Pennar Industries Limited Vs Commissioner of Customs (Export) (Madras High Court)
Conclusion: Customs department must reconsider an exporter’s application for renewal of a self-sealing licence when earlier violations had been settled and the exporter had not been given a chance to explain their case as there was clear violation of principles of natural justice.
Held: Assessee-company had filed two writ petitions challenging communications issued by the Commissioner and Deputy Commissioner of Customs that denied renewal of its self-sealing licence. The company argued that it had held the licence for over ten years and had previously renewed it without issue. They further argued that the denial was based on two old cases under the Customs Act. One of which was dropped by department, and the other had been settled after they approached the Settlement Commission and paid the required duty and interest, except for one bill of entry which they disputed due to time limitations. Customs department argued that the renewal was rejected in line with Facility Circular No. 15 of 2023, which required clean compliance history. They argued that self-sealing licences were issued based on trust, and due to past contraventions, they had lost faith in assessee. They stated that the denial was proper and based on policy. Assessee argued that both matters had either been resolved or substantially complied with and that these should not count as grounds to deny renewal. They also argued that the department failed to give assessee a personal hearing before issuing the denial, which caused serious harm to the company’s ongoing export operations. It was held that no personal hearing was afforded to assessee as seen from the impugned communications. Assessee also claimed that they were having the self sealing licence for a period of 10 years and that they had also renewed the licence previously. Assessee also claimed that since they were a very large exporter of Solar Modules and they were in the business for more than 50 years, the impugned communications would certainly affect assessee’s business activities. Therefore, assessee ought to have been granted a personal hearing by the respondents and the respondents should have considered their explanation before issuing the impugned communications, which have drastic civil consequences on assessee. Therefore, this Court was of the considered view that the impugned communications had been issued in violation of principles of natural justice as no personal hearing was afforded to assessee and the contentions raised by assessee before this Court had not been considered in the impugned communications.
