2022 (3) TMI 707 - HC - Customs

Recovery of duty Drawback claimed - company has not furnished proof of foreign inward remittance - violation of Rule16-A of the Customs Central Excise Duties in Service Tax Draw Back Rules, 1995 - violation of principles of natural justice - HELD THAT - It appears that after the company was closed, the assets were sold later. It is not clear whether the said company's name was struck off from the Registrar of Companies. At the same time, the petitioner has submitted all the records pertaining to export to substantiate inward remittance are available and therefore if a fair chance is given to file a statutory appeal against the impugned order or if the matter is remitted back to the respondents to pass a fresh order, the consequential recovery proceedings can be kept in abeyance. Considering the fact that the Show Cause Notice No.11 of 2018, dated 07.02.2017 had remained unserved on the said company, the impugned order in Original No.72 of 2018, dated 20.02.2018 has been passed in violation of principal of natural justice. It is therefore liable to be quashed. Consequently, the impugned recovery notice is also liable to be quashed. The petitioner may have records to prove that there were inward foreign remittance on the exports. The case is remitted back to the second respondent to pass a fresh order within a period of 90 days from the date of receipt of copy of this order - Petition allowed by way of remand.

Summary

Issues:
Challenge to impugned order and recovery proceedings based on violation of natural justice and duty drawback recovery.

Analysis:
The petitioner challenged the impugned order and consequential recovery proceedings initiated against them. The company in question had exported and imported goods, claiming duty drawback. A show cause notice was issued due to lack of proof of foreign inward remittance, leading to the company's closure. The petitioner, as the director, argued that notices were not served, and they possessed records to prove compliance with rules. The respondents argued that the order was served on the company, justifying the recovery notice. The court examined submissions and affidavits, confirming duty drawback sanctions and company closure. It was noted that assets were sold post-closure, but company status with the Registrar was unclear. The court found unserved notices, leading to a violation of natural justice in passing the impugned order, thus quashing it and the recovery notice.

The court ordered the case to be remitted for a fresh decision within 90 days. The quashed order was deemed a correction to the unserved notice, requiring the petitioner to provide evidence of foreign remittance within 30 days. Failure to cooperate would revive the quashed order and recovery proceedings. The petitioner's right to be heard before any new order was emphasized. The writ petition was allowed without costs, with connected petitions closed. The judgment focused on ensuring procedural fairness and giving the petitioner an opportunity to substantiate their compliance with duty drawback rules, emphasizing the importance of natural justice principles in administrative actions.