1992 (3) TMI 88 - HC - Customs

Investigation and Inquiry - Summons - Meaning and scope - Guideline for investigating officers

Summary

Issues Involved:
1. Jurisdiction of the Superintendent (Customs) to issue summons under Section 108 of the Customs Act.
2. Validity of the valuation process and related agreements.
3. Allegations of mala fide exercise of power.
4. Inquiry into under-valuation and smuggling.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Superintendent (Customs) to Issue Summons Under Section 108 of the Customs Act:
The petitioners challenged the issuance of summons by the Superintendent (Customs) on the grounds that the conditions precedent for the exercise of power under Section 108 were not satisfied. Section 108 empowers a gazetted officer of customs to summon any person whose attendance is necessary either to give evidence or produce documents in any inquiry related to the smuggling of goods. The court held that the Superintendent (Customs) had the jurisdiction to issue the summons as the inquiry related to the valuation of goods, which could potentially involve smuggling under Section 2(39) of the Customs Act. The court emphasized that the power under Section 108 is intended to facilitate the normal process of inquiry and prevent evasion of customs laws.

2. Validity of the Valuation Process and Related Agreements:
The petitioners argued that the Government of India had treated the agreements M.D. 301 and M.D. 302 as separate transactions and had granted necessary approvals for the importation. The court noted that the Customs authorities had reason to believe that the contracts were split to evade customs duty. The court held that the Customs authorities were within their rights to conduct a thorough inquiry to determine the correct valuation of the imported goods and that the inquiry was justified to ascertain whether the goods were liable for confiscation under Section 111(m) of the Customs Act.

3. Allegations of Mala Fide Exercise of Power:
The petitioners contended that the issuance of summons was a mala fide exercise of power, as there was no indication that the goods were smuggled into the country. The court rejected this argument, stating that the inquiry into under-valuation was a legitimate exercise of power under Section 108. The court further held that the Customs authorities had the duty to check evasion and discover illegal imports, and the issuance of summons was a necessary step in this process.

4. Inquiry into Under-valuation and Smuggling:
The petitioners argued that the inquiry into under-valuation was already being conducted by the Assistant Collector of Customs and that the issuance of summons by the Superintendent (Customs) was redundant and without jurisdiction. The court held that the inquiry into under-valuation was part of the broader inquiry into potential smuggling activities. The court emphasized that the Customs authorities had the power to summon persons and obtain information necessary for their inquiry. The court also noted that the status of the petitioner-company was irrelevant and that the Customs authorities were justified in conducting a thorough inquiry to prevent evasion of customs laws.

Conclusion:
The court dismissed the writ application, holding that the issuance of summons under Section 108 of the Customs Act was justified and within the jurisdiction of the Superintendent (Customs). The court directed the Customs authorities to issue fresh summons with a new date, as the original date had expired due to the interim order. The court made no order as to costs.