9911796707
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Issues Involved:
1. Validity of Show Cause Notice 2. Misuse of Import Licenses 3. Under-invoicing Allegations 4. Procedural Fairness and Natural Justice Detailed Analysis: 1. Validity of Show Cause Notice: The petitioner challenged the show cause notice dated 9.5.1985 issued under Section 124 of the Customs Act, 1962. The notice alleged unauthorized import and under-valuation of low carbon mild steel CRCA sheets. The petitioner argued that the notice was issued without proper grounds or investigation. It was contended that the notice was based on "understanding" rather than concrete evidence, which is insufficient to form the basis of a show cause notice. The Court found that the notice lacked primary facts and was issued prematurely, thus failing to meet the statutory requirements under Section 124 of the Customs Act. 2. Misuse of Import Licenses: The show cause notice alleged that the import licenses used were non-transferable and issued with actual user conditions, which were not adhered to. It was claimed that the goods imported were not related to the products manufactured by the license holders, thus constituting a misuse of the facilities granted under para 138 of the Import Policy. The petitioner countered this by asserting that the goods were indeed related to the products manufactured by the license holders and provided certificates from the Director of Industries to support this claim. The Court found that the allegations of misuse were based on incorrect assumptions and lacked factual basis. 3. Under-invoicing Allegations: The notice also alleged that the goods were grossly under-invoiced and that the actual suppliers were not disclosed. The petitioner argued that the valuation of CRCA sheets was consistent with the rates assessed by the Customs authorities and that no mill test certificate was required for defective sheets. The Court noted that the department failed to provide documentary evidence or proof of remittance of under-invoiced amounts, thus failing to justify the charge of under-invoicing. 4. Procedural Fairness and Natural Justice: The petitioner contended that the show cause notice was issued without providing a reasonable opportunity to respond, as it was received after the deadline for submission of replies. The Court observed that the customs authority acted in a quasi-judicial capacity and failed to act reasonably and with a sense of responsibility. The notice was found to be uncertain, indeterminate, and based on assumptions, thereby violating the principles of natural justice and procedural fairness. The Court emphasized that the grounds for the notice must be clear and specific to afford the petitioner an effective opportunity to defend themselves. Conclusion: The Court quashed the show cause notice, directing the respondents to assess the duties payable by the petitioner and release the goods upon payment. The respondents were also ordered to refund the warehousing and demurrage charges within 18 days from the presentation of the bill. The Court held that the notice was issued without proper application of mind and lacked the necessary factual basis, thus warranting interference under Article 226 of the Constitution.
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