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Issues Involved:
1. Mis-declaration of the value of the consignment. 2. Unauthorized importation due to non-compliance with the conditions of the import license. 3. Confiscation of goods due to lack of valid Import Trade Control (ITC) license. 4. Violation of principles of natural justice in the adjudication process. Detailed Analysis: 1. Mis-declaration of the Value of the Consignment The petitioner firm was charged with mis-declaration of the value of the consignment. The customs authorities considered the declared value of Rs. 4,360 to be too low, suspecting that the goods were of Japanese origin and valued at Rs. 17 per Gr. Gross c.i.f., making the correct value Rs. 18,530. The petitioner firm denied the charge, asserting that the goods were of Hong Kong origin and therefore cheaper. The customs authorities were not convinced by the documents provided by the petitioner to establish the Hong Kong origin. 2. Unauthorized Importation Due to Non-Compliance with the Conditions of the Import License The customs authorities issued a notice on April 19, 1960, stating that the first importation of buttons was unauthorized due to the petitioner's failure to export a specific variety of finished products up to a prescribed value within six months of the importation, as required by the license conditions. The petitioner firm disputed the jurisdiction of the customs authorities to take such proceedings and asserted that all conditions of the license had been fulfilled. 3. Confiscation of Goods Due to Lack of Valid ITC License On June 22, 1960, another notice was served upon the petitioner firm, indicating that the goods valued at Rs. 14,130 c.i.f. were imported without a valid ITC license. The petitioner firm denied the charge, stating that the allegations of undervaluation were "absolutely imaginary and without foundation whatsoever." The customs authorities conducted a hearing where the petitioner was asked to distinguish between the imported buttons and those of alleged Japanese origin. The petitioner condemned this procedure as unusual and asserted the genuineness of their documents. 4. Violation of Principles of Natural Justice in the Adjudication Process The adjudication order relied heavily on a chemical test report, which was not disclosed to the petitioner firm. The Supreme Court in Ambalal v. Union of India and State of Mysore v. Shiva Basappa has held that it is the duty of the adjudicating authority to disclose evidence to the petitioner and give them an opportunity to rebut the same. The failure to do so violated the principles of natural justice. Furthermore, the hearing process was flawed as the Deputy Collector first heard the petitioner, and then the Collector passed the penal order based on evidence collected by the Deputy Collector, which could lead to a miscarriage of justice. Conclusion: The High Court found that the customs authorities violated the principles of natural justice by not disclosing the chemical test report to the petitioner firm and by adopting a flawed hearing procedure. Consequently, the penal order was quashed, and a writ of certiorari was issued, allowing the customs authorities to proceed afresh against the petitioner firm.
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