Natural justice and mandatory customs notice requirements led to setting aside of a penalty order and remand for fresh adjudication.

Penalty proceedings under the Customs Act were held void where no show cause notice was shown to have been served and no personal hearing was afforded, breaching the mandatory requirements of Section 124 and the principles of natural justice. The adjudication was also unsupported by the necessary allegation under Section 112(b), indicating non-application of mind. As the order had been passed ex parte without first identifying the passenger or ascertaining the address, the penalty order was set aside and the matter remanded for fresh adjudication in accordance with law.

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Issues: Whether the penalty order was vitiated for want of show cause notice and personal hearing, resulting in violation of the principles of natural justice and requiring the matter to be remanded.

Analysis: The order recorded no service of show cause notice on the appellant and proceeded to adjudicate the matter ex parte without first ascertaining the identity and address of the passenger. The adjudication was thus made in disregard of the statutory requirement of notice and hearing under Section 124 of the Customs Act, 1962. The imposition of penalty under Section 112(a) and (b) was also unsupported by the necessary allegation under clause (b), showing non-application of mind. An order passed in violation of mandatory procedure and natural justice was held to be void.

Conclusion: The penalty order was set aside and the matter was remanded to the Addl. Collector to determine the identity of the passenger, follow the procedure under Section 124 of the Customs Act, 1962, and then pass orders in accordance with law.

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