2025 (7) TMI 1556 - HC - Customs

Recovery of availed Duty Drawback against Shipping Bills disclosed - levy of penalty u/s 117 of the Customs Act 1962 - violation of principles of natural justice - HELD THAT - Since the petitioner has paid the amount as stipulated in the impugned order-in-original under protest and since the petitioner has produced documents before this Court to substantiate their case that they have fulfilled the export obligations pertaining to the subject Shipping Bills this Court is of the considered view that they must be granted with an opportunity to defend their case that they are not liable to pay the Duty Drawback amount and penalty as stipulated under the impugned order-in-original that too when they have stated that only on account of Covid-19 and on account of the closure of their office during that period they could not properly attend the hearings pertaining to the impugned proceedings. This Court is of the considered view that if the petitioner is not permitted to raise objections with regard to the impugned order-in-original they will be put to irreparable loss and hardship as they have categorically contended before this Court that they are not liable to pay the amounts as stipulated in the impugned order-in-original and further having paid the amounts as stipulated in the impugned order-in-original under protest there is also no revenue loss caused to the respondent as they have already received the duty though paid under protest. This Court has not expressed its opinion on merits of the petitioner s contentions. The impugned order-in-original dated 27.03.2021 passed by the respondent is hereby quashed and the matter is remanded back to the respondent for fresh consideration on merits and in accordance with law by adhering to the principles of natural justice and by affording personal hearing to the petitioner - Petition disposed off by way of remand.

Summary

ISSUES:

Whether the petitioner is liable to pay the Duty Drawback amount and penalty imposed under the impugned order-in-original.Whether the principles of natural justice were violated in the impugned order-in-original by not affording the petitioner an opportunity of personal hearing and to submit explanations.Whether the petitioner fulfilled the export obligations in respect of the subject Shipping Bills.Whether the matter requires remand for fresh consideration on merits and in accordance with law.

RULINGS / HOLDINGS:

On liability, the Court held that the petitioner contends they are not liable to pay the Duty Drawback amount and penalty, having fulfilled export obligations and having paid the amounts under protest.The Court found that the principles of natural justice were not adhered to, as the petitioner was not afforded an opportunity of personal hearing or to submit explanations before passing the impugned order-in-original.The Court accepted that the petitioner submitted Export Realization Certificates and other documents substantiating fulfillment of export obligations, which were not considered before passing the impugned order.The Court quashed the impugned order-in-original and remanded the matter back to the respondent for fresh consideration on merits and in accordance with law, explicitly directing adherence to the principles of natural justice and affording personal hearing to the petitioner.

RATIONALE:

The Court applied the principles of natural justice, emphasizing the necessity of affording an opportunity of personal hearing and permitting submission of explanations before passing adverse orders.The Court recognized the payment of Duty Drawback amount and penalty under protest by the petitioner, noting that no revenue loss was caused to the respondent, thereby justifying the grant of opportunity to the petitioner to defend their case on merits.The Court considered the exceptional circumstances arising from the Covid-19 pandemic and closure of the petitioner's office, which impeded proper attendance to hearings and receipt of notices, as relevant to the procedural fairness.The Court refrained from expressing any opinion on the merits of the petitioner's contentions, leaving the determination of liability to the respondent upon fresh consideration in accordance with law.