1992 (8) TMI 92 - HC - Customs

Summary

Issues Involved:
1. Legality of the show-cause notice issued by the Assistant Collector of Customs.
2. Jurisdiction of the Assistant Collector of Customs to commence proceedings for confiscation and penalty.
3. Compliance with bond conditions u/s 143(1) of the Customs Act and its implications.

Summary:

1. Legality of the Show-Cause Notice:
The petitioners challenged the legality of the show-cause notice dated March 18, 1992, issued by the Assistant Collector of Customs, which called upon the petitioners to show cause why the imported goods should not be confiscated u/s 111(d) of the Customs Act, 1962, and why a penalty u/s 112 should not be imposed. The petitioners argued that the goods were cleared based on valid REP licenses and that the Customs Department's objections were without merit, as previously upheld by the Division Bench of the High Court and the Supreme Court.

2. Jurisdiction to Commence Proceedings:
The petitioners contended that once the imported goods are cleared for home consumption, they lose their character as "imported goods" as defined u/s 2(25) of the Customs Act. Therefore, the Customs Authorities lack jurisdiction to confiscate the goods u/s 111(d) or impose penalties u/s 112. The court agreed, stating that the goods lose their character as imported goods upon clearance for home consumption, and the power to confiscate can only be exercised if the clearance order is revised and canceled.

3. Compliance with Bond Conditions u/s 143(1):
The petitioners had executed ITC bonds and furnished bank guarantees as required by the Customs Department for the clearance of the consignments. The court noted that the petitioners complied with all the terms and conditions of the bonds within the stipulated period. According to sub-section (2) of Section 143, once the bond conditions are met, the Assistant Collector of Customs must cancel the bond, and the importer shall not be liable to any penalty under the Act. The court found that the Customs Department did not take any action to enforce the bonds after the stipulated period and had discharged the bank guarantees, indicating compliance with the bond conditions.

Conclusion:
The court concluded that the Assistant Collector of Customs had no jurisdiction to commence proceedings for confiscation of goods and levy of penalty under Sections 111 and 112 of the Customs Act by issuing the show-cause notice. The petition was allowed, and the rule was made absolute in terms of prayer (b), with no order as to costs.