Case Note & Summary
The Commissioner of Customs, Bangalore Division, filed an appeal under Section 130 of the Customs Act, 1962, challenging the Final Order No.A/20356/2020 dated 05.06.2020 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), South Zonal Bench, Bangalore, in Customs Appeal No.21036/2019. The respondent, M/s. Sri Manjunatha Cargo Pvt. Ltd., is a Customs Broker operating in Mumbai and Nhava Sheva. The Commissioner of Customs (General), Mumbai had issued three prohibition orders dated 03.01.2019, 16.01.2019, and 16.01.2019 against the respondent on the ground that the respondent had filed certain shipping bills on behalf of M/s.A.R.K.Enterprises, M/s.Y.K.Trends, and M/s.Otex Overseas in collusion with the said exporters with an intention to over value the goods for obtaining excess duty drawback. The respondent challenged these prohibition orders before the CESTAT, which set aside the orders on the ground that they were issued without issuing a show cause notice and without providing an opportunity of hearing, thereby violating the principles of natural justice. The Revenue, aggrieved by the CESTAT order, filed the present appeal. The High Court heard the appeal and reserved judgment on 17.12.2021, delivering it on 12.01.2022 through video conferencing from Dharwad Bench. The court held that the power under Section 108 of the Customs Act, 1962 cannot be exercised without adhering to the principles of natural justice. The prohibition orders were issued without any show cause notice or hearing, and therefore, the CESTAT was justified in setting them aside. The court found no substantial question of law involved in the appeal and dismissed the same, upholding the CESTAT order.
Headnote
A) Customs Law - Customs Broker - Prohibition Order - Natural Justice - Section 108, Customs Act, 1962 - The Commissioner of Customs issued three prohibition orders against a Customs Broker without issuing a show cause notice or providing an opportunity of hearing, on the ground of alleged collusion in overvaluation of goods for excess duty drawback. The CESTAT set aside the orders for violation of principles of natural justice. The High Court upheld the CESTAT order, holding that the power under Section 108 of the Customs Act, 1962 cannot be exercised without adhering to the principles of natural justice. (Paras 2-5) B) Customs Law - Appeal - Substantial Question of Law - Section 130, Customs Act, 1962 - The Revenue appealed against the CESTAT order, contending that the prohibition orders were preventive and not punitive. The High Court found no substantial question of law as the issue was squarely covered by the principles of natural justice. The appeal was dismissed. (Paras 6-8)
Issue of Consideration
Whether the prohibition orders issued against the respondent Customs Broker without issuing a show cause notice and providing an opportunity of hearing are sustainable in law.
Final Decision
Appeal dismissed. CESTAT order upheld. No substantial question of law involved.
Law Points
- Natural justice
- Prohibition order
- Customs broker
- Show cause notice
- Hearing
- Section 108 Customs Act 1962
- Section 130 Customs Act 1962
