2011 (2) TMI 1048 - AT - Customs

Waiver of pre-deposit - natural justice denied - Held that - The denial of natural justice to the appellants cannot be underplayed. MEPL requested for retest of samples and also for opportunity to cross-examine the Chemists/Analysts who tested/analyzed the said samples were turned down on 26.8.09 itself. The impugned order does not indicate that the Commissioner s decision dated 26.8.09 was instantly communicated to MEPL s advocate. Apparently, his letter dated 26.8.09 was sent to the advocate and the latter received it on 1.9.09. It is also on record that, in a letter dated 28.8.09, MEPL s advocate requested the Commissioner for opportunity of being heard. This letter carries dated seal of the Commissioner s office indicating that it was received by the Commissioner on 26.8.09. Obviously, the adjudicating authority chose to pass the final order on 31.8.09 without heeding the above request of the counsel for MEPL. Thus, the manner in which the case was adjudicated by the Commissioner clearly shows that rules of natural justices were flouted. Yet another plea made by the learned counsel is that MEPL was not permitted to cross-examine the Chemists of SASMIRA who analyzed the samples. It is on record that they offered to furnish the names and other particulars of the Chemists, which apparently they have not been able to do. Nevertheless, it is open to them to furnish the names and other particulars of the witnesses to the Commissioner and also state valid reason why they should be cross-examined. Thus sufficient reasons for remand of the case.

Issues Involved:
1. Waiver of pre-deposit and stay of recovery.
2. Denial of natural justice.
3. Validity of test reports and sampling procedures.
4. Liability of transferees of advance licenses.
5. Imposition of penalties on Customs House Agents (CHA).

Detailed Analysis:

1. Waiver of Pre-deposit and Stay of Recovery:
The appellants sought waiver of pre-deposit and stay of recovery for amounts adjudged against them. The Tribunal, after examining the records and hearing both sides, found sufficient grounds to set aside the Commissioner's order and directed de novo adjudication in accordance with law and natural justice principles. Consequently, pre-deposit was dispensed with, and the appeals were taken up.

2. Denial of Natural Justice:
The appellants contended that natural justice was denied. The Tribunal noted that the Commissioner passed the order without following the principles of natural justice, including not allowing cross-examination of Chemists/Analysts from SASMIRA and not providing a personal hearing after rejecting requests for retest of samples. The Tribunal emphasized that the Commissioner's decision dated 26.8.09 was not communicated timely, and the final order was passed without waiting for MEPL's reaction, thus flouting natural justice rules.

3. Validity of Test Reports and Sampling Procedures:
The appellants argued that the samples were drawn behind their back and tested after nearly three years. The Tribunal found that the samples were drawn in the presence of the party/their CHA and in accordance with established procedures. The Tribunal rejected the argument that the delay in testing invalidated the test reports, noting that the samples were not perishable and MEPL themselves had requested a retest. However, the Tribunal allowed MEPL to furnish names and particulars of Chemists for cross-examination if they could make a valid case before the Commissioner.

4. Liability of Transferees of Advance Licenses:
The Tribunal noted a contradiction in the Commissioner's findings. While the Commissioner held that the transferees had no role in manipulating export documents, he still demanded duty and imposed penalties on them. The Tribunal found this contradictory and indicative of non-application of mind. It was emphasized that the burden of compliance with Notification No. 204/92-Cus conditions could not be imposed on transferees who imported raw materials under valid licenses endorsed by DGFT.

5. Imposition of Penalties on Customs House Agents (CHA):
The Tribunal noted that the Commissioner imposed penalties on CHAs under Section 112(a) despite them having no role in any import. The Tribunal found that the submissions in the CHA's reply to the show-cause notice were not considered, and the written brief was ignored. The Tribunal emphasized that penalties should not have been imposed on CHAs under these circumstances.

Conclusion:
The Tribunal set aside the impugned order and remanded the case for de novo adjudication, directing the Commissioner to take fresh decisions on all issues in accordance with law and after giving parties a reasonable opportunity to adduce evidence and be heard. The Tribunal requested the Commissioner to complete the adjudication within six months. Additionally, the appeal filed by late Kabirdas Kewalram Mangtani was allowed.

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