2024 (3) TMI 367 - AT - Customs

CESTAT sets aside penalty for delayed bill of entry filing under EPCG licence due to port delays

CESTAT Chandigarh allowed the appeal challenging penalty imposition for delayed filing of bill of entry under EPCG licence for machinery import. The ... Imposition of Penalty - remanding matter back to the original authority - delay in filing the bill of entry - EPCG Licence - import of Machinery as “YIYOU MAKE HMI SCREW PRESS - MODEL EPC 1600 PRESS WITH PARTS AND ACCESSORIES 3 & 2 STATION DIE BOLSTER, TOOLING & GRAPHITE LUBRICATION MACH' - Benefit of Notification No. 16/2015-CUS - third container held at Mundra port due to excess weight in actual - HELD THAT:- From the records, it is clear that there was no intention on the part of the appellant for delaying the taking of delivery from ICD, Ludhiana. The fact of the matter is that out of three containers mentioned (Supra) two containers reached earlier and one container was held up at Mundra port on account of excess weight which was subsequently resolved by according the permission to carry the third container to ICD, Ludhiana. Further, once the Ld. Commissioner has recorded the findings that there is no basis as apparent on record to impose the penalty then it was incumbent for the Ld. Commissioner to set aside the same and there was no reasons to remand the same to the original authority. Further, the remand order of the Ld. Commissioner (Appeals) has not been complied with by the original authority till date without any reason. Thus, there is no justifiable reasons for imposition of penalty and to this extent upheld the order of the Ld. Commissioner (Appeals) and to set aside the impugned order to the extent of remanding the matter back to the original authority. The appeal is accordingly, allowed on above terms. ISSUES PRESENTED AND CONSIDERED 1. Whether the Commissioner (Appeals) was justified in remanding the matter to the original assessing authority for a 'speaking order' after setting aside a penalty that lacked any recorded basis. 2. Whether imposition of penalty in the absence of a speaking order, show cause notice and opportunity of personal hearing violates the principles of natural justice and is therefore unsustainable. 3. Whether delay in filing the bill of entry caused by a container being held at port due to excess weight (and subsequently permitted for transport) constitutes sufficient cause to negate an inference of intentional delay by the importer and to defeat the imposition of penalty. 4. Whether an assessing authority's failure to comply with appellate remand directions within a reasonable time affects the appellate adjudication and remedies available. ISSUE-WISE DETAILED ANALYSIS Issue 1: Legality and propriety of remanding the matter after setting aside the penalty Legal framework: Administrative law principles require that decisions imposing penalties state the legal basis and reasons. Appellate authorities may set aside or remit matters where procedural defects or lack of reasons exist. Precedent Treatment: No specific precedents were cited or applied in the judgment; the Court relied on established principles of reasoned decision-making and procedural fairness. Interpretation and reasoning: The Commissioner (Appeals) found no speaking order or reasons in the assessing authority's record stating under which provision the penalty was imposed, and remanded solely to enable the assessing authority to issue a speaking order and provide personal hearing. The Tribunal observed that once the appellate authority concluded there was no basis to impose the penalty, remand was unnecessary - the appellate power to quash a penalty is exercisable when the penalty is found without basis. Remand in that context resulted in an unjustified delay and permitted continuation of an unsupported penalty process. Ratio vs. Obiter: Ratio - where an appellate authority determines there is no basis to impose a penalty, it is incumbent on the appellate authority to set aside the penalty rather than remand for the same authority to articulate reasons ex post facto; remand is not required when the penalty is clearly unsupported on record. Conclusion: The Tribunal upheld setting aside the penalty but held that the remand to the original authority was unjustified; the Tribunal set aside the remand direction of the Commissioner (Appeals). Issue 2: Violation of natural justice by imposition of penalty without speaking order, show cause notice or personal hearing Legal framework: Principles of natural justice and statutory procedure require that administrative penalties be imposed following issuance of a show cause notice, recording of reasons, and opportunity of hearing; orders must be speaking and disclose the legal basis. Precedent Treatment: No authority was relied upon; the Tribunal applied the general doctrine that non-issuance of speaking order and lack of opportunity to defend are procedural infirmities rendering penalty unsustainable. Interpretation and reasoning: The Commissioner (Appeals) recorded that the assessing authority did not issue a speaking order, did not indicate the statutory section under which penalty was imposed, and had not given the appellant an opportunity to defend. These defects prevented the appellant from mounting an effective defense and amounted to a violation of natural justice. Ratio vs. Obiter: Ratio - imposition of penalty without a speaking order identifying the legal basis and without issuing a show cause notice or providing personal hearing violates natural justice and can be set aside. Conclusion: The Tribunal endorsed the Commissioner's finding of procedural infirmity and held that the penalty was without basis and unsustainable for failure to comply with principles of natural justice. Issue 3: Whether delay in filing bill of entry was excused by port detention of one container and whether there was intention to delay Legal framework: Liability for delay-related penalties hinges on establishing culpable delay or intention; legitimate external causes (e.g., port hold-ups resolved by authorities) can constitute sufficient cause to excuse delay. Precedent Treatment: No authorities cited; the Tribunal applied factual assessment standards to determine absence of intention. Interpretation and reasoning: The factual record showed two containers arrived earlier and the third was held at the port due to excess weight until permission was granted to transport it to the ICD. The bill of entry was filed upon arrival of the third container. There was no material to show deliberate delay or that the importer sought to procrastinate. The Tribunal found the delay attributable to circumstances beyond the importer's control (shipper/port actions) and not to the appellant's intention. Ratio vs. Obiter: Ratio - administrative penalties predicated on delay cannot be sustained where delay is caused by circumstances outside the importer's control and there is no evidence of intentional delay. Conclusion: The Tribunal concluded there was sufficient cause for the delay and no evidence of intentional delay; this supported setting aside the penalty. Issue 4: Consequence of non-compliance by assessing authority with appellate remand directions Legal framework: Appellate remands require compliance by the original authority within reasonable time; persistent non-compliance may warrant appellate intervention to prevent prejudice and secure finality. Precedent Treatment: No precedents discussed; principles of administrative efficiency and fairness informed the Tribunal's approach. Interpretation and reasoning: The Commissioner (Appeals) remanded the matter with a 30-day direction to issue a speaking order and provide hearing; the assessing authority had not complied even after more than a year. The Tribunal observed that continued non-compliance compounded prejudice to the appellant and reinforced the impropriety of remand where the penalty was already found baseless. Ratio vs. Obiter: Ratio - failure of the original authority to comply with appellate remand within a reasonable time supports appellate correction and may render remand an ineffective remedy; appellate authority may directly dispose of the matter where remand would perpetuate inaction and prejudice. Conclusion: The Tribunal found the remand ineffective due to inaction by the original authority and resolved the issue by quashing the penalty without further remand. Overall Disposition The Tribunal allowed the appeal to the extent of quashing the penalty of Rs. 12,15,000/-, upheld the finding that the penalty lacked basis and violated natural justice, and set aside the remand direction of the Commissioner (Appeals) as unjustified given the appellate finding that the penalty was unsustainable. The Tribunal found that delay in filing the bill of entry was excused by port-related events and there was no evidence of intentional delay by the importer.