Allowed

M/S.Kiruba Exports v. the Commissioner of Customs

Madras HC28 Sept 2021WA/2465/2021

Case brief

AI extract

What is this about?

The High Court allowed the writ appeal, holding that the High Court below erred in dismissing the petition based solely on alternate remedy availability. The Court found a violation of natural justice due to the denial of a genuine opportunity of personal hearing and the rigid fixing of dates without separate communications as per CBEC guidelines.

What did the court decide?

Writ Appeal allowed; Order-in-Original set aside; matter remanded to 1st Respondent for fresh consideration and verification of BRC-Negative Statement.

M/S.Kiruba Exports Vs the Commissioner of Customs — Writ and Judicial Review | Madras HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 28.09.2021

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CORAM

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THE HON'BLE MR.JUSTICE T.S.SIVAGNANAM

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and

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THE HON'BLE MR.JUSTICE SATHI KUMAR SUKUMARA KURUP

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Writ Appeal No.2465 of 2021
and
C.M.P.No.15873 of 2021

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M/s.Kiruba Export,
Rep. by its Proprietor
Mrs.S.Vimaladevi
No.84, Chennimalai Road,
Perundurai,
Erode District – 638 052... Appellant

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-vs-

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1.The Commissioner of Customs, Chennai-IV,

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O/o. The Commissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai, Chennai – 01.

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2.The Deputy Commissioner of Customs (BRC-DBK) O/o. The Commissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai, Chennai – 01. .. Respondents

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Appeal under Clause 15 of Letters Patent against the order
dated 30.07.2021 in W.P.No.15897 of 2021 and set aside the same.

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Prayer in WP.No.15897 of 2021: Petition filed under Article 226
of the Constitution of India praying for Issuance of Writ of
Certiorari to Call for the records pertaining to the impugned
Order-In-Original No.81386/ 2021 of the 2nd respondent dated
17.03.2021 and quash the same.

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https://hcservices.ecourts.gov.in/hcservices/

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For Appellant : Mr.Derrick Sam
 for Mr.A.Mohamed Ismail

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For Respondents : Mr.Mohana Murali
 Senior Standing Counsel

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JUDGMENT

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(Delivered by T.S.Sivagnanam, J.)

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This Writ Appeal filed by the appellant-assessee
questions the correctness of the order dated 30.07.2021, by which
the writ petition filed by the appellant in W.P.No.15897 of 2021
was dismissed on the ground that the appellant should avail the
alternate remedy available under the provisions of the Customs
Act.

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2.It is no doubt true that alternate remedy is available
under the provisions of the various enactments, especially in
taxing statutes Courts will always be slow in entertaining the
writ petitions. It is equally true that Courts have also drawn
distinction to cases which can be entertained by way of a writ
petition and carved out certain exceptions. One such exception
is that there has been violation of principles of natural
justice. The appellant before us has pitched their case on the
ground of violation of principles of natural justice. The
respondent issued notice dated 01.03.2021 referring to the show
cause notice dated 10.03.2017 stating that as per the available
records in the Office, the proof of realization of export
proceeds for Shipping Bill with Drawback amounting to
Rs.13,63,336/- is pending. Therefore, the respondent directed
the appellant to produce all relevant documents and fixed the
date of personal hearing as 08.03.2021, 09.03.2021 and
10.03.2021. The appellant appeared before the Deputy/Assistant
Commissioner of Customs, Drawback Section-BRC, Chennai and
requested for two weeks time for submission of Bank Realization
Certificate. The concerned Officer has made an endorsement in
the said representation, which is to the following effect.

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“As directed by DC [DBK-BRC] extension of

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time has been extended upto 06.04.2021 to produce
(BRC) negative certificate. If failed to produce
the documents within the fix time limit the case
may be decided on available documents.”

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https://hcservices.ecourts.gov.in/hcservices/

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3.In terms of the above endorsement, the appellant has

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been granted extension of time upto 06.04.2021 though not by the first respondent but by the second respondent, who is the concerned Officer of the said Department. Much prior to the expiry of the said date, the Order-in-Original dated 17.03.2021 has been passed on the ground that the appellant failed to give any objections to the notice dated 01.03.2021, did not availed the opportunity of personal hearing granted on those three days and therefore, the proposal in the show cause notice is confirmed. By letter dated 05.04.2021, the appellant has filed the BRC-Negative Statement in the office of the respondent as could be seen from the date seal dated 07.04.2021. However, by then the first respondent having passed an order had become functus officio and had no power to review this decision. Therefore, the appellant filed the writ petition challenging the said order which has been dismissed on the ground of availability of alternate remedy.

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4.The learned counsel for the appellant submitted that

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the dates fixed for providing opportunity of personal hearing cannot be mechanically fixed and the opportunity of personal hearing is for the purpose of giving a fair opportunity to the noticee and in the instant case, three dates were pre-fixed by the first respondent even while issuing the show cause notice. The Central Board of Excise and Customs [CBEC] in Circular No.1053/2/2017-CX dated 10.03.2017 has issued a master circular on show cause notices, adjudication and recovery proceedings and in paragraph 14.3 of the Circular deals with personal hearing which reads as hereunder:

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“14.3 Personal hearing : After having given a fair
opportunity to the noticee for replying to the show
cause notice, the adjudicating authority may
proceed to fix a date and time for personal hearing
in the case and request the assessee to appear
before him for a personal hearing by himself or
through an authorised representative. At least
three opportunities of personal hearing should be
given with sufficient interval of time so that the
noticee may avail opportunity of being heard.
Separate communications should be made to the
noticee for each opportunity of personal hearing.
In fact separate letter for each hearing/extension

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https://hcservices.ecourts.gov.in/hcservices/

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should be issued at sufficient interval. The
Adjudicating authority may, if sufficient cause is
shown, at any stage of proceeding adjourn the
hearing for reasons to be recorded in writing.
However, no such adjournment shall be granted more
than three times to a noticee.”

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5.In terms of the above Circular, the Adjudicating
Authority has to proceed to fix a date and time for personal
hearing and atleast three opportunities should be given with
sufficient interval of time so that the noticee may avail
opportunity of being heard and separate communication should be
made to the noticee for each opportunity of personal hearing.
Further, it has been directed that separate letter for each
hearing/extension should be issued on sufficient interval and if
sufficient cause is shown in any stage of the proceedings, the
Adjudicating Authority can adjourn the hearing for the reasons to
be recorded in writing and no adjournment should be granted more
than three times to the noticee. The procedure adopted by the
first respondent in issuing a show cause notice and fixing three
dates for personal hearing which are pre-fixed dates would fall
foul of the above Circular.

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6.The facts clearly show that adequate opportunity was
not afforded to the appellant. It may be true that the show
cause notice is of the year 2017, yet the Customs Department did
not take any action till issuance of notice dated 01.03.2021. On
receipt of the notice, the appellant sought for two weeks time to
produce the Bank Realization Certificates and time was granted by
the concerned Officer till 06.04.2021. Much before the said
date, the Order-in-Original has been passed. Therefore, we find
that there has been violation of principles of natural justice.
That apart, the appellant has submitted the certificates in the
form of negative statement on 07.04.2021. If those certificates
are verified and the stand taken by the appellant is found to be
correct, then the proceedings itself had to be dropped.
Therefore, we are convinced that the appellant's case will fall
within one of the exceptions that have been carved out by the
Hon'ble Supreme Court for entertaining the writ petition. In
this regard, we rely on the observations of the Hon'ble Supreme
Court in the case of Whirlpool Corporation vs. Registrar of Trade
Marks, Mumbai and others [(1998) 8 SCC 1].

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https://hcservices.ecourts.gov.in/hcservices/

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7.Thus, for the above reasons, the writ appeal is

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allowed, the order passed in the writ petition is set aside and the Order-in-Original No.81386/2021 dated 17.03.2021 is set aside and the matter is remanded to the first respondent for fresh consideration. The BRC-Negative Statement submitted by the appellant on 07.04.2021 shall be verified by the concerned authority and after affording an opportunity of personal hearing to the appellant, the case shall be adjudicated afresh on merits and in accordance with law. No costs. Consequently, connected miscellaneous petition is closed.

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