2017 (7) TMI 882 - HC - Customs

Court dismisses writ petition challenging Customs Act penalty, directs appeal to CESTAT Chennai. Importance of exhausting remedies.

The court found the writ petition challenging the penalty imposed on the petitioner under Section 112(b)(1) of the Customs Act, 1962, was not maintainable ... Penalty u/s 112 (b)(1) of CA - smuggling of gold bars - It is alleged in the SCN that the petitioner has abetted the alleged illegal transaction of dealing in gold bars knowingly that they are smuggled. To the show cause dated 25.10.2014, the petitioner caused a reply on 15.01.2015 refuting the allegations - principles of natural justice - Held that: - the petitioner is not questioning the statutory competency or jurisdiction of the adjudicating Authority to adjudicate the matter. The only dispute is with regard to the liability of the petitioner to pay penalty and even assuming he is liable, then the quantum. These are all the questions involving factual aspect which are to be considered and decided only by the next fact finding authority, namely, the Appellate Authority, here in this case, CESTAT, Chennai. Therefore, it is for the petitioner to canvass the correctness or otherwise of the order passed by the Adjudicating Authority before the Appellate Tribunal by raising all the contentions. Principles of Natural Justice - Held that: - the Adjudicating Authority has dealt with in detail as to why such request is rejected by relying on certain case laws. In any event, as the Appellate Authority is also a fact finding authority, certainly, the petitioner is entitled to canvass before such authority as to how such denial of cross examination of those two persons, has resulted in affecting his interest. If the request for cross examination was not at all considered, then it is a different matter to say that there is a violation of principles of natural justice. On the other hand, if such request is considered and rejected on some reasons and findings, then it is for the next fact finding authority to go into the same to find out as to whether such reasonings and findings are justifiable or not. Therefore, at this stage, this court is not inclined to go into such question and give any finding on the same. The present writ petition is not maintainable as the petitioner has to exhaust the alternative remedy of filing an appeal before the CESTAT - petition dismissed - decided against petitioner. Issues Involved:1. Imposition of penalty on the petitioner under Section 112(b)(1) of the Customs Act, 1962.2. Alleged violation of principles of natural justice.3. Maintainability of the writ petition in light of the availability of an alternative statutory appellate remedy.Detailed Analysis:1. Imposition of Penalty on the Petitioner:The petitioner, involved in the business of trading in jewellery and bullion, was penalized Rs. 2 crores under Section 112(b)(1) of the Customs Act, 1962. The penalty stemmed from the seizure of 33.3499 kgs of gold by the Directorate of Revenue Intelligence (DRI) from Thameem Ansari, who, along with Syed Rehman, implicated the petitioner in dealing with smuggled gold. Despite retraction of their statements, the Adjudicating Authority found the petitioner guilty of abetment in the illegal transaction of smuggled gold bars, leading to the imposition of the penalty.2. Alleged Violation of Principles of Natural Justice:The petitioner contended that the statements of Thameem Ansari and Rehman, which were retracted, lacked evidentiary value and required corroboration. The petitioner’s request to cross-examine these individuals was denied, which he argued constituted a violation of natural justice. However, the court noted that the Adjudicating Authority had considered and rejected the cross-examination request with reasoned findings and legal precedents. The court opined that such procedural issues should be examined by the appellate authority, not in a writ petition.3. Maintainability of the Writ Petition:The court emphasized that the petitioner had an alternative statutory remedy available under Section 129(A)(1) of the Customs Act, 1962, to appeal before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai. The court underscored the well-established legal principle that writ petitions in fiscal matters should not be entertained unless there is a jurisdictional error or a flagrant violation of natural justice. The court referred to precedents affirming the necessity of exhausting alternative remedies before seeking judicial intervention.Conclusion:The court concluded that the writ petition was not maintainable, directing the petitioner to exhaust the alternative appellate remedy by filing an appeal before CESTAT, Chennai, within four weeks. The court clarified that the appellate authority should consider the appeal on its merits, independent of the observations made in the court’s order. The petition was disposed of, and the connected miscellaneous petition was closed.