COMMISSIONER OF CUSTOMS versus MIS K. M. GANATRA & CO.
[2016] 1 S.C.R. 162, Supreme Court of India, 2016
Outcome: Appeal(s) allowed (Granted)
Segment: Facts
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[2016] l S.C.R. 162 
COMMISSIONER OF CUSTOMS 
v. 
MIS K. M. GANATRA & CO. 
(Civil Appeal No. 2940 of2008) 
JANUARY 14, 2016 
[DIPAK MISRA AND N. V. RAMANA, JJ.] 
Customs House Agents Licensing Regulations, 1984 -
Regulations JO, 13, 14 - Misuse of Customs House Agent licence 
(CHA) issued in favour of respondent - Transfer of licence by 
respondent and was a habitual offender in the same manner -
Cancellation of license by Commissioner of Customs - However, 
direction for restoration of licence after expiry of three years from 
the date of suspension of the licence by the tribunal - High Court 
upheld the order - On appeal, held: Transfer of licence in 
contravention of the Regulations is a serious violation - Misconduct 
reflects a chain of acts and thus, the discretion exercised by the 
tribunal is inappropriate - In view of the important position of CHA 
in the Custom House, misconduct is to be seriously viewed - Orders 
of High Court and tribunal set aside and that of the Commissioner 
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restored - Custom House Agent Licensing Regulations, 2004 -
Regulations 12, 13( b ), 13( d), 20(1 )( c), 13(n). 
Allowing the appeal, the Court, 
HELD: 1.1 The tribunal can dislodge or confirm or modify 
the order. The vesting of jurisdiction with the tribunal by the 
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statute is beyond any pale of controversy. When a jurisdiction is 
exercised, it has to be exercised in accordance with law, regard 
being had to the factual matrix of the case. The tribunal having 
been
conferred the power to modify the order, restricting the 
period of revocation would definitely come within the sweep of 
the said power. As regards the issue whether the said jurisdiction 
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the order passed by the Commissioner, it is clearly perceptible 
that there has been number of violations by the respondent. The 
enquiry report which formed the plinth of the order of the 
Commissioner demonstrates that by virtue of the transfer of the 
H licence in contravention of the Regulations, on many an occasion, 
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COMMNR. OF CUSTOMS v. MIS K. M. GANATRA & CO. 
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immense financial loss has been caused to the revenue. As the A 
factual matrix would exposit, it is a serious violation. The 
misconduct reflects a chain of acts. In such a situation, the 
discretion exercised by the tribunal is inappropriate. [Para 14] 
[172-D-G]] 
1.2 In *Noble Agency case the tribunal observed that the 
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Customs House Agent (CHA) occupies a very important position 
in the Custom House. The Customs procedures are complicated, 
the importers have to deal with a multiplicity of agencies viz. 
carriers, custodians as well as the Customs. The importer would 
find it impossible to clear his goods through these agencies 
without wasting valuable energy and time. The CHA is supposed 
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to safeguard the interests of both the importers and the Customs. 
A lot of trust is kept in CHA by the importers/exporters as well 
as by the Government Agencies. To ensure appropriate discharge 
of such trnst, the relevant regulations are framed. Reg 14 of the 
Customs House Agents Licensing Regulations lists out D 
obligations of the CHA. Any contravention of such obligations 
even without intent would be sufficient to invite upon the CHA 
the punishment listed in the Regulations. As such the misconduct 
has to be seriously viewed. The orders of the High Court and the 
tribunal is set aside and that of the Commissioner is restored. 
[Para 15, 16] [172-G-H; 173-A-D] 
Noble Agency v. Commissioner of Customs, Mumbai 
2002
(142) E.L.T. 84 (Tri. - Mumbai) - approved. 
Case Law Reference 
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2002 (142) E.L.T. 84 (Tri. - Mumbai) 
approved. 
Para 15 
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2940 
of2008 
From the Judgment and Order dated 10.08.2007 of the High Court 
. of Judicature at Bombay in Customs Appeal No. 71 of2007 
V. Mahana, B. V. Niren, Binu Tamta, B. Krishna Prasad for the 
Appellant. 
V. M. Doiphode, Rajesh Kumar, Krishana Kumar R. S., K. K. L. 
Gautam for the Respondent. 
The Judgment of the Court was delivered by 
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[2016] l S.C.R. 
DIPAK MISRA, J. l. The respondent, Mis. K.M. Ganatra & 
Co., was granted a Regular Customs House Agent (CHA) licence under 
Regulation l 0 of the Customs House Agents Licensing Regulations, l 984 
(for brevity 'the 1984 Regulations') framed under Section 146 of the 
Customs Act, 1962 (for brevity 'the Act'). While the respondent was 
carrying on the business, a letter was received from the Joint Director, 
ORI, BZU, Mumbai wherein it was mentioned that certain units based 
in Moradabad and Rampur area were misusing DEEC and DEPC 
Sch,eme and submitting fictitious or forged shipping bills either with a 
view to obtain inadmissible Duty Entitled Pass Books (DEPBs) or for 
fulfilling the export obligations against advance licences under Duty 
Exemption Entitlement Certificate (DEEC) Scheme, and to obtain waiver 
of BG conditions against the DEEC Licence as per the Exim Policy, 
though in reality no physical export of goods was taking place. In essence, 
the communication was to the effect that documents were fabricated to 
show that goods were exported. 
2. On the basis of the aforesaid information, investigations were 
initiated and certain firms were identified which were involved in the 
misuse of the licence in the aforestated manner. During the investigation 
it was found that an endeavour had been made to give the impression 
that they were bona fide exporters. The shipping bills were filed and 
for the
said purpose, services of CHA licence of the respondent licensee 
was utilised. It had further come to the notice of the authorities that 
after due investigation and interrogation, it had allowed its licence to be 
used by certain unauthorised persons for monetary consideration. After 
the said aspect came to light, the licence was suspended under Regulation 
21(2) of the 1984 Regulations and an enquiry was held against it under 
Regulation 23 of the 1984 Regulations. The enquiry officer held the 
enquiry and submitted the report on 25. l 0.2005 holding, inter alia, that 
the misconduct alleged against the respondent that it had allowed the 
unauthorised persons to handle the shipping bills stood proved, and 
accordingly opined that the articles of charge under Regulations 12, 13(b ), 
13(d), 20( I )(c ), 13(n) of the Custom House Agent Licensing Regulations, 
2004 (for short, 'the 2004 Regulations') were established. 
3. On the basis of the said enquiry report, the Commissioner of 
Customs (General), New Customs House Ballard Estate, Mumbai on 
22.08.2006, after affording appropriate opportunity of hearing to the 
respondent and analysing the facts and the material brought on record, 
came to hold that there had been misuse of the licence issued in favour
COMMNR. OF CUSTOMS v. MIS K. M. GANATRA & CO. 
165 
[DIPAK MISRA, J.] 
of the respondent and further the violation was serious in nature and it 
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did tantamount to involvement in fraudulent activity affecting the revenue. 
Being of this view, it cancelled the licence and revoked the entire security 
deposit. 
4. Aggrieved by the aforesaid order, the respondent preferred 
Appeal No. C/1135/06 - Mum before the Customs, Excise & Service 
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Tax Appellate Tribunal (for short, 'the tribunal'). The tribunal, by its 
decision dated 12.12.2006 opined thus:-
"We have considered the submissions. We find that it is an admitted 
fact that the appellant has allowed Shri Vipul Shah to crry on 
business on monthly rental basis or a consignment basis which c 
has resulted in fraudulent exports by his client whose credentials 
were not lloked into by the CHA. This cannot be considered as a 
mere commission agent being employed by the CHA. In fact no 
authorization from the customer in favour of the CHA is on record 
and the copy produced by the appellant is without any date and 
there is no evidence that it was procured before taking up the 
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business of the exporters in question. On the other hand the 
appellants contend that the same was recovered by the ORI but 
could not show any panchnama to that effect. We find that the 
tribunal has in the case of Noble Agency held that the statement 
of defence witness that employer for whom he was working did 
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not have CHA licence and that he
was using licence of the noticee 
CHA on payment of monthly sums is sufficient to prove subletting 
of licence. The decision has been concurred with in the case of 
Nanda International Vs. Commissioner of Customs, Chennai -
2004 (176) I.LT. 524 (Tri. -Chennai) the only difference being 
that since in latter case the licence remained revoked for a period 
six years & therefore, a lenient view was taken and the licence 
was restored though forfeiture of security deposit was upheld. In 
the instant case, we find that the licence has been suspended for 
the last two years and has now been revoked permanently. We 
consider it too harsh a punishment as it deprive the CHA of his 
Ii velihood. We consider that revocation for a period of three years 
from the date of suspension of licence (i.e. 1.3.2004) would be 
sufficient and on expiry of three years licence may be restored on 
taking fresh security deposit as we confirm the order of the 
Commissioner in forfeiting the security deposited by the appellant 
earlier." 
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We have reproduced the said paragraph only to highlight that 
though the tribunal has taken into consideration the admissions made by 
the respondent, findings recorded by the Commissioner and the act of 
violation by the respondent, yet it has exercised the discretion by directing 
restoration of the licence after the expiry of three years from the date of 
suspension of the licence on the ground that factual matrix warranted a 
lenient view to be taken. 
5. Dissatisfied with the order of the tribunal, the revenue 
preferred Customs Appeal No.71 of 2007 before the High Court of 
Judicature at Bombay. The Division Bench of the High Court, by the 
impugned order dated 10.08.2007, did not accept the stand of the revenue 
that subletting of CHA is a serious violation and that apart, the respondent 
is a habitual offender in committing the offence of subletting and in that 
factual backdrop, the tribunal was not justified in restricting the period of 
revocation to a span of three years. After repelling the stand of the 
revenue, the High Court further proceeded to observe that the tribunal 
has appositely exercised the discretion and taken a reasonable view and 
hence, the order of the tribunal did not warrant any interference. The 
said order is the subject matter of appeal by special leave before this 
Court. 
6. We have heard Ms. V. Mohana, learned senior counsel along 
with Ms. Binu Tamta, learned counsel
for the appellant and Mr. V.M. 
Doiphode, learned counsel for the respondent. 
7. Learned counsel for the respondent submitted that the present 
appeal does not deserve to be considered in view of the grounds taken in 
paragraph 'G' of the special leave petition. The said ground reads as 
under:-
"G That this Hon'ble Court, on similar facts involving violation of 
Regulations 12, 13(a), 13(b), 13(d), 19(8) of the CHALR in the 
case of Commissioner of Customs vs. Sri Prakash Ga wade SLP 
(C) No.5375 was pleased to issue notice and stay the impugned 
judgment of the High Court vide order dated 16.03.2007." 
8. It is urged by the learned counsel for the respondent that the 
said special leave petition which had given rise to Civil Appeal No.4520 
of 2007 which has been dismissed, and therefore, the present appeal 
deserves to be dismissed. To appreciate the submission, we may 
reproduce the order dated March 24, 2014 dismissing the appeal. It reads
COMMNR. OF CUSTOMS v. MIS K. M. GANATRA & CO. 
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[DlPAK MISRA, J.] 
as follows :-
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"1. We have heard learned counsel for the parties to the !is. 
2. We find no merit in the Civil Appeal. Accordingly, the Civil 
Appeal is dismissed. However, the question of law raised is kept 
open to be agitated in an appropriate case. I.A. No.7 is also 
disposed of accordingly. 
Ordered accordingly." 
9. It is manifest from the aforesaid order that the two-Judge 
Bench, while dismissing the appeal, has kept the question of law open. 
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The question of law raised is where there is transfer of licence and as a 
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matter of fact the same is established in addition to the fact that the 
licensee is a habitual offender in the same manner, whether the tribunal 
should exercise the power under the Regulations to modify the action 
taken by the competent authority. That being the issue raised in this 
appeal, we have noted the said aspect first. We are unable to accept the 
submission of the learned counsel for the respondent and, therefore, we 
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shall proceed to address the issue on merits. 
10. It is submitted by Ms. Mohana, learned senior counsel 
appearing for the revenue that when it has been established after 
conducting the necessitous investigation that the licensee has violated 
the terms of the licence and the Regulations and it habitually involved in 
the similar kind of activity, the discretion of the tribunal was totally uncalled 
for. It is urged by her that whenever a
statutory authority is conferred 
with the jurisdiction for modifying an order, appropriate reasons have to 
be ascribed and it should not be done without proper ascription of reasons 
as that would be reflective of non-application of mind. It is her further 
submission that when the order is demonstrative of flagrant violation of 
the statutory Regulations relating to licence which has financial implication, 
no leniency should have been shown. 
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11. Learned counsel for the respondent would contend that in 
similar circumstances, the period was restricted and once the discretion 
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has been exercised by the tribunal and that has been given stamp of 
approval by the High Court, this Court should be slow to exercise its 
jurisdiction under Article 136 of the Constitution of India. 
12. As is noticeable, the respondent was granted a regular licence 
under Regulation 10 of the 1984 Regulations. Regulation 11 deals with 
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execution of bond and furnishing of security. Regulation 12 stipulates 
the period of validity of a regular licence. Regulation 13; which stipulates 
that the licence is not transferable, reads as follows :-
"13. Licence not transferable.-Every licence granted or renewed 
under these Regulations shall be deemed to have been granted or 
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renewed in favour of the licensee and no licence shall be sold or 
otherwise transferred." 
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13. Regulation 14 deals with the obligations of Custom House 
Agent. The said Regulation, being pertinent, is reproduced below :-
"14. 
Obligations of Custom House Agent-A Custom House 
Agent shall: 
(a) obtain an authorisation from each of the companies, firms or 
individuals by whom he is for the time being employed as Custom 
House Agent and produce such authorisation whenever required 
by an Assistant Commissioner of Customs or Deputy 
Commissioner of Customs; 
(b) transact business in the Customs Station either personally or 
through an employee duly approved by the Assistant Commissioner 
of Customs or Deputy Commissioner of Customs, designated by 
the Commissioner; 
( c) not represent a client before an officer of Customs in any 
matter to which he, as officer of the Department of Customs 
gave personal consideration, or as to the facts of which he gained 
knowledge, while in Government service; 
( d) advise his client to comply with the provisions of the Act and 
in case of
non-compliance, shall bring the matter to the notice of 
the Assistant Commissioner of Customs or Deputy Commissioner 
of Customs; 
( e) exercise due diligence to ascertain the correctness of any 
information which he imparts to a client with reference to any 
work related to clearance of cargo or baggage; 
(f) not withhold information relating to clearance of cargo or 
baggage issued by the Commissioner of Customs from a client 
who is entitled to such information; 
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(g) promptly pay over to the Government, when due, sums
COMMNR. OF CUSTOMS v. MIS K. M. GANATRA & CO. 
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[DIPAK MISRA, J.] 
received for payment of any duty, tax or other debt or obligations 
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owing to the Government and promptly account to his client for 
funds received for him from the Government or received from 
him in excess of Governmental or other charges payable in respect 
of the clearance of cargo or baggage on behalf of the client; 
(h) not procure or attempt to procure directly or indirectly, 
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information from the Government records or other Government 
sources of any kind to which access is not granted by proper 
officer; 
(i) not attempt to influence the conduct of any official of the 
Customs Station in any matter pending before such official or his c 
subordinates by the use of threat, false accusation, duress or the 
offer of any special inducement or promise of advantage or by 
the bestowing of any gift or favour or other thing of value; 
(j) not refuse access to, conceal, remove or destroy the whole or 
any part of any book, paper or other record, relating to his 
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transactions as a Custom House Agent which is sought or may be 
sought by the Commissioner; 
(k) maintain records and accounts in such form and manner as 
may be directed from time to time by an Assistant <;:ommissioner 
of Customs or Deputy Commissioner of Customs and submit them 
for inspection to the said Assistant Commissioner of Customs or 
Deputy Commissioner of Customs or an officer authorised by 
him whenever required; 
(!) ensure
that all documents prepared or presented by him or on 
his behalf are strictly in accordance with orders relating thereto; 
(m) ensure that all documents, such as bills of entry and shipping 
bills delivered in the Customs Station by him show the name of 
the importer or exporter, as the case may be, and the name of the 
Custom House Agent, prominently at the top of such documents; 
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(n) in the event of the licence granted to him being lost, 
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immediately report the fact to the Commissioner; 
( o) epsure that he discharges his duties as Custom House Agent 
with utmost speed and efficiency and without avoidable delay; 
and 
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[2016] 1 S.C.R. 
(p) not charge for his services as Custom House Agent in excess 
of the rates approved by the Commissioner from time to time 
under Regulation 25." 
Regulation 19 provides for maintenance and inspection of accounts. 
We have referred to the said Regulation as it casts number of obligations 
on the Customs House Agent. Regulation 21 deals with the suspension 
or revocation of licence. Regulation 23 deals with procedure for 
suspending or revoking licence under Regulation 21. It is apt to note 
here that the Central Board of Excise and Customs, in exercise of the 
power conferred under sub-section (2) of Section 146 of the Act in 
supersession of the Customs House Agents Licensing Regulations, 1984, 
except as respect things done or omitted to be done before such 
supersession, brought the 2004 Regulations. It is not in dispute that the 
investigation has been carried on, order bas been passed under Regulation 
20( c) of the 2004 Regulations. The said order of revocation was assailed 
before the tribunal under Section 129A read with Regulation 22(8) of 
the 2004 Regulations. Section l 29B pertains to the jurisdiction of the 
tribunal and nature of the orders that the tribunal can pass. The said 
provision reads as follows : 
"Section 129B. Orders of Appellate Tribunal.-(!) The Appellate 
Tribunal may, after giving the parties to the appeal, an opportunity 
of being heard, pass such orders thereon as it thinks fit,
confinning, 
modifying or annulling the decision or order appealed against or 
may refer the case back to the authority which passed such decision 
or order with such directions as the Appellate Tribunal may think 
fit, for a fresh adjudication or decision, as the case may be, after 
taking additional evidence, if necessary." 
Regulation 22 of the 2004 Regulations reads as follows : 
"22. Procedure for suspending or revoking licence under 
Regulation20.-(l) The Commissioner of Customs shall issue a 
notice in writing to the Customs House Agent within ninety days 
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from the date of receipt of offence report, stating the grounds on 
which it is proposed to suspend or revoke the licence and requiring 
the said Customs House Agent to submit within thirty days to the 
Deputy Commissioner of Customs or Assistant Commissioner of 
Customs nominated by him, a written statement of defense and 
also to specify in the said statement whether the Customs House 
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Agent desires to be heard in person by the said Deputy
COMMNR. OF CUSTOMS v. MIS K. M. GANATRA & CO. 
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[DIPAK MISRA, J.] 
Commissioner of Customs or Assistant Commissioner of Customs. 
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Provided that the procedure prescribed in regulation 22 shall not 
apply in respect of the provisions contained in sub-regulation (2) 
to regulation 20. 
(2) The Commissioner of Customs may, on receipt of the written 
statement from the Customs House Agent, or where no such 
statement has been received within the time-limit specified in the 
notice referred to in sub-regulation (I), direct the Deputy 
Commissioner of Customs or Assistant Commissioner of Customs 
to inquire into the grounds which are not admitted by the Customs 
House Agent. 
(3) The Deputy Commissioner of Customs or 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 the basis of the proceedings, and he may also put any 
question to any person tendering evidence for or against the 
Customs House Agent, for the purpose of ascertaining the correct 
position. 
(4) The Customs 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 Deputy Commissioner of 
Customs or 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. 
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(5) At the conclusion of the inquiry, the Deputy Commissioner of F 
Customs or Assistant Commissioner of Customs shall prepare a 
report of the inquiry recording his findings and submit his report 
within ninety days from the date of issue of a notice under sub-
regulation (1). 
(6) The Commissioner of Customs shall furnish to the Customs 
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House Agent a copy of the report of the Deputy Commissioner of 
Customs or Assistant Commissioner of Customs, and shall require 
the Customs House Agent to submit, within the specified period 
not being less than thirty days, any representation that he may 
wish to make against the findings of the Deputy Commissioner of 
Customs or Assistant Commissioner of Customs. 
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[2016] 1 S.C.R. 
(7) The Commissioner of Customs shall, after considering the 
report of the inquiry and the representation thereon, if any, made 
by the Customs House Agent, pass such orders as he deems fit 
within ninety days from the date of submission of the report by 
the Deputy Commissioner of Customs or Assistant Commissioner 
of Customs, under sub-regulation (5). 
(8) Any Customs House Agent aggrieved by any decision or order 
passed under regulation 20 or sub-regulation (7) of regulation 22, 
may prefer an appeal under section 129 A of the Act to the Customs, 
Central Excise and Service Tax Appellate Tribunal established 
under sub-section (1) of section 129 of the Act." 
14. Relying on the statutory provisions, it is submitted by learned 
counsel for the respondent that the tribunal has jurisdiction to confirm, 
modify or annul the decision. There can be no cavil over the issue that 
the tribunal can dislodge or confirm or modify the order. The vesting of 
jurisdiction with the tribunal by the statute is beyond any pale of 
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controversy. The dispute pertains to exercise of such jurisdiction. When 
a jurisdiction is exercised, it has to be exercised in accordance with law, 
regard being had to the factual matrix of the case. The tribunal having 
been conferred the power to modify the order, restricting the period of 
revocation would definitely come within the sweep of the said power. 
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The issue would, as stated earlier,
be whether the said jurisdiction has 
been properly exercised in the case at hand. On a perusal of the order 
passed by the Commissioner, it is clearly perceptible that there has been 
number of violations by the respondent. The enquiry report which formed 
the plinth of the order of the Commissioner demonstrates that by virtue 
of the transfer of the licence in contravention of the Regulations, on 
many an occasion, immense financial loss has been caused to the revenue. 
As the factual matrix would exposit, it is a serious violation. The 
misconduct reflects a chain of acts. In such a situation, we are disposed 
to think that the discretion exercised by the tribunal is inappropriate. 
15. In this regard, Ms. Mohana, learned senior counsel for the 
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appellant, has placed reliance on the decision in Noble Agency v. 
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Commissioner of Customs, Mumbai 1 wherein a Division Bench of 
the CEGAT, West Zonal Bench, Mumbai has observed:-
"The CHA occupies a very important position in the Custom 
I 2002 (142) E.L.T. 84 (Tri. - Mumbai)
COMMNR. OF CUSTOMS v. MIS K. M. GANATRA & CO. 
[DIPAK MISRA, J.] 
House. The Customs procedures are complicated. The importers 
have to deal with a multiplicity of agencies viz. carriers, custodians 
like BPT as well as the Customs. The importer would find it 
impossible to clear his goods through these agencies without 
wasting valuable energy and time. The CHA is supposed to 
safeguard the interests of both the importers and the Customs. A 
lot of trust is kept in CHA by the importers/exporters as well as 
by the Government Agencies. To ensure appropriate discharge of 
such trust, the relevant regulations are framed. Regulation 14 of 
the CHA Licensing Regulations lists out obligations of the CHA. 
Any contravention of such obligations even without intent would 
be sufficient to invite upon the CHA the punishment listed in the 
Regulations .... " 
We approve the aforesaid observations of the CEGAT, West Zonal 
Bench, Mumbai and unhesitatingly hold that this misconduct has to be 
seriously viewed. 
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16. Resultantly, we allow the appeal and set aside the orders of D 
the High Court and the tribunal and restore that of the Commissioner. 
There shall be no order as to costs. 
Nidhi Jain 
Appeal allowed. 
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