1992 (5) TMI 34 - HC - Customs

Summary

Issues Involved:
1. Jurisdiction of the Collector of Customs to issue a show cause notice under Section 130 of the Customs Act.
2. Validity of the Collector's reliance on post-clearance enquiries.
3. Authority of customs officials to confiscate goods after clearance for home consumption.
4. Adequacy of opportunity given to the petitioner to present their case.
5. Imposition of fine exceeding the market value of the goods under Section 125 of the Customs Act.
6. Nature of proceedings under Section 130 as quasi-criminal and the standard of proof required.
7. Consideration of evidence regarding the classification and use of the imported goods.

Detailed Analysis:

Issue 1: Jurisdiction of the Collector of Customs to issue a show cause notice under Section 130 of the Customs Act.
The petitioner contended that only the Central Board of Excise and Customs had the authority to issue a show cause notice under Section 130 of the Customs Act. However, the court found that Notification-Cus. No. 101/64, dated 1st July 1964, delegated the Board's power of review under Section 130 to the Collector of Customs. Thus, the Collector had jurisdiction to issue the notice.

Issue 2: Validity of the Collector's reliance on post-clearance enquiries.
The petitioner argued that the Collector could only rely on the record as it existed at the time of clearance. The court, referencing a Supreme Court decision, held that the Collector could make further enquiries if necessary to rectify any illegality or impropriety. The court found that there was sufficient material for the Collector to exercise his power under Section 130, including expert opinions and discrepancies in the description of the goods.

Issue 3: Authority of customs officials to confiscate goods after clearance for home consumption.
The court noted that under Section 47 of the Act, the clearance of goods for home consumption is not final if action under Section 130 is taken or proposed. Goods can be confiscated if they are imported contrary to prohibitions or do not correspond with their entry. The court found no merit in the petitioner's argument that the customs authorities had no jurisdiction to confiscate the goods after clearance.

Issue 4: Adequacy of opportunity given to the petitioner to present their case.
The petitioner claimed they were not given full opportunity as certain materials were not disclosed. The court agreed that the Collector was not justified in declining the petitioner's request for documents on the grounds of public interest. This denial prejudiced the petitioner's case, and the Government of India did not adequately address this issue.

Issue 5: Imposition of fine exceeding the market value of the goods under Section 125 of the Customs Act.
The court upheld the learned Single Judge's decision that the fine imposed exceeded the market value of the goods and directed the Collector to reassess the fine in accordance with Section 125. The petitioner's grievance on this issue was addressed.

Issue 6: Nature of proceedings under Section 130 as quasi-criminal and the standard of proof required.
The court recognized that adjudication proceedings under the Act are quasi-criminal in nature, requiring the authorities to prove the case beyond reasonable doubt. The court referenced previous judgments to emphasize that the burden of proof lies with the customs authorities to establish the guilt of the importer.

Issue 7: Consideration of evidence regarding the classification and use of the imported goods.
The court found that the Government of India ignored significant evidence, including expert opinions and certifications from reputable institutions, which supported the petitioner's claim that the goods were stainless steel angles. The court criticized the Government for not giving due weight to this evidence and for adopting a wrong approach. The benefit of doubt should have been given to the importer.

Conclusion:
The appeal was allowed, and the order of the learned single Judge was set aside. All proceedings emanating from the notice issued under Section 130 by the Collector of Customs were quashed. The petitioner was not entitled to any refund of the customs duty as the goods remained assessed under Item 62(2) ICT. The bank guarantee furnished by the petitioner was discharged, and there was no order as to costs.