In the instant case, the Revenue alleged violation of conditions of duty-free import against Aurobindo Pharma Ltd. (Petitioner) and issued demand notice cum adjudication order (Impugned Demand) directing the Petitioner to pay Central Excise and Customs duties along with interest in terms of the bond executed by them before the Assistant Commissioner of Customs and Central Excise.
The Petitioner filed a writ petition before the Hon’ble Andhra Pradesh High Court (the HC) and argued that the Impugned Demand was issued in violation of the principles of natural justice as no Show Cause Notice was issued prior to issue of the Impugned Demand. Further, the Petitioner contended that no opportunity of being heard was granted before adjudication of the amount allegedly due and payable.
The Department contended that hearing was given after taking a decision and this fact is admitted in the Impugned Notice. Further, the Revenue argued that issuance of Show Cause Notice was not required under law in a case of this nature since the issue involved was not covered under Section 28 of the Customs Act, 1962 (Customs Act).
The HC held that issuance of Show Cause is a must before adjudication of the duty sought to be levied followed by demand. It was further held that Section 28(1)(a) of the Customs Act is mandatory in character and the very purpose of hearing as mentioned in Section 28(1)(a) of the Customs Act is not fulfilled in this case.
The HC observed that if Revenue’s argument that ‘in a case of this nature issuance of Show Cause Notice is not required, no hearing is to be given’, is accepted, then no post decisional hearing is required as there is no provision under law. Furthermore, the HC held that when the intention of the Legislature is to give a Notice before adjudication of the dispute, post decisional hearing does not fulfil the object of issuance of Show Cause Notice.
Accordingly, the HC set aside the Impugned Demand and directed that the matter should be considered afresh.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: firstname.lastname@example.org)