2013 (9) TMI 664 - HC - Customs

Anti- Dumping Duty challenge to show cause notice - Goods Sold to SEZ - Show Cause notice was issued to the petitioner as to why he should not be made liable for anti dumping duty chargeable in respect of the goods sold by the petitioner from Palta Special Economic Zone to third parties under domestic tariff area - Held that - The authority having its competence to raise any legitimate and valid demand, in excise of powers conferred under Section 28(1) of the Customs Act, 1962 and in terms of B-17 bond requested the writ petitioner to explain by orally or written statement and to show cause to the Commissioner of customs within 15 days from the date of receipt of the notice as to why an amount being the customs duty which was equivalent to anti-dumping duty should not be demanded from the writ petitioner. Petitioner imported various items for the purpose of using the same for its manufacturing purpose and during manufacturing certain imported materials were left out and could not be used for manufacturing in the said unit of the petitioner - Petitioner made applications before the Development Commissioner seeking permission for sale of the said goods to the indigenous buyers - Petitioner urged that the said permission was subject to payment of duty of customs by the third party purchaser - Admittedly, petitioner in pursuance to the permission granted by the Development Commissioner sold and delivered it to one third party buyer - Petitioner had claimed that the third party purchaser cleared the goods on payment on duties payable to customs as determined by the Customs Authorities. The petitioner had not taken any steps to appear before the Customs Authorities and submits their representation either orally or in writing/ they straight way had come before this Court challenging the legality and propriety of the notices - The authority concerned had not yet taken any action in pursuance to their notice served upon the present petition - Both the parties raised some points involving the question of law as well as facts which required to be adjudicated by the Authority concern upon submission of representation to the show cause notice - There were provisions in the law to move before higher forum if the petitioner was aggrieved with the decision whatever may be taken by the Authority concern. I.T.C. LTD. Versus UNION OF INDIA 1988(10) TMI 53 - HIGH COURT AT CALCUTTA - show cause notice issued by Statutory Authority may be challenged before Writ Court only on ground of where no case have been made out against the petitioner - Otherwise, adjudicating authority was to find and decide all questions including question of facts - High Court should not enquire into the correctness of facts - Ordinarily a writ petition was not maintainable against a show cause notice in as much as when a show cause notice was issued, the party gets an opportunity to place his case before the Authority concerned and there was elaborate procedure by way of an appeal and the revision against such order passed in such proceeding - it was not the proper stage for a writ court to interfere into the alleged matter as the authority concerned had made out a prima facie case which required to be adjudicated - So writ court should not intervene into the matter on allegations of incorrect and illegal inferences of facts and law. Writ petition dismissed.

Summary

Issues:
Challenge to show cause notice for anti-dumping duty on goods sold under domestic tariff area.

Analysis:
The petitioner, a company licensed under the Customs Act, challenged a show cause notice for anti-dumping duty on goods sold from a Special Economic Zone to a third party under domestic tariff area. The petitioner argued that the duty liability was on the buyer, not them, as they had permission for domestic tariff area sale granted by the Development Commissioner. The petitioner contended that the notice was arbitrary, unreasonable, and violated Article 14 of the Constitution of India and principles of natural justice. The petitioner sought a writ of mandamus to recall the notice.

The petitioner's advocate highlighted that the duty liability rests with the importer, in this case, the buyer Enfield Industries Limited. They argued that no duty was levied at the time of clearance, and the notice was time-barred. The advocate referred to relevant provisions of the Customs Act and cited Supreme Court decisions in support of their arguments.

The respondent's advocate contended that the notice was factual and within the jurisdiction of the Customs Act. They argued that the petitioner should respond to the notice before seeking judicial intervention. The show cause notice alleged under-invoicing and non-payment of anti-dumping duty, leading to a short levy of duty. The Customs Authorities requested the petitioner to explain the non-payment within a specified period.

The court noted that questions of law and facts were involved in the case, and the petitioner had not responded to the show cause notice before approaching the court. Citing precedent, the court observed that a writ petition is not maintainable against a show cause notice unless no case is made out against the petitioner. The court emphasized the need for the petitioner to engage with the Customs Authorities and exhaust available legal remedies before seeking judicial intervention.

Ultimately, the court dismissed the writ application without costs, stating that the authority had made a prima facie case that needed adjudication. The court refrained from interfering at this stage, emphasizing the importance of allowing the Customs Authorities to address the issues raised in the show cause notice through the established legal procedures.