2025 (12) TMI 759 - HC - Customs

Writ held maintainable where reply to show cause was ignored, breach of natural justice vitiated adjudication

HC held the writ petition maintainable despite availability of a statutory appeal, invoking the exception for breach of natural justice. The petitioner ... Maintainability of petition - availability of alternative remedy of appeal - Violation of principls of natural justice - non-consideration of petitioner's reply - HELD THAT:- The petitioner has placed on record proof of service in the form of email records and postal records. Therefore, it is proceeded on the basis that the petitioner had filed a reply to the show cause notice. The impugned order, however, proceeds on the basis that the petitioner filed no reply. This means that the petitioner’s reply has been completely ignored. This would amount to a violation of the principles of natural justice and fair play. This is one of the well-known exceptions to the rule requiring the parties to exhaust the alternative remedies provided by the statute. On the above ground of failure of natural justice arising out of non-consideration of the petitioner’s reply to the show cause notice, the impugned order in original is quashed and set aside and the matter remanded to the adjudicating authority to decide and dispose of the show cause notice afresh. Petition disposed off by way of remand. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the writ petition is maintainable despite the availability of a statutory appeal under Section 128 of the Customs Act, in view of an alleged breach of principles of natural justice. 1.2 Whether non-consideration of the petitioner's reply to the show cause notice, despite its service on the adjudicating authority, constitutes a violation of the principles of natural justice and fair play. 1.3 Appropriate relief and scope of interference, including whether the impugned order should be set aside wholly or only as regards the petitioner, and the directions to be issued on remand. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of writ petition despite statutory appeal under Section 128 of the Customs Act Legal framework (as discussed) 2.1 The Court noted that an appeal is provided against the order in original under Section 128 of the Customs Act and that ordinarily such petitions are not entertained when an alternative statutory remedy is available. Interpretation and reasoning 2.2 The Court examined the petitioner's plea that a detailed reply dated 11 March 2023 to the show cause notice had in fact been filed and duly served, but the impugned order recorded that no reply had been filed and proceeded on that basis. 2.3 The Court treated the allegation of non-consideration of the reply, if true, as a serious procedural defect amounting to violation of principles of natural justice and fair play. 2.4 The Court observed that such a violation falls within 'one of the well-known exceptions' to the rule that parties must first exhaust alternative statutory remedies. Conclusions 2.5 The writ petition was held to be maintainable notwithstanding the availability of an appeal under Section 128 of the Customs Act, because the case involved a fundamental breach of natural justice. Issue 2: Non-consideration of reply to show cause notice and violation of natural justice Interpretation and reasoning 2.6 The petitioner asserted that a detailed reply to the show cause notice was filed by e-mail and speed post on 11 March 2023, and produced email and postal records as proof of service. 2.7 By an earlier order, the Court directed the respondent to file an affidavit specifically dealing with the allegations of failure of natural justice, including whether the reply was received. Time was granted till 14 November 2025. 2.8 The respondents did not file any affidavit disputing the petitioner's averments regarding filing and service of the reply. The Court noted that the averments in the petition therefore remained unchallenged. 2.9 On examination of the record, the Court found that the petitioner did in fact file the reply to the show cause notice and that proof of service had been placed on record. 2.10 The impugned order nevertheless proceeded on the basis that no reply had been filed by the petitioner. The Court held that this necessarily meant the petitioner's reply had been completely ignored in the adjudication process. 2.11 The Court held that such complete non-consideration of a duly filed reply amounts to violation of the principles of natural justice and fair play, especially when the order proceeds as if no reply exists. Conclusions 2.12 The Court concluded that the impugned order suffered from a failure of natural justice on account of non-consideration of the petitioner's reply to the show cause notice. 2.13 On this ground alone, the order in original dated 27 March 2025 was quashed and set aside as against the petitioner. Issue 3: Relief, remand, and scope of setting aside the impugned order Interpretation and reasoning 2.14 Having found a violation of natural justice, the Court considered it appropriate to remand the matter to the adjudicating authority for fresh adjudication rather than decide the merits. 2.15 The Court directed that, upon remand, the adjudicating authority must consider the petitioner's reply (identified as Exhibit C to the petition) and afford an opportunity of personal hearing to the petitioner or his representative. 2.16 The Court further directed that the adjudicating authority shall pass a reasoned order and communicate the same to the petitioner. 2.17 The Court also considered the impact of its decision on other noticees covered by the same order in original and the show cause notice. Conclusions 2.18 The impugned order dated 27 March 2025 was set aside only to the extent it concerned the petitioner, described as Noticee Nos. 3 and 4 in the show cause notice dated 23 January 2023 and in the order in original. 2.19 The impugned order was expressly left undisturbed with respect to the other noticees. 2.20 The matter was remanded to the adjudicating authority to decide and dispose of the show cause notice afresh in accordance with law, after considering the petitioner's reply and granting a personal hearing.