2022 (7) TMI 838 - HC - Customs

Validity of final/reassessment order of Bill of Entry - ex parte final assessment of the Bill of Entry - import of steam coal of Indonesian origin - opportunity of personal hearing provided or not - HELD THAT - It is an undisputed fact that the petitioner imported 30720 metric ton steam coal and filed Bill of Entry No. 3415030 on 28.09.2017 which was assessed provisionally under section 18 of the Customs Act. It is also undisputed that the petitioner was never informed about the final assessment/re-assessment of the said Bill of Entry and for the first time, respondent No.4 by letter dated 05.07.2021 i.e. almost after two years and six months, informed the petitioner that the Bill of Entry No. 3415030 was finalized on 02.01.2019. Thus, the respondent No.4 has made final assessment/re-assessment of the said Bill of Entry ex parte in January 2019 without affording any personal hearing to the petitioner nor any reason for the variation being made to the said Bill of Entry as filed by the petitioner was communicated. It is also undisputed that no speaking order in support of the finalized Bill of Entry which has been varied has been issued to the petitioner at any point of time. It is clear that the respondent authorities is required to pass a speaking order on the reassessment within 15 days from the date of re-assessment of the Bill of Entry read with sub-section (2) of section 18 of the Customs Act. Respondent-authorities therefore, ought to have granted opportunity of hearing to the petitioner and thereafter ought to have passed a speaking order as contemplated under section 17(5) of the Customs Act - the final assessment order dated 02.01.2019 passed by the respondent No.4 on the Bill of Entry No. 3415030 and consequent further notices calling upon the petitioner to pay the amount of differential duty with applicable rate of interest are also set aside are set aside - respondents are directed to pass a fresh order of final assessment/re-assessment of the Bill of Entry after giving opportunity of hearing to the petitioner by passing a speaking order - application disposed off.

Summary

Issues Involved:
1. Legality of the ex parte final assessment of the Bill of Entry.
2. Violation of principles of natural justice.
3. Applicability of CBEC Circular No. 17 of 2011-Customs.
4. Availability and adequacy of alternative remedies under Section 128 of the Customs Act.
5. Requirement of a speaking order under Section 17(5) of the Customs Act.

Issue-wise Detailed Analysis:

1. Legality of the ex parte final assessment of the Bill of Entry:
The petitioner challenged the final/reassessment order of Bill of Entry No. 3415030 dated 28.09.2017 and the demand notice issued by the Deputy Commissioner of Customs. The petitioner argued that the final assessment was done ex parte without informing them, contrary to Sections 17 and 18 of the Customs Act. The respondent contended that the final assessment was carried out legally as per the provisions of the Customs Act applicable at the time.

2. Violation of principles of natural justice:
The petitioner claimed that they were not issued a show-cause notice nor granted a personal hearing before the final assessment, violating the principles of natural justice. They referenced CBEC Circular No. 17 of 2011-Customs, which mandates a show-cause notice and an opportunity for a hearing in case of a proposal to enhance duty. The court observed that the petitioner was never informed about the final assessment and that no speaking order was issued, which is a clear breach of the principles of natural justice.

3. Applicability of CBEC Circular No. 17 of 2011-Customs:
The petitioner relied on the CBEC Circular, which provides guidelines for provisional assessments and mandates a speaking order if the duty is reassessed. The respondent argued that the Circular was not applicable as the Bill of Entry was assessed under the provisions in force at the relevant time. The court, however, found that the principles laid down in the Circular were relevant and that the respondent should have followed them.

4. Availability and adequacy of alternative remedies under Section 128 of the Customs Act:
The respondent argued that the petitioner had an alternative remedy under Section 128 of the Customs Act by filing an appeal before the Commissioner of Customs (Appeals). The court noted that an appeal under Section 128 would be futile without a speaking order, as the petitioner would not know the reasons for the reassessment. The court referenced the Bombay High Court's decision in Zuari Agro Chemicals Ltd vs. Union of India, which held that a speaking order is necessary for an efficacious appeal.

5. Requirement of a speaking order under Section 17(5) of the Customs Act:
The court emphasized that Section 17(5) of the Customs Act requires a speaking order within fifteen days from the date of reassessment if the assessment is contrary to the importer's claim. The court found that the respondent failed to issue a speaking order, which is mandatory for finalizing the assessment. The court set aside the final assessment order and directed the respondent to pass a fresh order after giving the petitioner an opportunity for a hearing.

Conclusion:
The court set aside the final assessment order dated 02.01.2019 and the consequent notices demanding differential duty. The respondents were directed to pass a fresh final assessment/reassessment order after giving the petitioner an opportunity for a hearing and issuing a speaking order within twelve weeks. The petitioner was given the liberty to file an appeal under Section 128 of the Customs Act if aggrieved by the new final assessment order. The rule was made absolute to the extent mentioned, with no order as to costs.