2026 (2) TMI 1287 - AT - Customs

Right to fair hearing vitiates appellate orders lacking opportunity to be heard; matter remitted for fresh hearing.

Appellate decision set aside for violation of the right to be heard: the appellate order that allowed respondents and annulled confiscation and penalties ... Principles of natural justice - audi alteram partem - reasonable opportunity of being heard - adjournment and grant of time in appeal proceedings - power to refer back / remand for fresh adjudication - setting aside orders for breach of natural justice without adjudicating merits - HELD THAT:- Section 128-A the Customs Act, 1962, provides procedure in appeal before Learned Commissioner (Appeals), Commissioner have power that an order or decision has been passed without following the principles of natural justice, may refer the matter back for fresh adjudication or decision. It means that following of principles of natural justice is necessary at the stage of adjudication. It cannot be construed the principles required to be followed by the Adjudication Authority are not equally applicable on the Appellant Authority. Hon’ble Supreme Court in the case of Siemens Engineering and Manufacturing Company of India Ltd., Vs Union of India [1976 (4) TMI 204 - SUPREME COURT], wherein, held that “It is essential that Administrative Authorities and Tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. The Rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this Rule must be observed in its proper spirit and mere pretence of compliance with it would not be satisfy the requirement of law.” Thus, we have the considered that the impugned order passed by the Commissioner (Appeals), suffers from gross violation of principles of natural justice, as the Department was denied by opportunity of hearing which is very important for any adjudication. Accordingly, the impugned order is set aside and matter is remanded to the Commissioner (Appeals), with a direction to decide the appeals De novo, after providing due opportunity of hearing to both sides, in accordance with law. Issues: (i) Whether the Commissioner (Appeals) order suffered from gross violation of principles of natural justice by denying the Department a proper opportunity of hearing and, if so, whether the impugned order must be set aside and remitted for fresh decision.Analysis: The appeals arise from an order of the Commissioner (Appeals) which allowed respondents and set aside adjudication that confiscated goods and imposed penalties under the Customs Act, 1962. The record shows the Department asserted it was not provided an online link to participate in the scheduled personal hearing and was absent at the time of final hearing. Statutory provisions governing appellate procedure and adjournment powers, including Section 128(1-A) and Section 128-A of the Customs Act, 1962, vest the Commissioner (Appeals) with authority to grant time and to refer matters back where procedural fairness has not been observed. Section 129(2) provides review mechanism at Commissioner level and Section 123 allocates the burden of proof on parties challenging seizure or confiscation. Established precedents require administrative and quasi-judicial bodies to afford a fair hearing and to give clear reasons; a denial of opportunity to be heard is a procedural infirmity warranting setting aside the impugned order without entering into merits.Conclusion: The Commissioner (Appeals) order is set aside for gross violation of principles of natural justice and the matter is remitted to the Commissioner (Appeals) to be decided de novo after affording due and proper opportunity of hearing to both sides in accordance with law.Ratio Decidendi: Where an appellate authority decides an appeal without affording a party a proper opportunity of hearing, the defect of violation of audi alteram partem vitiates the order and requires setting aside and remand for fresh adjudication to ensure procedural fairness.