2009 (3) TMI 3 - HC - Customs

Optic Fibre Cables (OFC) imported by the petitioners and cleared on assessment under tariff Heading 85.44 - Officers collecting amount towards differential duty on the footing that OFC were liable to be assessed u/h 90.01, even before initiating reassessment proceedings is totally in gross abuse of the process of law - However, instead of directing refund of the amount and return of the two bank guarantees, revenue is directed to issue SCN for reassessment within two weeks from today

Issues Involved:
1. Justification of customs authorities seizing consignments of 48F optic fibre cables (OFC).
2. Legality of collecting differential duty from the petitioners.
3. Classification dispute of OFC under tariff Heading 85.44 versus Heading 90.01.
4. Voluntariness of the payment made by the petitioners.
5. Jurisdiction of the writ court in deciding the classification dispute and refund of duty.

Issue-wise Detailed Analysis:

1. Justification of customs authorities seizing consignments of 48F optic fibre cables (OFC):
The customs authorities seized three consignments of OFC imported by the petitioners and cleared on assessment under tariff Heading 85.44. The Court found the actions of the Directorate of Revenue Intelligence (DRI) officers in seizing the goods to be "wholly unjustified and uncalled for." The decision of the Commissioner of Customs (A) on 25-3-2008 held that OFC imported by the petitioners are classifiable under Heading 85.44, which was not stayed by any competent authority. Therefore, the customs authorities could not have seized the goods assessed and cleared under Heading 85.44 on the ground that the goods were liable to be assessed under Heading 90.01.

2. Legality of collecting differential duty from the petitioners:
The customs authorities collected Rs.1,83,46,210/- towards differential duty from the petitioners. The Court held that the collection of this amount was "wholly unjustified" as there was no reassessment order determining the duty liability. The petitioners had cleared the goods on payment of duty as assessed under Heading 85.44, and the assessment had not been set aside nor had any show cause notice been issued. The amount was collected under threat and coercion, as evidenced by the letters dated 19-12-2008 from the petitioners stating the payment was made due to threats of arrest.

3. Classification dispute of OFC under tariff Heading 85.44 versus Heading 90.01:
The petitioners classified OFC under Heading 85.44, while the revenue argued it should be under Heading 90.01. The Court noted that the classification under Heading 85.44 was upheld by the Commissioner of Customs (A) and had not been set aside. Therefore, the petitioners' classification could not be faulted. The Court did not express any opinion on the correct classification but emphasized that the petitioners' action was in conformity with the existing order by the Commissioner of Customs (A).

4. Voluntariness of the payment made by the petitioners:
The revenue argued that the payment was made voluntarily. However, the Court found this argument "equally unacceptable" as the petitioners had clearly stated in their letters that the payment was made under threat of arrest. The immediate filing of the writ petition further supported the claim that the payment was not voluntary.

5. Jurisdiction of the writ court in deciding the classification dispute and refund of duty:
The revenue contended that the writ petition was not maintainable as the classification dispute should be decided by the authorities under the Customs Act. The Court rejected this argument, stating that the order of the Commissioner of Customs (A) had not been stayed and both the revenue and the petitioners were bound by it. The Court also referenced the Supreme Court's decision in U.P. Pollution Control Board V/s. Kanoria Industrial Limited, which held that a writ petition for refund of money collected without authority of law is maintainable.

Conclusion:
The Court condemned the actions of the DRI officers as "high handed" and "in gross abuse of the process of law." It directed the respondents to issue show cause notices for reassessment within two weeks, failing which the amount collected and the bank guarantees furnished would be refunded/returned to the petitioners with interest. The respondents were also ordered to pay costs of Rs.10,000/- to the petitioners. The rule was made absolute, and the petition was disposed of accordingly.

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