Natural justice requires prior notice and hearing before customs recovery action and bank guarantee invocation are enforced.

Recovery action revoking a benefit already granted under customs proceedings cannot be sustained unless it follows the statutory adjudicatory scheme, including prior notice and a fair opportunity of hearing. Here, the recovery notice, communication to the bank and invocation of the bank guarantee were held unlawful because no show-cause notice had been issued and no personal hearing was afforded before enforcement. The impugned measures were set aside, while the authorities were given liberty to commence fresh proceedings in accordance with law after issuing notice and deciding the matter on hearing the petitioner. Refund protection was linked to completion of the fresh adjudication within the stipulated period.

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Issues: Whether recovery notice and invocation of bank guarantee issued without prior show-cause notice and personal hearing were sustainable, and whether consequential refund relief could be granted.

Analysis: The proceedings to revoke the benefit already conferred by the redemption letter required adherence to the statutory adjudicatory scheme. The record showed that no show-cause notice had been issued before initiating recovery and invoking the bank guarantee, and no opportunity of personal hearing had been afforded. In such circumstances, the action was contrary to the scheme contemplated for adjudication and to the principles of natural justice. The setting aside of the impugned recovery measures was accompanied by liberty to the authorities to commence proceedings afresh by issuing notice and deciding the matter after hearing the petitioner. The refund direction was made contingent on completion of the fresh adjudication within the stipulated period.

Conclusion: The impugned recovery notice, communication to the bank, and invocation of the bank guarantee were set aside as unlawful for want of prior notice and hearing, with liberty to proceed afresh in accordance with law.

Final Conclusion: The petitioner obtained quashing of the impugned recovery action and provisional protection against retention of the encashed amount, while the authorities were permitted to undertake fresh adjudication in compliance with the statutory procedure.

Ratio Decidendi: Recovery or enforcement action that revokes a benefit already granted under customs proceedings cannot be sustained unless preceded by a show-cause notice and a fair opportunity of hearing in accordance with the statutory adjudicatory process.

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