Case: The Commissioner of Customs (General), Mumbai Custom Zone-I, New Customs House, Ballard Estate, Mumbai-400 001 Vs. M/S. Gannon Dunkerley & Company Limited

Oral Judgment: (F.I. Rebello, J.)The respondents herein was having a CHA License valid upto 31st December, 2006. It appears from the record that they have appointed one Shri Girish P. Manjeshwar, who was a Regulation 9 Pass holder (now Regulation 8 as per CHALR, 2004). The said employee tendered his resignation. The respondents by letter dated 10th August, 2004 accepted the resignation with effect from 14th August, 2004 and relieved him from the services of the Company as per the terms and conditions of the appointment letter. As the respondents did not have a Regulation 9 pass holder they surrendered his pass on 18th November, 2004 as though they had made attempts to get a qualified person they were not in a position to get one. The Commissioner of Customs (General) vide notice No.116/06 dated 8th August, 2006 made the license of the respondents inoperative. The respondents vide their letter dated 17th August, 2006 wrote to the Commissioner of Customs (General) that they were shortly employing a qualified person and would continue to work as CHA and requested to condone the delay. They were informed by letter dated 30th August, 2006 that their request to continue the license as CHA cannot be considered in terms of the provisions of Regulation 15(2) of the CHALR, 2004. On 1st September, 2006 the Respondents intimated the Commissioner of Customs that they have appointed Shri S.Subhash, a Rule 9 qualified person under CHALR, 2004 and he would join in the first week of October, 2006. Various other representations were made. By communication of 29th March, 2007 the respondents requested the Commissioner of Customs (General) to pass an appealable order after granting an opportunity of personal hearing to them. That was granted and an order came to be passed on 21st May, 2007 whereby it was held that the order to make inoperative the CHS license was absolutely necessary. Aggrieved the Respondents preferred an Appeal.2. The learned Tribunal on consideration of the provisions of the Regulations and more specifically Regulation 15(2) of the CHALR, 2004, held that it would be applicable only in the case when there is a change of constitution of the firm or company. The Proviso to Rule 15(2) of the CHALR, 2004 and the time limit of two years prescribed therein is applicable only in the case of demise or retirement of the person and not in the case of resignation, which is the case here. It was further held that the proviso to Regulation 15(2) is not at all applicable in the instant case since the same is applicable only when there is a "G Card" holder of the Company and for all the aforesaid reasons it held that there is no provision under CHALR 2004 to make the VCHA license inoperative. In the light of that the impugned order dated 21st May, 2007 was set aside and the Appeal was allowed by order dated 3rd August, 2007.3. The Revenue has preferred this Appeal on the following question:-1. Whether the proviso to Regulation 15(2) is applicable only when there is a "G" Card holder of the Company2. Whether the Customs, Excise and Service Tax Appellate Tribunal can ignore that the appointment of a qualified person was to be carried out within time limit of 2 years the licence shall be revokedAt the outset we may point out that the Tribunal addressed itself to some wrong question. However, that need not detain us from disposing of the Appeal.4. AT the hearing of this Appeal the learned Counsel for the Appellant contended that the respondents did not employ a qualified person for a period of two years and consequently the Appellants were within their jurisdiction not to permit the respondents to operate the license. It is also submitted that the proviso to Regulation 15(2) of CHALR, 2004 would apply in this case.5. We may at once consider the Regulations which have been placed before us. These are Regulations known as Custom House Agents License Regulations 2004, which hereinafter shall be referred to as CHALAR. 2004. There is no dispute that in the present case the respondents had a valid license which would have expired on 31st December, 2006. We may at once note the provisions of Regulation 15 which are reproduced below:-"15. Change in constitution of any firm or Company - (1) In the case any firm or a Company, holding a licence under these regulations, any change in the constitution thereof shall be reported by such firm or Company, as the case may be, to the Commissioner of Customs as early as possible, and any such firm or a Company indicating such change shall make a fresh application to the said Commissioner of Customs within a period of sixty days from the date of such change for the grant of licence under regulation 9, and the Commissioner of Customs may, if there is nothing adverse against such firm or Company, as the case may be, grant a fresh licence of the category held by the applicant prior to the change in constitution.Provided that if the existing firm or Company moves an application for such changes, then such firm or Company may be allowed to carry on the business of Customs House Agent with the approval of the Commissioner of Customs till such time as a decision is taken on the fresh application of such firm or Company.(2) Notwithstanding anything contained in sub-regulation (1), where a licence granted or renewed under these regulations in favour of a firm or a Company has ceased to be in force because of the death or retirement of the person referred to in clause (b) of sub-regulations (2) and (3) of regulation 5, as the case may be, the firm or the company may apply for replacement of the name of the demised person by the name of a partner, director or employee who has passed the examination referred to in Regulation 8 in accordance with sub-regulation (8) of regulation 8.Provided that if there is no such person in the firm or Company, then such firm or Company, as the case may be, may authorize any other partner, director or employee who is a "G" card holder, to pass the examination referred to in regulation 8 within a period of two years from the date of the demise or retirement of such person, and the firm or Company may be permitted to carry on the business of a Customs House Agent with the approval of the Commissioner of Customs till such time such partner, director or employee passes the said examination."A perusal of Regulation 15(2) would indicate that the license would cease to be in force on the death or retirement of a person as referred to therein. The proviso permits in the event there is no qualified person for replacement in the firm or Company, the firm or Company authorise any other partner, director or employee who is a "G" card holder, to pass the relevant examination within a period of two years from the date of demise or retirement of the person and in such a case there is discretion in the Commissioner notwithstanding that if there be no qualified person to permit such authorised person to carry on the business of a Customs House Agent with the approval of the Commissioner of Customs till such time such partner, director or employee passes the said examination. In other words a reading of Regulation 15(2) and the proviso makes it abundantly clear that this Regulation provides for a situation when the license ceases to be in force on happening of the event set out therein which is not the case of the license being cancelled. While considering the difficulties that a business house may suffer the proviso permits the Commissioner of Customs in the circumstances set out therein to permit the company or firm to carry on the business of a Customs House Agent inspite of the fact that no qualified person is available as long as a "G" card holder is available.6. We may now peruse Regulation 20, which reads as under:-"20. Suspension or revocation of licence--(1) The Commissioner of Customs may, subject to the provisions of regulation 2, revoke the license of a Customs House Agent and order for forfeiture of part or whole of security, or only order forfeiture of part of whole of security, on any of the following grounds namely -(a) failure of the Customs House Agent to comply with any of the conditions of the bond executed by him under regulation 10;(b) failure of the Customs House Agent to comply with any of the provisions of these regulations, within the jurisdiction of the said Commissioner of Customs or anywhere else;(c) any misconduct on his part, whether within the jurisdiction of the said Commissioner of Customs or any where else which in the opinion of the Commissioner renders him unfit to transact any business in the Customs Station.(2) Notwithstanding anything contained in sub-regulation (1) the Commissioner of Customs may in appropriate cases where immediate action is necessary, suspend the licence of a Customs House Agent where an enquiry against such agent is pending or contemplated."The licence once validly issued can only be revoked or forfeited in the circumstances set out therein. In the instant case it is not the case of the Appellants that they have cancelled or forfeited the licence. Therefore, the case is not covered by the Regulation 20. Yet another provision which would be relevant would be Regulation 11, which reads as under:-11. Period of validity of a licence - (1) A licence granted under regulation 9 shall be valid for a period of ten years from the date of issue and shall be renewed from time to time in accordance with the procedure provided in sub-regulation (2).(2) The Commissioner of Customs may, on application made by the licensee before the expiry of the validity of the licence under sub-regulation (1), renew the licence for a further period of ten years from the date of expiration of the original licence granted under regulation 9 or of the last renewal of such licence, as the case may be, if the performance of the licensee is found to be satisfactory with reference, inter alia, to the following:-(a) quantity or value of cargo cleared by such licensee conforming to norms as may be specified by the Commissioner;(b) absence of instances of any complaints of misconduct including non-compliance of any of the obligations specified in regulation 13.(3) The fees for renewal of a licence sub-regulation (2) shall be Rs.5,000/-."The regulation, therefore, sets out, that the license would be valid for a period of 10 years from the date of issue and shall be renewed from time to time in accordance with the procedure provided in sub-regulation (2).7. A reading, therefore, of all these regulations would lead to the conclusion that the license so issued would continue to be in force for the period of its term, unless it is cancelled or revoked in terms of Regulation 20. On failure to have a qualified person at the highest, it merely becomes inoperative for the time being, but the moment a qualified person is available, then it is open to the holder of the licence to operate the license. The license being personnel to the person on his death it cannot be operated. The expression ceasing to be in force must be so read. In our opinion once the petitioner had communicated to the Appellants by letter that a qualified license holder was being appointed from 1st week of October, 2006 the Appellants were bound to permit the respondents to operate the license.8. In our opinion, therefore, though the Tribunal addressed itself to the wrong question which really would not be relevant, the question of law as framed considering the discussions as now discussed would not arise.

Decision reasoning: 0[ds]There is no dispute that in the present case the respondents had a valid license which would have expired on 31st December,perusal of Regulation 15(2) would indicate that the license would cease to be in force on the death or retirement of a person as referred to therein. The proviso permits in the event there is no qualified person for replacement in the firm or Company, the firm or Company authorise any other partner, director or employee who is a "G" card holder, to pass the relevant examination within a period of two years from the date of demise or retirement of the person and in such a case there is discretion in the Commissioner notwithstanding that if there be no qualified person to permit such authorised person to carry on the business of a Customs House Agent with the approval of the Commissioner of Customs till such time such partner, director or employee passes the said examination. In other words a reading of Regulation 15(2) and the proviso makes it abundantly clear that this Regulation provides for a situation when the license ceases to be in force on happening of the event set out therein which is not the case of the license being cancelled. While considering the difficulties that a business house may suffer the proviso permits the Commissioner of Customs in the circumstances set out therein to permit the company or firm to carry on the business of a Customs House Agent inspite of the fact that no qualified person is available as long as a "G" card holder is available.A reading, therefore, of all these regulations would lead to the conclusion that the license so issued would continue to be in force for the period of its term, unless it is cancelled or revoked in terms of Regulation 20. On failure to have a qualified person at the highest, it merely becomes inoperative for the time being, but the moment a qualified person is available, then it is open to the holder of the licence to operate the license. The license being personnel to the person on his death it cannot be operated. The expression ceasing to be in force must be so read. In our opinion once the petitioner had communicated to the Appellants by letter that a qualified license holder was being appointed from 1st week of October, 2006 the Appellants were bound to permit the respondents to operate the license.8. In our opinion, therefore, though the Tribunal addressed itself to the wrong question which really would not be relevant, the question of law as framed considering the discussions as now discussed would not arise.