1997 (12) TMI 124 - HC - Customs

Show cause notice quashed as time-barred; vehicle returned and must be registered without catalytic converter or penalties

RAJESH ARORA Versus COLLECTOR OF CUSTOMS

The HC quashed the show cause notice dated 8 May 1995 as time-barred and lacking jurisdiction, finding the vehicle had been validly cleared under the ... Import - Seizure - Words and Phrases - Meaning Issues Involved:1. Legality of the seizure and detention of the car by the respondents.2. Validity of the show cause notice issued by the customs authorities.3. Compliance with the relevant import policy and customs regulations.4. Jurisdiction of customs authorities post customs clearance.5. Timeliness of the show cause notice under Section 110(2) of the Customs Act.6. Entitlement to costs and damages due to the detention of the car.Issue-wise Detailed Analysis:1. Legality of the Seizure and Detention of the Car by the Respondents:The petitioner entered into an agreement on 30th October 1992 for the purchase of a car manufactured abroad with Rajan Sabharwal, who returned to India for permanent settlement. The car was cleared by customs authorities in New Delhi after payment of customs duty on 5th June 1993. The petitioner obtained delivery of the car but was later deprived of its possession following a raid by the Enforcement Directorate on 11th June 1993. The car remained under the control of the respondents, leading to the writ petition for quashing the impugned action and for the release of the car.2. Validity of the Show Cause Notice Issued by the Customs Authorities:The customs authorities issued a show cause notice on 8th May 1995 under Sections 110 and 111(d) and (o) of the Customs Act, which the petitioner challenged. The petitioner argued that the notice was issued beyond the statutory limit of six months as provided in Section 110(2) of the Customs Act and that customs authorities had no jurisdiction to issue the notice once the car was cleared after compliance with all formalities and payment of customs duty under Section 47 of the Customs Act.3. Compliance with the Relevant Import Policy and Customs Regulations:The policy at the time allowed import of cars without a license under specific conditions, including payment for the vehicle abroad and customs duty in foreign exchange. Rajan Sabharwal, the importer, fulfilled all conditions, including continuous stay abroad for more than two years and payment for the car abroad before returning to India. The customs authorities cleared the car, indicating compliance with the relevant policy. The respondents' reliance on a later public notice dated 30th March 1994 was misplaced as the relevant public notice was dated 26th June 1992.4. Jurisdiction of Customs Authorities Post Customs Clearance:The customs authorities' jurisdiction to issue the show cause notice was questioned since the car was cleared after compliance with all formalities and payment of customs duty. The court noted that the import and clearance of the car were valid under the relevant public notice dated 26th June 1992, and Section 111 of the Customs Act, which pertains to confiscation of improperly imported goods, was not applicable as the car was not imported contrary to any prohibition.5. Timeliness of the Show Cause Notice under Section 110(2) of the Customs Act:The respondents argued that the car was seized on 5th March 1995, within six months of the show cause notice. However, the petitioner contended that he was deprived of the car's custody in June 1993, making the notice beyond the six-month limit. The court found that the car was effectively seized by the customs authorities much earlier, as evidenced by the petitioner's letters and the respondents' control over the car. Thus, the show cause notice was issued beyond the statutory period, rendering it invalid.6. Entitlement to Costs and Damages Due to the Detention of the Car:The court acknowledged the petitioner's claim for exemplary costs due to the deprivation of the car's use and its deterioration from remaining idle. The court directed the respondents to return the car and allowed the petitioner to move the court for damages after assessing the car's condition upon delivery.Conclusion:The impugned show cause notice dated 8th May 1995 was quashed, and the respondents were directed to return the car to the petitioner forthwith. The registration authorities were instructed to register the car without insisting on the requirement of a catalytic converter or any penalty for late registration. The petitioner was granted liberty to seek damages after taking delivery of the car. The writ petition was disposed of with these directions, and the petitioner was entitled to costs.