2017 (10) TMI 1140 - HC - Customs

Principles of natural justice - opportunity of being heard - adjudication procedure - Held that - A perusal of Section 122A of the Customs Act shows that an opportunity of hearing to a party in a proceeding is required to be given before passing the order. If sufficient cause is shown at any stage of the proceeding, the adjudicating authority may grant more time to the party for reasons to be recorded in writing. A proviso has also been inserted that adjournment shall not be granted more than three times to a party during the proceeding. Admittedly, in the present case, the petitioner had purchased the above mentioned goods from M/s Sanex International PTE Ltd. & Sunagro PTE., Singapore at Container Freight Station, Dhandari Kalan, Ludhiana, which were cleared provisionally. However, the assessment had been finalised against the petitioner, without affording an opportunity of personal hearing and issuance of show cause notice under Section 28 of the Act - No opportunity of hearing was given to the petitioner. Neither any show cause notice under the provisions of the Act was issued nor any opportunity of hearing was given to the petitioner before passing the impugned order, resulting in violation of principles of natural justice - similar issue decided in the case of R.V. General Trading Vs. Union of India 2016 (9) TMI 673 - PUNJAB & HARYANA HIGH COURT , wherein in the absence of affording an appropriate opportunity of hearing, the impugned order was set aside and the matter was remitted back to the competent authority for fresh consideration. The action of the respondents in not providing an opportunity of hearing or issuance of any show cause notice to the petitioner before passing the impugned order cannot be held to be justified - the matter is remanded to the competent authority for passing fresh order - petition allowed by way of remand.

Summary

Issues involved:
1. Quashing of order rejecting declared classification and re-assessment of goods.
2. Allegations of illegal, arbitrary, and malafide actions violating constitutional articles.
3. Lack of adherence to Customs Act procedures and principles of natural justice.
4. Provisional assessment finalization without affording an opportunity of personal hearing.
5. Violation of principles of natural justice due to the absence of a show cause notice.
6. Comparison with a similar case where the impugned order was set aside for lack of opportunity of hearing.

Issue 1: Quashing of order and re-assessment
The petitioner sought to quash the order rejecting the declared classification and re-assessing the goods without following Customs Act procedures and principles of natural justice. The petitioner, engaged in importing Heavy Melting Scrap, declared values as per overseas supplier invoices. Despite provisional processing and clearance, the respondent failed to adjudicate the matter for years, eventually rejecting the declaration without issuing a show cause notice or providing a personal hearing. The Court found the actions unjustified, setting aside the impugned order and remanding the matter for a fresh decision after affording a proper opportunity of hearing.

Issue 2: Allegations of illegal actions
The petitioner alleged illegal, arbitrary, and malafide actions violating constitutional articles. The respondent's failure to follow prescribed procedures under the Customs Act, 1962, and denying the petitioner a fair hearing constituted a breach of Articles 14 and 19(1)(g) of the Constitution of India. The Court noted the importance of upholding constitutional rights and ensuring procedural fairness in administrative decisions, leading to the decision to set aside the impugned order.

Issue 3: Lack of adherence to procedures and natural justice
The petitioner contended that the respondent's actions were illegal, arbitrary, and violative of natural justice principles. Despite the petitioner's requests for inspection, verification, and a personal hearing, the respondent proceeded to reject the declaration without due process. The Court emphasized the necessity of following statutory procedures and providing a fair opportunity for affected parties to present their case before making a decision.

Issue 4: Provisional assessment finalization without hearing
The petitioner highlighted the finalization of provisional assessment without affording an opportunity of personal hearing. The respondent's failure to engage with the petitioner's submissions and objections before adjudication raised concerns regarding procedural fairness. The Court, citing a similar precedent, emphasized the importance of granting a proper opportunity of hearing before finalizing assessments to uphold natural justice.

Issue 5: Violation of natural justice
The Court observed a clear violation of principles of natural justice due to the absence of a show cause notice and an opportunity of hearing before passing the impugned order. The respondent's actions lacked procedural fairness and failed to adhere to the requirements of the Customs Act, leading to the decision to set aside the order and remand the matter for a fresh decision after proper consideration.

Issue 6: Comparison with a similar case
The Court referenced a previous case where an impugned order was set aside due to the lack of an appropriate opportunity of hearing. Drawing parallels, the Court reiterated the importance of affording affected parties a fair chance to present their case before making decisions that impact their rights. This comparison underscored the consistent application of principles of natural justice in administrative adjudications.

This detailed analysis of the judgment showcases the Court's emphasis on upholding procedural fairness, following statutory procedures, and ensuring that affected parties receive a fair opportunity to present their case before administrative decisions are made.