2024 (7) TMI 1122 - HC - Customs

Levy of penalty for non-fulfilment of the export obligation - Export Promotion Capital Goods (EPCG) authorizations - specific case of the petitioner/Company is that they were not served with any show cause notice and no opportunity of personal hearing was also given before passing the impugned order - violation of principles of natural justice - HELD THAT - As repeatedly held by the Hon'ble Supreme Court of India and this Court in various decisions, the appeal remedy is not a complete for entertaining Writ Petition under Article 226 of the Constitution of India, when there is violation of principles of natural justice. Therefore, the Writ Petition is very much maintainable, since the petitioner was not served with any show cause notice and was not given an opportunity of personal hearing before passing the impugned order. On this sole ground, the impugned order cannot be sustained and it is liable to be quashed. The impugned order dated 24.08.2021 is hereby quashed - Petition allowed.

Summary

Issues:
Challenge to penalty for non-fulfilment of export obligation under EPCG authorizations; Failure to submit documents evidencing fulfilment of export obligation; Allegation of no show cause notice and lack of personal hearing before imposing penalty.

Analysis:
The petitioner, engaged in manufacturing machined parts, obtained two EPCG authorizations for import of capital goods with an export obligation to export precision components for automobile industries. Despite fulfilling the export obligation, the petitioner failed to submit the necessary documents to the Licensing Authority, leading to a show cause notice and subsequent imposition of a Rs. 50,00,000 penalty by the respondent. The petitioner contended that they were not served with any show cause notice and were denied a personal hearing before the penalty was imposed.

The respondent's order lacked evidence of serving show cause notices to the petitioner, raising doubts about the procedural fairness of the penalty imposition. The Senior Panel Counsel for the respondent argued that an appeal remedy exists under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992, within 45 days of the order issuance, suggesting that the Writ Petition was premature under Article 226 of the Constitution of India. However, the court emphasized that the appeal remedy does not preclude the consideration of a Writ Petition when there is a violation of natural justice principles.

Citing precedents from the Supreme Court and the High Court, the judgment highlighted that the absence of a show cause notice and a personal hearing before passing the impugned order rendered it unsustainable. Consequently, the court quashed the order dated 24.08.2021 and directed the respondent to issue a fresh show cause notice, provide a personal hearing to the petitioner, and pass new orders within twelve weeks, adhering to legal principles.

In conclusion, the Writ Petition was allowed, and the impugned order was set aside due to the procedural irregularities in serving notices and granting a personal hearing. The court's decision emphasized the importance of upholding natural justice principles in administrative proceedings, ensuring fairness and transparency in penalty imposition for non-fulfilment of export obligations under EPCG authorizations.