2019 (2) TMI 448 - HC - Customs

Export of prohibited item - export of non-basmati rice in excess of 20% - N/N. 67 dated 23.1.2003 issued under rule 11 of the Export (Quality Control and Inspection) Act, 1963 - Held that - Appeal admitted on substantial questions of law.

Summary

Issues:
1. Tribunal's reliance on a decision of Delhi High Court and Notification No.67 dated 23.1.2003.
2. Applicability of a particular notification without a show cause notice.

Analysis:

1. The appellant's advocate argued that the Tribunal, in dismissing the appeal, relied on a decision of the Delhi High Court in a specific case. However, it was highlighted that the Delhi High Court later reviewed its decision in favor of the assessee. The Tribunal justified its decision based on the initial Delhi High Court ruling. Additionally, the Tribunal referenced Notification No.67 dated 23.1.2003 under rule 11 of the Export (Quality Control and Inspection) Act, 1963, stating that the prohibition on non-basmati rice in exports exceeding 20% applies to all consignments, leading to the confirmation of confiscation and penalties under section 114(1) of the Customs Act, 1962.

2. Reference was made to the Supreme Court decision in Prince Khadi Woollen Handloom Prod. Coop. Indl. Society v. CCE, emphasizing that if the revenue believes an appellant is not entitled to a specific notification's benefit, a show cause notice must be issued. In this case, it was argued that the revenue did not assert the applicability of the notification to the assessee. Therefore, without providing a show cause notice, the Tribunal should not have relied on the said notification.

The High Court admitted the case based on the submissions made by the appellant's advocate. Subsequently, two substantial questions of law were identified for consideration. The first question revolved around the justification of the Tribunal in upholding confiscation and imposing fines and penalties under sections 114(1) and 114AA of the Customs Act, 1962. The second question focused on whether the Tribunal was correct in relying on Notification No.67 dated 23.1.2003, issued under the Export (Quality Control and Inspection) Act, 1963, which was not specified as a restriction under a specific notification amended by DGFT. The proposed third question was included within the first question for further examination.