Natural justice in customs adjudication requires effective service of notice before confiscation or penalty orders can stand.
Confiscation and penalty proceedings were vitiated where the show-cause notice was not effectively served on the assessee despite an available USA address in the statement and passport. The High Court held that the adjudicating authority had not taken reasonable steps to serve notice at that known address, and substituted service by affixture on the notice board was insufficient in these circumstances. The ex parte order was therefore set aside for breach of natural justice, and the matter was remanded for fresh adjudication after granting an opportunity of hearing.
Issues: Whether the confiscation and penalty order passed without effective service of the show-cause notice and without giving the petitioner an opportunity of hearing was vitiated for breach of principles of natural justice, warranting quashing and remand.
Analysis: The notice issued in the adjudication proceedings had returned undelivered and the authority relied on substituted service by affixing it on the notice board. The Court found that the petitioner's USA address was available from the statement and passport, and that the adjudicating authority failed to take reasonable steps to serve notice at that address. In those circumstances, service at the local address and resort to affixture under section 153(e) of the Customs Act, 1962 were not accepted as sufficient compliance when the petitioner was not effectively notified of the proceedings.
Conclusion: The order was held to be vitiated by breach of natural justice, and the matter was remanded for fresh adjudication after granting the petitioner an opportunity of hearing. The conclusion is in favour of the assessee.
Ratio Decidendi: Where the adjudicating authority fails to effect reasonable service of notice at an available and known address, an ex parte confiscation or penalty order is liable to be set aside for violation of natural justice and the matter remitted for de novo consideration.
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