2024 (11) TMI 68 - AT - Customs

Demand for recovery of erroneous refund amount - violation of principles of natural justice - HELD THAT - The Hon ble Bombay High Court in the case of Patel Engineering Limited Vs Union of India 2013 (4) TMI 97 - BOMBAY HIGH COURT held that recovery proceedings cannot be initiated when the stay application has remained pending for reasons beyond the control of the assessee. In the revised scheme of appeals based on a mandatory pre-deposit, a stay on the order appealed is deemed operative once the appeal is accepted on the file of the Tribunal after paying the requisite pre-deposit. The impugned order is very cryptic without there being a adjudication of the rights and liabilities of parties by the application of mind to the merits of the matter. While the First Appellate Authority, could have decided the matter ex-parte for non-prosecution, however it should not have been done at the first instance when the intimation letter was returned with the remarks left and moved . The appellant should not have been denied the opportunity for a personal hearing as required by the principles of natural justice without making a serious attempt to reach out to him, through his representative or through the department, lest the appellant be aggrieved with closure of the appeal, for unintended lapses. This is not to condone the laxity on the part of the appellant in not updating his new contact address, which is not appreciated. However substantive justice should not be denied on technical grounds without making visible efforts to reach out to the appellant. The impugned order hence merits to be set aside. The Demand Notice which flows from the impugned order comes into jeopardy and cannot be implemented as being infructuous once the appellate order on which it is based is set aside. Set aside the impugned order and remand the matter to the file of the First Appellate Authority to be decided afresh after giving the appellant an opportunity of being heard, as per law

Summary

Issues: Appeal against rejection of refund claim on technical grounds, violation of principles of natural justice in issuing impugned order, validity of coercive action before completion of appeal period, cryptic nature of impugned order without proper adjudication, denial of opportunity for personal hearing, infructuous nature of Demand Notice based on impugned order.

Analysis:

1. The appeal was filed against the rejection of a refund claim on technical grounds. The impugned order directed the recovery of an erroneously sanctioned refund amount. The appellant challenged the order, alleging a violation of the principles of natural justice. The department issued a Demand Notice for recovery of the refund amount. The main issue was the rejection of the refund claim and the subsequent recovery demand.

2. The Tribunal noted that coercive action was taken before the completion of the appeal period, affecting the appellant's chances of relief from a higher appellate forum. The Tribunal referred to Circulars issued by the Board regarding the initiation of recovery proceedings. The Tribunal cited a case from the Bombay High Court emphasizing that recovery proceedings cannot be initiated when a stay application is pending beyond the control of the assessee.

3. The impugned order was criticized for being cryptic and lacking proper adjudication of the rights and liabilities of the parties. The Tribunal highlighted that the appellant should not have been denied a personal hearing based on the returned intimation letter. While acknowledging the appellant's failure to update their contact address, the Tribunal emphasized that substantive justice should not be denied on technical grounds without visible efforts to reach out to the appellant.

4. The Tribunal emphasized that the Demand Notice based on the impugned order would become infructuous if the appellate order is set aside. Consequently, the Tribunal set aside the impugned order and remanded the matter to the First Appellate Authority for a fresh decision after giving the appellant an opportunity to be heard. The parties were directed to advance arguments on the merits of the case before the said Authority.

5. The Tribunal concluded by allowing the appeal and disposing of it on the mentioned terms, emphasizing the appellant's cooperation in the process and the indication of the correct address for service of notice to the said authority within a specified timeframe. The order was pronounced in open court on a specific date.

This comprehensive analysis covers the issues raised in the judgment, including the rejection of the refund claim, procedural violations, coercive actions, and the Tribunal's decision to set aside the impugned order and remand the matter for a fresh decision.