2021 (10) TMI 198 - HC - Customs

Court finds violation of natural justice in show cause notice issuance. Appellant denied fair hearing. Order set aside.

The Court found a violation of natural justice in the issuance of a show cause notice and personal hearing. The appellant was not given a fair opportunity ... Violation of principles of natural justice - opportunity of personal hearing - adjournment and extensions in adjudication - functus officio - availability of alternate remedy - remand for fresh consideration and verification - CBEC master circular on show cause notices and personal hearingViolation of principles of natural justice - opportunity of personal hearing - CBEC master circular on show cause notices and personal hearing - availability of alternate remedy - Whether the writ petition could be entertained despite the availability of alternate statutory remedies on the ground of violation of principles of natural justice. - HELD THAT: - The Court held that the pre-fixing of three hearing dates in the show cause notice and the failure to issue separate communications for each hearing/extension ran counter to the procedure envisaged in the CBEC master circular regarding personal hearings. The appellant had sought and been granted an extension by the concerned officer until 06.04.2021 to produce the Bank Realization Certificate, but the Order-in-Original was passed on 17.03.2021 before that extended date. On these facts the Court found that adequate opportunity to be heard was not afforded and that there had been a breach of principles of natural justice. Consequently, the exception to the general rule of restraint in entertaining writ petitions in taxing statutes applied and the writ could be maintained notwithstanding the availability of alternate remedies. [Paras 3, 5, 6]The writ petition was maintainable and the Order in Original dated 17.03.2021 was set aside for violation of principles of natural justice.Functus officio - remand for fresh consideration and verification - adjournment and extensions in adjudication - What consequential relief should follow and whether the material (BRC Negative Statement) needs verification and fresh adjudication. - HELD THAT: - The Court noted that after the officer had granted an extension to 06.04.2021 the first respondent became functus officio upon passing the Order in Original on 17.03.2021 and therefore could not act on the material subsequently filed by the appellant. The BRC Negative Statement filed by the appellant on 05.04.2021 (date stamped 07.04.2021) must be verified by the competent authority. The matter was remitted to the first respondent to afford a proper opportunity of personal hearing and to adjudicate the case afresh on merits in accordance with law, including verification of the submitted negative certificate. [Paras 3, 6, 7]Order in Original set aside and matter remanded for verification of the BRC Negative Statement, fresh personal hearing and de novo adjudication in accordance with law.Final Conclusion: Writ appeal allowed; Order in Original dated 17.03.2021 set aside. The BRC Negative Statement filed by the appellant shall be verified and, after affording a proper opportunity of personal hearing, the first respondent shall adjudicate the matter afresh in accordance with law. Issues:Violation of principles of natural justice in the issuance of show cause notice and personal hearing.Analysis:The Writ Appeal questions the correctness of dismissing the writ petition filed by the appellant-assessee on the ground of availing the alternate remedy under the Customs Act. The appellant's case is based on the violation of principles of natural justice, specifically regarding the issuance of the show cause notice and the opportunity of personal hearing. The respondent issued a notice on 01.03.2021, referring to a show cause notice from 2017, stating pending realization of export proceeds. The appellant requested an extension to produce documents, which was granted until 06.04.2021. However, before this date, the Order-in-Original was passed, citing failure to respond to the notice and attend the pre-fixed personal hearing dates.The appellant argued that the pre-fixed dates for personal hearing should not be mechanically fixed, emphasizing the importance of providing a fair opportunity for the noticee to be heard. The Circular issued by the Central Board of Excise and Customs mandates at least three opportunities for personal hearing with sufficient intervals and separate communications for each hearing. The procedure followed by the first respondent, fixing pre-determined dates for personal hearing, was deemed to violate this Circular.The Court found that the appellant was not adequately afforded the opportunity to present their case. Despite the show cause notice being from 2017, no action was taken until 2021. The appellant's submission of the required certificates after the passing of the Order-in-Original further indicated a lack of procedural fairness. The Court concluded that there was a violation of natural justice and that the appellant's case fell within the exceptions allowing for the entertainment of a writ petition. Citing the Whirlpool Corporation case, the Court set aside the previous order and remanded the matter to the first respondent for fresh consideration, directing verification of the submitted certificates and a fresh adjudication in accordance with the law.