Court upholds Customs Department's jurisdiction in SCN challenge, directs addendum for specificity. Limited writ interference emphasized.

The court dismissed the writ petition challenging the Customs Department's Show Cause Notice (SCN) jurisdiction, ruling it was not entirely without jurisdiction or illegal. The court upheld the privilege claim over certain communications but directed the Customs Department to issue an addendum or corrigendum to the SCN, allowing the petitioner to respond more specifically. Emphasizing limited writ jurisdiction in SCN cases, the court required a balanced approach and found no grounds for interference.

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Issues Involved:
1. Jurisdiction of the Customs Department to issue the Show Cause Notice (SCN).
2. Validity and verification of Certificates of Origin (COO) under the Indo-Sri Lanka Free Trade Agreement (ISFTA) and South Asian Free Trade Agreement (SAFTA).
3. Applicability of the Agreement on Co-operation and Mutual Assistance in Customs Matters (CMA Agreement) between India and Sri Lanka.
4. Claim of privilege over certain communications by the Customs Department.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Customs Department to issue the Show Cause Notice (SCN):
The petitioner contended that the SCN issued by the Customs Department was without jurisdiction, arguing that only the Director (International Customs Division) had the authority to verify the COO under preferential trade agreements, as per Instruction No.31/2016 and an Office Memorandum dated 11.07.2017. The petitioner argued that the SCN was issued under Section 124 of the Customs Act, which requires goods to be prima facie confiscatable under Section 111, and that the only ground for confiscation was the disputation of the COO, which should be determined by the Principal Commissioner.

2. Validity and verification of Certificates of Origin (COO) under ISFTA and SAFTA:
The petitioner claimed concessional duty rates under ISFTA and SAFTA, asserting that the consignments originated from Sri Lanka. The Customs Department raised doubts about the COOs and seized the consignments. The petitioner argued that the verification process outlined in ISFTA and SAFTA rules should be followed, emphasizing the sanctity of these treaties between sovereign states.

3. Applicability of the CMA Agreement between India and Sri Lanka:
The Customs Department relied on the CMA Agreement dated 13.03.2015, which allows for mutual assistance in customs matters, including verification of COOs. The court held that the CMA Agreement, being a treaty between two sovereign states, would prevail over the procedures for COO verification outlined in ISFTA and SAFTA rules, as per Section 151B of the Customs Act. The court concluded that the CMA Agreement substitutes the ISFTA and SAFTA rules for COO verification.

4. Claim of privilege over certain communications by the Customs Department:
The Customs Department claimed privilege over communications dated 23.04.2018 and 15.05.2018 under the CMA Agreement, arguing that disclosing the names of officers and modes of verification would harm public interest. The court sustained the privilege claim for these communications but rejected the privilege claim for the CMA Agreement itself, as it was available in the public domain. The court directed the Customs Department to issue an addendum or corrigendum to the SCN, mentioning the CMA Agreement and the verification process, without disclosing privileged information.

Conclusion:
The court dismissed the writ petition, holding that the SCN was not wholly without jurisdiction or illegal, and thus did not warrant interference under writ jurisdiction. The court allowed the Customs Department to issue an addendum or corrigendum to the SCN, providing the petitioner with an opportunity to respond more specifically on merits. The court emphasized that writ jurisdiction should be exercised sparingly, particularly in cases involving SCNs, unless they are found to be wholly without jurisdiction or illegal.

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