2020 (3) TMI 861 - HC - Customs

Violation of principles of natural justice - opportunity of hearing to the petitioner not provided - It is the case of the petitioner that the petitioner was never supplied with the copy of the order placing the petitioner company in the Denied Entities List (DEL) - HELD THAT - SCN merely states that DRI has informed that the petitioner Firm is suspected to be misusing the Advance Authorisation . Details of the allegations against the petitioner have not been given in the Show Cause Notice. As far as the order placing the petitioner on DEL is concerned, the same is stated to have been passed on 26.06.2019, that is even prior to the issuance of the Show Cause Notice. In terms of Rule 9(2) of the Rules, the same was clearly premature and not permissible as on that date proceedings of cancellation of the license of the petitioner had not been initiated in accordance with Rule 10 of the Rules. Proviso to Section 9(4) of The Foreign Trade (Development and Regulations) Act, 1992 mandates grant of reasonable opportunity to the licensee of being heard before suspending the license - The learned counsel for the respondent has also produced before me the office file containing the purported order placing the petitioner on DEL. A perusal of the same shows that it records no reasons for placing the petitioner on DEL. It is merely a note on the letter received from DRI. The Impugned Order dated 26.06.2019, placing the petitioner on DEL, is therefore, clearly in breach of not only the Act, the Rules but also the Guidelines - Petition allowed.

Summary

Issues Involved:
Violation of principles of natural justice in listing the petitioner company in Denied Entity List without opportunity of being heard, vagueness of Show Cause Notice, premature order placing petitioner on Denied Entities List, breach of Act, Rules, and Guidelines.

Analysis:

1. Violation of Principles of Natural Justice:
The petitioner filed a petition seeking relief from the action of listing the company in the Denied Entity List without following natural justice principles. The petitioner argued that they were not provided with the order or given an opportunity to be heard before being listed. The respondent failed to issue a Show Cause Notice or grant a hearing, which the petitioner contended violated natural justice principles.

2. Vagueness of Show Cause Notice:
The Show Cause Notice dated 27.06.2019 was challenged by the petitioner for being vague. Despite repeated requests for complete documents detailing the allegations, the respondent failed to provide the necessary information to the petitioner, causing undue hardship. The vagueness of the notice was a key point of contention in the case.

3. Premature Order Placing Petitioner on Denied Entities List:
The order placing the petitioner on the Denied Entities List was passed on 26.06.2019, even before issuing the Show Cause Notice. This premature action was deemed impermissible as per Rule 9(2) of the Foreign Trade (Regulation) Rules, 1993, as proceedings for license cancellation had not been initiated. The premature order was a clear violation of procedural rules.

4. Breach of Act, Rules, and Guidelines:
The respondent relied on Rule 10 of the Rules to justify the actions taken against the petitioner. However, the court found that the order placing the petitioner on the Denied Entities List lacked reasons and did not adhere to the Guidelines for maintaining the list. The court highlighted the breach of the Act, Rules, and Guidelines in the actions taken against the petitioner.

5. Judgment and Conclusion:
The court set aside the order placing the petitioner on the Denied Entities List and the vague Show Cause Notice. The court emphasized that the actions taken were in breach of the law, rules, and guidelines. However, the judgment did not prevent the respondent from issuing a proper Show Cause Notice and taking lawful actions in the future. The petition was allowed with no costs imposed on either party.