M/S. Dec Agrotech PVT. LTD. & Anr vs. Union Of INDIA & Ors

Held

The Court held that the impugned order dated June 24, 2020, passed by the Additional Director General, Directorate of Revenue Intelligence, exercising powers under Section 110(2) of the Customs Act, 1962, is set aside on the ground of breach of principles of natural justice. The Court reasoned that although the authorities complied with the amended first proviso to Section 110(2) by recording reasons and informing the petitioner, they overlooked that they were acting in a quasi-judicial manner and were required to adopt a judicial approach. The amendment, while introducing additional burdens like recording reasons and informing the person from whom goods were seized, did not obviate the requirement to adhere to the principles of natural justice. The Court found that the authorities failed to provide an opportunity of hearing to the petitioner before exercising powers under Section 110(2), which is a breach of natural justice. The Court clarified that its observations were not a decision on the merits of the rival claims. The authorities were granted liberty to take steps in accordance with law. The Court also directed that if a notice is issued under Section 110(2) in addition to the existing notice, a notice to the email identity of the learned advocate for the writ petitioner would be considered sufficient.

Facts

The writ petitioners, M/s. DEC Agrotech Pvt. Ltd. & Anr., assailed an order dated June 24, 2020, issued by the Additional Director General, Directorate of Revenue Intelligence, Kolkata Zonal Unit. This order was passed exercising powers under Section 110 read with Section 124 of the Customs Act, 1962. The petitioners contended that the impugned notice breached principles of natural justice. The revenue authorities argued that the amendment to Section 110(2) of the Customs Act, 1962, in 2018 rendered the petitioner's cited precedents inapplicable. The investigation was initiated based on intelligence regarding the petitioners' alleged attempt to export inferior quality tobacco products by inflating their value to illegally claim IGST and Tobacco Cess, leading to the seizure of goods and the subsequent impugned order.

Key Issues

1. Whether the impugned order dated June 24, 2020, passed by the Additional Director General, Directorate of Revenue Intelligence, exercising powers under Section 110(2) of the Customs Act, 1962, suffers from a breach of the principles of natural justice, particularly in light of the amendment to the first proviso of Section 110(2) of the Act of 1962 effective from March 29, 2018. Petitioner's arguments: The petitioners argued that the power under the first proviso to Section 110(2) of the Customs Act, 1962, is quasi-judicial and requires a judicial approach, citing Supreme Court decisions in AIR 1972 Supreme Court 689 (The Assistant Collector or Customs and Superintendent, Preventive Service Customs, Calcutta & Ors. vs. Charan Das Malhotra) and AIR 1989 Supreme Court 1884 (I.J. Rao, Assistant Collector of Customs & Ors. vs. Bibhuti Bhushan Bagh & anr.). They contended that the 2018 amendment to Section 110(2) preserves the quasi-judicial character of the proceeding and necessitates adherence to natural justice. Revenue's arguments: The respondents argued that the 2018 amendment to Section 110(2) of the Customs Act, 1962, makes the precedents cited by the petitioner inapplicable. They contended that the adjudicating authority fulfilled the requirements of the amended first proviso by recording reasons for the extension and informing the writ petitioner, thus acting in accordance with the law and not requiring interference. They asserted that the petitioner was not entitled to a hearing before the order of extension was passed.