2014 (8) TMI 963 - HC - Customs

Natural Justice in Suspension Order: Fairness, Prima Facie Case, and Exhaustion of Remedies

NEPA AGENCY & CO. PVT. LTD. Versus UNION OF INDIA

The court addressed issues regarding breach of natural justice in a suspension order, admissibility of statements under Section 108 of the Customs Act, ... Revocation of CHA license - Opportunity for cross examination not provided - Held that:- It does not matter whether a party expressly asks for document or prays that the maker of the statements should be cross-examined. It is for the adjudicator to comply with the rules of natural justice and direct that copies of all documents, which are being relied upon to implicate a person have been made available to him to put forward his defence. Whether the person implicated would have a right of cross-examination or not would depend on the rules applicable to different Tribunals. - Here, mere reliance on those statements without the writ petitioners having been given an opportunity of dealing with the same was in breach of the principles of natural justice and the Commissioner was in gross procedural error. - show cause issued by the Directorate of Revenue Intelligence dated 13th December, 2013 along with the show cause issued under regulation 20 of the above Regulations be disposed of by 30th December, 2014 by giving an adequate opportunity to the writ petitioners to show cause and by way of a reasoned order. - Decided in favour of petitioner. Issues:1. Breach of principles of natural justice in suspension order.2. Admissibility of statements under Section 108 of the Customs Act, 1962.3. Exhaustion of alternative remedy before filing writ application.Issue 1: Breach of principles of natural justice in suspension orderThe judgment addresses the writ petitioners' delay in approaching the court after the suspension order was issued. The company, engaged in clearing and forwarding agent services, faced suspension and subsequent proceedings under Customs Brokers Licensing Regulations, 2013. The Commissioner of Customs had the authority to suspend the license under Section 19 without a prior hearing, but a hearing was required within fifteen days post-suspension. The Commissioner could then decide to revoke or continue the suspension. The judgment emphasized the importance of evaluating the prima facie case before passing an interim order. In this case, the suspension was confirmed, and a notice under Section 20 was issued based on statements obtained under Section 108 of the Customs Act, 1962.Issue 2: Admissibility of statements under Section 108 of the Customs Act, 1962The writ petitioners argued a breach of natural justice as they were not provided copies of the statements under Section 108 for cross-examination. The respondents contended that the petitioners did not deny the statements in their reply to the show cause notice, implying admission. However, the court found no explicit admission or waiver of rights in the petitioners' response. The judgment highlighted the adjudicator's duty to ensure fairness by providing all relied-upon documents to the implicated party for defense. Relying on statements without granting an opportunity for the petitioners to address them was deemed a procedural error by the Commissioner.Issue 3: Exhaustion of alternative remedy before filing writ applicationThe judgment addressed the argument that the final order was appealable, suggesting the need to exhaust alternative remedies before resorting to a writ application. However, the court found no evidence of admission or waiver in the petitioners' response to the show cause notice. Consequently, the court ordered expedited proceedings for the existing case against the petitioners, directing the review of the suspension order with an opportunity for the petitioners to be heard and contradict the Section 108 statements. The Customs Authorities were instructed to provide copies of the statements, and the petitioners were permitted to respond to the regulation 20 notice by a specified date.In conclusion, the judgment highlighted the importance of upholding natural justice principles, ensuring fair proceedings, and expediting the resolution of cases while granting parties adequate opportunities to present their case.