2009 (4) TMI 812 - HC - Customs

Detention orders challenged - Held that - the Department has failed to prove as to how they have arrived at the conclusion that there is undervaluation since there is no material on record to show that the Department has followed the procedure contemplated under the Act and Rules to arrive at the conclusion regarding the valuation. There is a lot of delay in slapping the impugned order of detention on the detenu. For the alleged incident said to have taken place during the year 2005, the impugned order of detention came to be passed on 9-9-2008, for which no explanation, worth considering and appreciating, is coming forth from the respondents. Thus, we have no hesitation to hold that the respondents have committed a legal error in slapping the impugned order of detention on the detenu. On this ground, this Habeas Corpus Petition is allowed.

Issues Involved:
1. Non-supply of relied upon documents.
2. Procedure for determining undervaluation under the Customs Act, 1962 and the Rules framed thereunder.
3. Delay in issuing the detention order.
4. Legitimacy of international bank transactions by the detenu.

Issue-wise Detailed Analysis:

1. Non-supply of relied upon documents:
The petitioner argued that the documents listed in the index at Page Nos. 42 and 43, which were relied upon by the Detaining Authority, were not provided to the detenu. Additionally, the detenu requested legible copies of certain documents, which were not furnished, causing prejudice to the detenu's ability to make an effective representation. The court, however, noted that these documents were part of the bills of entry filed by the detenu himself during the investigation. Thus, the non-supply of these documents or their legible copies did not vitiate the detention order. The court referenced the case of Usha Agarwal v. Union of India and Others, where it was held that illegibility of documents provided by the detenu himself does not invalidate the detention order.

2. Procedure for determining undervaluation under the Customs Act, 1962 and the Rules framed thereunder:
The petitioner contended that the respondents failed to follow the procedure prescribed under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, to assess the value of the imported apples, thus arriving at an erroneous conclusion of undervaluation. The court emphasized that the Customs Act and the Rules provide a detailed procedure for valuation, including the need for the Proper Officer to doubt the declared value and to follow specific rules to determine the correct value. The court found no evidence that the respondents followed these procedures. The court cited the case of Commissioner of Customs, Calcutta v. South India Television (P) Ltd., underscoring that the Department must provide cogent reasons for rejecting the invoice price and prove undervaluation with evidence of contemporaneous imports at higher prices.

3. Delay in issuing the detention order:
The court noted a significant delay in issuing the detention order. The alleged incident occurred in 2005, but the detention order was passed only on 9-9-2008. The respondents failed to provide a satisfactory explanation for this delay. The court found this delay to be a legal error, contributing to the decision to quash the detention order.

4. Legitimacy of international bank transactions by the detenu:
The Additional Public Prosecutor argued that deposits into the detenu's account from various sources, including an incident involving the Hongkong International Bank, indicated an offense. The court rejected this argument, noting that the detenu was engaged in international business and such transactions were a normal part of his business operations. The court found no wrongdoing in receiving payments through various banks from international customers.

Conclusion:
The Habeas Corpus Petition was allowed, and the impugned order of detention was set aside. The detenu was ordered to be released forthwith unless required in any other case.

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