2015 (11) TMI 1234 - HC - Customs

Detention of Imported goods - Detention beyond the period of six (6) months without issuing a show cause notice as contemplated under Section 110(2) - Held that - Legislature has consciously done away with the service of orders, decisions, summons and notices on the agent. The CHA, is an agent, who operates under a special contract with an importer or exporter, and in this context is authorized to perform various functions to clear the goods from customs. It is no part of the general duty cast upon the CHA to accept service of notices, summons, orders or decisions of the customs authorities, unless he has been specially authorized to do so. The CHA s explicit and implied authority is confined to his acts, as an agent, qua transactions relating to business concerning entry or departure of conveyances or, import or export of goods at the custom stations. In case the importer or exporter, in this case the petitioner, were to enlarge his authority, a specific authorization in that behalf ought to have been issued in his favour. The scope of the duties of an agent, and in that sense, the authority of the CHA, is provided for in the definition of customs broker, in regulation 2(c) of the Customs Brokers Licensing Regulations, 2013 It is no part of the usual and ordinary duty of the CHA to accept service of orders, summons, decisions or notices issued by the custom authorities. In case CHA represents, he has such an authority, he would have to produce the same before the concerned statutory authority. In this case the respondents neither sought production of the authority nor did the CHA supply any such documents to the custom authorities, which could, in the ordinary course, have persuaded them to serve the notices on the CHAs. Therefore, in the ordinary course, the customs authorities were required to follow the provisions of Section 153 of the Act, which required the service to be effected on the importer i.e. the petitioner in this case. - There is a proviso to sub-section (3) of Section 147, which in a sense protects the agent, save and except against his wilful act, negligence or default. The proviso is indicative of the fact that where any duty is not levied, or is short levied, or is erroneously refunded, for any reason, then such duty shall not be recovered from the agent unless in the opinion of the Asstt. Commissioner of Customs or Deputy Commissioner of Customs, it cannot be recovered from the owner, importer or exporter. - if the agent is negligent or in default, or his wilful act results in any of the situation referred to above, then recovery can be made against him, as well. Prior to the amendment made in 2012, service under Section 153 could also perhaps be effected on an agent, albeit an authorized agent, not on a CHA. After the amendment it appears that the legislature has done away with the service on the agent completely, by recognizing the fact that orders, decisions passed, summons or notices issued, need to be served in the first instance on the person for whom they are intended. It is after the intended person is served, that he could take a decision as to who would thereafter be entitled or authorized to appear for him before the concerned statutory authority. The amendment in that sense lends greater clarity qua the scope of the provision. - while the order passed under the proviso to Section 110(2) is held invalid, it would not in any manner affect the investigation, which is presently underway. With the quashing of the show cause notice dated 23.01.2015, and the order of even date i.e. 23.01.2015, the position which will obtain is that the respondents will have to return the seized goods to the petitioner. This would, however, not mean that respondents cannot continue their investigation and proceed to the next step towards trial by complying with the provisions of Section 124 of the Act. - Decided in favour of Appellant.

Summary

Issues Involved:
1. Non-compliance with statutory provisions of Section 110(2) of the Customs Act, 1962.
2. Validity of the show cause notice and order under Section 110(2) of the Customs Act.
3. Service of show cause notice on the Customs House Clearing Agent (CHA).
4. Provisional release and re-assessment of goods under Sections 17 and 18 of the Customs Act.
5. Availability of alternative remedy by way of appeal.

Detailed Analysis:

1. Non-compliance with statutory provisions of Section 110(2) of the Customs Act, 1962:
The petitioner raised the principal grievance that the respondents failed to comply with Section 110(2) of the Customs Act, 1962, by detaining imported goods beyond six months without issuing a show cause notice. The respondents attempted to justify the extended detention by invoking the proviso to Section 110(2), which allows an extension of six months.

2. Validity of the show cause notice and order under Section 110(2) of the Customs Act:
The petitioner argued that the show cause notice dated 23.01.2015 was ante-dated and contained interpolations, making it unsustainable in law. The respondents dispatched the show cause notice on 30.01.2015 and the order on 31.01.2015, both beyond the statutory six-month period. The court found that the show cause notice and order were not dispatched within the prescribed period, thus violating Section 110(2) read with Section 124(a) of the Act.

3. Service of show cause notice on the Customs House Clearing Agent (CHA):
The petitioner contended that service of the show cause notice on the CHA did not comply with Section 153 of the Act, which mandates service on the importer. The court held that service on the CHA was not valid as per the amended Section 153, which excludes service on agents. The CHA's authority to accept such notices was not established, and the respondents failed to follow the statutory requirement of serving the importer directly.

4. Provisional release and re-assessment of goods under Sections 17 and 18 of the Customs Act:
The petitioner argued that the respondents conducted a re-assessment without passing a speaking order under Section 17(5) of the Act. The court noted that the respondents had only ordered provisional release under Section 18, and the re-assessed value indicated in the communication could not be sustained without proper articulation of reasons.

5. Availability of alternative remedy by way of appeal:
The respondents argued that the petitioner had an alternative remedy by way of appeal. However, the court rejected this submission, holding that the proceedings were beyond jurisdiction due to the invalidity of the show cause notice and order.

Conclusion:
The court concluded that the respondents failed to comply with the statutory provisions of Section 110(2) and Section 153 of the Customs Act. The show cause notice and order dated 23.01.2015 were quashed, and the respondents were directed to release the seized goods to the petitioner. The court clarified that the quashing of the order would not affect the ongoing investigation, and the respondents could proceed with the trial by complying with Section 124 of the Act. The reliefs sought by the petitioner were allowed, with each party bearing its own costs.