Judgment:
1. In these proceedings under Article 226 of the Constitution, the Petitioner has challenged the validity of an order passed by the Commissioner of Customs on 7 July 2011 by which the Customs House Agents' Licence of the Petitioner has been revoked in exercise of powers conferred by Regulation 22(7) of the Customs House Agents Licensing Regulations, 2004. The licence of the Petitioner was suspended by the Commissioner of Customs and on 29 October 2009, a chargesheet was issued containing four Article of Charges. On 23 December 2010, the Enquiry Officer exonerated the Petitioner of the charges. The Petitioner thereupon filed representations before the Commissioner of Customs on 6 January 2011 and 18 February 2011 in respect of the enquiry report. By his order dated 7 July 2011, the Commissioner of Customs passed an order by which he differed with the report of the Enquiry Officer and ordered revocation of the licence.
2. The contention of the Petitioner is that the Commissioner could not have differed with the report of the Enquiry Officer in view of a judgment of a Division Bench of this Court in the Commissioner of Customs vs, Rajan Virji & Co.1 In that case, the Division Bench, while construing the provisions of Regulation 22 held that where an enquiry report of the Assistant Commissioner is not to the satisfaction of the Commissioner, Regulation 22 does not make any provision for disagreement by the Commissioner. In that view of the matter, the Division Bench held as follows: "On the above premise, we have no hesitation to record that in the entire regulation there is no power or 1 Customs Appeal 25 of 2006, decided on 27 January 2010. authority to the Commissioner to disagree with the report of the enquiry officer. ... 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." Regulation 22 provides as follows: "22, Procedure for suspending or revoking licence under Regulation 20.-
(1) The Commissioner of Customs shall issue a notice in writing to the Customs House Agent within ninety days 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 defence and also to specify in the said statement whether the Customs House Agent desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs. 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 (1), 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.
(5) At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs shall prepare a report of the inquiry recording (earlier wording 'his findings') 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 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.
(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 129A of the Act to the Customs, Central Excise and Service Tax Appellate Tribunal established under sub-section (1) of section 129 of the Act."
3. The regulation lays down the procedure for suspending or revoking a licence under Regulation 22. Clause (1) of the Regulation requires the Commissioner to issue a notice stipulating the grounds on which the licence is proposed to be revoked or suspended. Pursuant thereto, the Customs House Agent is given an opportunity to submit his written statement of defence to the Assistant Commissioner or Deputy Commissioner nominated by the Commissioner. Thereupon, the Assistant Commissioner of Customs has to enquire into the grounds which are not admitted under clause (2). Upon the conclusion of the enquiry, the Assistant Commissioner prepares a report recording his findings under clause (5). Under Clause (6) the Commissioner furnishes a copy of the report and requires the CHA to submit his representation against the findings of the Assistant Commissioner. Thereafter, the Commissioner under clause (7) is empowered to pass such orders as he deems fit after considering the report and the representation. Against the order passed by the Commissioner, the Customs House Agent who is aggrieved has a right of appeal to the CESTAT.
4. Prima facie, it appears from the scheme contained in Regulation 22 that after formulating the charges, the Commissioner entrusts the enquiry to an Assistant or Deputy Commissioner to be nominated by him. The Assistant or Deputy Commissioner is a delegate of the Commissioner. After the report is submitted, the CHA is required to be furnished with an opportunity to submit his representation against the findings to the Commissioner. The final decision revoking the licence has to be taken by the Commissioner in whom the power to revoke the licence is vested in clause (7) of Regulation 22. With all respect to the judgment of the Division Bench, we are of the view that the judgment in Rajan Virji's case to the effect that the Commissioner of Customs has no power to differ with the report of the Enquiry Officer requires reconsideration. As a matter of first principle, an authority which is vested with the power under a statutory regulation to take a final decision on the basis of an enquiry to be conducted by another authority subordinate to the authority in whom the power to decide is vested, is entitled to differ with the findings which are arrived at by the enquiring authority. Undoubtedly, this can be done only after compliance with the principles of natural justice, namely, by issuing a notice to show cause and recording reasons on the basis of which the findings of the Enquiry Officer are proposed to be differed with. Whether the impugned order was or was not in compliance with the principles of natural justice is a separate matter altogether which would have arisen if the Commissioner was, in the view of the earlier Division Bench, vested with the power to differ with the enquiry report. The Division Bench in Rajan Virji's case has however, held that the Commissioner has no power whatsoever to differ with the report of the enquiry, a view with which we are not inclined to agree, for the reasons indicated above.
5. Hence, we are of the view that the following issues would need to be examined by a larger Bench : (i) Under the provisions of Regulation 22 of the Customs House Agents Licensing Regulations, 2004, is the Commissioner of Customs entitled to differ with the findings which have been arrived at by the Deputy Commissioner of Customs or, as the case may be, the Assistant Commissioner of Customs in the report submitted under clause (5) of the Regulation (ii)Is it a correct proposition in law that under Regulation 22 no power or authority has been vested with the Commissioner of Customs to disagree with the report of the Enquiry Officer?
6. The Registry is requested to place the papers of the present case before the Hon'ble the Chief Justice so as to enable His Lordship to consider issuing such directions as are appropriate.
7. Counsel appearing on behalf of the Petitioner has submitted that the Petitioner has been out of business from 2008 and at this stage, he may be permitted to carry on business on such terms as the Court deems fit and proper. In the facts and circumstances of the case, we are not inclined to grant an ad- interim order at this stage. Ad-interim relief is refused.