2018 (11) TMI 1403 - HC - Customs

Imposition of late fine charges with penalty - petitioner has prayed for direction to the respondents to remove Alert inserted against the petitioner in its electronic system - Held that - In a Writ Petition, we would be extremely slow in striking down the show cause notice unless the petitioner demonstrates lack of jurisdiction or breach of natural justice or some such defect which goes to the very root of the matter. In the present case, we do not notice any such ground to quash the notices in exercise of writ jurisdiction. The petitioner must reply to the show cause notices and cooperate in the adjudication thereof. The petitioner has so far not filed any reply. If the petitioner wishes, such replies may be filed latest by 10.12.2018. The petitioner shall cooperate with the adjudication of such notices. The amount demanded by the department and the recovery of which is made a precondition for clearing the future Bills of Entry of the petitioner is the same for which the department has issued show cause notices to the petitioner calling upon the petitioner why such demands should not be confirmed. On the other hand, the department seeks recovery of such amount coercively by blocking the petitioner s future clearances. Obviously, there cannot be recovery coercively made even before the demand is confirmed. The respondents are directed to delete the name of the petitioner from the Alert list - Petition disposed off.

Summary

Issues:
Challenge to "Alert" insertion against petitioner and show cause notices issued by Customs Authorities.

Analysis:
The petitioner, a registered partnership firm and Customs broker, sought direction to remove the "Alert" against them and challenged show cause notices for late fine charges with penalties. The department alleged deliberate breaches by the petitioner, claiming they used a deceptive method to avoid late payment charges. Several other brokers were also accused of similar actions, with an estimated total late payment charges of around ?9 Crores, out of which the petitioner's share was ?89 Lacs. While many brokers paid up without protest, the petitioner did not, leading to the "Alert" against them and 18 show cause notices issued in May 2018. The petitioner contested the demand and challenged the notices, arguing against coercive recovery before adjudication.

The petitioner's counsel contended that the department's action of placing them in the "Alert" list was unauthorized as the demand was yet to be adjudicated, and the petitioner was contesting it. They argued that the competent authority had discretion to reduce or waive late fines, which had been regularized in this case. Additionally, they claimed the show cause notices prejudged the issue. On the other hand, the department's counsel defended their actions, stating the petitioner used irregular procedures to avoid charges and had not replied to the show cause notices, opting to challenge them directly in the High Court.

The Court declined to interfere with the challenge to show cause notices, emphasizing the need for adjudication by the competent authority and urging the petitioner to cooperate. However, regarding the "Alert" issue, the Court found the department's action impermissible. The Court clarified that coercive recovery before confirming the demand was unjust, especially when the same amount was the subject of show cause notices. Consequently, the Court directed the respondents to remove the petitioner's name from the "Alert" list. The petition was disposed of without expressing an opinion on the liability for late fine charges or penalties, leaving the adjudicating authority to decide independently based on the evidence presented.