2019 (7) TMI 689 - HC - Customs

Court nullifies Customs Act order due to breach of natural justice, emphasizes right to fair process

The court set aside the order confirming a Show Cause Notice under the Customs Act, 1962, due to a breach of natural justice principles. The Revenue ... Validity of order in the absence of show cause notice (SCN) and personal hearing - Principles of natural justice - It is the case of the petitioner that it came to know about the impugned order only when the order was received by the Partner of the Firm imposing penalty of ₹ 10,000/upon him, in the month of August 2018 - HELD THAT:- Before subsection (b) of Section 153B of the Act could be invoked, the authorities must establish that the show cause notice could not be served upon the party by the modes specified in subsection (a) of Section 153B of the Act. Thus, invoking subsection (b) by affixing it on the notice board of Customs House can only be done on failure of the mode of service provided in Section 153(1)(a) of the Act. In this case, undisputedly the Revenue is unable to show that the Show Cause Notice dated 9th February 2017 was served upon the parties or attempted to be served the parties by sending it by registered post or by courier (as approved by the Commissioner of Customs). In absence of the Revenue being able to establish the same, the invocation subsection (b) of Section 153(1) of the Act is not permissible. Thus, no satisfactory service of Show Cause Notice under the Act is shown by the respondent. The impugned order has been passed in breach of elementary principle of natural justice leading to a flaw in the decision making process - the impugned order of the Commissioner of Customs is set aside and the Show Cause Notice restored to him for fresh adjudication. Petition allowed. Issues:Challenge to order confirming Show Cause Notice under Customs Act, 1962 on grounds of breach of principles of natural justice.Analysis:The petition challenged the order confirming a Show Cause Notice issued under the Customs Act, 1962, alleging a breach of natural justice principles as the petitioner was not served with the notice or granted a personal hearing. The petitioner only became aware of the order when a penalty was imposed in August 2018. The Revenue contended that the notice was duly served by affixing it on the Customs House notice board. However, an affidavit filed later revealed that the original file was not traceable, casting doubt on the service of the notice and personal hearing. Section 153 of the Customs Act stipulated the modes of service, emphasizing registered post or courier before resorting to affixing on the notice board.The court noted that the Revenue failed to demonstrate that the Show Cause Notice was served through approved modes like registered post or courier, as required by Section 153 of the Act. The absence of proof of proper service rendered the invocation of subsection (b) impermissible. Furthermore, the petitioner asserted not receiving any notice of personal hearing, which the Revenue also failed to substantiate under the relevant Act sections. Consequently, the court held that the impugned order violated the fundamental principle of natural justice, warranting the setting aside of the order and restoration of the Show Cause Notice for fresh adjudication.The court emphasized that the petitioner should be afforded the opportunity to respond to the notice and be granted a personal hearing before the final adjudication. The decision to allow the petition was based on the prejudice caused by the lack of proper service of the Show Cause Notice, necessitating a fair process for the petitioner. Therefore, the court set aside the impugned order and directed that further proceedings against the petitioner should only proceed after proper service of the Show Cause Notice, enabling a response and personal hearing before final disposal.