2024 (8) TMI 1357 - HC - Customs

Violation of the principles of natural justice - contravention of provisions of Section 28AAA of the Customs Act 1962 - Adjudicating Authority did not consider any of the submissions of petitioner or deal with any submissions made by petitioner during the personal hearing but passed a non speaking order simply saying that recovery has been made from petitioner and therefore nothing further has to be done - HELD THAT - One thing is certain that petitioner has nowhere admitted its liability and petitioner had paid the amounts only in view of the tremendous pressure that was on petitioner to fulfill its export order and because an alert was put against IEC in system. It is also clear that no investigation has been conducted and SIIB(X) JNCH has only adopted a shortcut approach without investigating to trace the full truth. This method is unacceptable and has to be deprecated. Respondent no. 3 has also accepted that in view of incomplete investigation and lack of proper evidence it is not justified to confirm charges against petitioner. Jurisdiction is exercised and the impugned order dated 17th August 2021 passed by respondent no. 3 set aside. Respondent no. 2 is directed to investigate how a forged scrip was registered at JNCH and how re-registered license was used by two importers in ICD Tughlakabad. Respondent no. 2 shall also investigate why none of those parties were neither summoned nor any verification at Tughlakabad end has been done and ascertain the truth - petition disposed off.

Summary

Issues:
Violation of principles of natural justice and contravention of provisions of Section 28AAA of the Customs Act, 1962.

Analysis:
The petitioner, engaged in the export of agricultural commodities, alleged a violation of natural justice and contravention of Section 28AAA of the Customs Act, 1962. The petitioner sought to set aside an order-in-original dated 17th August 2021, citing issues related to the Focus Product Scheme (FPS) implemented by the Directorate General of Foreign Trade (DGFT). The petitioner had sold a duty credit scrip to various entities, leading to allegations of fraudulent re-registration and misuse of the scrip. The Revenue claimed that the petitioner admitted liability and paid a substantial amount under protest to release held-up shipments. However, the petitioner sought a refund of the amounts paid, including customs duty, interest, and penalty.

The Adjudicating Authority passed a non-speaking order, relying on Section 28AAA of the Act to hold the petitioner liable without adequately addressing the petitioner's submissions or conducting a detailed analysis. The Authority directed the appropriation of amounts paid without a thorough discussion on the applicability of the Act to the petitioner's case. The petitioner appealed this decision, leading to a remand for fresh adjudication by the Commissioner of Customs (Appeals).

The Commissioner found that the original order lacked adherence to natural justice principles and remanded the matter for reconsideration. However, the subsequent order dated 17th August 2021 by respondent no. 3 raised concerns due to incomplete investigations and lack of conclusive evidence. The petitioner was found to have paid under pressure, not admitting liability, and the investigation was criticized for adopting a shortcut approach without proper verification.

The High Court quashed the impugned order, emphasizing the need for a thorough investigation to determine the truth and hold the guilty party accountable. The Court directed respondent no. 2 to investigate the forged scrip registration and its subsequent use, instructing a refund of the amount paid by the petitioner with applicable interest. The Court highlighted the importance of following due process and ensuring a fair and comprehensive investigation to uphold justice.

In conclusion, the High Court's decision to quash the impugned order and direct a detailed investigation reflects the significance of procedural fairness and thorough examination in legal proceedings, particularly in cases involving alleged violations and misuse of statutory provisions.