2021 (3) TMI 1090 - HC - Customs

Violation of principles of natural justice - Release of imported goods of the petitioner - service of notice - HELD THAT - It is quite evident that mandate of section 124 is that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose the penalty and further the owner of the goods or such person must be given an opportunity of making a representation in writing within such reasonable time as may be stated in the notice against the grounds of confiscation or imposition of penalty and finally the owner of the goods or such person is given a reasonable opportunity of being heard in the matter. Thus three conditions are required to be fulfilled before an order of confiscation is passed or penalty is imposed. Admittedly in this case, no notice in writing under section 124(a) of the Customs Act was given to the petitioner before passing the impugned order in original which not only confiscated the goods but also imposed penalty on the petitioner. All that the impugned order in original says is that a personal hearing was given to the authorized representative of the petitioner on 18.09.2020 through video conferencing. There is nothing on record to show or indicate that a request was made on behalf of the petitioner for oral notice or oral representation. From a reading of the impugned order in original, it does not appear that the procedure laid down for rejection of declared value and redetermination of value was followed - it is quite evident that the impugned order in original stands vitiated due to statutory infraction leading to violation of the principles of natural justice thereby vitiating the impugned order-in-original. Petition allowed.

Summary

Issues Involved:
1. Quashing of the order dated 23.09.2020 passed by the Joint Commissioner of Customs.
2. Direction to release imported goods covered by Bill of Entry No.8311310 dated 28.07.2020.
3. Alleged violation of principles of natural justice.
4. Requirement of import license and Equipment Type Approval (ETA) compliance.
5. Rejection and redetermination of the declared value of imported goods.
6. Applicability of Section 124 of the Customs Act and Rule 12 of the Customs Valuation Rules, 2007.
7. Availability of an alternative remedy through appeal under Section 128 of the Customs Act.

Detailed Analysis:

1. Quashing of the Order Dated 23.09.2020:
The petitioner sought to quash the order dated 23.09.2020 issued by the Joint Commissioner of Customs, which rejected the declared unit price of imported smart plugs and redetermined the value, resulting in the confiscation of goods and imposition of penalties. The court found that the order was passed without issuing a show-cause notice as mandated by Section 124 of the Customs Act, thereby violating principles of natural justice.

2. Direction to Release Imported Goods:
The petitioner requested the release of imported goods covered by Bill of Entry No.8311310 dated 28.07.2020. Initially, interim relief was granted by the court on 03.11.2020, allowing the release of goods upon furnishing a bank guarantee for the amount of customs duty declared, redemption fine, and penalty imposed.

3. Alleged Violation of Principles of Natural Justice:
The petitioner contended that the impugned order was passed without issuing a show-cause notice and without providing a reasonable opportunity to be heard, as required under Section 124 of the Customs Act. The court emphasized that the absence of a written notice and the failure to follow due procedure constituted a breach of natural justice.

4. Requirement of Import License and Equipment Type Approval (ETA) Compliance:
The customs department raised objections regarding the requirement of an import license and ETA compliance for the imported smart plugs. The petitioner argued that the products did not generate wi-fi or Bluetooth signals and thus did not require such licenses. However, the customs department was not satisfied with these declarations and insisted on further compliance.

5. Rejection and Redetermination of Declared Value:
The Joint Commissioner of Customs rejected the declared unit prices of the imported goods and redetermined the values at higher rates, leading to the imposition of differential duty, confiscation, and penalties. The court noted that this redetermination was done without following the prescribed procedure under Rule 12 of the Customs Valuation Rules, 2007.

6. Applicability of Section 124 of the Customs Act and Rule 12 of the Customs Valuation Rules, 2007:
Section 124 mandates issuing a written notice before confiscating goods or imposing penalties, which was not followed in this case. Rule 12 requires the customs officer to intimate the importer in writing about the grounds for doubting the declared value and provide a reasonable opportunity to be heard. The court found that these statutory provisions were not adhered to, rendering the impugned order invalid.

7. Availability of an Alternative Remedy:
The respondents argued that the petitioner should have availed the statutory remedy of appeal under Section 128 of the Customs Act. However, the court held that the existence of an alternative remedy does not bar the exercise of writ jurisdiction, especially when there is a clear breach of natural justice. The court referenced the Forbo Siegling Movement Systems India Pvt. Ltd. case to support this position.

Conclusion:
The court set aside the impugned order dated 23.09.2020 due to statutory infractions and violations of principles of natural justice. The matter was remanded for fresh consideration, directing that the hearing be assigned to a different officer. The writ petition was allowed, and the court emphasized the need to follow the due process as mandated by the relevant statutory provisions.