2019 (9) TMI 133 - AT - Customs

Penalty on CHA under Regulation 18 of Customs Brokers Licensing Regulation, 2018 - appellant submits that for imposition of penalty under Regulation 18 of said Regulations, the appellant was not put on notice and as a result appellant did not have opportunity to defend himself - principles of natural justice - HELD THAT - Through the proceedings we have not come across anything to suggest that the appellant were put on notice for imposition of penalty under Regulation 18 of said Regulations. The contention of Revenue is that the Commissioner is having power to impose penalty. There is no doubt that the Commissioner is having power to impose penalty under Regulation 18, however, the said power needs to be exercised by observing principles of natural justice. The appellants were not put on notice to defend themselves against imposition of penalty. Therefore, the penalty imposed is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalty under Regulation 18 of Customs Brokers Licensing Regulation, 2018 without proper notice to the appellants.

Analysis:
The appellants were initially suspended from dealing with prohibited goods under Regulation 16 of the Customs Brokers Licensing Regulation, 2018. Following a post decisional hearing, the original authority revoked the suspension but imposed a penalty of ?50,000 under Regulation 18 without providing proper notice to the appellants. The appellant's counsel argued that the penalty imposition without prior notice violated principles of natural justice. On the other hand, the Authorized Representative of Revenue contended that the Commissioner had the authority to impose the penalty independently of Regulation 16. However, upon reviewing the case, the Tribunal found that the appellants were indeed not given notice regarding the penalty under Regulation 18. While acknowledging the Commissioner's power to impose penalties, the Tribunal emphasized that such power must be exercised while adhering to principles of natural justice. As the appellants were not afforded the opportunity to defend against the penalty, the Tribunal concluded that the penalty imposition was unsustainable. Consequently, the Tribunal set aside the penalty, modified the impugned order, and allowed the appeal.

This judgment highlights the importance of procedural fairness and adherence to principles of natural justice in penalty imposition under regulatory frameworks. It underscores the necessity for parties to be properly notified and given the opportunity to defend themselves when facing penalties, even if the authority possesses the power to impose such penalties independently. The decision serves as a reminder that administrative actions must be conducted in a manner that upholds the fundamental principles of justice and fairness to ensure the legitimacy and sustainability of penalties imposed under regulatory regimes.