2016 (6) TMI 144 - HC - Customs

Recovery of Duty Drawback refunded - 100% EOU cannot claim any duty drawback - Seeking grant of inspection of the investigation file and the non-relied upon documents (Non-RUDs) - Held that - a fair procedure should be followed by the Adjudicating Authority. Having permitted the Petitioner to collect the non-RUDs from the office of the DRI, after issuing notice on any working day with prior appointment , it is surprising that by the impugned letter, the Adjudicating Authority informed the Petitioner that its request for inspecting the non- RUDs is rejected. Clearly there has been a change of mind by the Adjudicating Authority on this aspect. The fact that no reasons have been given in the said letter for such rejection makes it even more suspect. As far as other request for inspection of the investigation file is concerned, Mr Satish Kumar points out that there could be documents in the investigation file which cannot be shown to the Petitioner and other co-noticees on account of their nature. The Court is of the view that this by itself cannot be a reason to refuse inspection of the investigation file. If there are documents in the investigation file which, according to the Adjudicating Authority, cannot be shown to the Petitioner, the Adjudicating Authority should give reasons in writing for refusing inspection of such documents. Therefore, the rejection of Petitioner s request by the impugned letter by the Adjudicating Authority is untenable in law and is, accordingly, set aside. - Appellant allowed to investigate the file and non- RUDs.

Summary

Issues:
Challenge to show cause notice dated 18th March, 2016 seeking recovery of Duty Drawback; Refusal of inspection of investigation file and non-RUDs by Adjudicating Authority.

Analysis:
The writ petition challenged a show cause notice (SCN) issued to the Petitioner seeking recovery of Duty Drawback. The Petitioner, a partnership firm engaged in garment manufacture export, had applied for setting up a 100% Export Oriented Unit (EOU) in NOIDA. Subsequently, a license for a Private Customs Bonded Warehouse was granted. Two years after a search at the Petitioner's premises, the SCN sought to recover Duty Drawback claimed by the Petitioner in 2007-08 and 2008-09. The Petitioner requested inspection of the investigation file and non-RUDs, which was initially rejected by the Adjudicating Authority.

The Court noted that the Adjudicating Authority's rejection of the inspection request was untenable in law. It directed the Authority to return the non-RUDs to the Petitioner and provide inspection of the investigation file within two weeks. If any portion of the file cannot be shown, the Authority must record reasons in writing. The Petitioner and co-noticees were given four weeks to file replies to the SCN. The Adjudicating Authority was instructed to complete the adjudication proceedings within six months.

The Court emphasized the importance of a fair procedure and directed the Adjudicating Authority to follow due process. It highlighted the need for reasons to be provided in case certain documents in the investigation file cannot be shown to the Petitioner. The judgment aimed to ensure transparency and fairness in the adjudication process, allowing the Petitioner to present defenses effectively. Ultimately, the writ petition and application were disposed of with the specified directions for the Adjudicating Authority to comply with.