The Kerala High Court has made it clear that the Customs Department cannot bypass the mandatory requirement of a personal hearing under Section 28(8) of the Customs Act, 1962 by citing Section 122A of the same Act.
The decision was delivered by Justice Ziyad Rahman A.A. while hearing a writ petition filed by M/s Premier Marine Foods, a partnership firm involved in export activities. The petitioner had challenged an order (Ext.P2) issued by the Deputy Commissioner of Customs under Section 28 of the Act, which demanded repayment of ₹1.32 crore in duty drawback due to short realization in export proceeds under 22 out of 397 shipping bills during the period from January 2020 to June 2022.
"As far as personal hearing is concerned, it is made mandatory as per Section 28(8). Since this is a special provision, reliance upon Section 122A, which is a general provision, cannot be made applicable," noted the Court.
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The customs authority had issued a notice (Ext.P1) proposing recovery under Rule 18 of the Customs and Central Excise Duty Drawback Rules, 2017. Though the petitioner was given 30 days to object, the final order (Ext.P2) was passed due to lack of response, without fixing any specific date for a personal hearing.
The petitioner's counsel, Advocate Jose Jacob, argued that denying a personal hearing violated statutory rights guaranteed under Section 28(8) of the Customs Act, which mandates the officer to allow the party to present their case before finalizing any duty demand.
In contrast, the department, represented by Standing Counsel P.R. Sreejith, claimed that the notice allowed the petitioner to request a personal hearing in writing as per Section 122A.
However, the Court rejected this argument, observing:
"It was obligatory on the part of the Deputy Commissioner to intimate the assessee about the specific date for personal hearing. Since such a course was not adopted, the order cannot be treated as one in tune with statutory requirements."
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Ultimately, the High Court quashed the impugned order and related demand notices, directing the Deputy Commissioner to re-examine the matter after granting the petitioner a proper opportunity for a personal hearing. The department has been given two months to comply with the order.
Case Title: M/s Premier Marine Foods v. Union of India
Case Number: WP(C) No. 46801 of 2024
Petitioner Counsel: Jazil Dev Ferdinanto, Jose Jacob, Sreelekshmi Ben, Anne Maria Mathew
Respondent Counsel: P.R. Sreejith