2015 (1) TMI 981 - HC - Customs

Challenge to the show cause notice - revenue contended that petitioners were attempted to be exported by mis-declaring the same as handicrafts and thereby liable for confiscation under section 113 (d) of the Act. - Penalty under sections 114 and 114 AA - Held that - We have seen the definition of 'illegal export' as defined under section 11-H (a) of the Act. Sandalwood has been listed as item No.182 in schedule 2 of the Indian Trade Classification (Harmonious System ) as item whose export in any form is prohibited excluding finished handicrafts products of Sandalwood, machine finished Sandalwood products and Sandalwood oil. Admittedly, the 1786 kgs., are in the form of Sandalwood logs and export of such logs is prohibited. The prohibition which is in the form of notification issued in exercise of the powers under the Foreign Trade Development and Regulation Act would fall within the umberage of section 113 of the Act. Clause (d) of section 113 of the Act covers any goods attempted to be exported contrary to any prohibition imposed by or under the Act or any other law. Therefore, the respondents 1 & 2 were vested with jurisdiction to issue the impugned show cause notice in so far as 1786 kgs. of Sandalwood logs lying in the petitioners' office premises. From the materials placed on record it is seen that there was no such intention expressed by the petitioners to deal with 1786 kgs., of Sandalwood logs in the manner now sought to be projected, for the first time in this Writ Petition. Therefore, this Court is of the considered view that the impugned show cause notice cannot be quashed on the grounds raised by the writ petitioners. - Decided against petitioner.

Summary

Issues:
Challenging show cause notice for confiscation of Sandalwood logs and imposition of penalties under Customs Act.

Analysis:
1. Challenging Paragraph 66 of Show Cause Notice:
The Partnership Firm and its partners filed writ petitions challenging paragraph 66 of the show cause notice, which proposed the confiscation of Sandalwood logs attempted to be exported. The petitioners argued that the proposal was arbitrary and based on a wrong opinion, denying them the right to appeal. The court clarified that the show cause notice was open for the petitioners to respond and contest on merits. The challenge to paragraph 66 was deemed misconceived, and the petition failed.

2. Challenging Paragraph 67 of Show Cause Notice:
The partners of the firm filed individual writ petitions to quash paragraph 67 of the show cause notice, which proposed the confiscation of Sandalwood logs lying in their office premises. The petitioners claimed ownership of the logs purchased legally and questioned the jurisdiction of the respondents to seize them. The court noted the area's vulnerability to smuggling and the prohibition on Sandalwood export, justifying the issuance of the show cause notice. The court found no merit in the petitioners' contentions and dismissed the writ petitions.

3. Jurisdiction and Prohibition on Sandalwood Export:
The court analyzed the provisions of the Customs Act regarding confiscation of goods attempted for illegal export. Sandalwood export is restricted except for specific finished products, and the respondents were within their jurisdiction to issue the show cause notice. The petitioners' claim of absolute ownership and freedom to deal with the logs was refuted, as their intentions were questioned, leading to the dismissal of the writ petitions.

4. Final Decision:
The court dismissed all writ petitions, directing the petitioners to respond to the show cause notice within thirty days. The judgment emphasized the legal provisions governing Sandalwood export, the respondents' authority to issue the notice, and the petitioners' failure to demonstrate a legitimate intention regarding the Sandalwood logs. The dismissal was based on the lack of merit in the petitioners' arguments and their failure to establish a valid legal ground for challenging the show cause notice.