2016 (8) TMI 338 - AT - Customs

Condonation of delay principle of natural justice - delay due to confusion as to the appeal remedy Held that - no proposal for penalty under section 114 of the Customs Act, 1962. There was violation of natural justice to impose penalty under section 114 at a subsequent stage. Law specifically requires the ld. Commissioner (Appeals) under proviso to Section 128A (3) of Customs Act, 1962, to issue notice where enhancement of any penalty is proposed following the course of natural justice Order does not sustain appeal allowed.

Summary

Issues: Delay in filing appeal condonation, Error in law by Commissioner (Appeal) on penalty imposition, Violation of natural justice in penalty imposition.

In the present case, the appellant sought condonation for a 21-day delay in filing the appeal, attributing it to confusion regarding the appeal remedy. The Tribunal acknowledged the delay as insignificant, neither malafide nor deliberate, and thus condoned it, allowing the appeal to proceed. This decision was based on the appellant's explanation of the confusion causing the delay.

Regarding the error in law by the Commissioner (Appeal) on penalty imposition, the appellant contended that the Commissioner committed a grave mistake by setting aside the Original Order (OIO) solely for adjudication on penalty under Section 114 of the Customs Act, 1962, without issuing a notice to the appellant as required by law due to the enhancement of liability. The Tribunal noted that the adjudicating authority had not acted on the Commissioner's direction, and the show cause notice (SCN) issued did not propose a penalty under Section 114. This failure to follow the due process deprived the appellant of the opportunity to defend, violating the principles of natural justice.

The Revenue argued that a mere mistake in quoting a wrong section should not prevent the Commissioner (Appeal) from imposing a penalty under Section 114. However, the Tribunal emphasized that the law mandates the Commissioner to issue a notice when enhancing a penalty, as per Section 128A(3) of the Customs Act, to ensure natural justice. As the Commissioner failed to adhere to this procedural requirement, the Tribunal concluded that the order did not stand, and the appeal was allowed in favor of the appellant. This decision was based on the violation of natural justice principles in the penalty imposition process.