2022 (10) TMI 16 - HC - Customs

Misdeclaration of export goods or not - 141.74 Carat of cut and polished diamonds - whether declarations made in the Shipping Bill were truthful or not - contravention of provisions of Section 50(3) of the Customs Act, 1962 or not - HELD THAT - There is absolutely no explanation as to why Respondent No.2 did not even consider it necessary to reply to Petitioner s request to return the diamonds, though Respondents seem to have no problem with those diamonds. In Paragraph 33 of the Reply, it is stated that Section 118(b) of the Customs Act, 1962 permits them to confiscate the balance 110.55 Carat also because they were all in the same package. If that was the position, then there is no reason why those diamonds were not included in the show-cause notice as proposed to be confiscated. Therefore, it is nothing but an afterthought to get over the allegation of inaction on the part of Respondent No.2. Mr. Mishra, in fairness, states that since those 110.55 Carat diamonds have not even referred to in the show-cause notice as liable to confiscation either under the provisions of Section 118(b) of the Customs Act, 1962 or under any other provision, prima facie, appeared to be returnable to Petitioner. Petition is disposed with the direction to Respondent No.2 to consider Petitioner s letter dated 14th July 2022, copy whereof is annexed to Petition and marked as Exhibit B , within two weeks from today.

Issues:
1. Alleged misdeclaration in Shipping Bill for export consignment.
2. Show-cause notice for confiscation and penalty under Customs Act, 1962.
3. Request for return of diamonds not proposed for confiscation.
4. Lack of response from Respondent No.2 regarding the return request.

Issue 1: Alleged misdeclaration in Shipping Bill for export consignment

The petitioner had filed Shipping Bill No.7550263 for an export consignment of cut and polished diamonds. The Customs Department recalled the consignment after a detailed examination revealed discrepancies in the declared FOB value. The Department alleged that the declarations in the Shipping Bill were not truthful, contravening Section 50(3) of the Customs Act, 1962.

Issue 2: Show-cause notice for confiscation and penalty under Customs Act, 1962

Following the examination, a show-cause notice was issued to the petitioner by the Deputy Commissioner of Customs. The notice called for an explanation as to why 57 lots of diamonds should not be confiscated under Section 113 of the Customs Act, 1962, with penalties proposed under Section 114(iii) and Section 114AA. The petitioner, in response, requested the return of the diamonds not proposed for confiscation.

Issue 3: Request for return of diamonds not proposed for confiscation

The petitioner, through a letter, requested the return of 110.55 Carat of diamonds that were not included in the proposed confiscation. The lack of response from Respondent No.2 regarding this request raised concerns about the handling of the situation and the reasons for not including these diamonds in the initial show-cause notice.

Issue 4: Lack of response from Respondent No.2 regarding the return request

In the absence of a response from Respondent No.2 to the petitioner's request for the return of the diamonds not subject to confiscation, the Court noted the lack of explanation for this silence. The Court highlighted the discrepancy in not including these diamonds in the show-cause notice if they were also liable for confiscation under Section 118(b) of the Customs Act, 1962.

The Court, upon considering the arguments presented, directed Respondent No.2 to review and respond to the petitioner's request for the return of the diamonds within two weeks. The Court emphasized the need for a timely resolution to address the concerns raised by the petitioner regarding the handling of the consignment and the discrepancies in the show-cause notice. The petitioner's request for the return of the diamonds not proposed for confiscation was deemed valid, and the Court sought a prompt resolution from the Customs Department in this regard.

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