2022 (8) TMI 1259 - AT - Customs

Levy of penalty u/s 114(iii) and 114AA of the Customs Act - respondents categorically stated that only the corrigendum was served on them without the show cause notice - principles of natural justice - HELD THAT - The Commissioner (Appeals) found as the fact that the corrigendum alone was served upon the two respondents and it was during the personal hearing that the show cause notice was served upon the two respondents, but it did not contain allegations against the respondents - Penalty could not have been imposed upon the two respondents if opportunity was not provided to the two respondents to file a reply to the show cause notice. This apart, the show cause notice also does not contain any allegation against the two respondents. There is no infirmity in the order dated 30.05.2019 passed by the Commissioner (Appeals) - Appeal of Revenue dismissed - decided against appellant.

Summary

Issues:
Appeal against imposition of penalty based on show cause notice irregularities.

Analysis:
The case involved an appeal filed by the Commissioner of Customs ICD seeking to quash an order passed by the Commissioner (Appeals) related to the imposition of penalties on two companies. The issue arose when it was discovered that traders/exporters were falsely claiming export incentives for goods that were machine-made instead of hand-made or braided as declared. While a show cause notice was initially issued to several parties excluding the two respondents, a subsequent corrigendum included the respondents' names for service of the notice.

During the adjudication process, the respondents argued that since they were not issued the original show cause notice, penalties could not be imposed on them. They contended that only the corrigendum was served, and the show cause notice received during the hearing did not contain allegations against them. Consequently, penalties were imposed on the respondents under specific sections of the Customs Act.

The Commissioner (Appeals) found merit in the respondents' argument, noting that a valid show cause notice was not issued to them, and the notice they received did not contain allegations against them. Therefore, the Commissioner (Appeals) set aside the order imposing penalties on the respondents. The department's representative acknowledged that the show cause notice was served only during the hearing and failed to refute the lack of allegations against the respondents in the notice.

The respondents' counsel emphasized that without the opportunity to respond to the show cause notice, penalties should not have been imposed. The absence of allegations against the respondents in the notice further supported their position. The Tribunal agreed with the respondents' arguments, stating that penalties could not be imposed without providing an opportunity to respond to the notice and considering the lack of allegations against the respondents. Consequently, the appeals filed by the department were dismissed, upholding the Commissioner (Appeals)'s decision.