2024 (10) TMI 1191 - HC - Customs

Petitioner must exhaust remedies by responding to customs show-cause notice before seeking writ relief for export NOC

Dow Chemical International Pvt. Ltd. Versus Commissioner of Customs NS-II Special Investigation and Intelligence Branch (X) and anr.

The Bombay HC dismissed a petition seeking declaration that petitioner need not obtain NOC from Narcotics Commissioner for exporting ADCOTE 545S ... Seeking declaration that the Petitioner is not required to obtain NOC from the Narcotics Commissioner (Respondent No. 2) for exporting its product, namely ADCOTE 545S containing Methyl Ethyl Ketone (MEK) - Whether ADCOTE 545S, which contains Methyl Ethyl Ketone (MEK), is covered under Schedule-B of the 2013 Order. - confiscation - penalty. HELD THAT:- The Customs authorities issued the Show-cause notice. The Assistant Narcotics Commissioner’s communication only conveys the Commissioner's opinion to the Deputy Commissioner of Customs. When adjudicating the show cause notice, the Petitioner will have full opportunity to comment upon such opinion or its correctness. However, insisting that this Court carry out this exercise while examining the validity of a show cause notice would not be appropriate. The circumstance that this Petition was instituted before the issue of show cause notice is entirely irrelevant. Based on the pleadings, it is doubtful whether the relief of declaration that no NOC from the Narcotics Commissioner was required, to be granted. In all probabilities, we would have relegated the Petitioner to respond to the eventual show cause notice that would have to be issued to the Petitioner. Now that a show cause notice has been issued, there is no case made out to deviate from the usual rule of exhaustion of alternate remedies. In Special Director and Another Vs. Mohd. Ghulam Ghouse and another [2004 (1) TMI 378 - SUPREME COURT] the Hon’ble Supreme Court has held that unless the High Court is satisfied that the show-cause notice was totally non-est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine. The writ petitioner should invariably be directed to respond to the show cause notice and take all the grounds that may now be highlighted in the writ petition. Whether the show cause notice was founded on any legal premises is a jurisdictional issue which the recipient of the notice can even urge, and such issues also can be initially adjudicated by the authority issuing the very notice, before the aggrieved party approaches the Court. In Mahanagar Telephone Nigam Ltd. Vs. Chairman Central Board, Direct Taxes and another [2004 (5) TMI 7 - SUPREME COURT], the Hon’ble Supreme Court held that it was settled law that the litigation against show cause notices should not be encouraged. The Court approved the decision of the High Powered Committee, which was eminently fair and aimed at preventing frivolous litigation. The Court held that the appellant’s right was not affected. It was clarified that the appellant could move a court of law against an appealable order. By not maintaining discipline and abiding by the decision, the appellant had wasted the public money and time of the courts. This Petition is dismissed with the liberty to reply to the show cause notice and face the adjudication proceedings. Issues Involved:1. Whether the petitioner's product, ADCOTE 545S, falls under Schedule-B of the Narcotics Drugs and Psychotropic Substances (Regulation of Controlled Substances) Order, 2013, requiring a No Objection Certificate (NOC) for export.2. Whether the issuance of a show cause notice to the petitioner was an exercise without jurisdiction.3. Whether the petitioner should be compelled to exhaust statutory remedies before seeking judicial intervention.Detailed Analysis:1. Inclusion of ADCOTE 545S in Schedule-B:The primary issue revolves around whether ADCOTE 545S, which contains Methyl Ethyl Ketone (MEK), is covered under Schedule-B of the 2013 Order. The petitioner contends that ADCOTE 545S, being a mixture, does not require an NOC as it is not explicitly listed in Schedule-B, which mentions MEK at Entry 10. The petitioner argues that the absence of specific terms like 'salts' or 'preparations' in Entry 10 suggests an intention to exclude products containing MEK. Conversely, the respondent argues that since MEK can be distilled or extracted from ADCOTE 545S, it falls under the purview of Schedule-B, necessitating an NOC. The court noted that determining whether ADCOTE 545S is covered by Schedule-B requires factual investigation and cannot be resolved merely by interpreting the entries.2. Jurisdiction and Validity of Show Cause Notice:The petitioner claims that the issuance of the show cause notice was without jurisdiction, arguing that the Narcotics Commissioner had already opined on the necessity of an NOC for ADCOTE 545S. However, the court found that the show cause notice was issued by the Customs authorities and that the Assistant Narcotics Commissioner's communication merely conveyed an opinion. The court emphasized that the petitioner could challenge the opinion during the adjudication process. The court held that the show cause notice was not inherently lacking jurisdiction and that the petitioner should respond to it, allowing the factual and legal issues to be addressed through the statutory process.3. Exhaustion of Statutory Remedies:The court reiterated the principle that judicial intervention should not occur until statutory remedies are exhausted unless there is a clear lack of jurisdiction or violation of natural justice. The court highlighted that the petitioner had not demonstrated exceptional circumstances to bypass the statutory process. It referenced several Supreme Court decisions underscoring the importance of exhausting alternate remedies before seeking judicial review. The court concluded that the petitioner should respond to the show cause notice and pursue the available statutory remedies before approaching the court.Conclusion:The court dismissed the petition, directing the petitioner to respond to the show cause notice and participate in the adjudication proceedings. It granted the petitioner four weeks to file a reply to the show cause notice and clarified that no coercive steps would be taken during this period. The court emphasized that all parties' contentions on merits remain open and that its observations should not be construed as a determination on the merits of the case. The interim relief previously granted was vacated, and no order for costs was made.