Customs adjudication may proceed despite prior clearance where exemption fraud is alleged and statutory notice has been issued.

Clearance of imported goods under Section 47 of the Customs Act, 1962 does not bar customs authorities from continuing adjudication where the department alleges fraud, suppression or wrongful availment of exemption on the basis of false origin documents. The show cause notice procedure under Section 124(a) was treated as sufficient to support confiscation or penalty proceedings, and the pending investigation with foreign authorities did not create any legal prohibition against the statutory process. The writ court therefore declined to interdict adjudication and left the importer to explain its case in the notice proceedings.

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Issues: Whether a writ of prohibition could be issued to restrain adjudication of a customs show cause notice when the goods had earlier been cleared under Section 47 of the Customs Act, 1962 and the department alleged wrongful availment of exemption on the basis of false origin documents.

Analysis: Clearance of imported goods under Section 47 does not create an absolute bar against subsequent action where the department alleges fraud, suppression, or wrongful exemption. Section 124(a) authorises issuance of notice before confiscation or penalty, and the authorities had already initiated proceedings on the footing that the imports were not entitled to duty concession. The Court held that, in the absence of any legal prohibition, it could not interdict the statutory adjudicatory process merely because investigation with the Thai authorities was still pending. The petitioner was relegated to submit its explanation in the adjudication proceedings.

Conclusion: The writ prayer for prohibition was rejected and the respondents were permitted to proceed with adjudication on the show cause notice.

Ratio Decidendi: A writ of prohibition will not lie to prevent customs adjudication on a show cause notice where the statutory notice procedure has been followed and the action is founded on alleged fraud or wrongful availment of exemption, even if the goods had earlier been cleared under Section 47.

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