2022 (4) TMI 1218 - HC - Customs

Validity/legality of SCN and Order-in-Original - it is alleged that the Show Cause Notice and Order-in-Original contain errors that are impossible to repair or rectify - waiver of demand along with interest and penalty - HELD THAT - Since no details have been provided even in the show cause notice to direct respondent to appear and answer such show cause notice would be only adding to their agony. It would not be even possible to answer the show cause notice without any particulars mentioned therein. The Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, the question as pressed do not raises any substantial question of law - appeal dismissed.

Summary

Issues:
Impugning order of Customs, Excise & Service Tax Appellate Tribunal - Setting aside demand and penalty under Customs Act, 1962 - Alleged errors in Show Cause Notice and Order-in-Original.

Analysis:
The appellant challenged the order passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) regarding the demand and penalty imposed under the Customs Act, 1962. The substantial question of law proposed was whether CESTAT was correct in setting aside the demand of ?1,00,47,253 along with interest and penalty of ?10,00,000, citing errors in the Show Cause Notice and Order-in-Original that were deemed impossible to rectify. The High Court reviewed the CESTAT's order and found no reason to interfere. The appellant alleged that the respondent failed to discharge obligations under the duty exemption entitlement certificate scheme, leading to non-compliance with Notification No. 203/92-Cus dated 19/05/1992.

The Show Cause Notice was adjudicated by the Commissioner of Customs, confirming the demand and imposing a penalty under the Customs Act, 1962. The respondent appealed to CESTAT, which allowed the appeal on 20.12.2018. The appellant contended that the respondent never received the show cause notice, preventing them from responding. The appellant requested the court to set aside the impugned order and direct the respondent to reply to the notice for the Commissioner of Customs to make a decision based on the response.

The High Court determined that the show cause notice was not sustainable as the appellant failed to prove that the respondent had availed of MODVAT credit on inputs from the local market. The court emphasized that the onus was on the appellant to substantiate the allegations against the respondent, citing relevant judgments. The show cause notice lacked particulars and details necessary for a proper response, rendering it inadequate for the respondent to address the allegations effectively.

Given the lack of details provided in the show cause notice and the inability of the respondent to answer without specific information, the High Court concluded that directing the respondent to respond would be unjust. The court found that the Tribunal did not err or apply incorrect principles in its decision, dismissing the appeal for lack of merit and without costs. The judgment highlighted the importance of providing sufficient details in legal notices to ensure fairness and the ability of the parties to respond adequately.