The main legal point established in the judgment is the importance of providing a reasonable opportunity of being heard before cancelling a licence and the necessity for the show-cause notice to specify the grounds for the proposed action, allowing the affected party to represent their case effectively.

JUDGMENT :

K.R. SHRIRAM, J.

1. Petitioner is impugning an order dated 10th January 2005 passed by Respondent No. 2 by which Respondent No. 2 has cancelled the licence under Sub-Section 2(b) of Section 58 granted to petitioner under Sub-Section (1) of Section 58 of the Customs Act, 1962 (the Act). Respondent No. 2 has also ordered petitioner to pay appropriate customs and central excise duties under the Customs and Central Excise Act, 1944 on the capital goods and raw material procured duty free, semi finished and finished goods lying in stock on the date of cancellation of the said licence.

2. Rule was issued on 4th February 2005 and interim relief in terms of prayer clause (c) subject to certain conditions imposed therein, modified by an order dated 5th May 2005, was granted. Pursuant to the interim orders petitioner has also made certain deposits with Respondent No. 2. Petitioner is a company registered under the Companies Act, 1956 and engaged in the manufacture of exciseable goods namely synthetic yarn. Petitioner had its factory at Piparia Industrial Estate, Silvasa. Petitioner was 100% export oriented unit (EOU) in terms of the import export policy. Petitioner was carrying on its manufacturing activity of synthetic yarn at its factory being Unit-I and Unit-II, both independent units at Pipariya, Silvasa. Unit-I had been licenced under Section 58 of the Act as private bonded warehouse vide licence dated 18th October 1994. Respondent No. 2 extended licence for a further period of two years with effect from 18th October 1999. It was further extended for a period of two years with effect from 18th October 2001 and once again for a further period of two years from 18th October 2003 to 31st March 2005.

3. Unit-II of petitioner also was licenced under Section 58 of the Act as private bonded warehouse vide licence dated 14th November 2003. The licence was valid till 31st March 2005.

4. During the course of its business, petitioner received various show-cause notices and complaints were also registered against petitioner for alleged violation of the licence requirement. Petitioner’s licence was also suspended by Respondent No. 2 without issuing show-cause notice and without affording an opportunity of being heard and without pendency of an enquiry under Clause (b) of Sub-Section (2) of Section 58 of the Act. This order was challenged by petitioner in Writ Petition No. 7049 of 2004 that was filed in this court. This court by an order dated 2nd September 2004, set aside the order of Respondent No. 2.

5. Thereafter, Respondent No. 2 issued show-cause notice dated 4th October 2004 calling upon petitioner to show-cause as to why licence granted to petitioner should not be cancelled for the reasons mentioned therein. Petitioner replied to the show-cause notice and was also granted personal hearing. Notwithstanding petitioner’s explanation, Respondent No. 2, by an order dated 1st January 2005, cancelled petitioner’s licence and also called upon petitioner to pay the appropriate customs and central excise duty as referred earlier. Impugning the said order dated 10th January 2005 petitioner has approached this court by way of this writ petition.

6. Mr. Shah submitted that in the show-cause notice dated 4th October 2004 Respondent No. 2 has simply relied upon six show-cause notices issued which was still pending adjudication and complaint that was filed by DRI which was still pending investigation. Mr. Shah submitted that on the date the show-cause notice dated 4th October 2004 was issued there was no conclusive finding that petitioner was in breach of any of the requirements for maintaining licence issued under Section 58 of the Act. Mr. Shah also submitted that the entire issuance of show-cause notice was premature because there was no evidence to show that petitioner had contravened any provisions of the Act or the rules or the regulations or committed breach of any of the conditions of the licence.

7. Mr. Kantharia submitted that in some of th