2015 (2) TMI 1222 - HC - Customs

Imposition of penalty u/s 11(2) of the Foreign Trade (Development & Regulation) Act - natural justice - the petitioner has exported Gold Medallions , which is not the product approved in the list of authorised operators in the letter of approval - petitioner also not commenced their production within one year from the letter of approval nor sought for extention of time - Held that - the petitioner did not have sufficient opportunity to submit their reply to the corrigendum issued to the show cause notice on 14.08.2014. Subsequently, the petitioner was not afforded opportunity of personal hearing after the corrigendum was issued and such personal hearing should have been granted to the petitioner after they had submitted their reply. The petitioner had no such opportunity to submit their reply, hence on this ground alone the impugned order is liable for interference - matter is remanded back to the respondent for fresh consideration - appeal allowed by way of remand.

Summary

Issues Involved:
Challenge to penalty imposed under Section 11(2) of the Foreign Trade (Development & Regulation) Act for violation of SEZ Rules and FTDR Act. Violation of principles of natural justice due to inadequate opportunity for response and personal hearing.

Analysis:

1. Challenge to Penalty Imposed:
The petitioner was penalized under Section 11(2) of the FTDR Act for exporting products not approved in the Special Economic Zone (SEZ) letter of approval. The respondent alleged violation of SEZ Act and Rules by exporting unauthorized items and failing to commence production within the specified period. A show cause notice was issued, and the petitioner contended that the products were correctly classified as "Pendants," not mis-declared. However, a corrigendum was later issued proposing action under Section 11 of the FTDR Act instead of Section 13, leading to a procedural shift. The petitioner argued they were not given adequate time to respond to the corrigendum, highlighting a violation of natural justice principles.

2. Violation of Principles of Natural Justice:
The Court found that the impugned order was flawed due to the lack of opportunity for the petitioner to adequately respond to the corrigendum and the absence of a subsequent personal hearing. The petitioner's right to submit a reply challenging the jurisdiction of the authority was hindered by the rushed timeline, as they received the corrigendum shortly before the impugned order was passed. The Court emphasized that the petitioner should have been granted a fair chance to present their case before a final decision was made. The judgment did not delve into the merits of the petitioner's claims regarding product approval and production commencement, leaving these aspects for the authority to decide after affording due process.

Conclusion:
As a result, the Court allowed the writ petition, quashed the impugned order, and remanded the matter to the respondent for fresh consideration. The petitioner was instructed to submit a detailed reply to the corrigendum within fifteen days, including all relevant documents. The respondent was directed to conduct a personal hearing post-reply submission and make a final decision within four weeks. The judgment underscored the importance of upholding natural justice principles in administrative proceedings and ensuring that parties have adequate opportunities to present their case before punitive actions are taken.