2019 (7) TMI 1260 - HC - Customs

Penalty u/s 117 on Customs Broker and initiation of enquiry under 'Customs Broker Licensee Regulations, 2018 - service of order - impugned order assailed primarily on the ground that the writ petitioner was not given notice u/s 124 of 'The Customs Act, 1962' - It is the specific case and stated position of writ petitioner that if the grounds i.e., grounds on which penalty was proposed to be levied had been communicated in accordance with Section 124(a) of the said Act, the writ petitioner would have been able to meet the same - principles of natural justice - HELD THAT - This Court is left with the considered view that personal hearing alone does not satisfy NJP in the instant case. In other words, this Court sustains the submission of learned counsel for writ petitioner in this regard. The writ petitioner has admitted in its capacity as CBL holder that it has failed to verify the correctness of the value and quality of the export consignment, which was exported, t he question as to whether it is the responsibility of the customs broker to so verify is left open owing to the nature of the order, which this Court proposes to pass - it is open to the writ petitioner to contend that duty is not cast on the customs broker licensee to verify the value and the quality of the consignment. It is open to the respondents to take a decision on the same. This Court is convinced that the writ petitioner ought to have been given a notice under Section 124(a) of the said Act clearly setting out the grounds on which the penalty was proposed to be imposed, so that the writ petitioner would have got an opportunity to dispel the same. This Court is informed by Revenue counsel that exporter has not chosen to assail the impugned order. This assumes significance as a perusal of the impugned order reveals that exporter has clearly waived issue of notice under Section 124 (a) of the Act. With regard to the writ petitioner, the respondent shall issue a notice u/s 124 of said Act to the writ petitioner within a period of fortnight from the date of receipt of a copy of this order. In this notice as mandated under Section 124(a) of the Act, the grounds on which the penalty is proposed to be imposed shall be set out besides other necessary particulars. Petition disposed off.

Summary

Issues:
1. Violation of natural justice principles in issuing a penalty against the writ petitioner without prior notice under Section 124 of 'The Customs Act, 1962'.
2. Imposition of penalty on the writ petitioner as a Customs Broker for alleged over-invoicing and collusion without proper communication of grounds for penalty.
3. The necessity of issuing a notice under Section 124 of the Act to the writ petitioner for proper representation and opportunity to respond.

Issue 1: Violation of Natural Justice Principles:
The writ petitioner, a Customs Broker, challenged an order imposing a penalty under Section 117 of 'The Customs Act, 1962' without prior notice under Section 124. The court noted that while a personal hearing was conducted, it alone did not satisfy natural justice principles. The petitioner argued that without a notice outlining the grounds for the penalty, effective representation was not possible. The court agreed that a notice under Section 124(a) was essential for the petitioner to adequately respond to the allegations. Thus, the court held that the absence of a formal notice violated natural justice principles.

Issue 2: Imposition of Penalty without Proper Communication:
The impugned order imposed a penalty on the writ petitioner for alleged failure to verify consignment value and quality, as well as collusion with the exporter. The court found that the penalty was based on grounds not adequately communicated to the petitioner. It emphasized that a notice under Section 124(a) was crucial for the petitioner to address the allegations. The court acknowledged the petitioner's argument that proper communication of grounds would have allowed them to refute the collusion accusation. Consequently, the court concluded that the penalty imposed without clear communication of grounds was unjust.

Issue 3: Necessity of Issuing Notice under Section 124:
The court directed the respondent to issue a notice under Section 124 of the Act to the writ petitioner, outlining the grounds for the proposed penalty within a fortnight. The petitioner was granted the opportunity to respond in writing and participate in a personal hearing. The court stressed the importance of following due process and providing the petitioner with a fair chance to address the allegations. It mandated that the respondent pass fresh orders based on the petitioner's representation and the outcome of the personal hearing. The court emphasized the need for proper communication and adherence to procedural requirements for a just decision.

In conclusion, the judgment highlighted the significance of observing natural justice principles, specifically the requirement of issuing a notice under Section 124 of 'The Customs Act, 1962'. The court set aside the impugned order concerning the writ petitioner, emphasizing the necessity of proper communication of grounds for penalties to ensure a fair opportunity for response and representation.