1992 (9) TMI 103 - HC - Customs

Customs Act: Court upholds validity of summons under Sections 107 and 108, expansive inquiry powers post-clearance.

The Court held that the summons issued under Section 108 of the Customs Act was valid and within the jurisdiction of the Customs Authorities. It was ... Offence (Customs) - Inquiry - Scope - Jurisdiction - Inquiry Issues Involved:1. Validity of summons issued under Section 108 of the Customs Act.2. Jurisdiction of Customs Authorities post clearance of goods.3. Scope and nature of inquiry under Sections 107 and 108 of the Customs Act.4. Impact of adjudication orders and penalties on further inquiries.Issue-wise Detailed Analysis:1. Validity of Summons Issued under Section 108 of the Customs Act:The summons issued to the petitioner-respondent by the Assistant Director, Directorate of Revenue Intelligence, was deemed invalid by a single Judge of the High Court. The Union of India and other appellants challenged this decision, arguing that the summons was necessary for investigating the alleged evasion of customs duty on the import of Lupofresh Browary HDP Extract/Pollots. The summons required the petitioner-respondent to provide evidence and documents related to the imports and sales. The Court examined the scope of Section 108, which empowers a gazetted officer of customs to summon any person necessary for an inquiry related to the smuggling of goods.2. Jurisdiction of Customs Authorities Post Clearance of Goods:The petitioner-respondent argued that once goods were cleared by the Customs Authorities and the Court, the Customs Authorities had no further jurisdiction to inquire or investigate into alleged customs duty evasion. The respondents-appellants maintained that based on intelligence reports and subsequent investigations, there was evidence of undervaluation and manipulation of import documents, justifying further inquiries. The Court held that the jurisdiction to inquire under Sections 107 and 108 does not end with the clearance of goods and can continue if there is a reasonable belief of smuggling or other violations.3. Scope and Nature of Inquiry under Sections 107 and 108 of the Customs Act:The Court delved into the provisions of the Customs Act, particularly Sections 107 and 108, which provide the framework for examining persons and summoning them to produce documents in connection with smuggling inquiries. The inquiry under these sections is preliminary to actions such as confiscation of goods or imposition of penalties. The Court emphasized that the power to hold inquiries is based on the suspicion of smuggling and continues until appropriate actions, such as confiscation or penalties, are concluded.4. Impact of Adjudication Orders and Penalties on Further Inquiries:The petitioner-respondent contended that once adjudication orders were passed and penalties paid, there should be no further inquiries. The Court, however, found that the existence of adjudication orders does not preclude further inquiries if new evidence or grounds for suspicion arise. The Court cited previous judgments to support the view that the satisfaction of the proper officer for confiscation proceedings remains unaffected by prior clearance orders. The Court clarified that while goods already confiscated cannot be subjected to further confiscation, new grounds can be used for imposing penalties or prosecution.Conclusion:The Court concluded that the summons issued under Section 108 was valid and within the jurisdiction of the Customs Authorities. The inquiry powers under Sections 107 and 108 are broad and can continue even after goods are cleared if there is reasonable suspicion of smuggling. The judgment of the learned single Judge was set aside to the extent that it held the summons under Section 108 to be without jurisdiction. The appeal was allowed, and no costs were awarded.