2007 (3) TMI 265 - SC - Customs

Show cause notice - whether without issuing show cause notice is the Department entitled to proceed against the exporter? Held that - Department is at liberty to collect the material in accordance with law but it cannot proceed against the exporter without issuance of the show cause notices. If they have collected the material in accordance with law and if they are today entitled to proceed in law by issuing show cause notices they may do so. - as regards ten consignments, the matter was fully adjudicated upon. It was carried in appeal. Ultimately, vide judgment delivered by the Tribunal in the case of the present assessee reported in 2006 (7) TMI 80 - CESTAT, KOLKATA , the Tribunal held that the confiscation effected by the Department in respect of ten consignments was erroneous. To that extent of the ten consignments the assessee has succeeded before the Tribunal. However, we once against make it clear that the said judgment of the Tribunal will not preclude the Department from proceeding with the investigation. However, no further steps can be taken without issuance of show cause notice - Decided against Revenue.

Summary

Issues:
1. High Court interference at the stage of summons issuance.
2. Department's entitlement to proceed without show cause notice.
3. Adjudication of consignments and Tribunal's judgment.

Issue 1: High Court interference at the stage of summons issuance
In the case, the Supreme Court set aside the impugned order by consent in C.A. Nos. 82-83 of 2002. The Court emphasized that the High Court should generally refrain from interfering when the Department has issued summons, unless exceptional circumstances exist. The Court clarified that it had not examined the merits of the case and allowed the Department to proceed in accordance with the law. The appeals were disposed of accordingly.

Issue 2: Department's entitlement to proceed without show cause notice
Regarding C.A. No. 81 of 2002, the Court dealt with the question of whether the Department could proceed against the exporter without issuing show cause notices. The Court noted that while the Department had issued show cause notices for some consignments, it had not done so for others. The Court held that the Department could collect material in accordance with the law but could not proceed against the exporter without issuing show cause notices. The Court clarified that the Department could proceed with the investigation after issuing show cause notices, as per the law. The appeal was dismissed subject to the above conditions.

Issue 3: Adjudication of consignments and Tribunal's judgment
The Court mentioned that ten consignments had been fully adjudicated upon, with the Tribunal ruling in favor of the assessee. However, the Court clarified that this judgment would not prevent the Department from continuing the investigation. The Court reiterated that no further steps could be taken without issuing show cause notices. The Court emphasized that its order did not direct the Department to take any specific actions but merely clarified the legal position. The appeal was dismissed, subject to the above conditions.