Dipak Kumar Dharamsinbhai Kakadiya Vs Chief Commissioner of Customs (CESTAT Mumbai)
CESTAT Mumbai held that Chief Commissioner was not justified in rejecting the compounding application filed u/s. 137(3) of the Customs Act, 1962 without granting any opportunity of hearing since the same results into violation of principles of natural justice.
Facts- The present appeals have been filed against the ex parte order dated 03.07.2025 passed by the Chief Commissioner-Compounding Authority whereby a common compounding application dated 1/2.7.2025 filed by the appellants herein was dismissed under Rule 4 (3) of the Customs (Compounding of offences) Rules, 2005 without giving any opportunity of hearing to the appellants.
The issue involved herein for consideration is whether the Compounding Authority i.e. the Chief Commissioner was justified in rejecting the compounding application filed u/s. 137(3) of the Customs Act, 1962 without granting any opportunity of hearing to the appellant which is the mandate enshrined in the first proviso to Rule 4(3) ibid.
Conclusion- Held that the Compounding Authority ought to have awaited the issuance of show cause notice and adjudication thereof and only thereafter could have taken a decision on the compounding application in accordance with law, after granting an opportunity of hearing to the appellants. This is particularly when the compounding is a one-time opportunity.
