1991 (2) TMI 119 - HC - Customs

Summary

Issues Involved:

1. Jurisdiction of the Customs Department to investigate the utilization of imported raw materials.
2. Applicability of the Customs Act and Imports and Exports (Control) Act.
3. Compliance with conditions of advance licence and Customs Notification No. 116/88.
4. Authority of Customs Department to seize and confiscate goods for non-compliance.

Summary:

1. Jurisdiction of the Customs Department to investigate the utilization of imported raw materials:

The appellants contended that the Customs Department had no right or authority to call upon them to furnish details of the import of raw materials and its utilization, as the raw materials were imported under an advance licence granted by the Controller of Imports and Exports. They argued that any breach of the conditions of the licence should be investigated by the licensing authority under the Imports and Exports (Control) Act, not the Customs Department.

2. Applicability of the Customs Act and Imports and Exports (Control) Act:

The Customs Department argued that the import licence was subject to conditions, including compliance with Customs Notification No. 116/88, which required the utilization of imported goods in accordance with the notification. The Department asserted that they had jurisdiction to investigate any suspected misuse or diversion of raw materials and to conduct preliminary enquiries under Sec. 111(o) of the Customs Act read with Section 25.

3. Compliance with conditions of advance licence and Customs Notification No. 116/88:

The learned single Judge found that the Customs Act and the Imports and Exports (Control) Act form a complete code and are administered as one scheme. The advance licence contained a specific condition requiring the utilization of imported goods in accordance with Customs Notification No. 116/88. The Judge concluded that the Customs authorities could investigate to ensure compliance with these conditions, and such an enquiry could necessarily be post-import.

4. Authority of Customs Department to seize and confiscate goods for non-compliance:

The appellants argued that the Customs authorities could not exercise powers of seizure or confiscation for breach of licence conditions, as these powers were vested in the licensing authority. However, the Court held that the Customs authorities had the power to investigate and take action for non-compliance with the conditions of the Customs Notification No. 116/88, which included the possibility of confiscation under Section 111(o) of the Customs Act. The Court dismissed the writ appeal, concluding that the Customs authorities had jurisdiction to enforce compliance with the notification and the conditions of the advance licence.