In a significant case, the Delhi High Court (HC) quashed the order penalising the fraudulent export for not issuing Show Cause Notice(SCN).
Sun Aviation Pvt. Ltd, the petitioner challenged the order dated 31.08.2022 passed by the Joint Commissioner of Customs imposing a penalty of ₹2,70,00,000/- (Rupees two crore seventy lacs) on the petitioner under Section 114AA of the Customs Act, 1962 (‘the Customs Act’).
The petitioner is an International Air Transport Association (IATA) Agent and is engaged in booking air freight for exporters and sub-agents through various airlines. The petitioner claims that in the normal course of its business, it receives bookings for air freight from clearing agents (CHAs), sub-agents, importers/exporters and brokers.
The petitioner has been penalized in respect of consignments exported by M/s Manisha Enterprises (proprietorship concern of Smt. Manish Garg) under five shipping bills (Shipping Bill Nos. 1128723, 1128800, 1128824, 1128828 and 1128884, all dated 15.04.2021). It is alleged that on an examination, it was found that the exporter was non-existent and the exports under the said Shipping Bills, were to fraudulently avail export benefits.
It was claimed by the petitioner that it had not received any Show Cause Notice and, therefore, was not afforded sufficient opportunity to contest the allegations against it. Further stated that it was not involved in the exports but had merely booked air freight and cannot be held responsible for the exports in question.
The respondent has filed the counter affidavit claiming that the Show Cause Notice was served to the petitioner. It was contended that the Show Cause Notice was dispatched by speed post and the tracking website (www.indiapost.gov.in) indicates that the Show Cause Notice was delivered on 17.05.2022. The notice for personal hearing was also dispatched by speed post and the tracking website of Speed Post reflects that the same was delivered on 26.08.2022.
Section 153 of the Customs Act, prescribes the modes for service of notices, summons, orders and other communications. A two-member bench comprising Justice VibhuBakhru and Justice Amit Mahajan observed thatthere is no material to indicate that the Show Cause Notice was served in any of the modes as stipulated under Section 153 of the Customs Act.
The modes of service are specified under sub-section (1) of Section 153 of the Customs Act. Sub-section (2) and sub-section (3) of Section 153 of the Customs Act contains deeming provisions stipulating the time of service of orders, decisions, summons, notices or communications that would be deemed to have been served.
Section 153(2) of the Customs Act provides that order, decision, summon, notice or any communication is deemed to have been served on the date on which it is tendered, published or a copy thereof is fixed or uploaded if the manner is provided under Section 153(1) of the Customs Act. Since there is no material to indicate that the Show Cause Notice was sent by speed post with acknowledgement due or had been served by any of the modes as specified under Section 153(1) of the Customs Act, the Court held that the impugned order imposinga penalty on the petitioner is not valid and set aside.
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