2018 (7) TMI 915 - HC - Customs

Imposition of Customs duty with penalty - Confiscation - redemption fine - penalty - Held that - Inspite of specific question put to Mr. Ranka counsel for the respondent regarding imposition of duty, he could not point out whether duty is liable to be imposed on the assessee, therefore, in our considered opinion, impugned order of penalty, redemption of fine and confiscation seems to be prima faice without jurisdiction - In that view of the matter, without expressing any opinion on the question of alternative remedy, to meet with the ends of justice, this court is bound to exercise its power under Article 226 of the Constitution of India to prevent injustice which has been done to the assessee. This is a fit case, where the High Court should exercise power otherwise this will amount to putting premium on the petitioner who is not required to pay even basic duty and penalty. The writ petitions are admitted.

Issues Involved:
1. Legality of the show cause notice.
2. Availability and exhaustion of alternative statutory remedies.
3. Jurisdiction of the High Court under Article 226 of the Constitution.
4. Imposition of penalty and duty under the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Legality of the Show Cause Notice:
The court referenced the case of Special Director vs. Mohd. Ghulam (2004) 3 SCC 440, emphasizing that High Courts should not routinely entertain writ petitions challenging the legality of show cause notices. The court held that unless a show cause notice is entirely without jurisdiction, the recipient should respond to it and allow the issuing authority to adjudicate the matter initially. The court should ensure that statutory functionaries are not stripped of their powers by interim orders.

2. Availability and Exhaustion of Alternative Statutory Remedies:
The judgment highlighted multiple precedents, including Commissioner of Income Tax vs. Chhabil Dass Agarwal (2014) 1 SCC 603, which underscored that writ petitions should not be entertained if an effective alternative remedy exists. The court reiterated that statutory forums created for grievance redressal must be utilized before invoking the writ jurisdiction of the High Court. This principle is especially stringent in cases involving recovery of taxes and public dues, as noted in Authorized Officer, State Bank of Travancore vs. Mathew K.C. Civil Appeal No.1281/2018.

3. Jurisdiction of the High Court under Article 226 of the Constitution:
The court cited Raj Kumar Shivhare vs. Asst. Director, Directorate of Enforcement (2010) 4 SCC 772, affirming that while the High Court's jurisdiction under Article 226 is a basic feature of the Constitution, it should not be used to bypass statutory remedies. The court should exercise its jurisdiction in line with the legislative intent of the relevant statutes. The judgment also referenced the consistent opinion of the Supreme Court that writ petitions are not ordinarily maintainable to challenge tribunal orders when statutory appeals are available.

4. Imposition of Penalty and Duty under the Customs Act, 1962:
In the context of the Customs Act, the court discussed the case of Diamond Shipping Company Ltd. vs. CC (2017) 358 ELT 108 (Cal), which outlined the limited grounds for interfering with orders passed by statutory authorities. The court noted that the impugned order was reasoned and that the petitioners had an alternative statutory remedy by way of appeal. However, the court found that the penalty, redemption of fine, and confiscation imposed on the assessee seemed prima facie without jurisdiction. Consequently, the court decided to exercise its power under Article 226 to prevent injustice, admitting the writ petitions and staying coercive actions against the petitioners until the final hearing.

Conclusion:
The court admitted the writ petitions and scheduled a final hearing while emphasizing the importance of exhausting statutory remedies before invoking the High Court's writ jurisdiction. The stay applications were disposed of, and no coercive action was to be taken against the petitioners until the final decision.

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