2025 (8) TMI 22 - HC - Customs

Natural Justice Violated: Only One Hearing Given Instead of Three, Case Remanded for Fresh Consideration Under Law

M/s. D2D International, (Represented by its Proprietor, Shri Sasikumar Subbaiya) Versus The Assistant Commissioner of Customs, Maharashtra

The HC held that the principles of natural justice were violated as the petitioner was given only one hearing instead of the required three. The ... Violation of principles of natural justice - opportunity of hearing was provided only once rather than three time as required - failure to produce Bank Realization Certificates for the subject exports for the periods 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14 - HELD THAT:- In the case on hand, admittedly as seen from the impugned order in original, the above procedure has not been followed. Only one personal hearing was afforded and thereafter the impugned order in original came to be passed. Since the petitioner has also filed documents before this Court to establish their case that they have the Bank Realization Certificates for the subject period for which the demand has been made and since only one personal hearing was afforded to the petitioner prior to passing of the impugned order in original, necessarily one more opportunity should be granted to the petitioner to place all the relevant documents, which includes the Bank Realization Certificates for the subject period from 2009-10 to 2013-14 to enable the respondent to consider the matter afresh on merits and in accordance with law and thereafter decide as to whether the petitioner is still liable to pay the amount as per the impugned demand or not. Since the respondent had violated the principles of natural Justice and since the petitioner has also filed documents to substantiate their contention that they are not liable to pay the amount stipulated under the impugned order in original, this Court is of the considered view that the impugned order in original has to be quashed and the matter has to be remanded back to the very same respondent for fresh consideration on merits and in accordance with law and after affording an opportunity to the petitioner to produce the Bank Realization Certificates for the subject period and other documents, if any. This Court is not expressing any opinion on the merits of the petitioner's contentions. It is for the respondent to consider the same on merits while passing the final orders pursuant to the directions issued by this Court today. The matter is remanded back to the respondent for fresh consideration on merits and in accordance with law - Petition allowed by way of remand. ISSUES: Whether the principles of natural justice were violated by affording only one personal hearing instead of three as mandated by the relevant Circular in proceedings under Rule 16A of the Customs, Central Excise & Service Tax Drawback Rules, 1995 read with proviso to Section 75(1) of the Customs Act, 1962 and FEMA, 1999.Whether the petitioner complied with the provisions of Rule 16A of the Customs, Central Excise & Service Tax Drawback Rules, 1995 r/w proviso to Section 75(1) of the Customs Act, 1962 and FEMA, 1999 by possessing and producing Bank Realization Certificates for the relevant export periods.Whether the impugned demand for recovery of duty drawback is sustainable in the absence of adequate opportunity to produce relevant documents including Bank Realization Certificates.Whether the writ petition is maintainable in view of the availability of a statutory appellate remedy under Section 128 of the Customs Act. RULINGS / HOLDINGS: The Court held that the principles of natural justice were violated as only one personal hearing was afforded despite the Circular issued by the Central Board of Excise and Customs dated 10.03.2017 mandating that 'at least three opportunities should be given with sufficient interval of time' for personal hearing in duty drawback claims.The petitioner has produced Bank Realization Certificates for the relevant periods (2009-10 to 2013-14) and contended compliance with Rule 16A and related provisions; therefore, the impugned demand was passed without proper application of mind.The impugned order confirming the demand is quashed and the matter is remanded for fresh consideration on merits after affording the petitioner an opportunity to produce all relevant documents, including Bank Realization Certificates, and after granting at least one more personal hearing.The Court did not express any opinion on the merits of the petitioner's contentions but emphasized adherence to the principles of natural justice and proper procedure in adjudication.The writ petition is entertained notwithstanding the availability of a statutory appellate remedy under Section 128 of the Customs Act, due to the violation of natural justice and the need for fresh consideration. RATIONALE: The Court applied the procedural requirements under Rule 16A of the Customs, Central Excise & Service Tax Drawback Rules, 1995, proviso to Section 75(1) of the Customs Act, 1962, and the Foreign Exchange Management Act, 1999, alongside the Circular dated 10.03.2017 issued by the Central Board of Excise and Customs mandating multiple personal hearings.The Division Bench precedent was cited to reinforce the mandatory nature of providing 'at least three opportunities' for personal hearing in duty drawback claims to comply with principles of natural justice.The Court recognized that procedural fairness requires adequate opportunity to produce Bank Realization Certificates, which are critical documents to establish compliance and negate liability for the demand.No doctrinal shift or dissent was noted; the decision reaffirmed established principles of natural justice and procedural fairness in customs adjudication.