2008 (12) TMI 28 - SC - Customs

Confiscation and penalty allegation of mis-declaration of Tetracycline as Lithopone which is freely importable no document pertaining report of the overseas enquiries was supplied/shown to the appellant, although reliance was placed thereupon A person charged with mis-declaration is entitled to know the ground on the basis whereof he would be penalized - principles of natural justice have been violated matter is remitted to Commissioner of Customs for fresh consideration

Summary

Issues:
- Violation of principles of natural justice in passing the impugned order by the authorities of the Customs Department.

Analysis:
The case involved the import of Lithopone pigment, where a mis-declared item, suspected to be Tetracycline HCL, was found in the shipment. The appellants contended that the foreign supplier had mistakenly sent Tetracycline, which was accepted by the exporter. Despite this, the goods were confiscated, and penalties were imposed by the authorities. The appellants argued that the principles of natural justice were violated as documents collected during the inquiry were not supplied to them, affecting their ability to defend against the charges.

The Customs Act, 1962 was invoked, and a notice was issued under Sections 111(d), 111(m), and 112(a) and (b) of the Act, alleging evasion of custom duty due to mis-declaration. The appellants' submissions regarding the mistake made by the foreign supplier were not fully considered, leading to the confiscation of goods and imposition of penalties. The Customs, Excise and Gold Control Appellate Tribunal upheld the decision, which was further challenged in a writ petition.

The main contention was whether the impugned order violated the principles of natural justice. The respondents argued that the documents from the overseas enquiry were not disclosed as the burden was on the appellants to prove the mistake. However, the Supreme Court found that the show cause notice did not provide sufficient indication of the nature and conclusions of the enquiry, affecting the appellants' ability to respond effectively. The Court emphasized that statutory authorities exercising quasi-judicial functions must adhere to natural justice principles.

Citing legal precedents, the Court highlighted the importance of transparency and fairness in administrative and quasi-judicial orders. It was emphasized that when civil consequences follow an order, the principles of natural justice must be upheld. The Court concluded that the impugned judgment could not be sustained due to the violation of natural justice principles and remitted the matter to the Commissioner of Customs for a fresh consideration, with directions to provide relevant documents to the appellants for inspection or response. The appeal was allowed with costs awarded to the appellants.