2021 (4) TMI 608 - HC - Customs

Validity of SCN issued - SCN issued inspite of certificate of origin issued by the Ministry of Foreign Affairs - the case is that the show cause notices make holes in the authenticity of the certificate of origin that has been issued and other document that has been issued by the suppliers of Bangladesh - HELD THAT - Subsequent to the judgement of the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT , the D.R.I. has lost its authority to issue any show cause notice under Section 28 of the Customs Act, 1962 - there appears to be a prima facie case for staying the show cause notice following the judgement in M/s. Canon India Pvt. Ltd. Let affidavit-in-opposition be filed within four weeks, reply thereto, if any, two weeks thereafter. Let the matter appear in the combined monthly list of July, 2021.

Summary

Issues:
1. Show-cause notices issued by the D.R.I under the Customs Act, 1962.
2. Validity of show-cause notices in light of SAFTA Agreement and Supreme Court judgment.
3. Authority of D.R.I to issue show-cause notices under Section 28 of the Customs Act, 1962.
4. Prima facie case for staying the show-cause notice.
5. Release of bank guarantees and provision of alternative security.

Analysis:

1. The writ petitions revolve around the common show-cause notices issued by the Directorate of Revenue Intelligence (D.R.I) under Section 124 read with Section 28 of the Customs Act, 1962, which have aggrieved the petitioners.

2. The petitioners challenge the authenticity of the show-cause notices, citing a certificate of origin issued by the Ministry of Foreign Affairs, Government of Bangladesh, under the SAFTA Agreement. The petitioners argue that any dispute should be resolved under the SAFTA Agreement provisions, as indicated in Articles 20 and 21, emphasizing the certificate's validity.

3. The authority of the D.R.I to issue show-cause notices under Section 28 of the Customs Act, 1962 is questioned post the Supreme Court judgment in M/s. Canon India Pvt. Ltd. vs. Commissioner of Customs. The petitioners contend that the D.R.I has exceeded its jurisdiction, and the show-cause notices are deemed non est in law, lacking legal authority.

4. The Court, after considering the arguments, finds a prima facie case for staying the show-cause notice in line with the precedent set by the Supreme Court judgment in M/s. Canon India Pvt. Ltd. The Court refrains from delving into the merits of other arguments raised by the petitioners at this stage.

5. Additionally, the petitioners seek the release of bank guarantees amounting to approximately Rupees Forty-two crores, furnished for the provisional release of goods. The Court notes the impact on the petitioners' business due to the blockage of funds and allows them to apply for providing alternative security, as no such security was presented in the current writ petitions.

In conclusion, the High Court of Calcutta has acknowledged the validity concerns raised by the petitioners regarding the show-cause notices issued by the D.R.I under the Customs Act, 1962. The Court has found a prima facie case for staying the notices and granted permission for the petitioners to seek alternative security for the bank guarantees. The judgment reflects a meticulous analysis of the legal arguments presented, emphasizing the importance of adherence to legal provisions and agreements in customs matters.