2015 (11) TMI 1233 - HC - Customs

Challenge to summons issues - Power to issue summons - Fraudulent availment of EPCG Scheme by way of endorsing EPCG licences with unconnected exporter s shopping bills in the third party details for obtaining EODC from DGFT - Held that - Senior intelligence officer can be construed as a gazetted customs officer as he has authority to issue summons. As per the decision of the Supreme Court reported in 2007 (3) TMI 265 - SUPREME COURT OF INDIA , the High Court should not interfere at the stage of issuance of summons. - it is only a summon, which has been issued to the petitioners directing them to appear before the authority under Section 108 of the Customs Act, 1962, to give evidence in connection with the above issue. Hence, at this stage this Court cannot make any interference. - Decided against appellant.

Summary

Issues Involved:
1. Legality and competence of the summons issued under Section 108 of the Customs Act, 1962.
2. Validity of the Senior Intelligence Officer's authority to issue summons.
3. Compliance with Export Obligation under the EPCG Scheme.
4. Allegations of fraudulent practices in obtaining the Export Obligation Discharge Certificate (EODC).

Detailed Analysis:

1. Legality and Competence of the Summons:
The petitioners challenged the summons dated 03.08.2015 issued by the 2nd respondent under Section 108 of the Customs Act, 1962, asserting that it was illegal, incompetent, and arbitrary. The petitioners argued that the summons was issued without proper delegation of powers and without application of mind. The respondents, however, contended that the summons was part of an investigation into the fraudulent availment of the EPCG Scheme and that the 2nd respondent was empowered to issue such summons under the Customs Act.

2. Authority of the Senior Intelligence Officer:
The petitioners contended that the Senior Intelligence Officer was not a competent person to issue summons under Section 108 of the Customs Act, 1962, as he could not be construed as a customs officer. They cited Section 2(34) of the Customs Act, which defines a "proper officer" as an officer of customs assigned specific functions by the Board or Commissioner of Customs. The petitioners also referenced the Supreme Court judgment in Commissioner of Customs Vs. Sayed Ali (2011) to support their argument. In contrast, the respondents argued that as per Notification No. 31/1997-Cus.(N.T.), dated 07.07.1997, officers of the Directorate of Revenue Intelligence (DRI) are appointed as officers of customs. Therefore, the 2nd respondent, being a gazetted officer of customs, was authorized to issue summons under Section 108 of the Customs Act.

3. Compliance with Export Obligation under EPCG Scheme:
The petitioners' company had imported machinery under the EPCG Scheme, availing duty exemption on the condition of fulfilling an export obligation. The company claimed to have exported goods worth Rs. 65,51,298/- directly and through third-party companies, obtaining an Export Obligation Discharge Certificate (EODC) from the Ministry of Commerce. However, the respondents alleged that the petitioners had fraudulently obtained the EODC by submitting irrelevant export documents and false certificates, showing exports that were not genuinely made by the petitioners.

4. Allegations of Fraudulent Practices:
The respondents' counter affidavit stated that specific intelligence indicated the petitioners had used third-party exporters' shipping bills to falsely claim fulfillment of their export obligation, thereby evading customs duty. The DRI officials found that the petitioners had no commercial relationship with these third-party exporters and had paid commissions to get their EPCG licenses endorsed on unrelated shipping bills. The investigation revealed that the petitioners had violated the EPCG conditions stipulated in the relevant Foreign Trade Policy (FTP).

Judgment:
The court dismissed the writ petition, stating that the summons issued under Section 108 of the Customs Act, 1962, was part of an ongoing investigation. The court found no merit in the petitioners' argument that the Senior Intelligence Officer lacked authority to issue the summons, as the DRI officials were appointed as customs officers under Section 4(1) of the Act. The court also noted that interference at the stage of issuance of summons was not warranted. The writ petition was deemed premature, and consequently, dismissed without costs.