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2018 DIGILAW 790 (BOM)

Aba International v. Union Of India

2018-03-19

PRAKASH D.NAIK, S.C.DHARMADHIKARI

body2018
JUDGMENT 1. Rule. 2. Rule made returnable forthwith. 3. Respondent waives service. 4. By this petition, under Article 226 of the Constitution of India, the petitioner challenges an order dated 5th January, 2018, passed by the Assistant Commissioner of Customs (I), APPRG. GR. III, New Custom House,Mumbai. 5. Since a very short point is involved, with consent of both sides, we pass this final order. 6. The petitioner claims to be importer and possessing a Import Export Code. He imported glassware, filed a Bill of Entry No.109814 dated 16th February, 2000, and also filed Special Import Licence ("SIL", for short). Since import items were not from restricted category, the value declared in the said bill of entry was Rs. 3,27,998/-. The country of origin was declared as Indonesia. It is stated that the imported goods were assessed provisionally and allowed to be cleared after execution of Bank Guarantee of Rs. 3,27,998/- dated 22nd February, 2000. 7. The petitioner claims that several show-cause notices were issued by the Director of Revenue, Intelligence, Mumbai, against glassware imports to several importers during the period concerned for under valuation against the import of glassware/s from Indonesia. The Directorate was of the opinion that the discounts claimed by the various importers in the value declared for assessing value and duty was in contravention of the statutory provisions, namely, the Customs Valuations Rules, 1988. The discount was held to be impermissible. 8. The show-cause notices issued by the Directorate for under valuation and the show-cause notices proposing to load the declared value on account of disallowing discounts against various importers were adjudicated in various Commissionerates. The charges of under valuation were dropped by the adjudicating authorities. It was held that, the burden to prove this under valuation was on the Department and that has not been discharged. Some of the demands raised under other Bills of Entries on the present petitioner also came to be dropped. 9. The petitioner relies upon the fact that as different adjudicating bodies had dropped the demand in the year 2000- 2001, and, the petitioner filed a Bill of Entry, cleared the goods provisionally under Bank Guarantee and expected the Department to issue the show-cause notice as another showcause notice was issued by the Directorate of Revenue Intelligence against the petitioner. The said notice came to be adjudicated, the demand was dropped by order dated 9th March, 2001. 10. The said notice came to be adjudicated, the demand was dropped by order dated 9th March, 2001. 10. The Department did nothing further in pursuance of the orders passed on 7th March, 2001, 18th December, 2000 and 9th March, 2001, but, accepted the said orders. 11. The petitioner approached the authorities by pointing out that a provisional release order was made in this case, but, nothing further has been done nor the file closed. The petitioner be intimated the final outcome of this action. 12. The allegations of the petitioner are that, after 18 years from import and provisional assessment order, the Assistant Commissioner, Customs, issued a letter, in which it is stated that the petitioner should attend the personal hearing for finalizing the subject Bill of Entry. 13. However, in reply to this letter, the petitioner pointed out that before such finalization, the Department will have to issue a show-cause notice. Let that show-cause notice be issued and, then, the petitioner would submit to the jurisdiction of the authority. Since the petitioner was repeatedly called by issuance of E-mails, eventually, the petitioner attended the proceedings. 14. It is in pursuance of his attendance for a personal hearing, that the impugned order has been passed and the operative part of the same appearing at page no.62 of the paper book reads as under: "15 In view of the above, I pass the following order: (a) I order the said B/E No.109814 dated 16.02.2000 to be finalized after loading the assessable value to 2.5 times the provisionally assessed value i.e. Rs. 3,27,998/- totally amounting to Rs. 8,19,995/-. (b) I confirm Customs Duty of Rs. 4,19,838/- on total assessable value of Rs. 8,19,995/- and appropriate Rs. 1,76,935/- paid on 26.02.2000 at the time of provisional clearance. (c) I confirm the differential duty of Rs. 2,51,903/- to be paid by the importer along with applicable interest. (d) I order the importer to kept alive the Bank Guarantee No.43/99 dated 23.02.2000 for Rs. 3,27,998/- until payment of all dues as above. Sd/- 03.01.18 (S.S. DHANI) ASSTT. COMMISSIONER OF CUSTOMS (I) APPRG.GR III NEW CUSTOM HOUSE MUMBAI." 15. Mr.Desai, learned Senior Counsel appearing for the petitioner, would submit that the impugned order is ex-facie illegal and unsustainable. (d) I order the importer to kept alive the Bank Guarantee No.43/99 dated 23.02.2000 for Rs. 3,27,998/- until payment of all dues as above. Sd/- 03.01.18 (S.S. DHANI) ASSTT. COMMISSIONER OF CUSTOMS (I) APPRG.GR III NEW CUSTOM HOUSE MUMBAI." 15. Mr.Desai, learned Senior Counsel appearing for the petitioner, would submit that the impugned order is ex-facie illegal and unsustainable. The impugned order proceeds on the footing that by the petitioner''s act of issuance of a letter and in the year 2013, to be precise of 11th February, 2013, the respondents can do away with the statutory requirement or precondition of issuance of a show-cause notice. Mr.Desai, would submit that in the garb of finalizing the proceedings, the Department cannot take recourse to any other provisions, much less Section 18 of the Customs Act, 1962. All the more, therefore, in this case it was mandatory to issue a show-cause notice raising the demand and then adjudicate it. If they fail to issue it, then, merely because the petitioner addresses a letter does not mean that the law can be breached and violated. In the circumstances, Mr.Desai would submit that when the impugned order refers to Section 28 and that has not been adhered to, then, all the more, we must entertain this petition, though it is directed against the Order-in-Original and not relegate the petitioner to any appellate remedy. 16. Mr.Jetly appearing for the respondents on the earlier occasion sought time to produce the original file. Today, he has produced the original file. Mr.Jetly would submit that, in this case, the petitioner has a remedy of filing an Appeal in terms of the statute. In such proceedings, the petitioner can very well raise the issue of legality and validity of the demand or the mode adopted in this case by the authorities. Thus, the Order-inOriginal can be challenged both on facts and law. In the light of such an alternate equally efficacious remedy, we should not entertain the petition. 17. Alternatively and without prejudice, Mr.Jetly would submit that in this case, the governing provision would be Section 18, as it was on the statute book at the relevant time. Thus, the Order-inOriginal can be challenged both on facts and law. In the light of such an alternate equally efficacious remedy, we should not entertain the petition. 17. Alternatively and without prejudice, Mr.Jetly would submit that in this case, the governing provision would be Section 18, as it was on the statute book at the relevant time. If, the provision opens with a non-obstante clause, and if the importer, who is unable to make a self assessment under Sub-section (1) of 17, makes a request in writing to the proper officer for assessment, or in terms of the Clauses (b), (c) and (d), then, the proper officer may direct that the duty leviable on such goods be assessed provisionally. If the importers or exporters, as the case may be, furnish such security to the proper officer, as he may be deem fit, for the payment of deficiency, if any, as may be finally assessed or reassessed, as the case may be, he can assess the provisional duty. According to Mr.Jetly, Sub-section (2) enables adjustment and to be made at the final assessment. He would submit that in this case Section 28, though mentioned in the impugned order, is not the source of the power or the order. In such circumstances, he would submit that there is no merit in the writ petition and the petitioner voluntarily submitted to the jurisdiction of the competent authority. Mr.Jetly would submit that the writ petition be dismissed. 18. With the assistance of the learned counsel appearing for both the sides and particularly Mr.Jetly, we have perused the original file. In the original file, there is no copy of the showcause notice issued to the petitioner. The file noting shows that the importer i.e. the petitioner has filed the Bill of Entry for the clearance of glass ware of Indonesia origin. The goods have been indeed examined and on scrutiny of samples, it was found that the goods require Special Import Licence for clearance. The petitioner has furnished Special Import Licence. As the goods have been supplied by the manufactures in Malaysia, then, as per the DRI instructions, Bill of Entry be assessed provisionally with the Bank Guarantee of 100% to be furnished by the importer. That be accepted for the import assessment purpose. That is the endorsement in the file of 24th February, 2000. As the goods have been supplied by the manufactures in Malaysia, then, as per the DRI instructions, Bill of Entry be assessed provisionally with the Bank Guarantee of 100% to be furnished by the importer. That be accepted for the import assessment purpose. That is the endorsement in the file of 24th February, 2000. The Bank Guarantee was then furnished and when it was to expire on 22nd February, 2001, the file was put up before the competent authority on 10th February, 2001. The Bank Guarantee extension letter was issued on 20th March, 2001. Thereafter, a very pertinent endorsement appears in the file and which is dated 24th September, 2004. "No.S/5-PD-39/00 III B/E No. : 109814 dtd.16/2/2000 Declared Value : Rs. 327998/- Enhanced Value : Rs. 327999/- Revenue Deposit Amount: Rs. 327998/-. As per Commissioner of Customs (Import) order dated 13/09/2004 in F.No.S/26-994/99 Gr-III dated 11/10/1999, the B/E is finalised at the enhanced/loaded value and the revenue deposit amount, if any, may be appropriated towards the Customs Duty. Accordingly, the B/E may be finalised and the Bond may be cancelled. Submitted please. Sd/- 24/9/04 DC/GR-III Letter issued to encashment of BG in file no.S/5-PD-1581/99 pl." 19. Upon perusal of this endorsement, we have no manner of doubt that the process under Section 18 was concluded. Once that process was concluded, then, it was incumbent upon the authorities to have issued a show-cause notice and that was throughout present to the mind of the authorities, as is evident from the endorsements in the file and equally in the impugned order. Section 28, as appearing at the relevant time, and as also today, enables recovery of duties, which have not been levied or have been short levied or erroneously refunded or any interest payable has not been paid, part-paid or erroneously refunded, for any reason other than the reasons of collusion, or any willful mis-statement or suppression of facts, then, the proper officer may, in case of any import made by any individual for his personal use or by the Government or by any educational, research or charitable institution or hospital, within one year, and, in any other case, within six months from the relevant date, serve the notice on the person chargeable with the duty or interest, requiring him to show cause as to why he should not pay the amount specified in the notice. The proviso enables invocation of extended period of five years in the circumstances set out herein. 20. It is this very provision which has been expressly referred in paragraph 13 of the impugned order, but, without the preceding requirement for its applicability being satisfied. In other words, the Order-in-Original was not preceded by a showcause notice. In the instant case, the definition of the term "Relevant Date" in explanation (1) to Section 28 would mean, in a case where duty is provisionally assessed under Section 18, the date of the adjustment of duty after the final assessment or reassessment, as the case may be. 21. In the peculiar facts and circumstances, we are unable to agree with Mr.Jetly that what the authorities have done is a continuation of the action initiated under Section 18. Meaning thereby, it was finalization of the provisional assessment and not adjudication into a demand and hence Section 28 is inapplicable. In the light of the factual findings, and, particularly the endorsements in the original file, we do not think that Mr.Jetly can argue contrary to the same. Here, on the own showing of the Revenue, the process under Section 18 was finalized as per the endorsement and orders of 24th September, 2004, reproduced above. Thereafter no show-cause notice was issued when the duty allegedly became due and payable and within the time stipulated by law. Thus, if the duty was not levied, but, leviable, then, the requirement in law and particularly Subsection (1) of Section 28 was to issue the show-cause notice and within a period of six months from the relevant date. Admittedly, no such show-cause notice is found in the file. Once, there is no such show-cause notice found in the file, then, there was no sanction in law to make an Order-in-Original, particularly, after the period of nearly 18 years from the date of filing of the Bill of Entry and 12 years from the date of the assessment, as contemplated by Sub-sections (1) and (2) of Section 18. Once such show-cause notice being not issued nor the order impugned in the petition being traceable thereto, then, merely because the petitioner makes a request and appears for a hearing, styled as "A Personal Hearing", before the Assistant Commissioner, would not vest in him the jurisdiction or the competence mandated by law. Once such show-cause notice being not issued nor the order impugned in the petition being traceable thereto, then, merely because the petitioner makes a request and appears for a hearing, styled as "A Personal Hearing", before the Assistant Commissioner, would not vest in him the jurisdiction or the competence mandated by law. Any voluntary submission to the jurisdiction of the authority, when in law he does not possess the same at all, will not suffice nor will waive the legal requirement. There is no such waiver as well, even if it is presumed that the benefit of the law being personal or restricted to the petitioner. Throughout the petitioner has been demanding and issuance of the show-cause notice and furnishing a copy thereof to him. That requirement in law being not fulfilled, we do not think that we should relegate the petitioner to any alternate remedy to challenge the impugned order. 22. The impugned order is ex-facie illegal and without jurisdiction. We can, in exercise of our plenary powers under Article 226 of the Constitution of India, entertain a petition to challenge such an order and, thereafter, quash and set aside the same once we are satisfied that allowing it to remain on record and permitting the authorities to enforce it would result in manifest injustice. 23. In the circumstances, we allow this petition. We quash and set aside the impugned order. Rule is made absolute in terms of prayer Clause (a). There would be no order as to costs.