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TMI Blog2024 (7) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... or determinative in nature. On the contrary, if the petitioners are able to give a plausible and satisfactory explanation with cogent proof in support of their explanation and reasoning, there is no reason to believe that the authorities concerned would not appreciate the same and take appropriate steps and measures based upon the response so to be given by the petitioners. Explanation 1 to Section 28 of the Act deals with the relevant date in connection with the said Section. In the instant case, the relevant date as per the documents enclosed along with the show cause notices i.e. the worksheet, shows the date to be 24.11.2017 i.e. the date of the bill of entry. Therefore, for all practical purposes, the limitation would be five (05) years from the relevant date, and hence, the show cause notices in the two writ petitions are within the extended period of limitation as envisaged under Section 28(4) of the Act. Moreover, even the aspect of limitation is one which could be factual as also legal which can also be looked into by appropriate authority basing upon the objections and reply that the petitioner would be raising to the show cause notices. The said cannot be determined in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted on the premises of the petitioners Sri Krishna group of companies and other entities along with the directors/partners. During the course of search, certain seizures were made and in respect of the said seizures, show cause notices dated 26.06.2020 and 27.06.2020 were issued under Section 124 of the Act. These two show cause notices were subjected to challenge by way of two different writ petitions i.e. Writ Petition No.29508 of 2021 and Writ Petition No.29531 of 2023. Initially the High Court granted an interim protection in both these writ petitions restraining respondents from initiating any consequential steps pursuant to the aforesaid two show cause notices. 6. In the course of search and seizure proceedings, it was revealed to the DRI officials that huge quantity of gold bullion imported by the petitioner was being fraudulently diverted into the local market for delivery at the shops in Hyderabad and where the petitioners were required to export gold bullion jewelries prepared by them from the imported gold bullion. The petitioners were found to be sending fake gold jewellery showing it to be the export of the gold jewellery manufactured from the gold bullions impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular dated 10.03.2017 does not show any exemption to any of the provisions of the Act so far as the instructions given in the circular being made applicable. Further, the provisions of Section 151A of the Act itself provides or empowers the Board to issue orders, instructions and directions to the officers of the Customs Department as a whole so far as assessment or disposal of a particular case in a particular manner is concerned and such instructions under the normal circumstances is mandatory in nature. 12. It was further contended by the learned Senior Counsel for the petitioner that the fact that they have included pre-show cause notice consultation in Section 28(1) of the Act goes to show the relevance of the said procedure in the statute itself. Therefore, it is not to be taken lightly, nor can it be avoided or waived by the authorities. It was also the contention of the learned Senior Counsel for the petitioner that the so-called circulatory circular No.1070/03/2021 dated 11.11.2021 cannot be confined so far as the provisions of the Central Excise Act or the Finance Act itself and that there cannot be a situation where there will be a ipso facto express exclusion of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the show cause notices on the ground of it being determinative in nature. Learned Senior Counsel also relied upon the decision of the Hon ble Supreme Court in ORYX Fisheries Private Limited vs. Union of India and Others (2010) 13 Supreme Court Cases 427 and contended that the Hon ble Supreme Court in the said judgment has in very categorical terms reached to the conclusion that the show cause notice should be of a nature where the noticee is confronted with definite conclusion of the alleged guilt. According to the learned Senior Counsel, the Hon ble Supreme Court in the said judgment has in very categorical terms held that the authority concerned cannot issue notices with a totally closed mind at the show cause stage itself. Thus, the closed mind is inconsistent with the concept of reasonable and fare opportunity available to a noticee. 18. Learned Senior Counsel for the petitioner further relied upon a decision of the High Court of Andhra Pradesh in the case of SBQ Steels Ltd. vs. Commissioner of Customs, Central Excise and Service Tax, Guntur Commissionerate, Guntur 2012 SCC OnLine AP 857 wherein the High Court of Andhra Pradesh had concluded that even the words prima fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all, on perusal of the explanation and reply that the petitioners would give to the show cause notices, the respondent authorities after due deliberation on the same would take a decision to either drop the proceedings or to further proceed with the show cause notices and to take to its logical conclusion. Thus, for the aforesaid reasons also, according to the learned Senior Standing Counsel for CBIC, it was not justifiable to exercise the writ jurisdiction empowered upon this Court under Article 226 of the Constitution of India. 23. It was further contended by the learned Senior Standing Counsel for CBIC that the show cause notices on its reading would show that they are self-explanatory in itself highlighting defaults and violations on the part of the petitioners and the consequences contemplated under the Act and it was in this context that their explanation was called for. Therefore, it was neither illegal nor arbitrary, rather is well within the four corners of law which does not warrant interference at this stage. 24. Highlighting the conduct of the petitioners, it was contended by the learned Senior Standing Counsel for CBIC that it is a case where the DRI officials receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, as it appears to be, which by now itself clearly indicates that it is neither conclusive in nature; nor is it determinative in nature. What is otherwise meant by the contents of the show cause notices is that, these being the factual findings derived in the course of search, prima facie, there appears to be the following violations and defaults for which the persons concerned are liable to be prosecuted and if found true, can also be penalized for the offences under the Act. 28. As regards the notices being barred by limitation, it was the contention of the learned Senior Standing Counsel for CBIC that since the show cause notices are one which has been issued under Section 28(4) of the Act; it is the extended period which shall be attracted in the instant cases. Therefore, the objections raised by the learned Senior Counsel for the petitioner of the show-cause notices being time barred is not sustainable. 29. Having heard the contentions put forth on either side and on perusal of records, as regards the first contention of the learned Senior Counsel for the petitioner of the show cause notices not being sustainable for non-compliance of pre show-cause notice consultation, it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e related show cause notice, and therefore, the said judgment could not have been brought within the purview of the explanation that is carved out under clause 5.0 of the said circular dated 10.03.2017. 33. The High Court of Jharkhand recently in the case of Himanchal Construction Company Pvt. Ltd. vs. Union of India 2021 (377) E.L.T. 545 (Jhar) dealing with whether pre-show cause notice consultation is mandatory or not in paragraph No.11 held as under: 11. The SCN also indicates that had the third party information not been received by the department and investigation initiated, the case could not have come to light. As such, it appeared that it is a case of wilful suppression of material facts from the department. Para- 21 of the SCN indicates that the Managing Director of the assessee and noticee No. 2 was also asked to explain as to why he be not held liable for penalty under Section 78A of the Finance Act, 1994 for his complicity in the aforesaid evasion of service tax since he had not given satisfactory answers to the queries made. Proceedings for adjudication in such matters are initiated by the office of the Commissioner of GST and Central Service Tax as has been informed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners to the show cause notices as to why the amount specified in the various subparagraphs of paragraph No.30 should not be appropriated and charged from the petitioners for alleged violation, misappropriation and illegalities committed under the provisions of the Act by the petitioners. 36. Likewise, the reading of the paragraph No.31 would also show that the petitioners and various persons who have been charged for alleged misconduct, misappropriation and violations of the Act calling upon their explanation as to why they should not be penalized under Section 112(A) and 112(B) and Section 114AA of the Act. 37. The very plain reading of the aforesaid paragraphs would clearly indicate that the contents of the show cause notices by no stretch of imagination can be termed to conclusive or determinative in nature. On the contrary, if the petitioners are able to give a plausible and satisfactory explanation with cogent proof in support of their explanation and reasoning, there is no reason to believe that the authorities concerned would not appreciate the same and take appropriate steps and measures based upon the response so to be given by the petitioners. 38. The Division Bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 SCC 639], State of UP. v. Brahm Datt Sharma, [(1987) 2 SCC 179 : AIR 1987 SC 943] etc. 14. The reason why ordinarily a writ petition should not be entertained against a mere show cause notice or charge-sheet is that, at that stage, the writ petition may be held to be premature. A mere charge-sheet or show cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show cause notice or charge-sheet does not infringe the right of any one. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance. 16. No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show cause notice if it is found to be wholly wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued in more than one place, those words alone cannot be read to interpret the impugned show cause notice as being pre-conceived or pre-meditated and the allegations in the show cause notice have to be read in its entirety. 23. In KVS Cargo Vs. Commissioner of Customs (General) 2016 (343) E.L.T. 24 (Del.), a show cause notice was impugned before the High Court of Delhi on the ground that it was pre-meditated. The matter arose under CBLR and the show cause notice was issued under Regulation 20 of the CBLR. The Court pointed out that paragraph 26 in the said notice is only putting the petitioner to notice in terms of Regulation 20(1) of the CBLR and the notice further shows that complete opportunity is being granted to the petitioner to furnish evidence and an opportunity of personal hearing is also being granted. The Court distinguished the decisions in Oryx Fisheries Pvt. Ltd., and Siemens Ltd. Vs. State of Maharashtra 2007 (207) E.L.T. 168 (SC) as done in Abhishek Mudhra and refused to entertain the challenge to a show cause notice. 24. In Additional Director General and another Vs. M.Rathakrishnan and another in W.A.Nos.702 and 703 of 2016 dated 18.04.2017, the Hon'ble Divisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that of the allegations contained in the show cause notice dated 31.10.2014. The petitioner filed their written submissions and requested for revocation of the order of interim suspension. The respondent by Order-in-Original dated 06.08.2014, revoked the order of interim suspension. The authority has recorded certain reasons of which one of the reasons being, the offence was detected on 02.09.2013 and the licence was suspended on 25.06.2014, which is almost nine months after detection of the offence and the show cause notice has already been issued under Regulation 20(1) and inquiry proceedings have been initiated by appointing an Inquiry Officer to inquire the professional mis-conduct of the petitioner and accordingly, the order of suspension was revoked. Therefore, whether the petitioner had fulfilled his obligations under the Regulation will be tested while show cause notice dated 31.10.2014 is being adjudicated. Thus, as on date, the allegations against the petitioner remain as allegations and as not culminated in a conclusive findings. In such circumstances, the respondent ought to have renewed the petitioner's licence subject to the outcome of the show cause notice da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not pay the amount specified in the notice. 42. Further, if we look into the contents of the show cause notices, the authority concerned have specifically mentioned that the show cause notices are being issued invoking the extended period of limitation, as would be evident from one of the clauses of the show cause notice, which for ready reference is reproduced herein under: It appears from the facts mentioned hereinabove that SKELLP and its representatives have resorted to willful misstatement and suppressed various facts in diverting/smuggling duty-free imported gold and other goods from SEZ unit and grossly mis-declaring their exports by exporting crude jewellery made up of semi- precious stones instead of studded gold jewellery for which permission was granted by SEZ authorities. Therefore, for such suppression of facts, willful misstatement and collusion, the duty leviable on above mentioned items, which have been diverted/smuggled out of SKELLP (SEZ), is liable to be recovered under the provisions of section 28(4) of Customs Act, 1962, by invoking the extended period read with Section 21, 22 and 25 of the SEZ Act, 2005. 43. Explanation 1 to Section 28 of the Act deals with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the considered opinion that the aspect of limitation, particularly, in the factual matrix of the present case is not one which could be determined by the writ Court. Therefore, we are unable to sustainthe said objection raised by the learned Senior Counsel for the petitioners. 47. For the aforesaid reasons, we do not find any of the three grounds raised by the petitioners to be strong enough for interdicting the show cause notices dated 31.10.2022 and 29.11.2022 under challenge in the present writ petitions. 48. Another reason why we are reluctant to entertain a writ petition at the stage of show cause notice is the judicial precedents in this regard which has been reiterated on many occasions by the Hon ble Supreme Court as also by the High Courts. Recently, the Hon ble Supreme Court in the case of Union of India Ors. vs. Coastal Container Transporters Association Ors. Civil Appeal No.2276 of 2019 dated 26.02.2019 of the Hon ble Supreme Court of India in paragraph No.19 held as under: 19. On the other hand, we find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the wr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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