2022 (10) TMI 270 - HC - Customs

Levy of penalty u/s 112 of the Customs Act, 1962 - allegation is that the Petitioner had conspired in alleged mis-declaration and undervaluation of Modems imported by one M/s. Hindustan Engineering Corporation - HELD THAT - When Petitioner has been accused of having played role in the procurement of electronic systems and parts for manufacture of automated teller machines and Petitioner has been imposed penalty of Rs.Seventy Five Lakhs under Section 112 of the Customs Act, 1962 for its alleged role in the import effected by M/s. Hindustan Engineering Corporation, and Petitioner having challenged those findings in the Appeal, the CESTAT should have specifically dealt with the grounds of challenge raised by Petitioner, and should have given independent findings as regards role of the Petitioner. Not having done so, and in view of the fact that the averment of Petitioner in the Petition that Petitioner was not given notice of hearing, which has not been denied, in the interest of justice, Petitioner should be given hearing by CESTAT. If a party does not turn up, it is not possible for CESTAT to go though the entire Appeal of the party, consider the grounds and pass a detailed order. At the same time, the CESTAT ought to have checked if a party has been properly served before proceeding to hear the matter and pass the order. Petition disposed off.

Summary

Issues:
Impugning order of CESTAT, Allegations of mis-declaration and undervaluation, Appeal dismissal due to lack of notice, Rectification application rejection, Consideration of grounds in Appeal, Lack of independent findings by Tribunal, Quashing and setting aside of orders, Restoration of Appeal to CESTAT, Giving notice of hearing to Petitioner.

Analysis:
The Petitioner challenged the order of the Customs Excise And Service Tax Appellate Tribunal (CESTAT) dated 16th October 2019, which was actually passed on 16th October 2018, rejecting the Petitioner's Misc. Application. The Petitioner, engaged in the manufacture and sale of electrical/electronic goods, was accused of involvement in the mis-declaration and undervaluation of imported Modems. Despite responding to the show cause notice and attending a personal hearing, the Petitioner's Appeal was dismissed in an ex-parte manner on 14th December 2017, leading to the filing of a rectification application before CESTAT.

The Petitioner contended that they did not receive any notice of the hearing before CESTAT, which was affirmed in the affidavit filed by the Respondent. The Petitioner sought rectification of the order on the grounds that their Appeal grounds were not considered, and the Tribunal did not provide independent findings. The Court noted that the CESTAT should have specifically addressed the grounds raised by the Petitioner and given independent findings on the Petitioner's role in the alleged mis-declaration. Due to the lack of notice to the Petitioner and the failure to consider the Appeal grounds, the Court quashed the impugned order and restored the Appeal to the file of CESTAT for a fresh disposal after giving notice of hearing to the Petitioner.

The Court emphasized the importance of ensuring that parties are properly served before proceeding with the hearing and passing orders. The final order dated 14th December 2017 was also quashed and set aside in relation to the Petitioner. The Court clarified that they did not make any observations on the merits of the case, allowing CESTAT to independently consider and dispose of the Appeal in accordance with the law. Consequently, the Petition was disposed of without any order as to costs. Additionally, the Customs Appeal No.13 of 2020, which was pending in the Court, was dismissed as withdrawn at the request of the Petitioner's counsel.

This comprehensive analysis of the judgment highlights the issues involved, the sequence of events leading to the legal challenge, and the Court's detailed reasoning behind quashing the impugned orders and restoring the Appeal to CESTAT for a fresh disposal with proper notice to the Petitioner.