INSTRUCTION DATE 08/06/2007

Representation on Customs House Agents Licensing Regulations-Regarding.
It has been brought to the notice of the Board by the Federation of Freight Forwarders Associations in India, National Apex Body of Custom House Agents Association that they are facing difficulties on the following issues raised by them in respect of Custom House Agents Licensing Regulations (CHALR), 2004:

(i) Renewal of licence for 10 years.

(ii) Refund of deposit upon cancellation of bond and surrender of licence.

(iii) Demand of deposit for existing licences.

(iv) Calling for records and inspection of accounts.

(v) Employment of persons by CHA licence holder.

2. These issues were examined in the Board.

(i) Renewal of licence for 10 years:

In terms of Regulation 3 of CHALR, 2004, it is provided that no person shall carry on the business as a Custom House Agent relating to import or export of goods unless he holds a licence granted under this regulation. Licence granted under CHALR, 2004 shall be valid for a period of 10 years from the date of issue and shall be renewed from time to time for a further period of 10 years from the date of expiration of original licence or its last renewal as per regulation 11.

It is stated in the representation that Custom Houses are not renewing the CHA licences as provided in the regulation 11(2) of CHALR, 2004. In the pretext of SCN, action initiated against CHA’s renewal is being given for a limited period say, 6 months only.

On examination of the provisions of CHALR, 2004, it is found that there is a separate provision for suspension or revocation of licences under regulation 20. Further, detailed procedure of issue of Show Cause Notice, personal hearing, verification of facts by nominated AC / DC, submission of all evidences and details of the case before deciding on the action of suspension or revocation is provided under regulation 22. An overriding provision under sub-regulation (2) of Regulation 20, provides that the Commissioner of Customs in appropriate cases where immediate action is necessary can suspend the licence of CHA where an inquiry against him is pending or contemplated. From the above, it is found that there are sufficient powers provided to the Commissioner, to immediately suspend any errant CHA in deserving cases without going through the detailed procedure laid out in regulation 22. Hence, it does not appear to be correct to extend the renewal for shorter period instead of extending for 10 years as provided in the regulations in cases where SCN has been issued. In view of the above, it is hereby clarified that renewal of Custom House License in all cases should be given for a period of 10 years.

(ii) & (iii) Refund of deposit upon cancellation / surrender:

Under the revised CHALR, 2004, licensed CHAs shall be eligible to work in all custom stations within the country. No separate licence shall be required in each Customs station as a licence is now centralised, having the facility to operate all over India. As per the CHALR, 2004, regulation 10, before granting a license to a person under regulation 9, security for an amount of Rs.50,000/- and surety bond for due observance of these regulations shall be taken. The present amount was revised upwards uniformly from the earlier level of Rs.25000/- for 9 specified customs stations and Rs.10,000/- for other places. The federation of CHAs have represented that the issue of revised amount of security and its applicability may be clarified to the field formations, so that they do not face any problems in claiming back the return of security deposit executed earlier and would also not be put into additional obligation to provide security at new customs stations, if any, where they apply for operating as CHA under regulation 9(2).

At the time of revising CHALR, 2004, it was clarified by the Board that enhanced security would be required only for fresh licences issued under CHALR, 2004. In view of the above, it is reiterated that in cases where the CHAs are surrendering the licences in the Customs stations, other than the one in which they had preferred as the main place of business for the purpose of single common CHA under the present regulations, the Custom House should return the security executed by CHA under earlier regulations for obtaining licence at individual locations. Further, as per the above said clarification such an enhanced amount will apply to only for fresh cases where CHA licence has been applied for in terms of the provisions of regulation 9(2).

(iv) Calling for records and inspection of accounts:

Under the regulation 18 of the revised CHALR, 2004, a CHA is required to maintain accounts in an orderly and itemized manner and reflect all financial transactions as CHA. Further, copies of the documents filed in import/ export transactions and correspondence and other papers relating to his business is also required to be kept in a file for the purpose of inspection by the Customs officers authorized in this behalf. For the purpose of implementing the CHALR, 2004, particularly on the basis of grounds such as reliability and financial status, compliance of the conditions for grant of licence, fulfillment of the obligations or for the purpose of Customs Act, the Customs officers may call for such records maintained by the CHA. However, it appears that since the specific grounds are not mentioned in the communication sent from various Custom Houses, the CHAs are experiencing difficulties in producing voluminous documents to the customs authorities. Considering the above, it is hereby clarified that field formations, wherever feasible, should specifically mention the purpose or grounds under which the records are sought from the CHA or the specific records which are being required shall be mentioned in the letter issued by field formations.

(v) Employment of persons by CHA licence holder:

In terms of the regulation 19 of the revised CHALR, 2004, any number of persons could be employed to assist the CHA, subject to minimal educational qualification. However, the CHA is required to take the approval of the concerned Deputy Commissioner, who would in turn take in to consideration the antecedents or any other information about the character of such persons. In the 1984 regulations, it was specifically provided that the employment of persons to assist him in his work as CHA was required to be governed by such conditions. However, the above words are not specifically mentioned in the new regulations, even though it is understood in the scheme of the regulations. Hence, it is hereby clarified that the restriction on employment of person with prior approval by CHA licence holder applies only in respect of persons who would assist in his work as CHA and not to general staff or other persons employed by CHA.

F. No. 502/ 6/ 2007-Cus.VI

Yours faithfully,

Sd./
(Anupam Prakash)
Under Secretary to the Government of India

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