2025 (4) TMI 713 - SCH - Customs

Rejection of petition - declination to interfere with the challenge to the legality and validity of the show cause notice issued under Section 124 of the Customs Act 1962 - classification of the exported goods - Pharmaceutical Raw Materials Sucrose BP - HELD THAT - Prima facie it appears that the authority who issued the show cause notice relied on the reply of the DGFT in this regard. According to Mr. Joshi the issue seems to have been concluded by the authority concerned relying on the reply of the DGFT and issue of show cause notice is just an empty formality - Indisputably no reply was given to the show case notice. This is exactly what the High Court has observed in its impugned order. In the peculiar facts and circumstances of the case let the Director General of Foreign Trade look into the representations filed by the petitioner herein and take an appropriate decision in that regard. We order accordingly. The authority concerned shall proceed further with the adjudication once the Director General of Foreign Trade takes an appropriate decision. Petition disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The primary legal issues considered in this judgment are:

1. Whether the Additional Commissioner of Customs had the jurisdiction to issue the show cause notice under Section 124 of the Customs Act, 1962.

2. The classification of the exported goods, specifically whether "Pharmaceutical Raw Materials: Sucrose BP" should be classified under CTH 1702 9090 or CTH 1701 9990.

3. The implications of the Director General of Foreign Trade's (DGFT) response regarding the classification and export policy of "Pharmaceutical Grade Sugar."

ISSUE-WISE DETAILED ANALYSIS

Jurisdiction of the Additional Commissioner of Customs

- Relevant legal framework and precedents: The Customs Act, 1962, particularly Section 124, governs the issuance of show cause notices. The petitioners argued that only the Director General of Foreign Trade had the authority to issue such notices.

- Court's interpretation and reasoning: The Court noted that the petitioners had not responded to the show cause notice to contest the jurisdiction of the Additional Commissioner of Customs. The High Court had previously dismissed the petition on similar grounds, emphasizing the lack of a formal reply challenging jurisdiction.

- Key evidence and findings: The petitioners had sent representations to the DGFT but did not formally reply to the notice issued by the Additional Commissioner of Customs.

- Application of law to facts: The Court found no compelling reason to interfere with the High Court's decision, as the petitioners had not utilized available procedural avenues to challenge the jurisdiction before approaching the Court.

- Treatment of competing arguments: The petitioners' argument that the DGFT was the sole authority was not substantiated by procedural actions, as they failed to contest the jurisdiction through a formal reply.

- Conclusions: The Court upheld the High Court's decision, allowing the petitioners the liberty to respond to the show cause notice.

Classification of Exported Goods

- Relevant legal framework and precedents: The classification of goods under the Customs Tariff is crucial for determining applicable duties and compliance with export regulations.

- Court's interpretation and reasoning: The Court considered the DGFT's response, which indicated that distinguishing "Pharmaceutical Grade Sugar" from refined sugar was not feasible, and that such sugar was classified as a restricted export item.

- Key evidence and findings: The DGFT's email response clarified the lack of a separate HSN code for Pharmaceutical Grade sugar, categorizing it as a restricted item.

- Application of law to facts: The Court directed that the DGFT should consider the petitioners' representations regarding the classification and export policy before any further adjudication.

- Treatment of competing arguments: The petitioners' contention that the show cause notice was a mere formality was addressed by directing the DGFT to make a determination on the representations.

- Conclusions: The Court ordered the DGFT to decide on the representations within two months, with further proceedings contingent on this decision.

SIGNIFICANT HOLDINGS

- Preserve verbatim quotes of crucial legal reasoning: The Court noted, "We are of the view that in the peculiar facts and circumstances of the case, let the Director General of Foreign Trade look into the representations filed by the petitioner herein and take an appropriate decision in that regard."

- Core principles established: The necessity of exhausting procedural remedies before judicial intervention was emphasized. The Court also highlighted the importance of jurisdictional challenges being raised at the earliest opportunity through appropriate channels.

- Final determinations on each issue: The petition was disposed of with instructions for the DGFT to review the representations and make a decision, after which the adjudication process may proceed. The petitioners were granted the liberty to challenge any adverse decision by the DGFT in accordance with the law.