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

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.

Court's reasoning:
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.