2025 (8) TMI 1488 - HC - Customs

Adjudicator's rubber-stamp of show-cause notice under s.112(a) & (b) quashed; matter remanded for fresh merits hearing

Senthil Kumar Versus The Commissioner Of Customs Adjudication Air, Chennai I, The Additional Directior Directorate Of Revenue Intelligence, Chennai And FAYAZUDEEN, Bakker Hussain, Abdul Faris Versus The Commissioner Of Customs (in Situ)

Senthil Kumar Versus The Commissioner Of Customs Adjudication Air, Chennai I, The Additional Directior Directorate Of Revenue Intelligence, Chennai And ... 1. ISSUES PRESENTED AND CONSIDERED 1. Whether an order-in-original imposing penalty under Section 112(a) & (b) of the Customs Act, 1962 is vitiated for violation of the principles of natural justice where the authority reproduces verbatim the show cause notice in the final order and fails to acknowledge or consider the replies of the affected persons. 2. Whether verbatim 'cut-copy-paste' reproduction of a show cause notice in an adjudication order without independent reasons constitutes pre-determination or denial of a reasoned decision such that writ jurisdiction under Article 226 is available. 3. Whether the remedial consequence for the defects identified (failure to consider replies and lack of independent reasoning) is quashing of the impugned order and remand for fresh consideration despite the availability of a statutory appeal. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Natural justice: failure to consider replies / acknowledgement Legal framework: Principles of natural justice require that an affected person be given a fair hearing and that submissions made in response to a show cause notice be acknowledged and considered with reasons in the final adjudicatory order. Precedent treatment: The Court applied established administrative law principles on fair hearing; reliance is placed on the approach in the cited Supreme Court authority emphasizing the need for substantive reasoning in adjudicatory decisions. Interpretation and reasoning: The Court found that at least one petitioner's reply was acknowledged as received yet not considered nor the reasons stated for its rejection. For other petitioners the impugned order failed even to acknowledge receipt of replies. Documentary proof (postal receipt) established receipt in at least one instance. The absence of consideration and absence of reasons why replies were unavailing were held to be a breach of the duty to afford a fair hearing and to record reasons. Ratio vs. Obiter: Ratio - An adjudicatory order which does not consider or explain the non-acceptance of replies given to a show cause notice violates principles of natural justice and renders the order amenable to quashing under writ jurisdiction. Conclusions: The impugned order was vitiated insofar as it failed to consider replies and to give reasons, thereby violating natural justice; remedial intervention was warranted. Issue 2 - 'Cut-copy-paste' reproduction and requirement of independent reasoning Legal framework: The adjudicator must provide independent, substantive reasoning in the final order; reasons are the 'soul' of a judicial/administrative decision and must demonstrate application of mind to the evidence and submissions. Precedent treatment: The Court followed the principle in the Supreme Court decision that prolific use of copy-paste from antecedent documents without independent reasons is impermissible and cannot substitute for substantive reasoning. Interpretation and reasoning: A comparative chart established near-verbatim reproduction of the show cause notice paragraphs in the impugned order. The Court found that the authority effectively reiterated the allegations but did not articulate independent findings or address petitioners' rebuttals with reasons. The respondent's contention that procedure was followed (opportunity to be heard) was rejected as insufficient where the final order fails to show consideration of the replies and independent application of mind. Ratio vs. Obiter: Ratio - Verbatim reproduction of a show cause notice in the concluding order, absent independent reasoning addressing the replies, amounts to inadequate adjudication and may be treated as pre-determination or failure to reason. Conclusions: The impugned order was defective because it cut, copied and pasted the show cause notice into the final order without independent reasoning; this lack of reasoning justified quashing and remand for fresh consideration. Issue 3 - Availability of writ remedy despite statutory appeal / appropriate relief Legal framework: Writ jurisdiction under Article 226 is available where orders are passed in breach of natural justice or where adjudicatory authority has pre-determined issues; availability of a statutory appeal does not oust writ relief in such circumstances. Precedent treatment: The Court applied the settled principle that where fundamental procedural defects exist (e.g., denial of fair hearing or pre-determination), a writ petition is maintainable notwithstanding the existence of an alternative statutory remedy. Interpretation and reasoning: Respondents argued that a statutory appeal lay and petitioners should have availed it. The Court held that because the impugned order disclosed a procedural defect going to the root of adjudication (failure to consider replies and lack of reasons), writ relief was appropriate. The Court refrained from expressing any opinion on merits and limited itself to quashing only insofar as it affected the petitioners, directing fresh consideration. Ratio vs. Obiter: Ratio - Where there is violation of natural justice or evident pre-determination, writ relief may be granted even if a statutory appeal exists; appropriate remedy is quashing and remand for fresh adjudication with compliance of natural justice. Conclusions: Writ jurisdiction was properly invoked; the Court quashed the impugned order in respect of the petitioners and remanded the matter for fresh decision on merits after affording a fair hearing within a specified time frame. Remedial directions and limits of interference Legal framework and reasoning: The Court exercised corrective jurisdiction to ensure compliance with natural justice and adequate reasoning but declined to adjudicate merits of the underlying allegations (e.g., involvement in smuggling, factual seizure from third party), noting those are for the authority to decide on fresh consideration. Conclusions: The Court set aside the impugned order only insofar as it related to the petitioners, remanded the matter for fresh adjudication within four months, directed that the petitioners be afforded a fair hearing and that the authority must give independent reasons; the Court did not express any view on substantive merits and imposed no order as to costs. Cross-references Issue 1 and Issue 2 are interlinked: the failure to consider replies (Issue 1) and verbatim reproduction without independent reasons (Issue 2) together establish the breach of natural justice and inadequate reasoning justifying writ relief (Issue 3 and remedial directions).