1959 (7) TMI 2 - HC - Customs

Summary

Issues Involved:
1. Jurisdictional excess in imposing personal penalty.
2. Violation of natural justice principles.

Detailed Analysis:

1. Jurisdictional Excess in Imposing Personal Penalty:

The petitioners contended that the personal penalty imposed by the 1st respondent was in excess of jurisdiction. According to Sec. 167(8) of the Sea Customs Act, the maximum penalty that could be imposed was Rs. 1,000. The 1st respondent imposed a personal penalty of Rs. 5,700, which the petitioners argued was beyond the legal limit. The court agreed with the petitioners, referencing a recent Appeal Court judgment that confirmed the maximum permissible penalty under Sec. 167(8) was indeed Rs. 1,000. Consequently, the court found that the personal penalty imposed was in excess of jurisdiction and invalid.

2. Violation of Natural Justice Principles:

The petitioners argued that the 1st respondent violated the principles of natural justice by inspecting certain samples of curtain nettings, embroidered all overs, and lace cloth without giving the petitioners an opportunity to rebut or explain this evidence. The 1st respondent's findings were based on these samples, which he inspected behind the petitioners' back. The court noted that the rules of natural justice require that no man shall be condemned or penalized without being given a chance to explain. The court cited several precedents, including Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal, and Union of India v. T.R. Varma, which emphasized that a party must be given an opportunity to rebut any evidence used against them.

The court observed that the 1st respondent's affidavit in reply did not deny the inspection of the samples but argued that the petitioners were not concerned with explaining past imports. This stance was found to be flawed as the petitioners should have been given an opportunity to explain the samples inspected by the 1st respondent. The court concluded that the 1st respondent's action of inspecting samples without giving the petitioners a chance to rebut or explain them was a clear breach of the rules of natural justice. Consequently, the order based on such inspection was void and illegal.

Conclusion:

The court ruled that the 1st respondent's order was invalid due to both the imposition of a personal penalty in excess of jurisdiction and the violation of natural justice principles. The rule was made absolute in terms of prayer (a) of the petition, setting aside the impugned order.