2021 (12) TMI 1115 - AT - Customs

Levy of penalty u/s 112 of Customs Act on Chartered Accountant (CA) - allegation of fabricating documents and wrongly verifying statements - opportunity of being heard not provided to appellant - HELD THAT - Imposition of penalty of ₹ 1,00,000/- under Section 112 of the Customs Act is the resultant outcome of such remand order that was re-adjudicated by the Commissioner of Customs (Export-II) and decided on 27.11.2017 without appellant being noticed. Appellant Shri S.L. Agrawal filed an affidavit to the effect that no such show-cause notice for hearing, leading to adjudication order, under challenge in this appeal was served on him and despite direction to learned Authorised Representative, the respondent-department failed to produce any proof of service on the summons on the appellant during the hearing of the adjudication proceeding that had commenced in 2017 without any challenge by the respondent department to the dropping of proceedings against the present appellant in the first adjudication order dated 26.12.2003. There are no hesitation to hold a finding that principles of natural justice has not been followed by the Commissioner of Customs (Export-II) and she has flouted the clear direction contained in the remand order to follow principles of natural justice, though passed in respect of the principal importer/appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of penalty under Section 112(a)&(b) of the Customs Act, 1962 without providing an opportunity to be heard.

Analysis:
The judgment pertains to the confirmation of a penalty under Section 112(a)&(b) of the Customs Act, 1962 without granting the appellant an opportunity to be heard. The appellant, a Chartered Accountant, was issued a show-cause notice in 2000 along with the main appellant, an importer, on allegations of fabricating documents and wrongly verifying statements. In an earlier Order-in-Original, the appellant was absolved of these liabilities, with proceedings against the appellant and other CAs being dropped. However, a subsequent round of litigation led to a penalty of ?1,00,000 being imposed under Section 112 of the Customs Act without the appellant being noticed. The appellant contended that no show-cause notice for the hearing leading to the adjudication order was served on him, and the respondent-department failed to provide proof of service during the adjudication proceeding that commenced in 2017. The appellant argued that the principles of natural justice were not followed by the Commissioner of Customs (Export-II), who flouted the direction in the remand order to adhere to these principles.

The matter had been remanded back by the CESTAT for re-hearing, directing the re-determination of the penalty under Section 112(o) after the demand of duty upon DGFT decision was known. The CESTAT Mumbai, in a previous order, had observed that the demand of duty was correlatable to the export obligation fulfilled by the appellant, emphasizing the need for the adjudicating authority to reconsider the issue afresh following the principles of natural justice. The appellant was instructed to cooperate with the adjudicating authority and produce relevant documents to justify the claim of fulfilling the export obligation. The subsequent imposition of the penalty without providing an opportunity to be heard was deemed a violation of the principles of natural justice.

In the final order, the appeal was allowed, and the penalty imposed under Section 112 of the Customs Act, 1962 was set aside. The judgment highlighted the importance of adhering to principles of natural justice and ensuring that all parties are given a fair opportunity to present their case before penalties are confirmed.