2005 (10) TMI 100 - HC - Customs

Court dismisses challenge to customs notice, emphasizes clarity in future notices

The court dismissed the petition challenging a show cause notice for enhancing the invoice value of imported goods under a registered contract. The court ... Show cause notice - invoice value - registered contract - finality of tribunal order and its binding effect on revenue - vagueness of notice / want of material for rejection - provisional clearance pending investigationRegistered contract - finality of tribunal order and its binding effect on revenue - show cause notice - Whether the CESTAT order in respect of earlier consignments conclusively precludes adjudication by Customs of the impugned show cause notice relating to subsequently imported consignments - HELD THAT: - The Court held that it could not be treated as conclusively established that the goods covered by the impugned show cause notice were imported pursuant to the same registered contract as those adjudicated by the Tribunal. The names of the suppliers in 35 of the 45 bills differed from the supplier named in the registered contract, and many imports were made beyond the 12month validity of the contract; these matters could be verified in adjudication. Consequently, the Tribunal's order insofar as it accepted the invoice value for consignments actually before it does not ipso facto apply to other consignments unless the petitioner establishes that those consignments fall within the same registered contract. The petitioners therefore are not entitled, without adjudication, to have the invoice value accepted for the 45 bills of entry merely on the basis of the earlier CESTAT order. [Paras 13]Petitioners' contention that the CESTAT order precludes adjudication of the impugned show cause notice is not accepted; admissibility of applying the Tribunal's order to the 45 bills is left to adjudication.Show cause notice - vagueness of notice / want of material for rejection - provisional clearance pending investigation - Whether the impugned show cause notice is vitiated by vagueness and absence of disclosed material for rejecting the invoice value - HELD THAT: - The Court found that the show cause notice was issued mechanically and lacked any disclosed material or reasons for rejecting the invoice value beyond a bald assertion that contemporaneous imports justified loading. The goods had been provisionally cleared pending investigation subject to revenue deposit and bank guarantee, and on completion of investigation the Revenue may either accept the invoice value or reject it, but prior to rejection the show cause notice must disclose the basis for doing so. A notice issued merely on suspicion without particulars does not meet that requirement and is therefore liable to be quashed. The Court noted that the department remains free to issue a fresh notice disclosing material, if any, before final assessment. [Paras 14, 15]Impugned show cause notice quashed for being vague and bereft of particulars; assessment to be finalized in accordance with law, subject to department's right to issue a fresh notice with disclosed material.Final Conclusion: The writ petition is allowed in part: the petitioners are not entitled as of right to have the earlier Tribunal order applied to the 45 subsequently imported consignments without adjudication, but the impugned show cause notice dated March 1, 2005 is quashed for want of disclosed material; the department may, if it has material, issue a fresh notice and must finalize assessment of the 45 bills in accordance with law within three months. Issues:Challenge to show cause notice regarding invoice value for imported goods under a registered contract.Analysis:The petition challenges a show cause notice issued for enhancing the invoice value of goods imported under a registered contract. The petitioner asserts that the imports under scrutiny were made pursuant to a registered contract, and a previous show cause notice for enhancing invoice value had been quashed by the CESTAT. The court entertained the petition based on this contention.The petitioner had a contract with a Canadian company for importing LDPE/HDPE/PP Mixed Plastic Granules/Powder. The initial consignments faced disputes with Customs authorities regarding invoice value, leading to a writ petition allowing provisional clearance. Subsequent imports were also cleared provisionally.A show cause notice was issued for rejecting the invoice value and assessing the goods at a higher value. The Assistant Commissioner of Customs upheld the higher value, but the CESTAT later directed acceptance of the invoice value. A fresh show cause notice was then issued, prompting the current petition.The petitioner argued that the new show cause notice was improper as the previous CESTAT decision should apply. The Customs authorities contended that the goods were imported beyond the contract period, with different suppliers for some entries, justifying the new notice.The court found discrepancies in the goods covered by the CESTAT order and those under the new notice. While acknowledging the contract period issue, it deemed the new notice vague and lacking valid reasons for rejecting the invoice value. The court quashed the notice but allowed for a fresh notice with proper grounds before final assessment.In conclusion, the court dismissed the petition, quashed the vague show cause notice, and directed Customs authorities to finalize the assessment within three months, emphasizing the need for clarity in future notices.