2025 (8) TMI 23 - HC - Customs

Impugned order violated natural justice by denying proper hearing intervals and ignoring petitioner's reply under CBIC Circular

M/s Variety Gift & Stationery Versus The Assistant Commissioner of Customs (Gr. 2), Chennai

The HC held that the impugned order violated natural justice as the respondent failed to provide personal hearing dates with sufficient intervals as ... Violation of principles of natural justice - respondent has not adhered to the CBIC Circular, dated 10.03.2017 by affording three personal hearings to the petitioner with sufficient interval of time - reply sent by the petitioner to the show cause notice has not been considered in the impugned order-in-original - rejection of petitioner's classification - HELD THAT:- Admittedly, the personal hearing dates for the petitioner were fixed on 09.10.2024, 10.10.2024 and 11.10.2024, but however, the petitioner failed to appear on the said dates. However, as seen from Clause 14.3 of the Board's Circular, dated 10.03.2017, it has been made clear that there should be sufficient interval of time between the personal hearing dates and further it has been made clear that separate notice of personal hearing will have to be sent by the respondent for each and every personal hearing. However, as seen from the personal hearing dates, the respondent has fixed the date of personal hearings consecutively without any sufficient interval of time as the hearing dates were fixed on 09.10.2024, 10.10.2024 and 11.10.2024 which are consecutive dates. The petitioner has also placed on record before this Court the reply sent by the petitioner to the respondent, dated 18.05.2024. Admittedly, the said reply has not been considered in the impugned order-in-original. The petitioner in the said reply has categorically contended by giving reasons as to why the classification declared by the petitioner is the correct classification. However, in the impugned order-in- original, the respondent has stated that no reply was received from the petitioner. The impugned order-in-original is dated 17.10.2024. The reply sent by the petitioner was on 18.05.2024 and received by the respondent on 20.05.2024. When the impugned order-in-original has been passed only on 17.10.2024, the respondent ought to have considered the reply submitted by the petitioner, which is dated 18.05.2024 and admittedly, the same was also received by the respondent on 20.05.2024. However, in the impugned order-in-original, it has been stated that no reply was received from the petitioner by total non application of mind. This Court is of the considered view that the impugned order-in-original has been passed in violation of principles of natural justice by not considering the reply sent by the petitioner dated 18.05.2024 and also by not adhering to Clause 14.3. of the Board Circular, dated 10.03.2017 which makes it clear that three personal hearing notices will have to be given to the petitioner by fixing personal hearing dates at sufficient intervals of time. The matter will have to be remanded back to the respondent for fresh consideration, on merits and in accordance with law within a time frame to be fixed by this Court, after adhering to the principles of natural justice and by affording three personal hearings to the petitioner - Petition allowed by way of remand. ISSUES: Whether the impugned order-in-original was passed in violation of the principles of natural justice.Whether the respondent adhered to the Board Circular No.1053/2/2017-CX dated 10.03.2017, specifically Clause 14.3, regarding affording three personal hearings with sufficient intervals.Whether the reply sent by the petitioner to the show cause notice was duly considered in the impugned order-in-original.Whether the classification of goods under the Customs Tariff Heading (CTH) was correctly determined by the respondent.Whether the imposition of differential duty, interest under Section 28AA, confiscation, redemption fine under Section 125(1), and penalty under Section 112A of the Customs Act, 1962 was justified. RULINGS / HOLDINGS: The impugned order-in-original was passed in violation of principles of natural justice by failing to consider the petitioner's reply dated 18.05.2024 and by not adhering to Clause 14.3 of the Board Circular, which mandates three personal hearings with sufficient intervals.The respondent did not comply with the mandatory requirement under Clause 14.3 of the Board Circular dated 10.03.2017, as the personal hearings were fixed on three consecutive days (09.10.2024, 10.10.2024, and 11.10.2024) without sufficient interval of time, thus violating the procedural safeguards.The respondent's statement in the impugned order that no reply was received from the petitioner constitutes a 'total non application of mind' since the reply was submitted on 18.05.2024 and received on 20.05.2024, well before the order dated 17.10.2024.The impugned order-in-original is quashed and the matter is remanded for fresh consideration on merits and in accordance with law, after affording three personal hearings with sufficient intervals and adhering to the principles of natural justice.The Court did not decide on the correctness of the classification or the imposition of duties, interest, confiscation, redemption fine, or penalty, leaving these issues to be reconsidered by the respondent on remand. RATIONALE: The Court applied the mandatory provisions of Clause 14.3 of the Board Circular No.1053/2/2017-CX dated 10.03.2017, which requires at least three opportunities of personal hearing with sufficient intervals and separate communications for each hearing to ensure a fair opportunity to be heard.The principle of natural justice mandates that the adjudicating authority must consider all replies submitted by the noticee before passing an order; failure to do so amounts to non-application of mind and procedural unfairness.The Court reaffirmed prior rulings that the directions contained in the cited Board Circular are mandatory and not directory, emphasizing strict compliance.The consecutive scheduling of personal hearings without sufficient intervals was held to be non-compliant with the Circular's requirements, undermining the fairness of the adjudication process.No dissent or doctrinal shift was noted; the Court followed established legal principles on natural justice and procedural fairness in administrative adjudication.