2023 (3) TMI 451 - AT - Customs

Improper Notice Invalidates Job Work Permission Withdrawal

M/s Shree Rishabhdev Marble And Minerals Private Limited Versus Commissioner of Customs (Preventive) Jodhpur, HQ at Jaipur

The Court held that the show cause notice, which formed the basis for withdrawing permission for job work in DTA due to alleged violations of the 100% EOU ... 100% EOU - withdrawal of permission granted for allowing job work in DTA - violation of principles of natural justice - HELD THAT:- The present proceedings before this Court emanate from a letter dated 6.1.2020 which cannot be treated as a proper show cause notice. No reason or evidence to support the allegation has been brought on record by the respondent – Department, in the letter. While the same has been collated, as per the contention of the learned authorized representative subsequently after search, as allegedly certain discrepancies were found which indicated violations. It, therefore, appeared to the Department that the imputations in the letter dated 6.1.2020 were later on found to be true. Same, however is a subsequent development, but at the time the show cause notice was issued, the allegation was merely based on suspicion. Clearly, therefore, there is violation of natural justice and manifestation of arbitrariness. Matter related to seizure at job worker premises is part of separate proceedings. For the purposes of the present proceedings before this Court, it is found that the show cause notice is improper and unsustainable and the proceedings based thereupon are liable to be set aside - Appeal allowed. Issues:1. Withdrawal of permission for job work in DTA based on alleged violations of 100% EOU scheme.2. Validity of the letter dated 6.1.2020 as a show cause notice.3. Allegations of violations and discrepancies in stock position leading to prompt action by the Department.4. Compliance with principles of natural justice and arbitrariness in the proceedings.Analysis:1. The issue in question pertains to the withdrawal of permission granted for job work in DTA due to alleged violations of the 100% EOU scheme. The Department sought to withdraw the permission based on suspicions of diversion of materials to DTA by the appellant. However, the letter dated 6.1.2020, which served as the basis for the withdrawal, lacked specific details regarding the violations and evidence supporting the allegations. The appellant contested this action, leading to the present proceedings.2. The validity of the letter dated 6.1.2020 as a show cause notice was challenged during the proceedings. It was argued that the letter did not provide sufficient reasoning or evidence to support the allegations made by the Department. The Court noted that the letter, initially an administrative communication, was later treated as a show cause notice, but it failed to meet the standards required for such a notice. The lack of proper grounds and evidence rendered the notice improper and unsustainable.3. The Department, in response, highlighted violations and discrepancies in the stock position that were discovered during subsequent searches at the premises of the job worker and the appellant. These findings were emphasized as the basis for prompt action taken by the Department. However, the Court observed that the allegations in the letter were based on suspicions and lacked concrete evidence at the time of issuing the show cause notice, indicating a violation of natural justice and arbitrariness in the proceedings.4. In the final analysis, the Court concluded that the show cause notice based on the letter dated 6.1.2020 was improper and unsustainable due to the lack of evidence and violation of natural justice principles. The proceedings initiated on that basis were deemed liable to be set aside. The Court clarified that the Department could reconsider the withdrawal of permission if conclusive evidence emerged from separate proceedings related to seizures. The appeal was allowed in favor of the appellant, emphasizing the importance of procedural fairness and evidence-based decision-making in such matters.