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Issues Involved:
1. Allegation of mala fides. 2. Confiscation of machinery post-clearance under Section 47. 3. Validity of machinery import under Open General Licence (OGL). Detailed Analysis: Issue 1: Allegation of Mala Fides The petitioner contended that the action of the second respondent was motivated by mala fides, influenced by a rival unit. The court examined the statement of objections, which asserted that the source of information about the alleged wrongdoing is irrelevant. The learned Counsel for the Central Government argued that no personal ill-will was attributed to the authorities and that the second respondent initiated statutory proceedings based on prima facie material. The court accepted this submission, noting that no personal animosity, bias, or prejudice was alleged against the Customs Department officers. It emphasized that the Intelligence Wing of the Customs Department typically verifies information from various sources and that the source of information cannot be disclosed. The court concluded that the informant's motive does not transfer to the second respondent and rejected the petitioner's contention. Issue 2: Confiscation of Machinery Post-Clearance Under Section 47 The petitioner argued that since the machinery was cleared under Section 47 of the Customs Act and the order was not reversed in appeal or revision, the machinery could not be confiscated. The court noted that fiscal legislation typically includes provisions for reassessment and collection of taxes, and Section 28 of the Act allows for reopening assessments within six months or five years in cases of collusion, willful misstatement, or suppression of facts. The court emphasized that Section 47 does not grant absolute finality to clearance orders, and goods cleared under this section can still be subject to confiscation under Section 111(o) if conditions for exemption are violated. The court highlighted that the show cause notice referred to Sections 111(d) and 111(m), indicating the machinery's liability for confiscation. The court cited several precedents to support its stance, including: - Jain Shudh Vanaspati Ltd. v. Union of India: The Delhi High Court held that clearance under Section 47 attaches finality unless fraud or deliberate suppression is shown. - N.K. Bapna v. Union of India: The Supreme Court held that clandestine removal of goods from a bonded warehouse can be considered smuggling, even if the goods were assessed to duty. - M.M. Joys Industries v. Union of India: The Madras High Court held that clearance under Section 47 does not preclude action under Sections 110, 111, or 113 of the Customs Act. - M/s. Jacsons Thevara v. Collector of Customs and Central Excise: The Supreme Court upheld the applicability of Section 111(o) for goods partially exempted from duty. - Gurupriya Tele Auto (P) Ltd. v. Superintendent of Central Excise: The Karnataka High Court held that Section 11A of the Central Excises and Salt Act allows for reopening assessments, similar to Section 28 of the Customs Act. The court concluded that the clearance under Section 47 does not bar subsequent confiscation proceedings and directed the petitioner to respond to the show cause notice. Issue 3: Validity of Machinery Import Under OGL The petitioner claimed that the machinery was validly imported under OGL, citing Appendix-I, Part-B, Item 10(56) of the Import and Export Policy. The court examined the relevant documents, including the application for the Importer Code Number and the DGTD's recommendation. The respondents contended that the machinery was not for manufacturing electronic components and equipment, and the petitioner only performed job work. The court noted that the show cause notice alleged suppression of facts and willful misstatement by the petitioner. The court emphasized that these matters should be adjudicated by the appropriate authority and directed the petitioner to participate in the proceedings. It cited several decisions to support its stance, including: - Kamath Packaging Ltd. v. Union of India: The court held that action can be taken against imported goods if they are subsequently found to be prohibited. - Madanlal Steel Industries Ltd. v. Union of India: The Madras High Court left it to the statutory authorities to determine the validity of seizure and confiscation. - M/s. Euresian Equipments & Chemicals Ltd. v. The Collector of Customs: The Calcutta High Court held that clearance for export under Section 51 does not bar subsequent proceedings if the clearance was unjustified. - M/s. C.J. Sheth and Co. v. M.G. Abrol: The Bombay High Court held that clearance of goods does not result in estoppel against the Revenue. The court concluded that the petitioner should respond to the show cause notice and participate in the proceedings. It allowed the petitioner to use the machinery during the pendency of the proceedings, subject to the condition that the machinery is not shifted or alienated. Conclusion The writ petition was dismissed, and the petitioner was directed to respond to the show cause notice. The court allowed the petitioner to use the machinery during the proceedings, provided it is not shifted or alienated.
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