2021 (6) TMI 179 - HC - Customs

Maintainability of petition - alternative remedy of appeal - Import of goods - refractory bricks - freely importable or restricted imports - period for filing statutory appeal - interpretation of the policy N/N. 45/2015-2020 dated 31.01.2020 issued by the Director General of Foreign Trade - Clarification by DGFT vide Trade Notice No.8/2020-2021, dated 04.05.2020 - goods confiscated without issuance of SCN - Principles of natural justice. HELD THAT - The issue turns on an interpretation of the policy notification issued by the Director General of Foreign Trade. The customs authority on its own ought not to have interpreted as to whether the goods in question can be called as restricted items. The respondent ought to have sought a clarification directly from the concerned authority in DGFT. In the alternative, the respondent could have mandated the petitioner to move the competent authority under Foreign Trade (Development and Regulation) Act, 1992 and obtain a clarification. Instead of doing so, the respondent applied his own understanding of the policy notification. What the respondent has done is not in accordance with Section 17 of the Customs Act - However, vide notification No.45/2015-2020 dated 31.01.2020, the Director General of Foreign Trade prohibited import of stock lot . Issue arose as to what was meant by this expression. Thereafter, clarification was provided by DGFT vide Trade Notice No.8/2020-2021, dated 04.05.2020 - The Trade Notice has clarified that If the whole imported paper consignment is without description for each category of paper, it is a stock lot. The respondent should have adopted a similar approach in this case - He could have contacted the other port authorities and ascertained the position - He could have moved the competent authority in DGFT and obtained clarification. Without doing so, he chose to straightaway pass the impugned order. This is clearly unfair as well as violation of Section 17 of the Customs Act. Principles of Natural Justice - HELD THAT - The impugned order is also violative of the principles of natural justice. The order of confiscation has been passed without issuing show cause notice - It is true that the petitioner has called upon the respondent to finalise the issue without show cause notice or personal hearing. But a careful reading of the contents of the petitioner's letter dated 06.08.2018 would show that since according to him there is no policy violation, he wanted the goods to be cleared without any delay. But the respondent had a different perception. They were not on the same page. There was a fundamental divergence in the stand taken by the two. Therefore, the respondent ought to have followed the procedure laid down in Section 124 of the Act. Section 124 is couched in imperative terms. The matter is remitted to the file of the respondent to pass order afresh in accordance with law - Petition allowed by way of remand.

Issues Involved:
1. Whether the goods imported by the petitioner are freely importable or restricted.
2. Whether the impugned order was served on the petitioner.
3. Whether the writ petition is maintainable despite the expiration of the appeal period.
4. Whether the respondent followed the correct procedure under the Customs Act, 1962.
5. Whether the principles of natural justice were violated.

Detailed Analysis:

1. Freely Importable or Restricted Goods:
The petitioner, a licensed importer, contended that the second-hand goods imported were freely importable. The respondent argued that since the goods were not capital goods, prior authorization from DGFT was required, leading to their confiscation and a penalty imposition. The court found that the customs authority should have sought clarification from DGFT or mandated the petitioner to do so, rather than interpreting the policy notification on its own. This action was deemed not in accordance with Section 17 of the Customs Act.

2. Service of the Impugned Order:
The petitioner claimed he was never served with the impugned order-in-original, leading to a writ petition to obtain a certified copy. The respondent countered that the order was served on the petitioner’s customs broker. The court noted the amendment to Section 152 of the Customs Act, which treats service on the customs broker as service on the assessee. However, discrepancies in the acknowledgment date raised doubts, but the court did not delve into this issue further.

3. Maintainability of the Writ Petition:
The respondent argued that the writ petition was not maintainable as the petitioner did not avail the alternative remedy of appeal within the limitation period. The petitioner cited Supreme Court decisions affirming that jurisdiction under Article 226 of the Constitution cannot be ousted. The court referred to the Mahindra and Mahindra case, which outlined parameters for exercising jurisdiction under Article 226, such as unfairness, unreasonableness, and violation of natural justice. The court found that the case met these parameters.

4. Procedure under the Customs Act, 1962:
The court highlighted that the customs authority should have followed Section 17 of the Customs Act for verification and assessment. The respondent’s failure to seek clarification from DGFT or mandate the petitioner to do so was deemed a violation of the statutory procedure. The court emphasized that the respondent should have adopted a similar approach as in the case of second-hand Coated paper in rolls, where clarification was sought from DGFT.

5. Violation of Principles of Natural Justice:
The court found that the order of confiscation was passed without issuing a show cause notice, violating Section 124 of the Customs Act, which mandates a notice and an opportunity for representation and hearing. Although the petitioner had requested the matter be finalized without a show cause notice, the court noted that the fundamental divergence in the parties’ stands necessitated following the statutory procedure. The court ruled that bypassing these steps was impermissible.

Conclusion:
The court quashed the impugned order, citing illegal actions and procedural violations by the respondent. The matter was remitted to the respondent for fresh consideration in accordance with the law, with directives to take further steps and pass final orders within eight weeks. The petitioner’s contentions regarding the nature of the goods were left open for reconsideration. The writ petition was allowed without costs, and connected miscellaneous petitions were closed.

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