2023 (7) TMI 842 - HC - Customs

Violation of principles of natural justice - non-consideration of documents and statements - EPCG scheme - contention of the Appellant that the demand of interest should be limited to the amounts debited in cash and not in respect of the amounts to be debited from EPCG licences - HELD THAT - The Tribunal has not examined various facts of the Appellant. The Tribunal was required to examine the facts and documents so as to form an opinion as to whether in the facts of the Appellant s case, the decision of Valecha Engineering Ltd. 2009 (8) TMI 451 - HIGH COURT OF BOMBAY was at all attracted. The Tribunal in passing the impugned order has merely reproduced the Order-in- Original and various paragraphs of Valecha Engineering, without examining its applicability to the facts of the Appellant and assigning any reasons thereof. The Tribunal has reproduced the submissions of the Appellant with respect to levy of interest to the effect that the Appellant had contended that levy of interest is against the doctrine of promissory estoppel and further that the interest in alternative can be only in respect of the duty required to be paid by them in cash and not on the component of duty allowed to be debited by them from the EPCG licences. The Tribunal ought to have examined the effect of the communication received from DGFT dated 27th October 2014, on the issue of imposing interest. The Tribunal has also not recorded any finding on the submissions made by the Appellant that interest if at all ought to have been levied only on cash demand confirmed amounting to Rs.10.94 crores and not on the duty paid under EPCG licences - the Tribunal ought to have accorded reasons after examining the facts of the Appellant before deciding the issue of interest. On the issue of interest under Sections 28AA and 28AB of the Customs Act, the appeal is allowed - Tribunal directed to pass a speaking order after examining the facts of the Appellant and after giving opportunity of hearing to both the parties and by speaking order.

Summary

Issues involved:
The appeal under Section 130 of the Customs Act, 1962 raises substantial questions of law regarding the Tribunal's order dated 24th October 2019. The issues include the consideration of vital documents, submissions made by the Appellant, and the applicability of certain decisions to the facts of the case.

Summary of Judgment:

Issue A: Consideration of Vital Documents
The Appellant was granted EPCG licenses and EOU permission, leading to the import of capital goods without payment of Customs Duty. Challenges arose regarding the Appellant's eligibility as a 100% EOU, resulting in show cause notices and the cancellation of EOU status. Despite subsequent permissions to treat imports under the EPCG scheme, the Respondent upheld the demand and levied interest under Sections 28AA and 28AB of the Customs Act, 1962. The Tribunal's order, rejecting the appeal, was based on the rejection of the Appellant's contention regarding the interest demand. However, the High Court found that the Tribunal failed to adequately examine the facts and documents of the case, leading to a lack of reasoning in its decision. The High Court directed the Tribunal to reconsider the issue of interest after examining the facts and providing a speaking order.

Issue B: Applicability of Decisions
The Appellant argued that the Tribunal did not properly consider the submissions made, relevant facts, and documents on record, merely reproducing the Order-in-Original and excerpts from previous decisions without applying them to the Appellant's case. The High Court agreed with the Appellant, emphasizing the need for a detailed examination of the facts and documents before reaching a decision. Referring to previous decisions, the High Court highlighted the importance of providing adequate reasons for decisions, especially in complex cases involving legal principles. The High Court allowed the appeal on the issue of interest under Sections 28AA and 28AB, directing the Tribunal to pass a speaking order after reevaluation.

Conclusion
The High Court allowed the appeal, setting aside the Tribunal's order and directing a fresh consideration of the issue of interest under Sections 28AA and 28AB of the Customs Act. The Tribunal was instructed to examine the facts, provide reasoning, and dispose of the appeal expeditiously within four months. No costs were awarded in the matter.

This summary provides a detailed overview of the judgment, highlighting the issues involved and the High Court's decision on each issue.