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TMI Blog2003 (12) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... alone which was used in the manufacturing activity. Now, if there was no manufacturing unit available or any such manufacturing unit as would have the capacity to manufacture the goods worth crores of rupees, how was the imported stainless steel utilised. The question would not only be misrepresentation while getting the Advance Licence but also about the utilisation of the imported material, which would squarely fall under Section 111(o) of the Customs Act. We do not think that the recovery of the evaded customs duty can be the only result or the fall out of the enquiry. There could be number of other issues involved, which we would be slow to discuss. In view of the fact that the enquiry has yet not been completed and it is not decided as to whether the action should ensue from the same or not, the contention that the exercise is redundant and, therefore, without jurisdiction has, therefore, to be rejected. We do not think this is an admission at all because there will be no question of there being no authority to the first respondent in enquiring into the breach of the conditions of the licence. However, that authority cannot exclude the jurisdiction of the Customs authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Customs Act. We would have nothing to say about the merits of the order as we have already expressed that it is not our task to see the correctness of the order. We do feel that the criticism, atleast about the last licence, is justified. In short, there will be no question of interfering with the notice issued by the Customs Department and, in our view, the learned single Judge has correctly dismissed the writ petitions. The writ appeals are, therefore, dismissed with the costs of Rs. 3,000/- each. Connected WAMPs are closed. X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners as it entailed the personal appearance of the petitioners before the concerned officer. They further plead that the concerned officer had no powers to interfere in the imports and exports made by the licence-holder since the entire exports and imports of the petitioners on the basis of the advance licence is governed under the duty-free scheme, which is monitored and governed only by the first respondent. Lastly it was contended that the notice was not issued by the Gazetted Officer and hence was a non-est notice. 4. As against this, the contentions raised by the Department was that there was nothing wrong in the second respondent issuing the notice was purely for the purposes of investigation and that such a hue and cry could not be made about the notice. It is pointed out by the second respondent that on a tip off, the second respondent came to know about the grave irregularities by these manufacturing importers. It is pointed out that these manufacturing importers had made misrepresentations regarding the fact that they owned a factory whereas, some of the petitioners had even given the fake addresses of their factory while the others did not have any machinery in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gate any matter as, in fact, everything stood closed by this adjudication. Learned Counsel also urged that it was a settled law by the celebrated decision of the Supreme Court in East India Commercial Company case [1983 (13) E.L.T. 1342 (S.C.) = AIR 1962 SC 1893], which was followed later on right up to the case of Union of India v. Sampat Raj Dugar [1992 (58) E.L.T. 163] and Titan Medical Systems Pvt. Ltd. v. Collector of Customs, New Delhi [2003 (151) E.L.T. 254] that there could be no parallel proceedings and, therefore, there would be no necessity of proceeding even with the investigation and the whole exercise would not even be a bona fide exercise of investigating alone. We were taken through the various investigations as also through the conditions of licence by the learned Counsel, who, on that basis, contended that there was in fact no jurisdiction in the concerned officer to issue a notice under Section 108 of the Customs Act. 7. As against this, Shri Arvind Datar, learned Senior Counsel appearing on behalf of the second respondent urged that what was being done was merely the investigation of certain irregularities which are suspected to have taken place. He pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at question is concluded against the appellants. 10. A glance at Section 108 of the Customs Act, under which the summons is given, would suggest that it is a power given to any Gazetted Officer of the Customs Department to summon any person during any enquiry which the officer would make in connection with the smuggling of any goods. A summons can be for the production of the documents or those in possession or under the control of the persons summoned and such a summoned person is bound to attend and to state the truth upon any subject respecting which he is examined by the summoning officer. These powers are given obviously with an idea to check the smuggling. The definition of 'smuggling' is to be found in Section 2(39) of the Act, which is as under : "smuggling in relation to any goods, means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113". When Section 111 is seen, it is clear that any goods brought from a place outside India would be liable for confiscation provided under any of the eventualities described in clauses (a) to (p). It will be enough for us to quote sub-section (o), which reads as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then pointed out that in that show cause notice it was alleged that the noticee diverted the duty-free imported raw material instead of utilising the same for "manufacturing" the export-product as required under the Actual User Advance Licence and no proper accounts were maintained for consumption and utilisation of the imported raw materials as prescribed in the EXIM policy and, therefore, the noticee was not eligible for Actual Users Advance Licence and misdeclared the facts and obtained the licence in a fraudulent manner, causing loss to the tune of crores of rupees to the exchequer and, therefore, this would attract the provisions of Section 11(1) and Section 11(2) of the Foreign Trade Act and, therefore, the noticee was directed to show cause as to why the said licence should not be cancelled and penalties imposed. It is then pointed out that the same Joint Director General of Foreign Trade, after holding the enquiry, has exonerated the noticee-appellant and has not chosen to invoke Section 9(4) and/or Rule 10 for cancellation of the licence. 12. We have gone through the said order very carefully. We were also taken through the relevant paragraphs wherein, it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmerce questioned about the bona fide of their factory. The issue has now been highlighted by the DRI on a mere assumption that the noticee firm "appears" to have not used those imported materials in the manufacturing process of the final product." These observations would suggest as if everything was alright with the manufacturing industry of the appellants. However, the learned Counsel for the respondents points out that the factory, where crores of rupees worth of imported stainless steel was used for manufacturing the utensils, was, on inspection by the customs officer, found to be of having an area of 600 sq.ft. Learned Counsel further pointed out that there was material on record of the customs authorities that the so-called landlord of that factory completely disowned any knowledge about the appellants or their carrying on the manufacturing activities therein. Learned Counsel further suggests that in one of the appellants' case, there was no factory at all as the door number of the factory was 10-A, while there was no house bearing that door number on that street. He submits that in the wake of this, the customs authorities felt that what was being done w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the appellants have smuggled the goods or have engaged themselves in smuggling of the goods in importing the goods without paying the proper customs duty, or if they have brought exempted goods and have not complied with the conditions of which the exemption was granted, that would certainly be an act of smuggling, in which event, any concerned Customs Officer empowered under the Act would have jurisdiction to enquire. It cannot be a defence, to nip such an enquiry in the bud, that there has already been an adjudication regarding the advance licence on the basis of which the imports have been made and that such adjudication has been closed in favour of the appellants. That may be so. However, the jurisdiction of the Customs Officer to enquire into the matter would not stand concluded merely because of that. It was tried to be urged that this is the law laid down by the Supreme Court in East India Commercial Company case, cited supra, which has been followed in Union of India v. Sampat Raj Dugar [1992 (58) E.L.T. 163] and further in Titan Medical Systems Pvt. Ltd. v. Collector of Customs, New Delhi [2003 (151) E.L.T. 254]. 14. On the other hand, learned Counsel for the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 30-3-1988. Condition No. 2 of the Advance Licence was also referred to and ultimately, relying on Section 111(o) of the Customs Act, which we have quoted above, the learned Judge held that the section conferred a power of confiscation of the imported goods if they were not properly utilised and the conditions of the licence not observed. It was then held by the learned Judge that the Customs Department was thoroughly justified and had the jurisdiction to investigate or enquire into the matter. In paragraph 21 even the power of adjudication under Foreign Trade Act. Then Import and Export (Control) Act, was referred to by the learned Judge and it was held that though there was an authority for confiscation under the Foreign Trade Act, the identical powers are conferred on the authorities under the Customs Act also and that, in the case in hands, the customs authorities, on the basis of the credible information, had effected the search of the various premises of the petitioner company and seized some documents and hence the Customs Department had issued letters, calling upon the petitioner to furnish more information. In paragraph 25, the overlapping aspect in respect of the enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n investigation does not by itself preclude the Customs authorities from doing so." Learned Counsel for the respondents, therefore, suggests that this judgment in Seshang Sea Foods case, cited supra, applies on all fours to the present controversy. 16. On the other hand, Shri Habibullah Basha, learned senior Counsel suggests that the judgment in Sheshank Sea Foods case, cited supra, need not be followed by us more particularly in view of the judgment in East India Commercial Company case, cited supra, which is a judgment by the Larger Bench and which judgment was not brought to the notice of the Supreme Court in Sheshang Sea Foods case, cited supra. 17. We are unable to accept this argument firstly, there is a very clear reference to the decision in East India Commercial Company Limited, cited supra, in the High Court judgment which fell for consideration in Sheshank Sea Foods case. We have, therefore, deliberately made a detailed reference to the High Court judgment which fell for consideration therein. We have also pointed out that in the High Court judgment, the judgment of East India Commercial Company case was clearly referred to and the learned Judge had distinguished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler of Imports to cancel such licences and make them ineffective. The specified authority has not cancelled the licence issued in this case on the ground that the condition has been infringed. We need not consider the question whether the Chief Controller of Imports or the Government of India, as the case may be, can cancel a licence after the term of the licence has expired, for no such cancellation has been made in this case. In the circumstances, we must hold that when the goods were imported, they were imported under a valid licence and therefore it is not possible to say that the goods imported were those prohibited or restricted by or under Chapter IV of the Act within the meaning of clause (8) of S. 167 of the Sea Customs Act." Learned Counsel wants to draw our attention to the fact that in this case, the imports were made under a valid licence and those imports were made under the surveillance of the Customs authorities. He further points out that at the time of importing the goods, the Customs authorities had not objected to in any manner and further the matching exports were also made and the licences were also redeemed and, therefore, there would be no question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment in this case is not apposite to the present controversy excepting for the observations in paragraph 21, which are heavily relied upon. The observations are to the following effect : "The next question is whether the import of the said goods was contrary to law in any manner and whether the said goods are liable to be confiscated under the Customs Act. The only provisions relied upon by the appellants are Clauses (d) and (o) in Section 111 of the Customs Act, which we have set out herein above. In our opinion none of these clauses are attracted in the present case. Clause (d) contemplates an import which is contrary to any prohibition imposed either by the Customs Act or any other law for the time being in force. No such prohibition can be pleaded in this case since on the date of the import the said goods were covered by a valid import licence. The subsequent cancellation of licence is of no relevance nor does it retrospectively render the import illegal. [East India Commercial Co. Ltd. v. The Collector of Customs, Calcutta - 1983 (13) E.L.T. 1342 (S.C.) = 1963 (3) SCR 338 at 372]. Clause (o) contemplates confiscation of goods which are exempted from duty subject t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultimately, penalty was imposed. That was challenged before the Central Excise Gold Control Appellate Tribunal. The appeals were dismissed though after reducing the quantum of penalty. It was against that the importer went to the Supreme Court. The Supreme Court, therefore, was dealing with the said imposition of duty. In paragraph 13, it is observed : "To be noted that the licensing authority (sic) having taken no steps to cancel the licence. The licensing authority have not claimed that there was any misrepresentation. Once an advance licence was issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf." From this, it is suggested that it is only the licensing authority and in this case, the first respondent, which alone would be required to take any steps against the importers for the breach of conditions of the licence, etc. It is suggested that the licence in this case has not been granted by the Customs authorities and, therefore, the Customs authorities would not have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with as to what transpires in the enquiry or whether the ultimate result in the enquiry could legitimately result in the payment of additional customs duty. The question is only of the jurisdiction on the part of the Customs authorities to initiate an enquiry and in case of the result of the enquiry, any proceedings are initiated against the appellants, it would be for the appellants to allege all these points in those proceedings. We do not think that the recovery of the evaded customs duty can be the only result or the fall out of the enquiry. There could be number of other issues involved, which we would be slow to discuss. In view of the fact that the enquiry has yet not been completed and it is not decided as to whether the action should ensue from the same or not, the contention that the exercise is redundant and, therefore, without jurisdiction has, therefore, to be rejected. 26. It was pointed out to us that in their counter though the 1st respondent has candidly admitted the liability of the appellants for punishment under Section 12 of the Foreign Trade Act, in paragraph 7 a stand is taken that the issue regarding the violation of conditions of the licence can be deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mons issued under Section 108 of the Customs Act for effecting the enquiry such as these cannot be bad for the lack of jurisdiction. 31. It is trite law that where it is only a summons, there will be no question of considering the fall-out, at least at this stage. Learned Senior Counsel for this proposition has relied upon the celebrated decision in Union of India v. Prakash P. Hinduja [2003 SCC (Cri.) 1314] wherein the Apex Court held that there is no power in the Magistrate or the Court to interfere in the investigation or during the course of the investigation. Though the said decision pertains to an entirely different jurisdiction like criminal jurisdiction, learned Senior Counsel wants us to read the observations to be applicable even to the present proceedings, which are likely to be penal in nature. He says that even before any penalty is contemplated or ordered, the Court should not interfere in the matter of investigation. There can be no dispute about the proposition. However, in our opinion, there would always be a question of jurisdiction, as for example, if such a notice has been given by an authority of the Sales Tax Department, this Court could always have interfere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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