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2014 (4) TMI 908 - HC - CustomsJurisdiction & Power of DGFT Price Fixation Notification Fixation of Tariff Value of Betel nut - Non-fulfillment of the policy condition of notification - Policy to import betel nut Issuance of Show cause notice - Section 111(d) of the Customs Act, 1962 - Article 166 of the Constitution Purpose of the Act - Imposition of penalty - Section 112 - Held That - Judgment in Dattatreya Moreshwar v State of Bombay 1952 (3) TMI 32 - SUPREME COURT followed - Clauses (1) and (2) of Article 166 are directory only and non-compliance with them does not result in the order being invalid and that in order to determine whether there is compliance with these provisions all that is necessary to be seen is whether there has been substantial compliance with those requirements - Relying upon S. MIRA COMMODITIES PVT. LTD. Versus UNION OF INDIA 2008 (9) TMI 213 - MADRAS HIGH COURT - The DGFT functions as a limb of the Central Government and not as a delegatee and mere non-mentioning of the specific source of power does not invalidate the entire executive action. Merely by revising the rate in the garb of the amendment to a circular which has been quashed and set aside by the High Court cannot be done by way of an amendment of the policy u/s 5 of the FTDR Act - Paragraph 2.1 of the Foreign Trade Policy, 2009-2014 clearly provides the import and export, to be free except, where regulated by Foreign Trade Policy or any other law in force - It further provides that the Item wise export and import policy shall be notified by the DGFT as amended from time to time - According to the respondent, Paragraph 2.6 of the policy empowers the DGFT to adopt and enforce any measure under the principles of restrictions through a notification The aforesaid parameters set forth therein does not satisfy the imposition of conditions by way of revision of rate from ₹ 75/- to 110/- per kg and above - Therefore, the DGFT even as a delegatee is not empowered to put a condition by revising the rate as a condition to import. Impugned notification dated 13-5-2013 issued by DGFT for fixation of tariff value cannot be sustained therefore set aside. - Decided in favor of assessee. Fixation of tariff value by the Customs Department - Notification dated 25-6-2013 - Held that - The contention of the petitioners that the Board cannot fix the tariff value is unacceptable and runs contrary to the intendment of the legislation. - Except that the impugned notification does not stand on the anvil of wednespury principle and the principle of proportionality, it is not averred in the writ petition, the said notification lacks subjectivity - The power to frame the tariff value is entirely depend upon the satisfaction of the Board and the question of sufficiency of the ground which forms such satisfaction cannot be gone into unless it is demonstrated that it is extraneous to the scope and purpose of the statute - Relied upon Barium Chemicals Ltd. -vs- Company Law Board 1966 (5) TMI 36 - SUPREME COURT OF INDIA It would be deciphered from the impugned notification that the authorities took note of the trend of the value of such or like goods and, therefore, the presumption lies in favour of upholding the notification - This Court, therefore, does not find that the impugned notification, which is issued in exercise of the power u/s 14(2) can be invalidated on the grounds taken by Assessee - Decided against the assessee. Maintainability of writ petition filing after submitting reply to the Show Cause Notice - Held that - The petitioners have not only challenged the show cause notice after giving reply but have also challenged the impugned notification dated 13th May, 2013 and 25th June, 2013 which forms the basis of the issuance of the said show cause notice. There is no impediment in maintaining the writ petitions even after filing of the reply. - Following decision in the case of Suttons & Sons Pvt. Ltd; vs Union of India & Ors 1994 (2) TMI 298 - HIGH COURT OF CALCUTTA ; writ petition is maintainable - Decided in favor of assessee.
Issues Involved:
1. Legality of the notification dated 13th May 2013 issued by the Director General of Foreign Trade (DGFT). 2. Legality of the notification dated 25th June 2013 issued by the Ministry of Finance (Central Board of Excise and Customs). 3. Validity of the show cause notice issued by the Commissioner of Customs (Preventive), West Bengal, Kolkata. Issue-wise Detailed Analysis: 1. Notification dated 13th May 2013: The notification issued by the DGFT fixed the Cost Insurance & Freight (CIF) Value at Rs. 110/- per kg and above as a condition for importing areca nuts. The petitioners argued that the DGFT lacked the authority to amend the Foreign Trade Policy under Section 5 of the FTDR Act, as this power is vested solely in the Central Government. They contended that the DGFT could only advise the Central Government and not amend the policy. The court noted that the DGFT issued the notification under the powers conferred by Section 5 of the FTDR Act, read with Paragraph 2.1 of the Foreign Trade Policy, 2009-2014. However, the court found that the DGFT, acting as a delegatee, could not exercise powers under Section 5 due to the prohibition under Section 6(3) of the FTDR Act. The court also highlighted that the notification was issued in the name of the DGFT and not the Central Government, violating the procedural requirements under Article 77 of the Constitution. The court concluded that the notification was invalid as it was not issued by the appropriate authority and quashed it. 2. Notification dated 25th June 2013: This notification, issued by the Ministry of Finance, fixed the tariff value of areca nuts at US $1613 per metric ton. The court examined the validity of the notification under Section 14(2) of the Customs Act, 1962, which allows the Board to fix tariff values for imported goods based on the trend of values of such or like goods. The court found that the Board had the authority to fix tariff values notwithstanding the transaction value under Section 14(1). The court rejected the petitioners' argument that the notification lacked a valid basis, noting that the Board's satisfaction regarding the trend of values was sufficient. The court upheld the notification, finding no grounds to invalidate it. 3. Show Cause Notice: The show cause notice issued by the Commissioner of Customs (Preventive), West Bengal, Kolkata, contemplated confiscating the imported areca nuts for violating the policy condition of the CIF Value and imposing a penalty under Section 112 of the Customs Act, 1962. The court emphasized that judicial review of show cause notices is limited and should only be exercised if the notice is without jurisdiction or issued by an incompetent authority. The court found that the show cause notice was based on the impugned notifications, which were under judicial scrutiny. The court concluded that there was no impediment to maintaining the writ petitions challenging the notifications and the show cause notice, even after replying to the notice. The court disposed of the writ petitions, quashing the notification dated 13th May 2013 and upholding the notification dated 25th June 2013.
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