2022 (2) TMI 909 - AT - Customs

Levy of penalty u/r 112(a) of the Customs Act, 1962 - evasion of anti-dumping duty (ADD) - Overvaluation of goods imported from China - power of DRI to issue SCN - 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 Ankur 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 - impugned order dated 14.10.2019, 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 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of penalty under section 112(a) of the Customs Act, 1962 without issuing a show cause notice to the appellant.

Analysis:
The appeal was filed by M/s Asia Pacific Impex Pvt. Ltd. to challenge the penalty imposed by the Principal Commissioner of Customs ICD, TKD, New Delhi under section 112(a) of the Customs Act, 1962. The show cause notice issued by the Directorate of Revenue Intelligence highlighted the evasion of anti-dumping duty by certain importers of Melamine by overvaluing the goods imported from China. The notice specifically called upon multiple individuals and entities, including the appellant, to show cause. However, the Principal Commissioner imposed a penalty on the appellant even though the show cause notice did not require the appellant to show cause, which was deemed a violation of the principles of natural justice.

The appellant argued that the Directorate of Revenue Intelligence did not have the jurisdiction to issue the show cause notice under section 28 of the Customs Act, citing a Supreme Court decision. Additionally, it was contended that the order against the appellant was invalid as no show cause notice was issued directly to the appellant, thereby depriving them of the opportunity to respond. The appellant's counsel also relied on a previous decision of the Tribunal to support their case.

On the other hand, the authorized representative for the department argued that since the show cause notice was issued to the Director of the appellant and a copy was sent to the appellant, they had the opportunity to respond. However, the Tribunal noted that the show cause notice was not issued to the appellant directly, and thus, the appellant was not obligated to file a reply. The Tribunal emphasized that the show cause notice is fundamental for passing any order against a person, as per the principles of natural justice.

Consequently, the Tribunal held that the impugned order imposing a penalty of ?10,00,000 on the appellant under section 112(a) of the Customs Act should be set aside. The decision was based on the failure to issue a show cause notice directly to the appellant, rendering the order against the appellant invalid. Therefore, the appeal was allowed, and the penalty was revoked.