2017 (2) TMI 961 - HC - Customs

Import of Cigarettes - confiscation - interest - penalty - levy of duty, interest and penalty to past import of cigarettes also - whether the case falls under the category of natural justice or under the category of jurisdiction? - Held that - the case may not fall under the category of violation of natural justice. A SCN was issued to which the petitioners submitted a reply. The petitioners were granted an opportunity to appear through counsel at the time of personal hearing. Therefore, the petitioners cannot complain of violation of natural justice. Jurisdiction - Held that - what could be found out from the records alone could be the subject matter of proceedings u/s 28(4). What cannot be established merely by the records cannot form the basis of the proceedings under Section 28(4) - the power u/s 28(4) cannot be invoked in cases where a claim is made that what was imported was completely different from what was indicated in the Bills of Entry. In a case where the Bills of Entry declared the goods to be Baby Diapers and the Proper Officer also cleared the goods for home consumption u/s 47(1), it may not be possible for the Department later on to contend that cigarettes concealed in Baby Diapers could have been imported and taken into the market. The 2nd respondent could not have invoked the jurisdiction under Section 28(4) in respect of the past containers. If this is permitted, it would become a matter of surmises for any officer to claim that some goods could have been smuggled into the country by concealing them behind the goods that were declared to be the goods of import in the Bills of Entry. Hence, the Orders-in- Original impugned in these writ petitions are liable to be set aside only insofar as they impose a duty, interest and penalty in respect of the past 13 containers. Petition disposed off - decided partly in favor of petitioner - the petitioners will have to avail the alternative remedies available to them in law.

Summary

Issues Involved:

1. Jurisdiction of the adjudicating authority.
2. Violation of principles of natural justice.
3. Legality of proceedings under Section 28(4) of the Customs Act, 1962.
4. Basis for imposing duty, interest, and penalty on past imports.

Detailed Analysis:

Jurisdiction of the Adjudicating Authority:
The petitioners challenged the jurisdiction of the 2nd respondent, claiming that the adjudication should be limited to the cargo in the two live containers seized and not extend to the past imports from 13 containers. The court found that the 2nd respondent's conclusion that past imports could have contained contraband was based on presumptions and not on concrete evidence. The court noted that the primary evidence for past containers was lost, and the reliance on retracted statements and corroborative statements was insufficient to draw such a conclusion.

Violation of Principles of Natural Justice:
The court examined whether there was a violation of natural justice in the proceedings. It was observed that the petitioners were issued show cause notices, submitted replies, and were given an opportunity to appear through counsel. Therefore, the court concluded that there was no violation of natural justice as the petitioners were granted a fair hearing.

Legality of Proceedings under Section 28(4) of the Customs Act, 1962:
The court scrutinized the invocation of Section 28(4) for past imports. It was emphasized that Section 28(4) allows for proceedings within five years in cases of collusion, willful misstatement, or suppression of facts. However, the court highlighted that this section cannot be invoked based on mere presumptions about the nature of goods imported in the past, especially when the goods were cleared under Section 47 after following prescribed procedures.

Basis for Imposing Duty, Interest, and Penalty on Past Imports:
The court critically analyzed the basis for imposing duty, interest, and penalty on past imports. The 2nd respondent's reliance on oral statements, which were retracted, and the weight factor argument were found to be speculative. The court noted that the examination reports for past containers indicated that proper procedures were followed, and there was no evidence of misdeclaration. Consequently, the court held that the imposition of duty, interest, and penalty on past imports was not justified.

Conclusion:
The court allowed the writ petitions to the extent of setting aside the orders imposing duty, interest, and penalty on the past 13 containers. The court directed that for all other matters, the petitioners must avail the alternative remedies available under the law. The miscellaneous petitions pending in these writ petitions were closed, and no costs were awarded.