2023 (7) TMI 321 - AT - Customs

Imposition of penalty on the appellant under Section 117 of the Customs Act, 1962 - alleged violation of Warehousing Regulations, 2016 - SCN not issued - violation of principles of natural justice - HELD THAT - There are force in the contention of the learned advocate for the appellant inasmuch as the show-cause notice issued proposing confiscation of the goods lying outside the bonded area cannot suffice the requirement of imposition of penalty without issuance of a show-cause notice proposing actions for violation of Warehouse (Custody Handling of Goods) Regulations, 2016. The Department after conducting inquiry even though endorsed a copy of the same to the appellant; however, notice was not issued to the appellant proposing actions on the basis of the said report for alleged violation of Warehouse (Custody Handling of Goods) Regulations, 2016. There is a violation of principles of natural justice - matter is remanded to the adjudicating authority to initiate the proceedings afresh if so inclined by way of issuance of the show-cause notice and observing principles of natural justice in deciding the case afresh - Appeal allowed by way of remand.

Summary

Issues Involved:
- Imposition of penalty under Section 117 of the Customs Act, 1962 without proper notice
- Violation of principles of natural justice in the adjudication process

Summary:
Issue 1: Imposition of penalty under Section 117 of the Customs Act, 1962 without proper notice
The appeal was filed against an Order-in-Original passed by the Commissioner of Customs, Bangalore, which proposed confiscation of goods and recovery of duty due to the removal of imported machines from a bonded warehouse without payment of duty. The appellant argued that the imposition of penalty under Section 117 of the Customs Act, 1962 was a violation of natural justice as they were not issued a notice under Section 124 proposing actions for alleged violations. The adjudicating authority had canceled the private warehousing license and imposed a penalty without proper notice. The appellant's advocate cited the judgment of the Bombay High Court in support of their argument.

Issue 2: Violation of principles of natural justice in the adjudication process
The Revenue argued that the penalty imposed for violations of Warehouse Regulations was justified as the appellant did not rebut the violations found during the inquiry. However, the Tribunal found that the show-cause notice proposing confiscation of goods outside the bonded area did not fulfill the requirement for imposing a penalty without a separate notice for Warehouse Regulations violations. The Tribunal concluded that there was a violation of natural justice principles and set aside the impugned order, remanding the matter to the adjudicating authority for a fresh decision with proper notice and adherence to natural justice principles.

In conclusion, the Tribunal found in favor of the appellant, setting aside the impugned order and remanding the case to the adjudicating authority for a fresh decision in accordance with the principles of natural justice and proper issuance of notices.