2022 (2) TMI 805 - AT - Customs

Penalty u/s 112(a) of the Customs Act, 1962 - evasion of anti-dumping duty by over valuating the goods imported from China - Principal Commissioner, even though the show cause notice did not require the appellant to show cause, imposed a penalty upon the appellant under section 112(a) of the Customs Act - HELD THAT - It is a fact that the show cause notice was not issued to the appellant. It was issued only to five persons including Amit Agarwal, who is the Director of the appellant. The appellant has stated that since it was not required to file reply to the show cause notice, no reply was filed - Show cause notice is the basis on which any order can be passed against a person. This is the basic requirement of the principles of natural justice. As the show cause notice was not issued to the appellant, the appellant did not file any reply. The appellant cannot be faulted for not filing a reply since the show cause notice did not call upon the appellant to file a reply. The impugned order against the appellant deserves to be set aside. It would, therefore, not be necessary to examine whether the Directorate of Revenue Intelligence had the jurisdiction to issue the show cause notice under section 28(4) of the Customs Act - the impugned order, in so far as it imposes a penalty of ₹ 10,00,000/- on the appellant under section 112(a) of the Customs Act, deserves to be set aside and is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Jurisdiction of Directorate of Revenue Intelligence to issue show cause notice under section 28 of the Customs Act
Imposition of penalty under section 112(a) of the Customs Act without issuing a show cause notice to the appellant
Violation of principles of natural justice by not providing an opportunity to the appellant to respond to the show cause notice

Analysis:

1. Jurisdiction of Directorate of Revenue Intelligence: The case involved a show cause notice issued by the Directorate of Revenue Intelligence regarding evasion of anti-dumping duty by overvaluing imported goods. The appellant argued that the Directorate did not have jurisdiction to issue the notice under section 28 of the Customs Act, citing a Supreme Court decision. However, the Tribunal did not delve into this issue as the case was decided on other grounds.

2. Imposition of Penalty without Issuing Show Cause Notice: The Principal Commissioner imposed a penalty on the appellant under section 112(a) of the Customs Act without requiring the appellant to show cause. The appellant contended that this action was a violation of natural justice principles as the appellant was not given an opportunity to respond. The Tribunal agreed with this argument, emphasizing that a show cause notice is fundamental for passing any order against a person. Since the notice was not issued to the appellant, the penalty order was set aside.

3. Violation of Principles of Natural Justice: The appellant's counsel also argued that the order should be set aside due to the absence of a show cause notice to the appellant, which deprived the appellant of the opportunity to present its case. The Tribunal concurred with this view, highlighting that the appellant cannot be faulted for not responding to a notice that was not directed to them. Consequently, the impugned order imposing a penalty of ?10,00,000 on the appellant was set aside, and the appeal was allowed on the grounds of the appellant's right to be heard and the principles of natural justice.

In conclusion, the Tribunal set aside the penalty imposed on the appellant under section 112(a) of the Customs Act, emphasizing the importance of a show cause notice as a fundamental element of natural justice. The judgment underscored the necessity of providing an opportunity for the appellant to respond and present their case before any adverse order is passed against them.