2010 (4) TMI 136 - HC - Customs

Court sets aside differential duty demands, upholds release conditions, orders costs. Emphasizes fair action by authorities.

Mr. Biharilal Singhal Versus The Union of India and others

The court set aside the communications demanding differential duty, bonds, and bank guarantees for past imports. It upheld the provisional release ... Import of Printed Thermal Paper Roll (“PTPR”) – Exemption under Notification No. 26/2000Cus dated 1st March, 2000 – issue of classification - after filing of the bills of entry (B/E), the goods were withheld and were not released by the department in spite of the requests made by the petitioner. - the petitioner was asked to deposit an amount equivalent to the CVD on the said imported PTPR. The petitioner deposited Rs.2,47,540/ and Rs.1,05,503/towards CVD payable on the said imported goods under protest and without admitting the classification thereof. – before release department asked the petitioner to deposit duty for the past consignments cleared under exemption notificationHeld that: The Revenue cannot demand the amount of duty in respect of past CVD on the imports covered under 28 bills of entry which were already assessed and cleared during the year 2009, in the absence of any positive action by issuing show cause notice to set up demand in this regard. Needless to mention that once the show cause notice is issued the assessee/noticee would get an opportunity to putforth his say. Once, he has elected to file his say and objection is raised, then the adjudicating authority is free to adjudicate upon rival contentions in accordance with law by reasoned order following principles of natural justice. But no law permits the Revenue to twist the arms of the importer in the manner in which it is being done through the communication dated 1st October, 2009. The action of the Revenue to the extent of their duty demand in respect of CVD for the past import covered under 28 bills of entry during the year 2009 is clearly bad and illegal and unsustainable in law besides being in breach of principles of natural justice.A costs quantified in the sum of Rs.25,000/(Rs.Twenty Five Thousand Only) to be paid by the Revenue to the petitioner for their unjustifiable and arbitrary decision with respect to past imports covered by 28 bills of entry during the year 2009, which respondents could not justify on any count. Issues Involved:1. Validity of the communications dated 29th September 2009 and 1st October 2009 issued by the Deputy Commissioner of Customs.2. Legality of withholding clearance of goods covered by the Bills of Entry Nos. 649199 and 650812.3. Justification of the demand for bank guarantees and bonds related to past imports.4. Compliance with the principles of natural justice and statutory powers.Detailed Analysis:1. Validity of the Communications Dated 29th September 2009 and 1st October 2009:The petitioner challenged the communications dated 29th September 2009 and 1st October 2009, issued by the Deputy Commissioner of Customs, which demanded a bank guarantee equivalent to Rs. 88,30,137 for the two bills of entry and a bond for Rs. 15,75,33,199 for CVD and basic customs duty for past 28 bills of entry. The court was called upon to decide the validity of these communications.2. Legality of Withholding Clearance of Goods Covered by the Bills of Entry Nos. 649199 and 650812:The petitioner argued that the respondents had no power or jurisdiction to refuse clearance of goods covered by the bills of entry dated 26th and 27th August 2009. The petitioner had already deposited the CVD under protest and requested the release of the goods. The court noted that the respondents were withholding the clearance to pressurize the petitioner to comply with their demands, which was deemed impermissible in law.3. Justification of the Demand for Bank Guarantees and Bonds Related to Past Imports:The court examined the respondents' demand for bank guarantees and bonds concerning past imports covered under 28 bills of entry filed during 2009. The petitioner contended that there was no connection between the past bills and the current consignments. The court found that in the absence of a show cause notice, the demand for past imports was unjustified. The respondents' action was deemed arbitrary and illegal, as it breached the principles of natural justice.4. Compliance with the Principles of Natural Justice and Statutory Powers:The court emphasized that statutory authorities must act without bias and arbitrariness. The respondents' failure to issue a show cause notice and their arbitrary demands were found to violate the principles of natural justice. The court highlighted that statutory powers must be exercised with reasonableness and fairness, and the respondents' actions did not meet these standards.Conclusion:The court set aside the impugned communications to the extent they demanded differential duty, execution of bonds, and bank guarantees for past imports. The court maintained the conditions for the provisional release of the consignments covered by the bills of entry dated 26th and 27th August 2009. The respondents were directed to pay costs of Rs. 25,000 to the petitioner for their unjustifiable and arbitrary actions. The judgment clarified that the Revenue could take lawful action in respect of past imports if advised. The petition was partly allowed, and the related Civil Application was dismissed.