2010 (1) TMI 671 - HC - Customs

Mis-declaration and undervaluation - there is no basis for exercise of the power and impugned Show Cause Notice is without jurisdiction - Merely because a contempt petition is pending, cannot be a ground to hold that the Show Cause Notice is mala fide or untenable - The evasion alleged is of Rs. 712.77 crores. In such a situation, the advice to the petitioner not to alienate the property till notice was pending cannot be held to be untenable - The statutory authority may take its decision after considering the view point of the petitioner, in accordance with law, without being influenced by any observation made hereinabove

Summary

Issues:
Quashing of notice under Section 28BA of the Customs Act, 1962.

Analysis:
The petitioner sought the quashing of a notice dated 8-6-2009, calling for approval for the provisional attachment of a plot under Section 28BA of the Customs Act, 1962. The petitioner argued that he was falsely implicated in a case involving misdeclaration and evasion of duty by certain firms. Despite being granted anticipatory bail, he was arrested, leading him to file a contempt application. The petitioner contended that he had multiple properties and posed no risk of disposing of them, thus challenging the necessity of invoking the drastic power under Section 28BA. The department's circular emphasized exercising such power only if there was a reasonable basis to believe there would be a revenue loss, which the petitioner claimed was not applicable in his case.

In response, the respondents justified the notice by referring to a pending Show Cause Notice alleging duty evasion and misdeclaration amounting to Rs. 712.77 crores against the petitioner. They highlighted the petitioner's admission of misdeclaration and undervaluation during investigation, asserting that the impugned action was essential to safeguard revenue interests.

After hearing both parties, the court opined that the petition was premature as a Show Cause Notice under Section 28 of the Act was pending against the petitioner, justifying the invocation of Section 28BA to protect revenue interests in light of the substantial alleged evasion amount. The court dismissed the petition, stating that the advice to the petitioner not to alienate the property during the pending notice was valid. It was concluded that the impugned Show Cause Notice was not without jurisdiction, emphasizing that no final view on merits was expressed, leaving the statutory authority to decide after considering the petitioner's perspective in accordance with the law.

This judgment underscores the importance of procedural fairness and the statutory authority's discretion in matters involving revenue protection under the Customs Act, 1962. The court's decision to dismiss the petition highlights the significance of pending legal proceedings and the need to safeguard revenue interests, even when faced with allegations of mala fide intentions.