Licence Suspension Penalty under Reg 20 (2) for CHA Harsh for Minor Violation – Reform of Law Must – Article by Ravinder Jain

1. The Custom House Agent(CHA) is a familiar figure in the process of Import and Export of goods in India. Due to the procedural complexities involved in getting the goods cleared both inward and outward, the CHA assistance becomes a necessity.

2. The appointment as well the working of a CHA is governed by the Custom House Agents Licensing Regulations 2004. These regulations set out the eligibility criteria, examination details as well as experience required to become an Authorised CHA.

3. Regulation 13 and its sub-sections contains the obligations which the CHA is required to follow in the discharge of its functions. He is required to obtain an authorization from the Importer/Exporter, transact business in person or by his licensed employee, advise his client to comply with the provisions of the Customs Act or inform the deptt of any suspected infringement, not disclose any confidential information but make the Customer/client aware of all rules/ circulars, notifications, conduct himself in an efficient manner in clearance of the goods without delay, have all duties/dues paid promptly, maintain proper records of all transactions relating to clearances,

4. The CBEC has followed these Regulations up by issuing Circular 9/2010 dated 8.4.2010 wherein they have devised a system of Client/Customer Identification Procedure requiring the CHA to check the specified documents .

5. Any infringement of the CHA Regulations and/or the Circulars or other instructions issued from time to time invites disciplinary action.

6. Regulation 20(2) enables the Commissioner of Customs to suspend the license immediately in “appropriate” cases where an enquiry against the agent is pending or contemplated. What it translates into is that the Commissioner can order the CHA to cease all activities till such time as an enquiry is completed and a decision on the enquiry report is taken. This would take a few years or more. In the event of suspension therefore, the custom House Agent would be out of work and without livelihood.

7. Regulation 22 provides a mechanism of conducting enquiries after the issue of charge-sheet. The CHA Regulations do not proscribe limitations for the issue of chargesheets. Where the chargesheets are not issued for years together, the CHA has no effective avenues of relief. The Tribunal (CESTAT) generally directs the Commissioner to file a chargesheet within a specified time without giving any interim relief of allowing the CHA to work till such time as a decision is taken after enquiry. The High Courts also generally refuse to interfere in such cases or of providing interim relief.

8. In such cases therefore, the Custom House Agent becomes a helpless creature. Contrary to this position of the CHA, a suspended employee of the Customs Department who too is facing similar enquiry on his alleged mis-conduct is entitled to be re-instated if he is not given a chargesheet within 6 months of being suspended. Moreover, he is given a slightly reduced pay package (subsistence allowance) during this period.

9. Contrary to the position taken by CESTAT, the corresponding Tribunal for an employee, the CAT or the Central Administrative Tribunal generally takes a kinder and more helpful position in Appeals filed against arbitrary suspensions/dismissal from service.

10. What is more glaring is the contrast between penalties/punishments meted out to a CHA who has been found to have infringed the CHA under Regulation 22 ie after enquiry and the types and quantum of an employee guilty of mis conduct.

11. Like the medieval ages only one punishment to a CHA. Whether the infringement has resulted in loss of revenue or of smuggling or is only procedural/technical: Only one punishment prescribed in the CHA regulations: Revocation of his license. This means that the CHA is at the total mercy of the Commissioner and his subordinates who conduct the enquiry.

12. Contrast this with what happens to an employee: For minor infringement, minor punishment of censure, warning, reducing increments of pay or major ones: reduction in pay/post/promotion . Dismissal from service is a rarity in such cases and the conduct rules specifically specify what punishment is to be imposed for what offence.

13. Not for the CHA, his head is always under the Damocles sword.

14. Time to change. Yes!