2008 (2) TMI 418 - HC - Customs

Customs Act: Court dismisses petition on stamping foils clearance, upholding Customs authorities' discretion.

The court dismissed the writ petition challenging the withholding of clearance of stamping foils due to excess stock. The petitioner's request for ... Provisional assessment under Section 18 of the Customs Act - discretion of the Customs authorities to order provisional assessment - non-disclosure under Section 46(4) of the Customs Act - availability of alternative remedy by appeal to Commissioner (Appeals) - release of goods under Section 110(1A) of the Customs Act - scope of judicial review under Article 226 - limited to perversity, ex facie illegality and breach of natural justiceProvisional assessment under Section 18 of the Customs Act - discretion of the Customs authorities to order provisional assessment - Whether the petitioner was entitled as a matter of right to release of the consignment on provisional assessment - HELD THAT: - The Court held that provisional assessment under Section 18 is discretionary and available only if one of the statutory conditions is satisfied. Sub sections (a) and (c) of Section 18 contemplate satisfaction of the proper officer after investigation or inquiry before exercising the power. The designated officer recorded reasons to believe that full information and documents were not furnished and that discrepant packing lists existed; the petitioner failed to appear despite summonses and did not dispel the doubts. The earlier direction of the Court did not amount to a mandatory order to release the goods on provisional assessment. Consequently, there was no entitlement as of right to provisional assessment in the circumstances of this case. [Paras 12, 14, 15, 19]Petition for mandatory direction to release goods on provisional assessment refused; provisional assessment is discretionary and not a matter of right on these facts.Non-disclosure under Section 46(4) of the Customs Act - provisional assessment under Section 18 of the Customs Act - Whether the existence of two packing lists and alleged non-disclosure under Section 46(4) justified refusal of provisional assessment - HELD THAT: - The authority found that the importer possessed two packing lists showing different quantities and had not disclosed this fact at the time of filing the bill of entry. Since the right to provisional assessment is without prejudice to Section 46, the officer validly held that Section 18 was not applicable where non disclosure under Section 46(4) was established or reasonably suspected. The petitioner's non cooperation prevented clarification of these serious discrepancies. [Paras 7, 15]Refusal of provisional assessment on account of non disclosure and discrepant packing lists was not ex facie illegal or perverse.Scope of judicial review under Article 226 - limited to perversity, ex facie illegality and breach of natural justice - availability of alternative remedy by appeal to Commissioner (Appeals) - Whether the writ petition was maintainable in view of alternative statutory remedy and whether the Court should interfere - HELD THAT: - The Court reiterated that interference under Article 226 is limited to cases of breach of natural justice, ex facie illegality or perversity. The order rejecting provisional assessment (dated 3rd August 2007) was amenable to statutory appeal to the Commissioner (Appeals) and its legality had not been impugned in the writ petition. There was no show ing of breach of natural justice or manifest illegality to warrant Palmary interference. [Paras 5, 16, 19, 21]Writ petition dismissed; petitioner permitted to avail the statutory appeal and other remedies as provided by law.Release of goods under Section 110(1A) of the Customs Act - Whether the Court would direct release of goods under Section 110(1A) - HELD THAT: - The petitioner made an oral submission seeking release under Section 110(1A) but there was no pleading or formal prayer in the writ petition for such relief. The Court declined to entertain the oral prayer and observed that, if open in law and procedure, the petitioner may apply to the appropriate authority for release under the statutory provision and any Central Government procedure thereunder. [Paras 20, 21]Oral prayer for release under Section 110(1A) not entertained; petitioner granted liberty to pursue statutory procedure before the appropriate authority (remanded for fresh application/consideration).Final Conclusion: Writ petition dismissed. The Court found no ex facie illegality or perversity in the refusal to make provisional assessment, held that provisional assessment under Section 18 is discretionary and not a matter of right on the facts, and directed that the petitioner is at liberty to pursue the statutory appeal and any procedure for release under Section 110(1A) as law permits. Issues Involved:1. Withholding of clearance of a consignment of stamping foils.2. Provisional assessment of duty under Section 18 of the Customs Act, 1962.3. Availability of an alternative forum for challenging the impugned order.4. Compliance with Section 46(4) of the Customs Act.5. Examination of the Customs authorities' discretion in making provisional assessments.6. Application of the Circular dated 3rd March 2004 and relevant case laws.Issue-wise Detailed Analysis:1. Withholding of Clearance of a Consignment of Stamping Foils:The petitioner, a sole proprietor engaged in import and export, challenged the withholding of clearance of a consignment of stamping foils from China. The goods reached Kolkata in March 2007, and an excess stock of 2.6 MT over the declared quantity was found. The petitioner attributed this to an error by the overseas supplier and sought clearance upon payment of full duty for the excess material. Clearance was not permitted, leading to the first writ petition (W.P. No. 676 of 2007), which directed Customs authorities to adjudicate the matter under Section 18 of the Customs Act.2. Provisional Assessment of Duty Under Section 18 of the Customs Act, 1962:The Customs authorities rejected the petitioner's request for provisional assessment and clearance on 3rd August 2007. The petitioner filed another writ petition on 21st August 2007, seeking a direction for provisional assessment. The court examined the order, noting that the petitioner failed to appear before the Customs authorities and did not provide necessary documents, leading to the rejection of provisional assessment.3. Availability of an Alternative Forum for Challenging the Impugned Order:The Customs authorities argued that the petitioner had an alternative remedy by filing an appeal before the Commissioner (Appeals). The court noted that the petitioner did not challenge the order dated 3rd August 2007, which was annexed in the affidavit-in-opposition.4. Compliance with Section 46(4) of the Customs Act:The Customs authorities found discrepancies in the importer's declarations, including possession of two different packing lists for the same consignment. The non-disclosure of this fact at the time of filing the bill of entry constituted a violation of Section 46(4) of the Customs Act. The court observed that the right to provisional assessment under Section 18 is without prejudice to Section 46, and thus, Section 18 was not applicable in this case.5. Examination of the Customs Authorities' Discretion in Making Provisional Assessments:The court held that the Customs authorities have discretion under Section 18(1) of the Act to make provisional assessments based on specific conditions. The petitioner did not satisfy these conditions, as he failed to provide full information and did not cooperate with the authorities. The court found no ex-facie illegality or perversity in the Customs authorities' decision.6. Application of the Circular Dated 3rd March 2004 and Relevant Case Laws:The petitioner relied on a Circular dated 3rd March 2004 and case laws, including Gyan Chand & Ors. v. State of Punjab and Manickam Enterprises v. Commissioner of Customs Trichi. The court noted that the circular and case laws did not support the petitioner's claim for provisional assessment as a matter of right. The court emphasized that the conditions under Section 18(1) must be satisfied, and the circular could not override the statutory provisions.Conclusion:The court dismissed the writ petition, stating that the Customs authorities' decision was neither illegal nor perverse. The petitioner was advised to pursue an appeal against the order dated 3rd August 2007 or apply for release of goods under Section 110(1A) of the Act if applicable. The court's order did not prevent the petitioner from seeking these alternative remedies.