2009 (8) TMI 246 - HC - Customs

High Court Overturns Orders for Lack of Hearing, Emphasizes Natural Justice

KCK. EXPORTS LIMITED Versus UNION OF INDIA

The High Court quashed the orders dated 18-1-2000, 9-2-2000, and 27-1-2000 due to lack of opportunity for the petitioner to be heard. The Court emphasized ... Recovery proceedings for erroneous drawback - impugned order has been passed directing the petitioner to refund the drawback claimed - impugned order has been passed by the respondents without issuing any show cause notice or affording opportunity of hearing to the petitioner - Circular No. 68/97, dated 2-12-1997 was issued by the Central Government on 2-12-1997 by which draw back has been intended to the exports under DEPB – drawback granted on basis of circular ibid - Once the benefit was given to the petitioner on the basis of certain Circulars, the said benefit cannot be withdrawn without giving any opportunity to the petitioners. It is a settled law that principle of natural justice has to be complied with and no order can be passed without affording proper opportunity to person concerned. - In the present matter it is an admitted fact that the benefit was given by the authority concerned on the basis of Circular issued by the Central Government – impugned order set aside - In the result, present writ petition is allowed Issues involved:1. Quashing of orders dated 18-1-2000, 9-2-2000, and 27-1-2000.2. Validity of the impugned communications/orders dated 27-1-2000, 9-2-2000, and 22-3-2000.3. Compliance with principles of natural justice in administrative matters.Analysis:Issue 1: Quashing of OrdersThe petitioner, engaged in manufacturing and exporting leather goods, sought relief against orders dated 18-1-2000 and 9-2-2000. The petitioner, a declarant unit exempt from Central Excise duty, applied for draw back under Circular No. 68/97. Despite being granted rebate, the Deputy Commissioner demanded a refund. The High Court held that the impugned orders were passed without affording the petitioner an opportunity of hearing. It emphasized that the benefit granted based on Circulars cannot be withdrawn without due process. The Court quashed the orders and remanded the matter back for fresh consideration.Issue 2: Validity of Impugned CommunicationsThe petitioner challenged the communications/orders dated 27-1-2000, 9-2-2000, and 22-3-2000 seeking a refund. The Court noted similarities with another writ petition and disposed of both together. It was argued that no opportunity was required as the matter pertained to policy. However, the Court held that principles of natural justice must be followed, especially when civil consequences are involved. The Court found that the impugned orders were untenable as no opportunity was given to the petitioner. Consequently, the Court quashed the orders and directed the petitioners to file fresh objections for reconsideration.Issue 3: Compliance with Natural JusticeThe Court reiterated the importance of adhering to natural justice principles in administrative matters. It emphasized that even in cases with civil consequences, proper opportunity must be provided before passing orders. The Court highlighted that once a benefit is granted based on Circulars, it cannot be revoked arbitrarily. In this case, the authority had not disposed of the petitioner's representation. Therefore, the Court held that the impugned orders were unsustainable and ordered a fresh consideration with due process.In conclusion, the High Court allowed the writ petitions, directing the petitioners to submit fresh objections for reconsideration while emphasizing the importance of following natural justice principles in administrative decisions. The Court clarified that it had not expressed any opinion on the merits, leaving the final decision to the concerned authority.