Natural justice in customs clearance conditions: onerous security cannot be imposed without prior notice and a fair hearing.

An onerous customs clearance condition requiring a full-value bond and a 100 per cent bank guarantee could not be sustained where the importer was not given prior notice of that proposal or a meaningful opportunity to respond. The communications only sought documents for the bills of entry and did not disclose reliance on Rule 6(4)(c) of the CAROTAR Rules, 2020 or the proposed security condition. The Bombay High Court held that imposing such a condition without fair notice breached natural justice and vitiated the decision-making process. The impugned conditions were set aside, and the matter was remitted for reconsideration after hearing the importer and passing a speaking order.

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Issues: Whether the condition requiring the importer to furnish a bond for the full value of goods and a bank guarantee for 100 per cent of the differential duty could be sustained when no prior notice or opportunity to respond to that proposal was given.

Analysis: The communications sent to the importer sought production of documents in relation to the bills of entry, but they did not disclose any proposal to insist upon a full bond and bank guarantee, nor did they refer to Rule 6(4)(c) of the CAROTAR Rules, 2020. A person affected by such a condition must have a fair idea of the case to be met and a meaningful opportunity to respond before the condition is imposed. Since no such opportunity was afforded, the decision-making process suffered from a breach of natural justice. The merits of the proposed condition were not examined, and all contentions on that aspect were kept open.

Conclusion: The impugned conditions were set aside for breach of natural justice, and the matter was directed to be reconsidered after hearing the importer and passing a speaking order.

Ratio Decidendi: An onerous customs clearance condition affecting civil rights cannot be imposed without prior notice disclosing the proposal and a fair opportunity to respond; failure of procedural fairness vitiates the decision-making process.

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