2011 (11) TMI 376 - HC - Customs

Custom Circular - introduction of a Risk Management System (RMS) with an Accredited Clients Programme (ACP) - Assessee argued case booked cannot be ground to deny accreditation to carry business and challenged the constitutional validity - Held That - Condition 7(iii) bears a sufficiently rational nexus with this object and cannot be construed as being arbitrary or violative of the fundamental rights conferred by Articles 14 or 19(1)(g) of the Constitution.

Summary

Issues Involved:
1. Legality and validity of condition 7(iii) of the circular issued by the Central Board of Excise and Customs.
2. Alleged violation of the fundamental right under Article 19(1)(g) of the Constitution.
3. Petitioner's eligibility for accreditation under the Accredited Clients Programme (ACP).

Issue-Wise Detailed Analysis:

Legality and Validity of Condition 7(iii) of the Circular:
The Petitioner challenged the legality and validity of a condition contained in paragraph 7(iii) of a circular issued by the Central Board of Excise and Customs. The circular, dated 24 November 2005, introduced a Risk Management System (RMS) with an Accredited Clients Programme (ACP) to facilitate importers who comply with customs laws. The RMS allows accredited clients to clear consignments based on self-assessment without physical examination, reducing cargo dwell time and transaction costs. Paragraph 7(iii) originally required that importers have no cases of Customs, Central Excise, or Service Tax booked against them in the previous three financial years. This condition was later amended on 20 August 2011 to specify the types of cases that would disqualify an importer from accreditation.

Alleged Violation of Fundamental Right under Article 19(1)(g) of the Constitution:
The Petitioner argued that condition 7(iii) violated their fundamental right under Article 19(1)(g) of the Constitution to carry on business. They contended that merely having a case booked against them should not be grounds for denying accreditation, as it would cause serious hardship in conducting business. The Court, however, found that the condition was not arbitrary and was designed to balance trade facilitation with enforcement. The Court held that the condition had a rational nexus with the objective of ensuring compliance and was not violative of Articles 14 or 19(1)(g) of the Constitution.

Petitioner's Eligibility for Accreditation under ACP:
The Petitioner initially applied for ACP accreditation on 2 March 2010, but was denied due to non-compliance with condition 7(iii). A subsequent application on 8 April 2011 also failed to provide necessary details about any penal actions under Customs, Central Excise, or Service Tax laws. The Assistant Commissioner of Customs requested further information, which the Petitioner did not provide, instead approaching the Court. The Court found that the Assistant Commissioner was within his jurisdiction to request this information and that the Petitioner should have responded to the communication. The affidavit in reply from the Assistant Commissioner detailed that the Petitioner had been involved in a case of duty evasion, which disqualified them from ACP benefits. The Court concluded that the Petitioner had no right to claim ACP benefits and dismissed the Petition.

Conclusion:
The Court upheld the validity of condition 7(iii) of the circular, finding it neither arbitrary nor violative of constitutional rights. The Petitioner was found ineligible for ACP accreditation due to involvement in duty evasion cases. The Petition was dismissed, and the Petitioner was advised to respond to the Assistant Commissioner's request for information. No order as to costs was made.