2012 (10) TMI 833 - HC - Customs

Validity of show cause notice - Held that - It is not a mere formality, but a statutory right to oppose the decision for extension of time. Issuance of a notice of three day has defeated the right of the petitioner to effectively defend its case. The petitioner had not only submitted reply, but also requested for more time, so as to represent the case before the department. The department in hurry to pass the order before six months, passed an exparte order, by considering the objection filed by the petitioner, without giving an opportunity of personal hearing. The impugned order therefore on the face of it is in violation of principles of natural justice - alternative remedy of statutory appeal cannot be a bar to maintain this writ petition - Writ petition is allowed. Impugned order is set aside. The petitioner shall be entitled to release of goods subject to payment of admitted duties and right of department to hold enquiry and impose duties & penalties under Section 124 of the Act -Connected Miscellaneous Petition is closed - No costs.

Issues:
1. Validity of the writ petition seeking to quash an order extending the period for issuance of a show-cause notice under Section 110(2) of the Customs Act, 1962.
2. Availability of alternative statutory remedy for the petitioner.
3. Compliance with principles of natural justice in the issuance of show-cause notice and extension of time for action by the Customs authority.
4. Interpretation and application of Section 110(2) of the Customs Act regarding the extension of time for action against defaulters.
5. Justification for extending the period under the proviso to Section 110(2) and the impact on the rights of the parties involved.

Analysis:
1. The petitioner sought a writ to quash an order extending the period for issuance of a show-cause notice under Section 110(2) of the Customs Act, arguing that the impugned order violated principles of natural justice by not providing a proper opportunity for a hearing. The court examined the statutory provisions and emphasized the importance of following due process, including giving justification for extending the period and allowing the party to contest the decision effectively.

2. The respondents contended that the writ petition was not maintainable as an alternative statutory remedy was available to the petitioner. However, the court held that since the impugned order was passed in violation of natural justice and the statute, the availability of a statutory appeal did not bar the petitioner from seeking relief through a writ petition.

3. The court highlighted that the issuance of a show-cause notice with only three days for a response did not comply with the principles of natural justice. It emphasized that the party's right to oppose the extension of time was not a mere formality but a statutory right, and the department had the burden to show sufficient cause for the extension.

4. Section 110(2) of the Customs Act provides a six-month period for taking action against defaulters, with the provision for extension on sufficient cause being shown. The court stressed that the objective of the time limit was to prevent unnecessary retention of goods and ensure the party's rights were not prejudiced due to delays in adjudication by Customs authorities.

5. Considering equity and the rights of the parties involved, the court concluded that upholding the impugned order would prejudice the petitioner's rights. The court allowed the writ petition, setting aside the impugned order and granting the petitioner the release of goods upon payment of admitted duties, while preserving the department's right to conduct an inquiry and impose duties and penalties under Section 124 of the Act.

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