2013 (1) TMI 726 - HC - Customs

Benefit of the concessional rate of duty at 5 per cent under Sl. No. 108 of the Notification No. 12/2012-Cus., dated 17th March, 2012 - Classification of goods - Violation of principle of natural justice - Held that - Petitioner, in the view of this Court, was legitimately entitled to opportunity of hearing and in any case, the goods ought to have been sent for examination/testing as requested by the petitioner. - only because an appeal has been preferred in respect of the assessment order passed on September 28, 2012, this writ petition should not be entertained. So far as the appeal is concerned the same may be disposed of expeditiously preferably within two months from the date of communication of this order. However, the mere fact that the petitioner has once preferred an appeal does not estop the petitioner from invoking the jurisdiction of this Court under Article 226 of the Constitution of India. It is well settled that the existence of an alternative remedy of appeal does not operate as an absolute bar to entertaining a writ petition. There are certain well recognized exceptions to the rule of alternative remedy, one of them being violation of principles of natural justice. In the instant case, the impugned order of assessment has been passed in flagrant violation of the principle of natural justice. The proper officer shall cause the samples to be drawn from the consignment in question i.e., the consignment covered by the second Bill of Entry and send the same for testing to an appropriate laboratory. Subject to the condition that the petitioner furnishes a bank guarantee covering the balance duty that is the duty as self assessed by the petitioner and duty payable on the basis that the goods are classifiable under Tariff Head 3816 of the first schedule to the Customs Tariff Act, 1975, to the satisfaction of the Assessing Authority, the consignment covered by the second Bill of Entry shall be provisionally released - Decided conditionally in favour of assessee.

Summary

Issues:
Classification of imported goods under Customs Tariff Head, Provisional assessment, Opportunity of hearing, Violation of principles of natural justice.

Classification of Imported Goods under Customs Tariff Head:
The petitioner imported Investment Powder and Gypsum Powder from Turkey, mistakenly classifying them under incorrect Customs Tariff Head initially. The petitioner later corrected the classification and claimed concessional rates of duty under specific notifications. The department raised queries regarding the classification, leading to disputes over the correct classification of the goods. The Assessing Authority passed orders classifying the goods differently, which were challenged by the petitioner through a writ petition.

Provisional Assessment:
The petitioner requested provisional assessment pending examination and testing of the goods, offering to execute a bond for the differential duty. The Assessing Authority, however, passed orders without providing an opportunity of hearing to the petitioner or sending the goods for examination/testing as requested. The petitioner contended that the goods should have been examined, especially when requested, before passing the assessment order.

Opportunity of Hearing:
The petitioner argued that the Assessing Authority should have provided an opportunity of hearing before passing the assessment orders, as reassessment and classification under a different tariff head have civil consequences. The petitioner cited legal precedents emphasizing the importance of affording a reasonable opportunity of being heard, especially when administrative decisions involve significant consequences.

Violation of Principles of Natural Justice:
The High Court held that the impugned assessment orders were passed in violation of the principles of natural justice as the petitioner was not given a fair opportunity of being heard. The Court set aside the assessment order, directing the proper officer to draw samples for testing and provisionally release the goods subject to a bank guarantee. The Court emphasized that the existence of an alternative remedy of appeal does not bar invoking writ jurisdiction, especially in cases involving violations of natural justice.

In conclusion, the High Court quashed the impugned assessment order, highlighting the importance of providing a fair opportunity of hearing and conducting necessary examinations before passing assessment orders. The Court directed provisional release of goods pending testing and emphasized that the existence of an appeal remedy does not preclude seeking writ relief in cases of procedural violations.