2016 (10) TMI 377 - HC - Customs

Finality of assessments violating the principles of natural justice - opportunity of being heard - provisional assessment of bills of entry u/s 18 of the Customs Act, 1962 for want of test reports - samples drawn and sent for testing - test reports not communicated and final assessment made - whether the final assessment made without communicating the test report to petitioner and without affording the opportunity of personal hearing was justified? - Held that - It may be a special drive initiated to clear all arrears or old files. It may be that the bills of entry which were assessed provisionally were not thereafter taken up for finalization or no final assessment orders were passed for a long period of time, resulting in either revenue loss or leakage. However, that is no justification for proceeding in the manner deprecated by various Division Benches. It is not as if such finalization can be done suddenly and without compliance with the principles of natural justice. Once the Revenue concedes the position, that they have issued a Show Cause Notice, called for certain documents and equally taken on record a written explanation and reply to the charges or allegations in the Show Cause Notice, then, it was incumbent upon it have given a complete opportunity to a party like the petitioner of making oral submissions by relying on the record. This was possible only at a personal hearing - final assessment made not sustainable - opportunity to be afforder and then assessment to be finalized. The issue stands covered in the decision taken in the case of Balaji Impex Versus Union of India & Others 2011 (7) TMI 291 - Bombay High Court . Petition disposed off - decided in favor of petitioner.

Summary

Issues:
Challenge to order by Customs (Preventive), violation of natural justice in finalizing assessments, communication of finalization without test outcome, Show Cause Notice, appeal dismissed as barred by limitation, special drive for finalization of bills of entry, compliance with principles of natural justice in adjudication process.

Analysis:
The writ petition challenged an order by Customs (Preventive), Alibaug Division, finalizing assessments without communicating test outcomes, violating principles of natural justice. The petitioners claimed that the assessments were done provisionally for 11 bills of entry, and after a Show Cause Notice proposing finalization, they were informed to pay differential duty without proper adjudication. The petitioners argued that the assessments were finalized abruptly without providing an opportunity for a personal hearing, contrary to the principles of natural justice. The Senior Counsel cited previous judgments deprecating such practices and urged the petition to be allowed.

The respondents contended that the assessments were completed after due process, including issuing a Show Cause Notice, to which the petitioners responded denying the allegations. The respondents argued that the appeal filed by the petitioners was dismissed as barred by limitation, as the appeal period starts from the communication of the initial order. The respondents defended the finalization process and the dismissal of the appeal as per legal requirements.

The Court noted that a special drive was initiated to clear pending assessments, but emphasized that finalization cannot be done abruptly without following principles of natural justice. The Court found that the impugned communications lacked reasoning and discussion on upholding the demands or allegations in the Show Cause Notice. The Court agreed with the Senior Counsel that the case was similar to previous judgments criticizing rushed finalizations without proper adjudication. Consequently, the Court set aside the impugned communications and directed the respondents to provide a personal hearing to the petitioners, allowing them to rely on records and make detailed submissions before passing a reasoned order.

In conclusion, the Court allowed the writ petition, emphasizing the need for a fair adjudication process, setting aside the impugned communications, and directing the respondents to follow due process. The Court clarified that the order did not conclude any factual matters or controversies on merits, keeping all contentions open for further proceedings.