Customs Denies Self-Sealing Licence Citing Settled Past Violations: Madras HC Orders Reconsideration [Read Order]

In a recent ruling, the Madras High Court held that the customs department must reconsider an exporter’s application for renewal of a self-sealing licence when earlier violations have been settled and the exporter has not been given a chance to explain their case.

Pennar Industries Limited filed two writ petitions challenging communications issued by the Commissioner and Deputy Commissioner of Customs that denied renewal of its self-sealing licence. The company argued that it had held the licence for over ten years and had previously renewed it without issue. They further argued that the denial was based on two old cases under the Customs Act.

One of which was dropped by the department, and the other had been settled after they approached the Settlement Commission and paid the required duty and interest, except for one bill of entry which they disputed due to time limitations.

The customs department counsel argued that the renewal was rejected in line with Facility Circular No. 15 of 2023, which requires clean compliance history. They argued that self-sealing licences are issued based on trust, and due to past contraventions, they had lost faith in the petitioner. They stated that the denial was proper and based on policy.

The petitioner’s counsel argued that both matters had either been resolved or substantially complied with and that these should not count as grounds to deny renewal. They also argued that the department failed to give the petitioner a personal hearing before issuing the denial, which caused serious harm to the company’s ongoing export operations.

The single-judge bench comprising Justice Abdul Quddhose observed that the customs authorities had not taken into account important facts, such as the dropping of one case and the payment of dues in the other.

The court also observed that denying renewal without giving the petitioner a personal hearing went against the principles of natural justice, especially given the serious impact on the business.

The court held that the communications denying the renewal were issued unfairly and without proper procedure. The court quashed the impugned communications and directed the customs authorities to reconsider the petitioner’s application after giving them a personal hearing and an opportunity to present their case.

The department was ordered to complete the process within eight weeks. The writ petitions were allowed.

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