2016 (3) TMI 388 - HC - Customs

Writ petition - Validity of order - Passed without affording an opportunity of personal hearing - Held that - no opportunity of personal hearing was afforded to the petitioner as provided under the Customs Act and unless and otherwise the petitioner is permitted to produce the documentary evidence so as to consider, then there is no point for the authority to pass an order in original. Thus, on the ground of violation of principles of natural justice the impugned order is liable to be set aside. - Decided in favour of petitioner

Summary

Issues:
1. Challenge to the impugned order imposing duty without affording an opportunity for a personal hearing.

Analysis:
The petitioner, a 100% Export Oriented Unit (EOU), exported telephone cords to a foreign buyer, with a portion of the goods being rejected due to color issues. The rejected goods were reimported for repair and re-export, but were found to be beyond repair. The petitioner disposed of the defective goods after paying appropriate excise duty. The respondent issued a demand notice alleging that the petitioner replaced the goods instead of rectifying and re-exporting them as per Notification 158/95. The petitioner contested that no personal hearing was granted before the duty was imposed, leading to the challenge of the impugned order.

The court noted that the petitioner was not afforded a personal hearing before the duty imposition, which is a violation of principles of natural justice. The respondent passed the order based on the petitioner's admission of liability in another case, without addressing the lack of personal hearing in the current matter. The court found that without allowing the petitioner to present documentary evidence, the order lacked a basis. Consequently, the impugned order was set aside due to the procedural irregularity.

In the final judgment, the court remitted the matter back to the respondent for fresh consideration. The respondent was directed to provide the petitioner with an opportunity for a personal hearing within two weeks. The petitioner was instructed to submit objections and relevant documentary evidence related to the disposal of defective goods. The respondent was mandated to pass a fresh order based on the submissions within two weeks thereafter, emphasizing compliance with legal principles and the opportunity for a fair hearing. No costs were awarded in this matter.