report is not to the satisfaction of the Commissioner, regulation 23 makes no provision for disagreement therefor. In fact, the wording of sub-regulation (6) is that it is mandatory for the Commissioner to furnish the enquiry officer s report to the CHA, irrespective of the fact whether or not the findings of the enquiry officer are against the CHA. The authority of the Commissioner in sub-regulation (7) comes into play only after the copy of the enquiry report is furnished to the CHA and his arguments thereupon are recorded. If the CHA is aggrieved by any decision or order passed under regulation 21 or sub-regulation (7) of regulation 23, he may appeal under section 129A of the Customs Act, 1962, to the Tribunal established under section 129(1) of the Customs Act. 17. On the above premise, we have no hesitation to record that in the entire regulation there is no power or authority to the Commissioner to disagree with the report of the enquiry officer. As observed hereinabove, an action of any body or authority in excess of their power or in violation of the restrictions placed on their powers is ultra vires. The reason is that it goes to the root of the power of such authority and the declaration of nullity is the only relief that is granted to the aggrieved party. One more principle of law gets 9 attracted in this case laid down by the Apex Court in the case of State of Uttar Pradesh v. Singhara Singh, AIR 1964 SC 358; wherein the Court recognised principle that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and the other methods of performance are necessarily forbidden applies even to the quasi-judicial authorities. The principle behind the rule is that if the power was to be given to disagree, the statutory provision might as well have been enacted in that behalf. Following the said legal position of law, the Tribunal was justified in holding that the impugned action of the appellant- Commissioner of Customs (General) was in violation of principles of natural justice. 18. As a matter of fact, it was obligatory on the part of the Tribunal to examine in detail the scope of the authority in favour of the commissioner to disagree with the report of the enquiry officer. It appears that this aspect has not been brought to the notice of the Tribunal. Had there been any power to disagree, we would have remanded this matter to the Commissioner for consideration afresh since the findings recorded by the Tribunal revolves around breach of principles of natural justice which can always be cured by affording an opportunity afresh. However, on deeper consideration we found that no useful purpose would be served by remanding the matter to the Commissioner for consideration afresh, since we could not locate any power or authority in favour of the Commissioner to disagree with the report of the enquiry officer. 19. On the above canvass, order of the Tribunal setting aside the order of the Commissioner cacelling CHA 10 licence and forfeiting security deposit can be supported, may be for the additional reasons recorded by the Tribunal. For the reasons stated herein and the view taken, the action of the Tribunal needs confirmation. In the result, appeal is dismissed with no order as to costs. (K.K.TATED, J.) (V.C.DAGA J.)