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2020 (1) TMI 441
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....titioners seek a writ of mandamus quashing and setting aside the Order No.MUNCUSM- 000-COM-030-16-17 issued by respondent No.2 confirming duty with interest and imposing penalty, with the following prayers:- a. Your Lordships be pleased to issue a writ mandamus of or in the nature of mandamus quashing and setting aside the order passed by the Respondent No. 2 bearing No.MUN-CUSTM-)))-COM- 030-2016-17 Dated 31.03.2017 issued on 05.04.2017. b. Your Lordships be pleased to issue a writ of Prohibition or in the nature of Prohibition thereby completely and permanently prohibiting Respondent No. 2 & its subordinate officers from taking any action against the petitioner, for disturbing the benefits allowed, in view of Order In Original No. MUN-CUSM-000-COM-030-16-17 dated 31.03.2017 issued on 05.04.2017. c. Pending admission, hearing and final disposal of the petition Your Lordships be pleased to stay further proceedings pursuant to the Order No. MUN-CUSM-000-COM-030-16-17 dated 31.03.2017 issued on 05.04.2017 by the Respondents including therein the stay of recovery of duty confirmed and the penalty imposed. d. Such other and further reliefs as deemed ....
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.... documents including statutory record, copy of ARE 3 etc. That DRI recorded statement of authorized persons of the aforesaid 100% EOU as well as Director. It is alleged that the EOUs have accepted the fact of receipt of material in their factory premises and recorded that the said material is duly accounted for in their statutory record. It is contended that the transporters and the truck owners have also supported the same. It is alleged that the DRI had also requested jurisdictional Assistant Commissioner's to certify whether the material covered under the respective ARE 3 were physically verified by the Range Officer or not. That in response to the same, respective jurisdictional Assistant Commissioner certified that the goods were covered under the respective ARE 3's are received by the said 100% EOU but have not been physically verified. It is further contended that the goods sold to respective units were brass rods / hollow rods of various length which cannot be packed in the box but can only be covered by jute clothes and supplied to the respective 100% EOU. It is contended that the DRI has, on relying on statements of the some owners of the truck, issued show-cause notice p....
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....ared as invalid or cancelled. That neither the custom department nor the department of DGFT has ever raised any objection or has ever stated that the petitioner has violated any of the condition of the Notification No. 96/2009 - CUS availed and, therefore, the demand of custom duty is also not sustainable and is bad in law. It is also contended that adjudicating authority has confirmed the show-cause notice without considering the submissions made and as also the documentary evidence produced and the order passed by the adjudicating authority is bad in law and without jurisdiction. It is submitted that the duty of the Central Excise demanded is equal to the duty refunded by the department of DGFT and is not based on transaction value and since the refund is neither issued by Customs Department nor by Central Excise Department, the demand raised is bad in law and without jurisdiction. It is contended that the show-cause notice clarifies that the refund is of the CENVAT paid and hence, recovery of Central Excise Duty would amount to double recovery of duty and is without jurisdiction and bad in law. On all these grounds, the petitioners have challenged the impugned order passed by re....
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....e show-cause notice has only been issued on the basis of the statement of the some of truck drivers and has stated that the Investigating Agency has ignored the statement of the transporter who had admitted that the materials physically transported and has produced relevant documents. The petitioner reiterated his contention that the advance authorizations issued by the department of DGFT are still valid and are neither declared as void nor cancelled by the authority. It is also stated that the authority has ignored the fact that the said authorizations are used to importation of material only after obligations are complied with. It is further stated that the department has ignored the fact that the Central Excise Duty demanded on the so-called clandestine clearance is nothing but duty paid clearance and hence, no duty can be demanded and, therefore, it is beyond jurisdiction of the respondents. 7. Heard Mr.Mihir Joshi, learned senior counsel with Mr.Paresh Sheth, learned counsel for the petitioners and Ms.Shruti Pathak, learned counsel for respondent No.2 at length. Perused the materials placed on record and the decisions cited at the Bar. 8. Mr.Mihir Joshi, learned senior c....
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....d that the adjudicating authority has ignored the fact that they are demanding duty on the goods cleared under proper invoice and on which, duty is physically paid and is accepted by the department as duty. He has submitted that the DGFT has also accepted the fact that as the duty is physically paid, it has refunded such payment by way of Terminal Excise Duty Refund. 8.3 Mr.Joshi, learned senior counsel has submitted that the alleged demand of Rs. 90,59,957/- under the provisions of Section 11A(4) of Central Excise Act is challenged on the ground that the same is without jurisdiction in as much as said amount is nothing but refund sanctioned by DGFT and the Customs department has no jurisdiction to recover such amount. He has submitted that the demand of Rs. 1,26,99,092/- which is confirmed under Section 28(4) of the Customs Act, 1962 is challenged on the ground that the exemption availed is against valid advance authorization which are still not challenged or cancelled by DGFT. 8.4 Regarding TED, Mr.Joshi, learned senior counsel has submitted that so far as the recovery of TED is concerned, the clearances are with payment of Central Excise Duty and, therefore, the allegation....
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....he petitioners have not availed alternative remedy and directly approached this Court. While referring to the decision in the case of Panoli Intermediate (India) Pvt. Ltd. Vs. Union of India, 2015 (326) E.L.T. 532 (Guj.), she has submitted that in the said decision also, this Court has held that the writ petition is maintainable but the grounds mentioned therein are that when the authority has passed the order without jurisdiction and by assuming jurisdiction and by overstepping or crossing the limits of jurisdiction or acting in flagrant disregard to law or rules or procedure or acting in violation of the principles of natural justice where no procedure is specified and accordingly, the said decision will not be applicable in this case. 9.1 Ms.Shruti Pathak, learned counsel for respondent No.2 has submitted that the petitioners were granted the benefits of the advance authorization scheme which was issued to allow duty free import of inputs. According to her submission, the petitioners were required to fulfill the criteria which includes (i) physical exports (including exports to SEZ); (ii) intermediate supply and/or (iii) supply of goods mentioned in the categories mentioned i....
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....se of breach of the provisions contemplated under the said section, the powers are also conferred with the authority to confiscate the goods. According to her submissions, the contentions of the petitioners that the advance authorization has not been cancelled and that the license is not cancelled by the authority is not justified. According to her submissions, there were misused of the advance authorization scheme which was made by the petitioners and, therefore, the EODC stipulates and provides that the custom authority is empowered to take action against the licensee at any stage for misuse of the scheme. 9.3 Ms.Shruti Pathak, learned counsel for respondent No.2 has submitted that during the course of investigation, it was found that there is difference in daily stock production and clearance statement and physical verification was also not done by the concerned officers and they did not give any intimation of the receipt of the goods without CT-3 to the Central Excise Officer. 9.4 Ms.Shruti Pathak, learned counsel for respondent No.2 has submitted that the duty which is demanded by the custom authority is on different footing then the refund from the TED. She has submitte....
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....y may inform DGFT regarding fraud, but the Custom Authority itself cannot initiate any proceedings. He has submitted that at the relevant point of time, there was valid Advance Authorization in favour of the petitioner and, therefore, the issuance of the notice is without jurisdiction. 11. In the case of Commissioner of Customs Vs. Rajnarayan Jwalaprasad (supra), this Court while relying on the decision of the Supreme Court in the case of Titan Medical Systems Pvt. Ltd. Vs. Collector of Customs (supra) has observed that once an advance licence is issued and not questioned by the licensing authority, the customs authority cannot refuse exemption on an allegation that there was any misrepresentation. That if there was any misrepresentation, it was for the licensing authority to take steps on that behalf. 12. In the case of C. C. (Export Promotion), Mumbai Vs. Koatex Infrastructure Ltd (supra), it is observed therein that when EODC has neither been suspended nor cancelled, the parties are entitled for the exemption. 13. In the case of Simplex Infrastructure Ltd Vs. Union of India (supra), where the case was that the Terminal Excise Duty was granted and the refund thereof was ....
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....ithout jurisdiction or in excess of jurisdiction or acted in flagrant disregard of the law or the rules of procedure or have acted in violation to the principles of natural justice and thereby resulting into failure of justice". It is further observed therein that "certiorari jurisdiction may be exercised when the error if not corrected at the very moment may become incapable of correction at the later stage and refusal to intervene would result travesty of justice". It is further observed that "such jurisdiction of writ of certiorari should not be converted into the Court of appeal or indulge into reappreciation of the evidence or evaluation of the evidence or correction of the errors were two views are possible. The High Court while exercising the jurisdiction of writ of certiorari may annul or set aside the act or set aside the proceeding, but cannot substitute its own decision in question thereof". 16. In the case of Mangali Impex Ltd (supra), while dealing with Section 28(11) of the Customs Act, 1962, the Delhi High Court has observed that "the department cannot seek to rely upon the said section for the proposition that it was authorised of customs, DRI, DGCEI etc. to exer....
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....o obtain export product, may also be allowed. DGFT, by means of Public Notice, may exclude any product(s) from purview of Advance Authorisation. Duty free import of mandatory spares upto 10% of CIF valuation of Authorisation which are required to be exported / supplied with resultant product are allowed under Advance Authorisation. Advance Authorisations are issued for imputs and export items given under SION. These can also be issued on the basis of Adhoc norms or self declared norms as per para 4.7 of HEP. [Advance Authorisation can be issued either to a manufacturer exporter or a merchant exporter tied to supporting manufacturer(s). However, advance authorisation under paragraph 4.7A of HBP. V1 (for pharmaceutical products manufactured through Non- Infringing (NI) process) shall be issued to Manufacturer exporter only. Advance Authorisation shall be issued for : (i) Physical exports (including exports to SEZ); and/or (ii) Intermediate supplies; and/or (iii) Supply of goods to the categories mentioned in paragraph 8.2(b), (c), (d), (e), (f), (g), (I) and (j) of FTP; (iv) Supply of 'stores' on board of foreign going vessel / ai....
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....g unit of supplier to RA concerned. Where applicant is branch office or manufacturing unit of a supplier, it shall furnish self certified copy of valid RCMC. Recipient may also claim drawback benefits on production of a suitable declaration from supplier, in the format given in Annexure III of ANF 8. In case of TED refund, a declaration, in the format given in Annexure II of ANF 8, regarding non-availment of CENVAT credit, shall be given, by the recipient of goods, in addition to other prescribed documents.] (ii) In case of supplies under paragraphs 8.2(a), (b) & (c) of FTP, claim shall be filed against receipt of payment through normal banking channel as in Appendix 22B. Claims should be filed within a period of twelve months from the date of payment. In cases where payment is received in advance, last date for submission of application may be correlated with date of supply instead of date of receipt of payment. Claim can be filed 'Invalidation Letter / ARO wise' against individual authorisations within the time limit as specified above. 100% TED refund any be allowed after 100% supplies have been made physically and payment received at least up to 90%. However, grant of ....
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....n. Exemption from TED shall also be available for supplies made by an Advance Authorisation holder to a manufacturer holding another Advance Authorisation if such manufacturer, in turn, supplies the product(s) to an ultimate exporter. 22. It is worthwhile to refer to Section 9 of the Foreign Trade (Development and Regulation) Act, 1992. Section 9 reads as under:- 9. Issue, suspension and cancellation of licence. - (1) The Central Government may levy fees, subject to such exceptions, in respect of such person or class of persons making an application for [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] of in respect of any [licence, certificate or any instrument bestowing financial or fiscal benefits] granted or renewed in such manner as may be prescribed. [(2) The Director General or an officer authorised by him may, on an application and after making such inquiry as he may think fit, grant or renew or refuse to grant or renew a licence to import or export such class or classes of goods or services or technology as may be prescribed and grant or renew or refuse to grant or renew a certificate, scrip or any instrument bestow....
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....utilation of imported goods which are ordinarily used for more than one purpose so as to render them unfit for one or more of such purposes; and where any goods are so denatured or mutilated they shall be chargeable to duty at such rate as would be applicable if the goods had been imported in the denatured or mutilated form. 25. Section 28(4) of the Customs Act, 1962 provides as under:- "28(4) Where any duty has not been [levied or not paid or has been short-levied or short-paid] or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reasons of, - (a) collusion; or (b) any wilful mis-statement; or (c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been [so levied or not paid] or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. 26. Section 111(o) of the Custo....
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....) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made there under like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit of five thousand rupees, whichever is greater] 28. It is an admitted fact that the petitioners had instead of availing alternative remedy straightway approached this Court seeking extraordinary writ jurisdiction under Article 226 of the Constitution of India. However, in certain circumstances, the High Court can exercise its extraordinary writ jurisdiction under Article 226 of the Constitution of India, if the following circumstances exists. (i) when the authority has passed the order without jurisdiction and by assuming jurisdiction which there exist none; (ii) has exercised power in excess of jurisdiction and by overstepping or crossing the limits of jurisdiction; or (iii) has acted in flagrant disregard to law or rules or procedure or has acted in violation of the principles of natural justice where no procedure i....
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....d date of issuance is 05.04.2017. While referring to the letters of jurisdictional Central Excise Offices of recipient EOUs, it has been observed therein that the concerned authority has stated that in certain transactions, the officer has physically verified the goods. So far as other transactions are concerned, it was not physically verified. It also appears from the impugned order that while referring to the various documents and statements of truck owners, the authority has come to the conclusion that the petitioners have clandestinely disposed of the goods in local market and proposed confiscation of the goods and the penalty and the interest thereof. 32. It is one of the contention of the respondent that the physical verification of the goods was not done and that EOUs were not subject to the physical verification by the Central Excise Officer as well as they did not give any intimation of the receipt of the goods without CT-3 to the Central Excise Officer. It appears that the Custom Department's stand is that due to non-verification of the goods by the concerned officer, the petitioners have clandestinely disposed of the goods in the local market. Now, it is pertinent to ....