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2025 Supreme(Ker) 2092
IN THE HIGH COURT OF KERALA AT ERNAKULAM
A.K. JAYASANKARAN NAMBIAR, EASWARAN S., JJ.
M/s Southern Gold Private Limited - Appellant
Versus
Commissioner of Customs (Appeals) Cochin - Respondent
W.A. No. 97 of 2025
Decided On : 08-04-2025
Advocate Appeared:
For the Appellant : Akhil Suresh
For the Respondent: Girish Kumar V.
Enhancement of penalties and fines requires clear show cause notice; failure to adhere to this principle negates legality of decisions in customs proceedings.
Headnote:(A) Customs Act - Section 129 D(2) - Appeal against customs orders - Appellant company challenged orders enhancing penalties and redemption fines without proper show cause notice. Court held that principles of fairness must be adhered to; orders set aside and matter remitted for fresh consideration. (Paras 9-10)
(B) Administrative Law - Legal and proper adherence to statutory provisions is essential; any enhancement in penalties should be proposed clearly and unambiguously to ensure fairness in assessment. (Paras 6-8)
Facts of the case:
Appellant purchased gold for export but faced penalties due to alleged mis-declaration. Multiple appeals and orders followed. Court initially directed reassessment of the appeals on merits, later challenged as excessive penalty was imposed without basis.
Findings of Court:
The appeal was allowed, setting aside the enhanced penalties and fines due to lack of procedural fairness.
Issues: The main issues included whether the penalties and fines imposed were lawful, and if the process adhered to required statutory notices.
Ratio Decidendi: The court emphasized due process in administrative actions, stressing no enhancement of penalties can occur without explicit notice, ensuring the appellant's right to contest effectively.
Result: Appeal allowed, orders set aside and remitted for fresh consideration.
| Table of Content |
|---|
| 1. background on the appellant's case. (Para 1 , 2) |
| 2. complex proceedings and previous judgments. (Para 3 , 4) |
| 3. relegation to alternate remedy decision. (Para 5 , 6) |
| 4. arguments on enhancement of penalties. (Para 7 , 8) |
| 5. court's analysis and reasoning. (Para 9 , 10) |
JUDGMENT :
A.K. Jayasankaran Nambiar, J.
1. The petitioners in WP(C).No.40658 of 2024 are the appellants before us aggrieved by the judgment dated 18.11.2024 of a learned Single Judge that dismissed the Writ Petition.
2. The brief facts necessary for the disposal of the Writ Appeal are as follows:
The appellant company had bought imported gold bullion (free of duty) from M/s. Bank of India and manufactured gold ornaments for export in terms of the foreign trade policy that was in vogue. A consignment covered by Shipping Bill No.7996621 dated 14.08.2017 was intercepted by the Customs Authorities, who assessed the purity of gold and weight of gold in the jewellery and found it to be less than what was declared in the shipping bill. The Department, therefore, issued Ext.P1 show cause notice in relation to the current consignment of gold jewellery that was intercepted and also in relation to 71 earlier shipping bills under cover of which gold jewellery had been exported by the appellants in the past, on the ground that there had been mis- declaration of the purity and weight of gold occasioned by the appellant company while effecting the said export. The show cause notice so issued culminated in Ext.P3 order dated 27.03.2018, whereby the consignment of gold jewellery covered by the shipping bills mentioned above was subject to confiscation but permitted to be released on payment of redemption fine. A separate penalty was also imposed. A further show cause notice (Ext.P2) was also served on the appellants in relation to the gold allegedly diverted to the domestic market, and the adjudication of the said show cause notice resulted in Ext.P4 order dated 27.03.2018 by which penalties were imposed on the appellants.
3. Against Exts.P3 and P4 orders, appeals were preferred both by the Department as well as by the appellant company and its Managing Director. By Ext.P7 order, the four appeals preferred by the appellant company and its Managing Director were dismissed as time-barred. By Ext.P8 order, the two appeals that were preferred by the Department were allowed by enhancing the penalties from Rs.1,50,00,000/- to Rs.4,94,96,65,375/-. The appellants, therefore, approached this Court through WP(C).No.33787 of 2018 impugning Exts.P7 and P8 orders. The said Writ Petition was disposed by a learned Single Judge of this Court who set aside Exts.P7 and P8 orders and directed a fresh consideration of the appeals against Exts.P3 and P4 orders on merits. Ext.P10 is the judgment of this Court in the Writ Petition aforementioned.
4. Pursuant to Ext.P10 judgment, the First Appellate Authority proceeded to reconsider the appeals preferred by the appellant company, its Managing Director, and the Department against Exts.P3 and P4 orders. This time around, the First Appellate Authority passed Exts.P11 and P12 orders dismissing the appeals preferred by the appellant company and its Managing Director but allowing the Department appeals on a point that was never urged therein, after dismissing the Department appeal on the grounds urged in the appeal. In a sense, what the First Appellate Authority did was to enhance the redemption fine and penalty imposed by the original authority on the appellant company and its Managing Director, in the appeals that were preferred by the appellant company and its Managing Director, where no show cause notices were issued by the First Appellate Authority before enhancing the penalty and redemption fine. Similarly, when it came to the Department Appeals, the First Appellate Authority did not advert to the question as to the premise on which the Department was permitted by the Review Cell under the CUSTOMS ACT to file the appeals. It is seen that the
