1983 (9) TMI 94 - HC - Central Excise

Appeal - Pre-deposit of duty or penalty - Natural Justice - Personal hearing - Valuation - Provisional assessment - Limitation

Issues Involved:
1. Violation of Articles 19(1)(g) and 14 of the Constitution of India.
2. Legality of the demand for short-levy of customs duty.
3. Applicability of Sections 30(a) and 30(b) of the Sea Customs Act, 1878.
4. Validity of the provisional assessment and final assessment of customs duty.
5. Compliance with principles of natural justice.
6. Jurisdiction of the High Court.
7. Validity of the certificate issued under Section 142(c) of the Customs Act, 1962.
8. Limitation period for demanding short-levy under Section 39 of the Sea Customs Act, 1878.
9. Requirement of deposit under Section 189 of the Sea Customs Act, 1878 for maintaining an appeal.

Detailed Analysis:

1. Violation of Articles 19(1)(g) and 14 of the Constitution of India:
The petitioners argued that their rights under Articles 19(1)(g) and 14 were violated as they were subjected to hostile, unequal, and discriminatory treatment. They claimed the fundamental right to carry on business without unreasonable restrictions and to be treated equally with other similarly situated companies.

2. Legality of the demand for short-levy of customs duty:
The Customs authorities demanded additional duty from the petitioners for short-levy, which was contested by the petitioners on the grounds that no extra duty was payable based on the analysis of shipments. The petitioners argued that they were not provided with the relevant rules or notifications under which such assessment was sought to be made.

3. Applicability of Sections 30(a) and 30(b) of the Sea Customs Act, 1878:
The petitioners contended that the assessment should have been made under Section 30(a) and not Section 30(b). Section 30(a) deals with the wholesale cash price, while Section 30(b) applies where such price is not ascertainable. The Customs authorities used the prices quoted in the Indian Trade Journal for assessment under Section 30(b), which the petitioners challenged as not being a correct index of manganese ore prices.

4. Validity of the provisional assessment and final assessment of customs duty:
The petitioners argued that the provisional assessments were made at their request due to the time required for testing the ore. However, they contested the final assessments, claiming that the Customs authorities did not follow proper procedures and relied on extraneous factors. The Customs authorities maintained that the assessments were made based on analysis reports and prices quoted in the Indian Trade Journal.

5. Compliance with principles of natural justice:
The petitioners claimed that the Customs authorities violated principles of natural justice by not providing them with the analysis reports or giving them an opportunity to contest the assessments. They argued that the samples were drawn behind their back and the assessment was made without due hearing. The court noted that the Customs authorities must follow principles of natural justice, and the failure to do so rendered the initial order a nullity.

6. Jurisdiction of the High Court:
The Customs authorities argued that the High Court of Calcutta did not have jurisdiction as the cause of action arose in Visakhapatnam. The court, however, held that it had jurisdiction as the notices were served on the petitioners in Calcutta.

7. Validity of the certificate issued under Section 142(c) of the Customs Act, 1962:
The petitioners challenged the validity of the certificate issued for recovery of the short-levied duty, arguing that it was not signed by the District Collector. The Customs authorities contended that the certificate was issued under Section 142(c) and was valid. The court found that the certificate was issued in accordance with the law.

8. Limitation period for demanding short-levy under Section 39 of the Sea Customs Act, 1878:
The petitioners argued that the demand for short-levy was barred by limitation as it was not made within three months from the date of the first assessment. The court noted that the limitation period under Section 39 applied and found the demand to be time-barred.

9. Requirement of deposit under Section 189 of the Sea Customs Act, 1878 for maintaining an appeal:
The Customs authorities required the petitioners to deposit the short-levied amount as a condition for hearing the appeal. The petitioners argued that the original order was a nullity, and thus, the requirement for deposit did not apply. The court held that the appeal could not be dismissed for non-deposit when the original order was void.

Conclusion:
The court found that the Customs authorities violated principles of natural justice by not providing the petitioners with the analysis reports and not giving them an opportunity to contest the assessments. The initial order was deemed a nullity, and the subsequent steps taken based on that order were also invalid. The court held that the demand for short-levy was barred by limitation and that the High Court had jurisdiction to entertain the petition. The rule was made absolute, and the respondents were allowed to proceed afresh in accordance with the law.

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