Validity of Customs Act Section 28 show cause notice upheld; petitioner directed to respond

The court found the show cause notice issued under Section 28 of the Customs Act, 1962 to be valid and not lacking jurisdiction. It concluded that the writ petition was premature, directing the petitioner to submit a reply/explanation before the respondent for further consideration. The court emphasized providing a reasonable opportunity of hearing to the petitioner and disposed of the writ petition, leaving all rights and contentions of the parties open.

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Issues Involved:
1. Validity of the show cause notice dated 27.06.2017 under Section 28 of the Customs Act, 1962.
2. Allegation of suppression of facts and invocation of the extended period of limitation.
3. Jurisdiction and maintainability of the writ petition.
4. Compliance with principles of natural justice.

Detailed Analysis:

1. Validity of the Show Cause Notice:
The petitioner challenged the show cause notice dated 27.06.2017, which was issued under Section 28 of the Customs Act, 1962. The notice called upon the petitioner to explain why the goods imported as warranty replacement but sold out of warranty should not be confiscated, why differential duty should not be demanded, why interest should not be levied, and why penalties should not be imposed. The petitioner contended that the notice was arbitrary and lacked jurisdiction.

2. Allegation of Suppression of Facts and Invocation of Extended Period of Limitation:
The petitioner argued that the extended period of limitation under Section 28(1) of the Customs Act could only be invoked in cases of collusion, willful misstatement, or suppression of facts. The petitioner asserted that the show cause notice contained mere bald allegations of suppression without specific references to any act or omission. The petitioner relied on the executive order dated 27.02.2013 and the circular dated 10.03.2017 by the Central Board of Excise and Customs, which were allegedly contradicted by the impugned notice.

The revenue countered that the petitioner admitted during inquiries that some goods were sold out of warranty, which was not disclosed earlier, thus justifying the invocation of the extended period due to suppression of facts.

3. Jurisdiction and Maintainability of the Writ Petition:
The petitioner sought to invoke the writ jurisdiction, arguing that the show cause notice was issued without jurisdiction, and the existence of an alternative remedy was not a bar. The revenue contended that the writ petition was not maintainable as the petitioner bypassed the efficacious alternative remedy provided under the Act, and personal hearings were adjourned at the petitioner's request.

4. Compliance with Principles of Natural Justice:
The court noted that the petitioner had invoked the writ jurisdiction without appearing before the statutory authority. It emphasized that there is no bar to entertain a writ petition if the impugned notice is without jurisdiction. However, the court found that the show cause notice contained sufficient ingredients to justify the extended period, and the allegations of suppression were supported by material facts.

Conclusion:
The court examined various judgments, including Calcutta Discount Co. Limited vs. Income Tax Officer, Uniworth Textiles Limited vs. Commissioner of Central Excise, and Siemens India Limited vs. State of Maharashtra, to determine the validity of the show cause notice and the invocation of the extended period.

The court concluded that the show cause notice was not ill-founded and that the writ petition was premature. The petitioner was directed to submit a reply/explanation before the respondent, who would consider the submissions and take a decision in accordance with law, providing a reasonable opportunity of hearing to the petitioner. All rights and contentions of the parties were left open, and the writ petition, along with pending applications, was disposed of.

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