2015 (7) TMI 417 - HC - Customs

Validity of SCN - Proper officer - DRI officials have been appointed as customs officers - Seizure of 15.16kg of gold bars of foreign origin - confiscation and penalty - petitioner has retracted all the statements - whether the show cause notice has pre-determined the issue and it is the pre-meditated in nature - Held that - the contention of the learned Senior Counsel that the insertion of sub-section (11) to Section 28 is only with regard to the power exercisable under Section 28 of the Act and would not apply to Section 124 is not tenable in the light of the fact that the notifications referred to supra states that all officers of the Directorate of Revenue Intelligence to be Officers of Customs and the Notifications dated 26-4-1990, 6-7-2011 and 21-6-2012 and the Circulars dated 15-2-1999 and 23-9-2009, make it manifestly clear that DRI officials have been appointed as customs officers by in exercise of the powers conferred under Section 4(1) of the Act. Issuance of SCN - Held that - an act or omission which will render the goods liable for confiscation under Section 111 or 113 of the Act, is an act of smuggling as defined under Section 2(39) and where there is smuggling, Chapter 14 would get attracted. Section 113 provides for confiscation of goods attempted to be improperly exported and Section 122 refers only to the question of adjudication process and the limit of officers and it is only under Section 124, which says that before confiscating the goods or imposing any penalty, the show cause notice should be given to the person concern. The show cause notice runs to 41 pages and most of which are the summary of the statements given by the petitioner and other co-noticees, the material which was recovered the result of the search conducted in the residence etc. Therefore, this Court has no hesitation to hold that the show cause notice is neither pre-meditated nor pre-conceived rather it is an attempt to place all the facts, which have been recorded by the officers of the DRI in the course of investigation. Therefore, by elaborately setting out all the facts in the show cause notice in fact provides full and effective opportunity to the petitioner to put forth his objections to the show cause notice, which will be adjudicated by a different officer and not the respondent, who issued the show cause notice. The Writ Petition fails and it is dismissed - Decided against the appellant.

Summary

Issues Involved:
1. Jurisdiction of the respondent to issue the show cause notice.
2. Allegation of pre-judgment and pre-determination in the show cause notice.

Detailed Analysis:

1. Jurisdiction of the Respondent to Issue the Show Cause Notice:

The petitioner challenged the show cause notice on the grounds of jurisdiction, arguing that the respondent, being an Additional Director of the Directorate of Revenue Intelligence (DRI), is not an "officer of Customs" as per Section 2(34) of the Customs Act, 1962. The petitioner contended that the notice lacked prior approval from an officer of Customs not below the rank of Assistant Commissioner, as mandated by Section 124 of the Act.

The respondent countered by citing various notifications and circulars, including Notification No. 38/F.No.4/1/6-CAR and Customs Notification No. 19/1990 (N.T.), which appoint DRI officers as Customs officers. The respondent argued that these notifications empower DRI officers to issue show cause notices and undertake investigations. The court referenced the amendments to Section 28 of the Act, particularly sub-section (11), which clarifies that DRI officers are proper officers for issuing show cause notices.

The court concluded that the impugned show cause notice does not suffer from a lack of jurisdiction, as the DRI officers have been appointed as Customs officers through valid statutory notifications and circulars. The court emphasized that the petitioner did not challenge these notifications or circulars, and thus, the jurisdictional challenge fails.

2. Allegation of Pre-Judgment and Pre-Determination in the Show Cause Notice:

The petitioner argued that the show cause notice pre-judged the issue and was pre-meditated, thereby denying the petitioner a fair opportunity to defend himself. The petitioner relied on specific phrases used in the notice, such as "admittedly," "invariably," and "wilfully," to support this contention.

The court examined the show cause notice in detail and found that it primarily narrated the sequence of events, statements recorded from the petitioner and other noticees, and the results of the investigation. The court noted that the notice elaborately set out all the facts and provided the petitioner with a full and effective opportunity to respond. The court emphasized that the adjudication would be conducted by an independent officer, not the respondent who issued the notice, thereby safeguarding the petitioner's rights.

The court distinguished the present case from the decisions in Oryx Fisheries Private Limited and Siemens Ltd., where the show cause notices were found to be pre-judged. The court held that the use of certain expressions in the notice did not render it pre-conceived or pre-meditated, as the overall content of the notice aimed to present all recorded statements and investigation findings.

Conclusion:

The court dismissed the writ petition, directing the petitioner to submit a reply to the show cause notice within thirty days. The court found that the show cause notice was issued with proper jurisdiction and did not pre-judge the issue, ensuring the petitioner's right to a fair adjudication process.