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TMI Blog1994 (9) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... ings are 2708.11, 2708.19 and 2708.20. 4.Heading 27.08 includes Pitch and Pitch Coke obtained from Coal Tar or from other Mineral Tars for which no countervailing duty is leviable. Sub-heading 2708.11 covers Pitch which is obtained by blending Creosote oil or other coal tar distillates, for which the rate of duty is Rs. 100/- per tonne. Sub-heading 2708.19 relates to Pitch obtained by other methods, for which the rate of duty is 15%. 5.According to the petitioners there are two methods of producing Coal Tar Pitch according to the required specifications for manufacture of anodes. One is the "straight run" method whereby coal tars of different compositions are selected and the process of distillation is carefully controlled. According to the petitioners, this method can be used on a small scale and is not viable for commercial production on a large scale. According to the petitioners, Coal Tar Pitch can be more easily obtained by the "cut-back" method, by which all the oils are distilled out and some distillates such as creosote or anthracene are added back according to the desired proportions. 6.According to the petitioners, all the Coal Tar Pitch imported by them was obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous documents from such premises. In addition, Officers of the petitioner Company and the Agents of the foreign suppliers were also interrogated by the Customs officials. 12.It appears that, thereafter, the Collector of Customs, Calcutta, sent a notice to the petitioner Company dated 23rd April, 1992, asking it to show cause, inter alia, as to why the consignments of Coal Tar Pitch imported by the petitioner Company should not be finally assessed at the higher rate of duty, as prescribed under sub-heading 2708.19, and why the duty refunded to the petitioner Company should not be recovered by enforcing the Bank Guarantees given by it, and why fines and penalties under the provisions of Customs Act, 1962, should not be imposed on the petitioner Company. 13.The notice to show cause, which has been made Annexure "A" to the writ petition, appears to have been issued in terms of Sections 28 and 112 of the Customs Act, 1962, and forms the subject matter of challenge in the writ petition, along with the proceedings initiated on the basis thereof. 14.Appearing in support of the writ petition, Mr. P.P. Ginwala, learned Senior Counsel, submitted that both the notice to show cause and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities had prejudged the matter and had already made up their minds that the petitioners were guilty of the offences with which they had been charged, so as to preclude the possibility of a fair adjudication. Mr. Ginwala urged that the impugned notice to show cause and the proceedings initiated on the basis thereof were liable to be quashed. 20.Opposing the writ application on behalf of the Customs authorities, Mr. Rathin Das, learned Senior Advocate, firstly contended that the writ application was premature, since only a notice to show cause had been issued to enable the petitioners to explain the method used for manufacture of the imported Coal Tar Pitch in order to substantiate their stand that the said goods are to be categorised under sub-heading 2708.11 and not sub-heading 2708.19, for the purpose of payment of countervailing duty. 21.Mr. Das contended that it was not as if the matter had already been decided, but since certain suspicions had arisen regarding the process of manufacture of the aforesaid goods, an opportunity was being given to the petitioners to explain the matter before any further action was taken by the Department. 22.Mr. Das then urged that, although ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the process of manufacture of the said goods. Mr. Das contended that a search and seizure conducted in the offices of the writ petitioner Company and the offices of the Agents of the foreign suppliers had revealed incriminating documents to show that in order to pass off the imported Coal Tar Pitch as having been manufactured by the "cut-back" method, the petitioner Company had written to the foreign suppliers, indicating the very wording in which the certificates relating to the manufacturing process were to be given. Mr. Das submitted that certificates more or less identically worded, as desired and indicated by the petitioner Company, had been provided by the foreign suppliers, both German and Japanese. 27.Mr. Das, however, stated in his usual fairness that the foreign suppliers of the petitioner Company, were all concerns of repute. 28.Mr. Das submitted that the seized documents gave rise to a suspi- cion that the writ petitioner Company had tried to evade payment of countervailing duty at the higher rate by passing off the imported consignments of Coal Tar Pitch as having been manufactured by the "cut-back" process. 29.Mr. Das urged that since a prima facie case had bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular product in a particular way, the onus is on them to prove that such product should be so classified. The Hon'ble Supreme Court has clearly spelt out the legal position in this regard in the case of Deputy Commissioner of Sales Tax (supra), cited by Mr. Ginwala. 35.Even if the adjudication is allowed to continue, it would be an exercise in futility in the absence of any positive and conclusive proof in the hands of the Customs authorities regarding the mode of manufacture of the Coal Tar Pitch imported by the petitioner Company. Since it will not be possible for the petitioner Company to establish that the Coal Tar Pitch had been manufactured by the cut-back process, the show cause notice and the proceedings initiated on the basis thereof, appear to be in the nature of a roving enquiry to procure evidence, which the Customs authorities do not appear to have in their possession. 36.Mr. Das's contention that the Customs authorities would discharge their onus of proving that the Coal Tar Pitch in question had not been obtained by the cut-back method, at the time of adjudication, cannot be accepted in the absence of any positive assertion anywhere in the show cause notice th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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