2023 (10) TMI 1224 - HC - Customs

Validity of SCN - authority issuing the show-cause notice not being the competent authority - authorities have not taken into consideration the response and explanation given to the department at the time of the pre-notice consultation - SCN does not deal with the submission of the petitioner made in their explanation to the pre-notice consultation - laboratories have given a report that the product being unfit for human consumption. HELD THAT - On going through the contents of the impugned show-cause notice there were certain serious allegations levelled against the petitioner, firstly, so far as selling the product in the open market loosely and which presumably was for human consumption; secondly, the sale being not made to any of the agencies dealing with animal feeds; thirdly, the petitioner violating the declaration that he had given in the course of the import being made; fourthly, there being no sufficient documents / invoices or details of the sale made by the petitioner in respect of the entire consignment imported by them. Reliance placed in the decision of the Hon ble Apex Court in MALLADI DRUGS PHARMA. LTD. VERSUS UNION OF INDIA 2004 (3) TMI 67 - SC ORDER , wherein the Hon ble Apex Court held Neither party knows whether the Department has proceeded further and / or whether any order has been passed pursuant to the show-cause notice. Even otherwise, in our view, the High Court was absolutely right in dismissing the writ petition against a mere show-cause notice. We see no reason to interfere. The appeals stand dismissed. Taking into consideration the gravity of the contents of the show-cause notice, the writ petitions not entertained at this juncture - petition dismissed.

Summary

Issues involved:
The judgment involves the challenge of a show-cause notice issued under Section 28(4) of the Customs Act, 1962, regarding the classification of imported goods and the imposition of duties. The key issues include the competence of the authority issuing the notice, consideration of petitioner's response during pre-notice consultation, failure to address laboratory reports, and allegations of evasion of customs duties.

Details of the judgment:

*Issue 1: Competence of the authority issuing the show-cause notice*
The petitioner challenged the show-cause notice on the grounds that the issuing authority was not competent under the Customs Act. The respondent argued that the petitioner should respond to the notice and that no prejudice would be caused at this stage. The court noted that the petitioner should avail remedies under the Act after responding to the notice.

*Issue 2: Classification of imported goods*
The petitioner imported nut pieces under specific tariff classifications, claiming exemption based on the nature of the goods. However, the authorities disputed the classification, alleging that the goods were misdeclared as agricultural waste when they were actually cashew nuts. The court highlighted the duty variations based on different classifications and the potential tax evasion if the allegations were true.

*Issue 3: Response to pre-notice consultation*
The petitioner contended that the authorities did not consider their explanations during the pre-notice consultation. The respondent argued that the petitioner failed to provide sufficient evidence that the goods were intended for animal feed, as declared, and instead sold them in the open market for human consumption. The court emphasized the importance of accurate documentation and declarations in such cases.

*Separate Judgment by the Judges:*
The judges dismissed both writ petitions at the admission stage, citing precedents that show-cause notices should be responded to before seeking judicial intervention. They reserved the petitioner's right to respond to the notice and pursue remedies under the law. The court emphasized the seriousness of the allegations and the need for proper compliance with statutory procedures before seeking relief through writ petitions.