2005 (7) TMI 115 - HC - Customs

Chemical test - Challenge to - Show cause notice - Whether the imported goods are eligible for concessional duty or not - seconds and defective goods are ineligible for the concessional duty, Notification No. 21/02, as amended - HELD THAT - It is alleged by the department that this is a case of blatant mis-declaration of description of the goods with a view to evade huge amount of duty at higher rate. A show cause notice has been issued proposing to take action under Section 111(m) and 112 (a) of the Customs Act, 1962 in connection with the above imports and the appellant has to face the adjudication proceedings. It is alleged that the request for the re-test by a different agency is not permissible. It is further alleged that there is no provision entitling the appellant to get samples of the detained goods. It is further alleged that both the department as well as the trade are accepting the opinion furnished by the National Metallurgical Agency, which is a Government Agency. It is alleged that the writ petitions are premature, as they have been filed at a show cause notice stage. It may be mentioned that the National Metallurgical Laboratory is a neutral body and we see no reason why its report should be biased against the appellant. We cannot understand the apprehension of the appellant in this connection. At any event, the department has stated that it is prepared to give an opportunity to the appellant to cross-examine the chemical examiner of the National Metallurgical Laboratory who tested the samples. We cannot understand what more the appellant want. It seems that the appellant only wants to protract and delay the adjudication proceedings. In our opinion, the appellant can cross-examine the chemical examiner of the National Metallurgical Laboratory in connection with these two objections, but he cannot claim any right to draw samples from the detained goods, since there is no provision in law permitting taking of such samples. As regards the appellant's prayer for a direction to the first respondent to make a provisional assessment u/s 18 of the Customs Act while releasing the goods detained, it may be mentioned that part of the goods seized have already been released provisionally, detaining a certain amount as security to safeguard the differential duty amount and adjudication liabilities as per the request of the appellant in its letter dated 18-11-2004. Thus, the authorities have acted in a fair manner. It may be mentioned that Section 18(1) of the Customs Act does not make it mandatory on the Customs Officer to make a provisional assessment. The use of the word may in Section 18(1) indicates that it is the discretion of the Customs Officer to make a provisional assessment or not, and he is not bound to do so. Of course, he cannot exercise such discretion arbitrarily, but in this case we are of the opinion that the Customs Officer has acted fairly and not arbitrarily, as he has already released part of the goods and detained the other part as security to safeguard the interest of the Revenue. Thus, there is no force in these appeals, and they are dismissed accordingly. However, we direct that the adjudication proceedings be completed by the authorities concerned expeditiously. No costs. Consequently, connected W.A.M.Ps are also dismissed.

Issues Involved:
1. Eligibility for concessional duty on imported goods.
2. Right to draw samples for independent analysis.
3. Provisional assessment and release of detained goods under Section 18 of the Customs Act, 1962.
4. Alleged mis-declaration and evasion of duty.
5. Prematurity of writ petitions against show cause notices.

Detailed Analysis:

1. Eligibility for Concessional Duty on Imported Goods:
The appellant, a manufacturing unit engaged in the production of iron and steel products, imported non-alloy steel slabs, claiming concessional duty under Notification No. 24/2004. However, the Customs Department detained the goods, alleging they were "seconds and defective goods," which are ineligible for concessional duty as per Government of India Customs Notification No. 21/02. The appellant contested this classification, asserting that the goods were not "seconds or defective."

2. Right to Draw Samples for Independent Analysis:
The appellant sought a writ of mandamus to allow drawing samples for independent analysis to support their claim during adjudication proceedings. The department, relying on the National Metallurgical Laboratory's (NML) report, denied this request, stating there is no legal provision entitling the appellant to draw samples. The court upheld this stance, noting that the appellant could cross-examine the NML experts but had no right to draw samples.

3. Provisional Assessment and Release of Detained Goods Under Section 18 of the Customs Act, 1962:
The appellant requested provisional assessment and release of the detained goods. The department had provisionally released part of the goods, detaining the rest as security for differential duty and adjudication liabilities. The court found that Section 18(1) of the Customs Act grants discretionary power to Customs Officers for provisional assessment and that the officer had acted fairly by releasing part of the goods.

4. Alleged Mis-Declaration and Evasion of Duty:
The department alleged willful mis-declaration by the appellant to evade higher duty rates, supported by the NML's findings that the goods were non-alloy steel slabs seconds attracting higher duty. The court noted that a show cause notice had been issued, and the appellant must face adjudication proceedings.

5. Prematurity of Writ Petitions Against Show Cause Notices:
The court deemed the writ petitions premature, as they were filed at the show cause notice stage. Citing precedents, the court emphasized that ordinarily no writ lies against a show cause notice, and the appellant should participate in the adjudication process. The court referenced the Supreme Court's decision in Special Director v. Mohammed Ghulam Ghouse, reinforcing that writ petitions are not maintainable at the show cause notice stage.

Conclusion:
The court dismissed the appeals, affirming the learned single judge's order and directing the completion of adjudication proceedings expeditiously. The court reiterated that the appellant had no right to draw samples but could cross-examine the NML experts. Additionally, the Customs Officer's actions in provisionally releasing part of the goods were found to be fair and within discretion. The court highlighted the necessity for the appellant to engage in the adjudication process rather than seeking premature judicial intervention.

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