2021 (11) TMI 204 - HC - Customs

Violation of principles of natural justice - Import of capital goods under EPCG Scheme - no show-cause notice indicating initiation of adjudication process issued - N/N. 102/2009-Cus dated 11.09.2009 - HELD THAT - A perusal of the records would indicate that no show-cause notice has been issued as the first step in the proceedings of adjudication as contemplated under Section 28 - It is admitted that petitioner was not afforded any opportunity of personal hearing. Wherever the benefit conferred upon the petitioner by issuance of redemption letter is sought to be revoked, there has to be strict adherence to the principles of natural justice. The recovery notice dated 18.09.2018 issued by the respondent no.3 at Annexure-'M' and the letter dated 18.09.2018 at Annexure-'N' are set aside. The respondent authorities to issue a show-cause notice and decide the matter after affording an opportunity of personal hearing to the petitioner. The action of invocation of bank guarantee by the respondent is set aside and the communication of the authority to the bank is held to be illegal as the same was issued without issuance of prior show-cause notice as per the statutory scheme - Petition disposed off.

Summary

Issues:
1. Writ of certiorari to set aside a notice dated 31.05.2017
2. Setting aside a recovery notice dated 18.09.2018
3. Refund of ?4,00,000 realized by encashment of a bank guarantee

Analysis:
1. The petitioner imported capital goods under the EPCG Scheme and fulfilled the export obligation within the specified time frame. A bond was executed to ensure compliance with the notification's terms. The petitioner received a redemption letter confirming the discharge of export obligations.

2. Despite fulfilling the export obligation, the authorities issued a demand notice claiming a duty payment of ?28,34,120 along with interest. The petitioner responded with evidence of completing the export obligation in 2013, refuting the alleged violation of conditions in the EPCG Notification.

3. Subsequently, a recovery notice was issued, invoking a bank guarantee without prior adjudication through a show-cause notice. The petitioner emphasized the lack of opportunity for a personal hearing and the necessity for following principles of natural justice in revoking benefits conferred earlier.

4. The court found the enforcement of the bank guarantee without a show-cause notice to be illegal and directed the authorities to issue a show-cause notice, allowing the petitioner a personal hearing. The action of invoking the bank guarantee was set aside, emphasizing the importance of adherence to statutory procedures.

5. The court ordered the refund of ?4,00,000 if the adjudication process, post the issuance of the show-cause notice, was not completed within six months. The judgment aimed to ensure procedural fairness and adherence to legal requirements in matters concerning duty payments and enforcement of guarantees.

6. In conclusion, the petition was disposed of, with directions for the authorities to follow due process, issue show-cause notices, allow personal hearings, and refund the amount if adjudication was delayed. The judgment underscored the significance of procedural fairness and adherence to statutory provisions in customs matters.