2014 (9) TMI 401 - HC - Customs

Challenge to the show cause notice - export of goods - claim of duty drawback - denial of claim on the ground of misdeclaration of goods - proposal to confiscate the goods - competency of officer to issue SCN - Held that - So far as the competence of the authority to issue a show cause notice is concerned this Court does not find that the same could be thrown at the nascent stage of its issuance. The heading of the show cause notice clearly depicts that the same has been issued by invoking the provisions contained under Section 124 of the Customs Act, 1962. Section 124 postulates that no order confiscating the goods or imposing any penalty or person shall be made unless the owner of the goods or such person is given a notice in writing with the prior approval of the officer of the customs not below the rank of the Assistant Commissioner of Customs informing him on the grounds on which it is proposed to confiscate the goods or imposed a penalty. Though, the other portions of the said section relates to an opportunity of hearing to be given to the person and also making a representation by the importer or the exporter as the case may be. The show cause notice is admittedly issued by the Assistant Commissioner of Customs (Port), Calcutta. This Court does not find that any case is made out which made warrant the invocation the power of judicial review at the show cause stage. The petitioner can take all the plea available to him in the reply to a said show cause notice before the authority and it is expected that the authority would consider the same and shall decide the proceedings in accordance with law. The petitioner is permitted to file reply to the said show cause notice within four weeks from date. - Decided against the assessee.

Summary

Issues:
Challenge to show cause notice under Article 226 of the Constitution of India, Competence of authority issuing show cause notice, Suppression of material facts in show cause notice, Power to issue show cause notice before final assessment, Interpretation of Section 5(2) of the Customs Act.

Analysis:

1. Challenge to show cause notice under Article 226 of the Constitution of India:
The petitioner challenged a show cause notice issued under Section 124 of the Customs Act, 1962, invoking Article 226 of the Constitution. The petitioner argued that the notice was beyond the competence of the authority as it was supposed to be issued by the Assistant Commissioner of Customs or Deputy Commissioner of Customs as per Section 74 of the Act.

2. Competence of authority issuing show cause notice:
The petitioner contended that the show cause notice was issued by the Commissioner of Customs, which was not in line with the hierarchy specified in Section 5(2) of the Customs Act. The petitioner relied on a judgment from the Madras High Court to support the argument that the expression "who is subordinate to him" implies an officer immediately in a lower rank and not in the line of descent.

3. Suppression of material facts in show cause notice:
The petitioner alleged that the show cause notice failed to reflect the report prepared at the time of export, amounting to a gross suppression of material facts. However, the respondent argued that all relevant facts were disclosed in the notice, and any determination should be made after receiving the reply and other documents.

4. Power to issue show cause notice before final assessment:
The petitioner argued that authorities cannot issue a show cause notice before the final assessment is made, citing a previous judgment. However, the respondent contended that the notice was issued concerning the drawback claimed by the petitioner under Section 74 of the Act, justifying the issuance of the notice before final assessment.

5. Interpretation of Section 5(2) of the Customs Act:
The interpretation of Section 5(2) of the Customs Act was a crucial point of contention. The petitioner emphasized that the expression "who is subordinate to him" should be narrowly construed, while the respondent argued that such a narrow interpretation would defeat the legislative intent and render the provisions unworkable.

In conclusion, the Court found that the petitioner's arguments did not warrant judicial review at the show cause notice stage. The petitioner was allowed to file a reply to the notice, and the authorities were directed to independently decide the proceedings. The judgment was clear that it did not impact the ongoing proceedings and was disposed of without costs.