TaxTMI 
TaxTMI 
2019 (7) TMI 515
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....ack pepper (these 45 consignments shall hereinafter be collectively referred to as 'said consignment' and wherever they need to be referred to based on the consignment, 44 consignments in 88 containers shall be referred to as 'Aracknut consignment' and one consignment in two containers shall be referred to as 'Black pepper consignment'). (c) With regard to said consignment, writ petitioner filed 45 Bills of Entry for clearance of said consignment on the basis of 'South Asian Free Trade Agreement' ('SAFTA' in brevity) and 'Indo Sri Lanka Free Trade Agreement' ('ISFTA' for brevity). To be noted, relevant statute in this regard is 'Customs Act, 1962 [Act 52 of 1962]' (hereinafter 'Customs Act' for brevity) and the 'Customs Tariff Act, 1975' (hereinafter 'Customs Tariff Act). (d) Contending that said consignment originates from Sri Lanka, concessional rate of duty was claimed by the importer as SAFTA provides for concessional rate of duty for Black pepper and ISFTA provides for concessional rate of duty for Aracknut, if consignments originate from Sri Lanka. (e) Raising doubts about 'Certifica....
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..... 3 This Court now proceeds to advert to the submissions made in the hearings and embarks upon the exercise of dispositive reasoning qua such submissions for returning a verdict. 4 Mr.P.Chidambaram, learned Senior Counsel appearing on behalf of counsel on record for writ petitioner, learned Additional Solicitor General Mr.G.Rajagopalan leading Mr.V.Sundareswaran, learned Senior Panel Counsel for respondents 1 and 2 besides Ms.R.Hemalatha, learned Senior Panel Counsel (Customs) for third respondent were heard. 5 When this writ petition was listed for admission on 10.6.2019, limited notice was issued vide proceedings / orders came to be passed. This court considers it appropriate to extract and reproduce the said proceedings / orders as it captures the nature of limited notice that was issued by this court and more importantly, it captures the pivotal and primordial submission of the writ petitioner in assailing the impugned SCN. 10.6.2019 proceedings of this court reads as follows : "Mr.P.Chidambaram, learned Senior Counsel, leading the counsel on record for the sole writ petitioner, is before this Court. 2. This writ petition pertains to import of Black Pepper and Arecanuts ....
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....Leave Petitions are disposed of in the above terms. Pending applications, if any, stand disposed of." [Underlining made by Court to highlight and supply emphasis] 9. It was submitted by learned Senior Counsel for writ petitioner that the instant writ petition has been filed assailing the aforesaid show cause notice dated 5.5.2019 bearing Ref F.No.DRI /CZU/VIII/48/ENQ-1/INT-36/2018 (hereinafter 'impugned SCN' for brevity), pursuant to the aforesaid order of Hon'ble Supreme Court dated 8.5.2019. 10. As the writ petition is one assailing the show cause notice i.e., impugned SCN, the writ petitioner was called upon to make submissions on whether the case on hand falls within well carved out exceptions adumbrated in a long line of authorities where writ petition will be entertained against a SCN. To be noted, learned Senior Counsel submitted that there can be no disputation that aforesaid order of Hon'ble Supreme Court dated 8.5.2019 and more particularly, the underlined portion is subject to writ petitioner making out a case for interference qua writ jurisdiction at SCN stage. 11. In this backdrop, it was submitted by the learned Senior Counsel for writ petition....
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....s Division) Central Board of Excise & Customs, Department of Revenue, Ministry of Finance, Room No.49, North Block, New Delhi-110 001. 011-2309 3380 (off); 011-2309 3760 (fax.) Email: [email protected]." 15. Adverting to the aforementioned Office Memorandum dated 11.7.2017, it was submitted that the aforesaid Director (International Customs Division) is now part of a Directorate, which is headed by a Principal Commissioner Headquartered in Delhi. Specific reference was drawn to paragraph 2.1.C. captioned (FTA) and subclause (iv) thereto of the Office Memorandum dated 11.7.2017 in this regard. 16. In sum and substance, it was contended that the impugned SCN has been issued without jurisdiction by the first respondent. To be noted, it is the specific submission of learned Senior Counsel for writ petitioner that both respondents 1 and 2 do not have jurisdiction to issue the impugned SCN, as it pertains to a disputation qua COO. Impugned SCN is inter alia primarily under section 124 of 'The Customs Act, 1962' ('said Act' for brevity). For issuing of SCN under section 124 of said Act, it is imperative that the goods should prima facie be confiscatabl....
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.... counsel for writ petitioner may file rejoinder, if any (which shall be entertained only if it contains new facts), by 17.6.2019, with advance copies to Revenue counsel. 25. List on 17.6.2019 under the caption 'NOTICE REGARDING ADMISSION'." 6 It is important to note that learned Senior counsel for writ petitioner fairly submitted that there is no disputation that though instant writ petition has been filed pursuant to aforementioned order of Hon'ble Supreme Court dated 08.05.2019, it is subject to writ petitioner making out a case for interference qua writ jurisdiction at SCN stage. This is captured in the last few lines / last sentence in paragraph 10 of the aforesaid order / proceedings of this Court dated 10.06.2019. Likewise, the crux and gravamen of writ petitioner's submission or in other words, primordial and pivotal submission of learned Senior Counsel for writ petitioner is captured in paragraph 16. 7 It is also to be noted that along with instant writ petition, more than one writ miscellaneous petitions have been taken out. To be precise, four writ miscellaneous petitions have been taken out and they are W.M.P.Nos.15476, 15479, 15481 and 15484 of 2019.....
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....reads as follows : "Rules 4, 11, 12 and 13 of ISFTA Rules : 4.Claim at the time of importation.- The importer of the product shall, at the time of importation- (a)make a claim that the products are the produce or manufacture of the country from which they are imported and such products are eligible for preferential treatment under the India-Sri Lanka Free Trade Agreement, (hereinafter referred to as the Agreement), and (b)produce the evidence specified in these rules. Explanation:- For the purposes of this notification, "Preferential treatment" in relation to any product means the exemption granted under the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.26/2000- Customs dated 1st March, 2000 and includes preferential concessions. 11.Certificates of origin.- Products eligible for a Certificate of origin in the form annexed shall support Preferential treatment issued by an authority designated by the Government of the exporting country and notified to the other country in accordance with the certification procedures to be devised and approved by both the Contracting Parties. 12.Prohibitions.- Either country may prohibit i....
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....anctity and should be regarded as sacrosanct. 12 Responding to the aforesaid submissions, learned Solicitor submitted that there is an agreement styled 'Agreement between the Government of the Republic of India and the Government of the Democratic Socialist Republic of Sri Lanka on Co-operation and Mutual Assistance in Customs matters' ('CMA Agreement' for brevity) dated 13.3.2015 between the Governments of India and Sri Lanka, vide two communications dated 23.04.2018 and 15.05.2018, officers have been appointed by name (not designation) inter-alia for exchange of information qua COO under CMA Agreement. Learned Solicitor submitted that this CMA agreement is traceable to section 151B of Customs Act. 13 Adverting to sub-section (5) of section 151B of Customs Act, it was submitted by learned Solicitor that post 29.3.2018 when section 151B was brought into statute books, i.e., Customs Act, any action taken in pursuance of any agreement, i.e., CMA agreement in the instant case shall be deemed to have been taken under the provisions of this section. Respondents claimed privilege / immunity qua this CMA agreement dated 13.3.2015 and the two communications thereunder. A....
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....son why it is apprehended that their disclosure would lead to injury to public interest. This last requirement would be very important when privilege is claimed in regard to documents which prima facie suggest that they are documents of a commercial character having relation only to commercial activities of the State. If the document clearly falls within the category of privileged documents no serious dispute generally arises; it is only when courts are dealing with marginal or borderline documents that difficulties are experienced in deciding whether the privilege should be upheld or not, and it is particularly in respect of such documents that it is expedient and desirable that the affidavit should give some indication about the reasons why it is apprehended that public interest may be injured by their disclosure." 14 In the aforesaid backdrop, immunity / privilege claimed qua 13.3.2015 CMA agreement is rejected as it is available in official website of respondents and it is in public domain. The immunity / privilege claimed qua communications dated 23.4.2015 and 15.5.2018 appointing officers by name (not designation) under CMA agreement is sustained. It is sustained as in the c....
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....t eschews this submission of respondents 1 and 2. In this regard, this court considers it appropriate to extract relevant portion of paragraph 6 of this affidavit, which reads as follows: "6... It is further submitted that the two communications referred to above whereby the nodal officers were nominated are appointed under the agreement of the year 2015 and not under rule 11 of the Notification No.19/2000-Cus NT dated 06/03/2000 as observed by the Division Bench in WA No.329/2019 and in the circumstances this Hon'ble Court may be pleased to record the objection for disclosure and thus render justice." In other words, the issue of immunity / privilege has been decided by this Court on the basis that it is not desirable to disclose officers appointed by name irrespective of whether they have been so appointed under CMA agreement or for the purpose of Rule 11 of ISFTA Rules. 16 This takes us to a very interesting and intriguing aspect of the matter. 17 Impugned SCN does not refer to CMA agreement dated 13.3.2015, but merely says that correspondence was made with Nodal office of Sri Lankan Customs. Even with regard to correspondence, paragraphs 10 to 13 of impugned SCN make i....
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.... S/N Container No. Status Discharge vessel/voyage Loading vessel/voyage Load Date 1 XINU1366335 Transshipment Northern Jupiter/803E Ever Delight V.124E 16-10-18 ii.Director of Customs, Central Intelligence Unit, Sri Lankan Customs vide further letter CIU/DRI/INF/08/2018 dated 19/11/2018 (RUD-12) in respect of 26 (88-62) containers of areca nuts also confirmed that the consignments were transshipped through Sri Lanka by providing additional details of discharge vessel, discharge date, loading vessel and loading date. As per the letter the 26 containers had arrived to Sri Lanka for transshipment in four vessels namely Em Astoria, Barbara, Honolulu Bridge & Ever Decent and got loaded onto four vessels namely MSC Maria Laura, MSC Lucia, ALS Fides & OEL Shravan (voyage no.18062) destined to India. For ease of understanding, the details furnished by Sri Lanka Customs for the 26 containers is shown in Table 2 below in respect of one of the 62 containers Table 2 Container No. Seal No. Status Discharge vessel/voyage Discharge Date Loading vessel / voyage Load Date MAXU241 9598 Not available Transshipment EmAstoria / 1LW1 16-Oct-18 Msc Maria....
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....eizure memorandum dated 01/12/2018 (RUD-14) on the reasonable belief that the country of origin of the goods has been mis-declared and therefore the goods are liable for confiscation under the provisions of the Customs Act 1962. 12.Subsequently, two letters which were not solicited were received in this office from the Director of Exports, Export Directorate, Sri Lanka Customs, suo moto. The first letter no.CUS/EXP/MISC/04 dated 30/11/2018, the Director of Exports, Sri Lanka Customs (RUD-15), inter alia stated that consequent to an appeal by the relevant exporters from Sri Lanka, exports directorate of the Sri Lanka Customs had authorized the Director General of Customs in Sri Lanka to conduct a detailed investigation into (i)the circumstances under which the emails from Sri Lanka customs were sent (referred to in para 10 above) and (ii) the true status of the said exports whether they were in fact transshipped or originated in Sri Lanka; that Exports Directorate is conducting investigation into all aspects of the exportation including records available at export cargo examination yards as well as the three container terminals of port of Colombo; that they would reply with the tr....
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....151B(5) of Customs Act which has been alluded to supra, this Court has no hesitation in coming to the conclusion that CMA agreement dated 13.3.2015 will prevail over the procedure for verification of COO adumbrated in SAFTA Rules and ISFTA Rules as this CMA agreement also has been signed by two sovereign States. As already alluded to supra, entire section 151B was brought into the Customs Act on and with effect from 29.03.2018 by the Finance Act, 2018 (Act 13 of 2018) and this court deems it appropriate to extract entire Section 151B of Customs Act, which reads as follows : "151B.Reciprocal arrangement for exchange of information facilitating trade (1) The Central Government may enter into an agreement or any other arrangement with the Government of any country outside India or with such competent authorities of that country, as it deems fit, for facilitation of trade, enforcing the provisions of this Act and exchange of information for trade facilitation, effective risk analysis, verification of compliance and prevention, combating and investigation of offences under the provisions of this Act or under the corresponding laws in force in that country. (2) The Central Governme....
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....respondents 1 and 2 do not issue addendum / corrigendum within a fortnight from the date of receipt of a copy of this order, it is open to writ petitioner to respond to impugned SCN raising this issue also. 22 The reason why this court refrains from interfering with the impugned SCN is owing to the principle that writ jurisdiction being a discretionary jurisdiction will ordinarily not be exercised for quashing a SCN and that it will be done only in rare and exceptional cases, if a SCN is found to be wholly without jurisdiction or wholly illegal for one reason or the other. This principle has been laid down Hon'ble Supreme Court in Kunisetty Satyanarayana case being Union of India v. Kunisetty Satyanarayana reported in (2006) 12 SCC 28. Relevant paragraphs are paragraphs 15 and 16 and the same reads as follows : "15.Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge-sheet. 16.No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reaso....