2021 (10) TMI 198 - HC - Customs

Maintainability of petition - availability of alternate remedy available under the provisions of the Customs Act - requirement of fixation of date for opportunity of personal hearing - violation of principles of natural justice - CBEC in Circular No.1053/2/2017- CX dated 10.03.2017 - HELD THAT - In terms of the Circular, the Adjudicating Authority has to proceed to fix a date and time for personal hearing and atleast three opportunities should be given with sufficient interval of time so that the noticee may avail opportunity of being heard and separate communication should be made to the noticee for each opportunity of personal hearing. Further, it has been directed that separate letter for each hearing/extension should be issued on sufficient interval and if sufficient cause is shown in any stage of the proceedings, the Adjudicating Authority can adjourn the hearing for the reasons to be recorded in writing and no adjournment should be granted more than three times to the noticee. The procedure adopted by the first respondent in issuing a show cause notice and fixing three dates for personal hearing which are pre-fixed dates would fall foul of the above Circular. The facts clearly show that adequate opportunity was not afforded to the appellant. It may be true that the show cause notice is of the year 2017, yet the Customs Department did not take any action till issuance of notice dated 01.03.2021. On receipt of the notice, the appellant sought for two weeks time to produce the Bank Realization Certificates and time was granted by the concerned Officer till 06.04.2021. Much before the said date, the Order-in-Original has been passed - there has been violation of principles of natural justice. That apart, the appellant has submitted the certificates in the form of negative statement on 07.04.2021. If those certificates are verified and the stand taken by the appellant is found to be correct, then the proceedings itself had to be dropped. The matter is remanded to the first respondent for fresh consideration - Petition allowed by way of remand.

Summary

Issues:
Violation of principles of natural justice in the issuance of show cause notice and personal hearing.

Analysis:
The Writ Appeal questions the correctness of dismissing the writ petition filed by the appellant-assessee on the ground of availing the alternate remedy under the Customs Act. The appellant's case is based on the violation of principles of natural justice, specifically regarding the issuance of the show cause notice and the opportunity of personal hearing. The respondent issued a notice on 01.03.2021, referring to a show cause notice from 2017, stating pending realization of export proceeds. The appellant requested an extension to produce documents, which was granted until 06.04.2021. However, before this date, the Order-in-Original was passed, citing failure to respond to the notice and attend the pre-fixed personal hearing dates.

The appellant argued that the pre-fixed dates for personal hearing should not be mechanically fixed, emphasizing the importance of providing a fair opportunity for the noticee to be heard. The Circular issued by the Central Board of Excise and Customs mandates at least three opportunities for personal hearing with sufficient intervals and separate communications for each hearing. The procedure followed by the first respondent, fixing pre-determined dates for personal hearing, was deemed to violate this Circular.

The Court found that the appellant was not adequately afforded the opportunity to present their case. Despite the show cause notice being from 2017, no action was taken until 2021. The appellant's submission of the required certificates after the passing of the Order-in-Original further indicated a lack of procedural fairness. The Court concluded that there was a violation of natural justice and that the appellant's case fell within the exceptions allowing for the entertainment of a writ petition. Citing the Whirlpool Corporation case, the Court set aside the previous order and remanded the matter to the first respondent for fresh consideration, directing verification of the submitted certificates and a fresh adjudication in accordance with the law.