2026 (1) TMI 488 - HC - Customs

Duty drawback recovery order challenged for alleged lack of hearing; ex parte order upheld, writ refused, appeal allowed within deadline.

An assessee challenged an ex parte Order-in-Original directing recovery of duty drawback as violating natural justice. The HC held that no breach occurred ... Validity of an ex parte order - violation of principles of natural justice - demanding recovery of duty drawback - adequate hearing opportunities - HELD THAT:- This Court, in view of the fact that the petitioner chose not to attend the personal hearing dates afforded by the respondent on three occasions and the petitioner, having not submitted the documents, despite specific request having been made by the petitioner through one of their emails seeking time to furnish those documents, this Court is not inclined to interfere with the impugned Order-in-Original, as, in the opinion of this Court, principles of natural justice has not been violated by the respondent. However, this Court, in the interest of justice, to enable the petitioner to seek alternate statutory remedy, is inclined to direct the petitioner to file an Appeal against the impugned order before the Commissioner of Customs (Appeals), the Competent Authority, to challenge the impugned Order-in- Original within a time frame to be fixed by this Court, that too, because, the petitioner is having the benefit of an interim stay of the operation of the impugned Order-in-Original in this Writ Petition till date. This Writ Petition is disposed of. 1. ISSUES PRESENTED AND CONSIDERED 1) Whether the impugned Order-in-Original suffered from violation of principles of natural justice on the ground that it was passed ex parte, despite issuance of personal hearing notices and the petitioner's conduct in not attending hearings or seeking an alternate date. 2) Whether the Court should exercise writ jurisdiction to interfere with the Order-in-Original, or instead require the petitioner to pursue the alternate statutory appellate remedy, and what protective directions (including timeline and coercive action restraint) should govern such course. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Alleged violation of principles of natural justice due to ex parte adjudication Legal framework: The Court examined the allegation of breach of principles of natural justice in the context of whether adequate hearing opportunities were afforded and whether the petitioner availed them. Interpretation and reasoning: The Court treated as undisputed that three personal hearing opportunities were afforded and that personal hearing notices were sent to the petitioner. The petitioner did not attend any of the scheduled hearings and also did not send a reply requesting another suitable date for personal appearance. The Court further noted that the petitioner had sought time by email to furnish documents (including Bank Realisation Certificates and related statements), but found that, despite sufficient time and opportunities, the documents were not furnished to the respondent. On these facts, the Court held that non-participation by the petitioner, despite repeated hearing opportunities, could not be converted into a ground to allege denial of natural justice. Conclusion: The Court conclusively held that principles of natural justice were not violated by the respondent and declined to interfere with the impugned Order-in-Original on that ground. Issue 2: Interference in writ jurisdiction versus directing the petitioner to avail alternate statutory remedy; consequential directions Legal framework: The Court considered the availability of an alternate statutory remedy of appeal before the Commissioner of Customs (Appeals) and structured relief to enable the petitioner to invoke that remedy. Interpretation and reasoning: Having found no violation of natural justice and noting the petitioner's failure to attend hearings, the Court held it was not inclined to interfere with the Order-in-Original in writ jurisdiction. At the same time, in the interest of justice, and considering that the petitioner had enjoyed interim protection during the writ proceedings, the Court directed the petitioner to pursue the statutory appeal within a fixed timeframe, subject to compliance with mandatory pre-deposit. The Court also issued a protective direction that no coercive steps be taken for execution of the Order-in-Original until the appellate authority passed final orders, and fixed a timeline for disposal of the appeal on merits. Conclusion: The writ petition was disposed of with directions: the petitioner must file the statutory appeal within 30 days of receipt of the order with mandatory pre-deposit; the appellate authority must entertain and decide it on merits within six months; and no coercive steps shall be taken until final appellate orders are passed.