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TMI Blog1992 (3) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners approached the Government of India in the Department of Industrial Development for necessary approval in respect of importation of Blast Furnace equipments as also approval for obtaining engineering and technical documentation from the said S.N. Portugal. The Government of India, Ministry of Industry, Department of Industrial Development, by its letter dated 1-2-1989 accorded approval subject to certain conditions. The petitioners assert that the Government of India had treated the agreement and import in respect of the technical documentation valued at 12.5 million D.M. as a separate transaction. The aforesaid letter of the Government of India has been annexed as Annexure - 2 to the writ application. On receipt of the aforesaid letter, the petitioners made certain request pursuant to which the Government of India also modified its earlier order vide letter dated 26th of May, 1989. The said letter has been annexed as Annexure - 4. The Ministry of Commerce and Industry issued import licence for the import of the Blast Furnace equipments and also granted permission to the petitioner-Company to import related engineering and technical documentation from the said S.N. Portuga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 11-10-1989 and thereby did not produce a vital information for determination of the price of the imported goods. It was further indicated in the notice that the petitioner-Company should explain as to why the price for technical documentation valued at D.M. 12.5 million shown in the sale contract dated 11-10-1989 and the price paid for commission to the extent of D.M. 3,40,000/- should not be proportionately added to the price paid or payable for the equipment and materials for Blast Furnace and three 200 tones torpedo ladles to fix the transaction value under Rule 4 read with Rule 9 of the customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The said notice has been annexed as Annexure-6. The petitioner-Company assailed the legality of the aforesaid show cause notice in this Court by filing a writ application which was registered as O.J.C. No. 3052 of 1990 and an application for interim relief for release of the goods had been filed which was registered as Misc. Case No. 4102 of 1990. The writ application was not entertained and was held to be premature since the Customs Authority had not passed any final orders. But in the interim application, this cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of assessment under(i) Section 14 of the Customs Act being under adjudication by opp. party No. 3 pursuant to his show cause notice under Annexure - 6 and the final hearing in the said adjudication proceeding having been made as early as on 21st September, 1990, and no final order having been passed thereunder, opp. party No. 4 has exercised his powers under Section 108 of the Customs Act on the allegation that he is inquiring into the self-same under-valuation and such purported exercise of power is nothing but a mala fide exercise, inasmuch as there is no whisper that the goods have been smuggled into the country and it is only in an inquiry in connection with the smuggling of goods, the power of issuance of summons under Section 108 of the Customs Act can be exercised. The petitioner having imported goods after obtaining due(ii) permission of the Government of India and Government of India having accepted the two contracts M.D. 301 and M.D. 302 to be independent and separate and documentation having arrived at Calcutta through airfreight and having been released on payment of duty, opp. party No. 4 has exercised his power under Section 108 for ulterior and extraneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods imported had not been reflected in the bills of entry presented at Paradeep Port and, therefore, the goods in question attract the provisions for confiscation under Section 111(m) of the Customs Act and, therefore, will be held to be `smuggled goods' under Section 2(39) of the said Act and since an inquiry is being held in connection with `smuggling' of goods, the authorities have the power under Section 108 to call upon the petitioners to appear whose attendance the authority considers necessary for production of the documents mentioned in the schedule appended to the summons and as such there is no illegality in the issuance of summons under Section 108 of the Customs Act. 5.In course of hearing of the writ application, Mr. Lahiri, the learned counsel appearing for the petitioners, reiterates his stand taken in the writ application and with sufficient emphasis urges that in the facts and circumstances under which the goods have been imported by obtaining due permission from the Central Government and its officers on full disclosure of the entire transaction, by no stretch of imagination it can be said that the petitioner-Company has been involved in any `smuggling' of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the goods brought from a place outside India which do not correspond in respect of value or any other particulars with an entry made under the Act shall be liable to confiscation, and since the Customs authorities prima facie have taken the view that the goods imported pursuant to agreement M.D. 302 have to be valued not only on the basis of value indicated in the said agreement, but also the value indicated in M.D. 301, which is apparent from the original sale agreement dated 11-10-1989, the goods imported are liable to be confiscated under Section 111(m) and therefore, would come within the mischief of the definition of `smuggled goods' under Section 2(39). When an inquiry is being held in relation to the aforesaid transaction, the Customs Authority has the power to issue summons under Section 108 and, therefore, there is no justification in the argument of the petitioners' counsel that there was no basis for issuing summons under Section 108. 7.In view of the rival stand of the parties, the moot question that arises for consideration is the nature of the power of the Customs Authorities under Section 108 of the Customs Act and the circumstances under which such power can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l process of inquiry. While the country was facing a great economic crisis and smuggling activities had a disastrous impact on the country's economy, the Legislatures have brought in several laws with an effort to stabilise the country's economy. The legal hardware has not been able to halt the invisible economic aggressor inside as the smugglers, hoarders and adulterators have been busy in their under-world activities. Justice Krishna Iyer while dealing with a case relating to offence committed under the provisions of the Customs Act had observed that the wave of white collar crime must disturb the Judges' conscience. While, therefore, the provision contained in Section 108 of the Customs Act must be interpreted bearing in mind the aforesaid laudable objective for which it has been engrafted in the statute, but by no means it can be construed to authorise the Customs authorities from deviating the legal path or over-stepping the legal restraints in their effort to curb the smuggling activities. The Customs officials while acting under the provisions of the Customs Act should, therefore, ensure that the procedural safeguards are not impaired in any manner. It is in this context we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently the value of the goods has been declared to be the value as contained in M.D. 302, but factually the value should be the combined value of M.D. 302 and M.D. 301 and it is in that connection a thorough inquiry has been ordered by the Collector of Customs and in course of such inquiry, opp. party No. 4 has issued summons under Section 108 of the Customs Act. If the goods imported under M.D. 302 are found to have been given valuation which does not correspond to the valuation given by the importer, then certainly it would attract the mischief of Section 111(m) of the Customs Act and thereby it would be held to be "smuggled goods" within the ambit of Section 2(39) of the said Act and necessarily, therefore, such an inquiry must be held to be an inquiry in connection with the "smuggling of goods". In this view of the matter, we are unable to persuade ourselves to agree with the submission of Mr. Lahiri, the learned counsel for the petitioners, that the pre-conditions contained in sub-section (1) of Section 108 have not been satisfied in the present case, nor can we hold that there has been mala fide exercise of power. In course of hearing of this case, Mr. Lahiri with great forc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Collector to direct a further inquiry into the matter in which inquiry opp. party No. 4 has issued the necessary summons. This argument does not appeal to us in any manner. The power of the Collector of Customs to order for confiscation is not taken away in any manner even after an adjudication is made. That apart, there is no provision in the Customs Act which forbids the Collector of Customs to get any case transferred to him for any thorough inquiry even if the case was being heard by any subordinate authority. Neither there is any impropriety in the Collector's action nor is there any illegality in the same. As has been indicated in the counter affidavit filed by the Department, the Collector of Customs has ordered for a thorough inquiry into the matter in respect of the transactions in question and it is because of this an inquiry has been taken up by opp. party No. 4, and in the process of such inquiry, the summons has been issued. We do not find any infirmity in the aforesaid approach of the Collector, nor can we hold that the Collector lacked jurisdiction in the matter. In this view of the matter, the contention of Mr. Lahiri must be rejected. After applying our mind to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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