Authority's order set aside for violating natural justice principles under Section 28AAA of Customs Act

The Bombay HC set aside the Adjudicating Authority's order dated 17th August 2021 for violating natural justice principles under Section 28AAA of the Customs Act, 1962. The Authority failed to consider petitioner's submissions during personal hearing and passed a non-speaking order based solely on recovery made. The court found the investigation incomplete, noting petitioner never admitted liability and paid only under pressure due to export obligations and IEC alert. The court directed proper investigation into forged scrip registration and re-registered license misuse by multiple importers.

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Issues:
Violation of principles of natural justice and contravention of provisions of Section 28AAA of the Customs Act, 1962.

Analysis:
The petitioner, engaged in the export of agricultural commodities, alleged a violation of natural justice and contravention of Section 28AAA of the Customs Act, 1962. The petitioner sought to set aside an order-in-original dated 17th August 2021, citing issues related to the Focus Product Scheme (FPS) implemented by the Directorate General of Foreign Trade (DGFT). The petitioner had sold a duty credit scrip to various entities, leading to allegations of fraudulent re-registration and misuse of the scrip. The Revenue claimed that the petitioner admitted liability and paid a substantial amount under protest to release held-up shipments. However, the petitioner sought a refund of the amounts paid, including customs duty, interest, and penalty.

The Adjudicating Authority passed a non-speaking order, relying on Section 28AAA of the Act to hold the petitioner liable without adequately addressing the petitioner's submissions or conducting a detailed analysis. The Authority directed the appropriation of amounts paid without a thorough discussion on the applicability of the Act to the petitioner's case. The petitioner appealed this decision, leading to a remand for fresh adjudication by the Commissioner of Customs (Appeals).

The Commissioner found that the original order lacked adherence to natural justice principles and remanded the matter for reconsideration. However, the subsequent order dated 17th August 2021 by respondent no. 3 raised concerns due to incomplete investigations and lack of conclusive evidence. The petitioner was found to have paid under pressure, not admitting liability, and the investigation was criticized for adopting a shortcut approach without proper verification.

The High Court quashed the impugned order, emphasizing the need for a thorough investigation to determine the truth and hold the guilty party accountable. The Court directed respondent no. 2 to investigate the forged scrip registration and its subsequent use, instructing a refund of the amount paid by the petitioner with applicable interest. The Court highlighted the importance of following due process and ensuring a fair and comprehensive investigation to uphold justice.

In conclusion, the High Court's decision to quash the impugned order and direct a detailed investigation reflects the significance of procedural fairness and thorough examination in legal proceedings, particularly in cases involving alleged violations and misuse of statutory provisions.

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