2024 (8) TMI 677 - HC - Customs

Challenge to SCN issued u/s 18(2) of the Customs Act, 1962 and the adjudication order in original - order records that no reply was received from the importer in response to the SCN - violation of principles of natural justice - HELD THAT - Admittedly, in this case it is noticed that the petitioner had imported sports goods for a project which was awarded by the Central Government to NBCC and NBCC had subcontracted the job to the petitioner. The petitioner claims that the petitioner is entitled to an exemption and the goods imported by the petitioner is covered by Notification No.146/94-Customs Serial no.1, dated 13th July, 1994. Records reveal that the petitioner was given an opportunity of personal hearing by the Adjudicating Officer and after hearing the petitioner, a final order had been passed. Although a personal hearing was given but non-consideration of such response by recording in the order that no reply was received appears to be a mechanical approach, apart from being violation of principles of natural justice. Although, there is an Appellate Authority, however, as the order-in-original stands vitiated and the order cannot be sustained. The same is, accordingly, set aside and is remanded back to the Adjudicating authority for re-hearing. Petition disposed off by way of remand.

Summary

Issues:
Challenging show cause notice under Customs Act, 1962 and adjudication order in original.

Analysis:
The petitioner filed a writ petition challenging a show cause notice dated 14th May, 2020 issued under Section 18(2) of the Customs Act, 1962, and the subsequent adjudication order in original dated 13th November, 2020. The petitioner was involved in a project for the development of North Indian States, including Sikkim, where they were responsible for the supply and installation of a synthetic football field. The petitioner imported artificial turf for football, claiming exemption of duty under a specific customs notification. Despite providing evidence that the goods were imported for a project awarded by the Central Government, the adjudication order was issued without considering the petitioner's response to the show cause notice.

The petitioner argued that the order failed to acknowledge their response to the show cause notice, leading to a violation of principles of natural justice. The respondents claimed they could not trace the petitioner's reply but noted down their submissions during a personal hearing. The respondents contended that since the petitioner's arguments were considered during the hearing, the order should not be set aside for non-consideration of the response. They also highlighted the availability of an appeal as an alternative remedy, which the petitioner had not pursued within the prescribed time, making the writ petition belated.

Upon review, the Court found that the petitioner had imported goods for a project subcontracted to them by NBCC, which was awarded by the Central Government. Despite the petitioner's claim of entitlement to duty exemption under a specific customs notification, the order in original inaccurately stated that no reply was received to the show cause notice. The Court emphasized that the purpose of issuing a show cause notice is to inform the importer of the circumstances requiring a response. The failure to consider the petitioner's response and incorrectly stating no reply was received was deemed a mechanical approach and a violation of natural justice principles.

The Court decided that due to the flaws in the order-in-original, it could not be sustained. Consequently, the order was set aside, and the matter was remanded back to the Adjudicating authority for re-hearing. The Adjudicating authority was directed to consider the petitioner's response and dispose of the matter on merits within eight weeks from the date of communication of the order. The writ petition was disposed of with these observations and directions.