1995 (2) TMI 72 - HC - Customs

Summary

Issues Involved:
1. Jurisdiction of the Preventive Officer of the Department of Revenue Intelligence.
2. Validity of an order under Section 110 for goods already cleared under Section 47.
3. Correct classification of the imported machines under Tariff Heading 8432 or 8701.
4. Finality and review of an order under Section 47.
5. Legality of subsequent proceedings for short levy and confiscation under Sections 28 and 111.

Detailed Analysis:

1. Jurisdiction of the Preventive Officer of the Department of Revenue Intelligence:
The petitioners raised a preliminary objection that the Preventive Officer of the Department of Revenue Intelligence (DRI) had no jurisdiction to issue the impugned order of detention under Section 110 of the Customs Act. The Department produced a relevant notification showing that the Preventive Officer of the DRI was indeed empowered to exercise powers under Section 110. The court decided this preliminary issue against the petitioners by an order dated 19th September 1994.

2. Validity of an order under Section 110 for goods already cleared under Section 47:
The petitioners argued that an order under Section 110 cannot be passed for goods already cleared under Section 47, as such goods are no longer liable to be confiscated under Section 111. The court clarified that Section 47 does not involve any adjudication and is administrative in nature. The proper officer's satisfaction under Section 47 does not preclude the exercise of other powers under the Act, including those under Sections 28 and 111. Therefore, the power under Section 110 can be exercised without the order under Section 47 being revised or set aside.

3. Correct classification of the imported machines under Tariff Heading 8432 or 8701:
The petitioners contended that the machines were correctly classified under Tariff Heading 8432 and that the Customs Authorities' attempt to classify them under Tariff Heading 8701 was incorrect. They cited previous instances where similar machines were classified under Tariff Heading 8432, including an order by Shri Varadarajan, Additional Collector of Customs. The respondents argued that the machines had been imported earlier under Tariff Heading 8701 by the petitioners themselves, and subsequent imports were also classified under Tariff Heading 8701. The court noted that the show cause notice issued under Section 28 read with Section 124 of the Act would allow the Adjudicating Authority to determine the correct classification.

4. Finality and review of an order under Section 47:
The petitioners argued that an order under Section 47 is final and amounts to an adjudication, which can only be corrected by an order passed in Revision under Section 129D or Section 17(4). The court held that Section 47 does not involve adjudication, and the proper officer's satisfaction is administrative. Therefore, an order under Section 47 does not preclude proceedings for short levy under Section 28 or confiscation under Section 111. The court cited several precedents to support this view, including cases from the High Courts of Calcutta, Madras, and Karnataka.

5. Legality of subsequent proceedings for short levy and confiscation under Sections 28 and 111:
The court held that goods cleared under Section 47 can still be subject to confiscation under Section 111(m) if they were imported by misdeclaration. Additionally, duty short-levied can be recovered under Section 28 despite an order under Section 47. The court referenced several cases, including Hindusthan Motors and United India Minerals, to support this position. The court also noted that the Delhi High Court's interpretation of Section 47, which attaches finality to the satisfaction of the officer that the goods are not prohibited, is conditional upon there being no fraud or deliberate suppression.

Conclusion:
The court dismissed the writ application with costs and vacated any interim orders. The petitioners were allowed to raise all points in answer to the show cause notice to justify their claim regarding the classification of the machines under Tariff Heading 8432. The court emphasized that the power under Section 110 could be exercised without revising or setting aside an order under Section 47, and that proceedings for short levy and confiscation under Sections 28 and 111 were valid despite the clearance of goods under Section 47.