2018 (2) TMI 818 - HC - Central Excise

Whether any notice or opportunity of hearing is mandatory before passing an order of appropriation under Section 142(1)(a) of the Customs Act, 1962? Held that - when the assessee is given opportunity of hearing in the determination of the amount and he is aware of the amount, which he has to pay under the Act but even then he fails to pay the same, no further notice is necessary and the said amount can always be appropriated from the amount, which is payable or due to him under the Act - it is not mandatory for the Department to issue any further notice before appropriating any amount under Section 142(1)(a) of the Act - appeal allowed.

Summary

Issues:
1. Appeal against CESTAT order regarding appropriation under Section 142(1)(a) of Customs Act, 1962.
2. Substantial question of law - Notice or opportunity of hearing mandatory for appropriation under Section 142(1)(a).

Analysis:
The High Court entertained an appeal by the Commissioner of Central Excise challenging a CESTAT order dated 19-10-2015, which held that the appropriation of an amount under Section 142(1)(a) of the Customs Act, 1962 was illegal. The substantial question of law admitted for consideration was whether a notice or opportunity of hearing is mandatory before passing an order of appropriation under Section 142(1)(a) of the Customs Act, 1962. The Court proceeded ex parte as the respondent did not appear despite notice being served.

The counsel for the Customs Department argued that no further notice is required for the recovery or appropriation of customs duty after it has been determined and due notice has been given to the assessee. Section 142(1)(a) of the Customs Act, 1962 was crucial in this context, allowing the proper officer to deduct the amount payable from any money owing to the person under their control. The provision indicates that appropriation is only applicable when a sum payable under the Act remains unpaid, necessitating a prior determination of the amount payable after providing an opportunity of hearing to the assessee.

The Court emphasized that if the assessee has been given an opportunity of hearing and is aware of the amount due under the Act but fails to pay, no further notice is required for appropriation under Section 142(1)(a). It was clarified that the Department is not obligated to issue another notice before appropriating any amount under this provision. Consequently, the Court answered the question in the affirmative, holding that no additional notice is mandatory before appropriating an amount under Section 142(1)(a) of the Customs Act, 1962, and allowed the appeal.