TaxTMI 
TaxTMI 
2021 (5) TMI 327
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....rari quashing and setting aside the detention and seizure dated 29.07.2020 (Annexure-H Colly), dated 03.08.2020 (Annexure-L & M) & 11.08.2020 (Annexure-W Colly); (B) In addition to and in alternate to relief (A) above, Your Lordships may be pleased to direct the Respondents their servants and agent to release the goods provisionally, on such terms and conditions that this Hon'ble Court deems proper; (C)) During the pendency and final disposal of the present petition, Your Lordships may be pleased to stay the implementation of the Detention/ Seizure dated 29.07.2020 (Annexure-H Colly), 03.08.2020 (Annexure-L & M) & 11.08.2020 (Annexure-W Colly); (D) This Hon'ble Court may be pleased to release the goods under detention and Seizure pending hearing and final disposal of this petition on such condition as are deemed proper; (E) An ex-parte ad-interim relief in terms of Para 8(C ) & 8(D) above may kindly be granted on such terms and conditions deemed fit by this Hon'ble Court. (F) Any other further relief as may be deemed fit in the facts and circumstances of the case may also pleased be granted." 2. The writ applicants are Private L....
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.... the different prices of respective types of scrap. It also appears from the materials on record that the finished goods, i.e., after dismantling/segregated scrap of 78710.6 Kgs of the estimated value of Rs. 1,72,25,108/- of the ownership of M/s. CMR Chiho Recycling Technologies Pvt. Ltd stored in the premises of their sister concern, namely, M/s. CMR Chihor Industries Pvt. Ltd, was also seized on 29th July, 2020 under the Panchnama dated 29th July, 2020. 6. It further appears that the entire matter, at present, is under the investigation of the DRI. The Deputy Director, DRI, Zonal Unit has issued "No Objection" for the provisional release of the seized goods on 03.08.2020 and 11.08.2020 respectively. 7. The importer, i.e, the writ applicant No.1 applied for the provisional release of the seized goods vide their application dated 05.08.2020. Upon receipt of the application, the same was processed. The provisional release of the seized goods has been ordered on the following terms and conditions; "(1) Goods seized under Seizure Memo No.03.08.2020 of M/s. CMR Chiho Recycling Technologies Pvt. Ltd, for quantity: 78710.6 Kgs valued at 17225108/- provisionally....
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....y for his clients is to come before this Court invoking its writ jurisdiction under Article 226 of the Constitution of India. 13. Mr. Parikh would submit that, as on date, the business of the Company has come to a standstill. The seizure of the goods by the Department has virtually brought the entire Industrial Unit to a grinding halt. Almost 250 workers are without wages as there is no work with the Company because of the seizure of the goods. He would submit that if the Company is asked to furnish the Bank Guarantee to the tune of Rs. 8.46 Crore, then the Company will have to raise the requisite balance in their Bank Account of such amount. He would submit that only thereafter the Bank would issue a Bank Guarantee. Mr. Parikh would submit that having regard to the present scenario, even otherwise, the company is facing acute financial crunches. 14. Mr. Parikh, the learned senior counsel submitted that the larger issues involved in this writ application including the issue whether any alternative remedy is available to the writ applicants under the provisions of the Customs Act or not may be looked into by this Court at a later stage. However, the fervent request....
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....ee amount Entire amount of duty leviable on seized goods (Duty @ 2.5% + 10% Surcharge) Rs. 1,04,57,854/- IGST @ 18% Rs. 18,82,414/- Total duty Rs. 1,23,40,268/- Redemption Fine @ 10% of value of seized goods. Rs. 3,80,28,561/- Penalty @ 5% of the value of seized goods. Rs. 1,90,14,281/- Total Rs. 6,93,83,110/- Bond Value Value of Goods seized 23,59,891 Bank Guarantee amount Entire amount of duty leviable on seized goods (Duty @ 2.5% + 10% Surcharge) 64, 897 IGST @ 18% 11,681 Total duty 78578 Redemption Fine @ 10% of value of seized goods. 235989 Penalty @ 5% of the value of seized goods. 117995 Total 4,30,562 Bond Value Value of Goods seized 32256787 Bank Guarantee amount Entire amount of duty leviable on seized goods (Duty @ 2.5% + 10% Surcharge) 1774123 IGST @ 18% 6125564 Total duty 7899687 Redemption Fine @ 10% of value of seized goods. 3225679 Penalty @ 5% of the value of seized goods. 1612839 Total 12738205 i.e. 1.28 Crore Bond Value Value of G....
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....Entries, which were assessed provisionally and once again, they were reassessed provisionally at the rate of 5% on basic custom duty. 4. The further consignment also arrived where the petitioner also encountered the similar difficulties and therefore, it has preferred a separate petition being Special Civil Application No.673 of 2021. 5. So far as the present petition is concerned, the affidavit-­in-­reply has been filed by the respondent No.3 - Director of Revenue Intelligence ('the DRI' for short), who is working as Deputy Director at DRI, wherein the contention has been raised that the petitioner unduly availed benefit of concessional rate of 2.5% Basic Customs Duty ('the BCD' for short) instead of 5% in terms of serial No.368 of Notification No.50/2017­CUS dated 30.06.2017. On the search being conducted of the premise of the petitioner and of the Customs Broker Firm, the Panchnama is drawn and the documents have been seized. The statement recorded of various persons also indicate how undue benefits have been reaped by the petitioner company. 6. Another company of the same group Century Metal Recycling i.e. of M/s.CMR CHIHO Recycling Technolo....
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....reafter also, the cargo consisting of the same goods were imported and seized on 11.08.2020 and for the release of the goods, the mechanism has been prescribed under Section 110(A)of the Act. It is further contended that the respondent has considered Note 7 of Section XV of Customs Tariff, which speaks of classification of composite articles except where the heading otherwise requires, the articles of base metal (including articles of mixed material treated as the articles of base metal under the interpretative Rules) containing two or more base metal are to be treated as articles of the based metal predominating by weight over each of the other metals. 8.1 With Reference to ground C of the petition, it is submitted that, the respondent thoroughly considered Note 7 of Section XV of Customs Tariff. The said Note 7 is reproduced herein below for ready reference: ­­­"Classification of composite articles:­­­ Except where the heading otherwise require, articles of base metal (including articles of mixed materials treated as articles of base metal under the interpretative Rules) containing two or more base metals are to be treated as articles of the ba....
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....have declared their product as "Discarded and non­serviceable semi­broken motor scrap" which cannot be termed as articles of base metal on any reasoning. On the basis of facts available on records as on date, respondent No.3 has not changed the classification of their product till date. Respondent No.3 has challenged their claim for benefit of concessional rate of duty of 2.5% instead of effective rate of 5% under Serial No.368 of Notification No.50/2017 (Customs) dated 30.06.2017 as amended. 8.4 The Respondent contended further that predominating nature of product will not be applicable in case of CTH 7204 as mentioned at Sr.No.368. Petitioner themselves have admitted that they are importing motor scrap consisting Iron Scrap 85%, Copper Scrap 10% and Aluminum Scrap 5%. Moreover, at the time of import, petitioner also furnishes certificates of analysis issued by seller and Form 9 which is presented for trans boundary movement document. Both of these documents contained three separate items/chapter heading however, invoice by seller is being issued with only one description i.e. "Discarded and Non Serviceable Semi Broken Motor." Petitioner knowingly does not take into con....
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.... 5% on their assessable value, they intentionally did not declare their product properly in bills of entry filed by them under Section 46 of the Act. Prior to that, the petitioner was importing their goods in separate three headings of three different scraps and subsequently, they shifted to one tariff heading merely by changing the description of their imported goods to one description in invoices issued by seller, who appears to be company from the same group, with whom they have joint venture agreement. Respondent, at this point of investigation, have not asked them to classify their product to three separate headings, but has challenged their declaration for benefit of concessional rate of duty i.e. 2.5% instead of effective rate of 5% by showing Sr.No.368 of Notification No.50/2017­CUS dated 30.06.2017 which is available for 'Melting scrap of iron or steel (other than stainless steel)', not on Copper scrap or Aluminum Scrap under this S.No.368. Respondent further submits that Copper scrap or Aluminum Scrap is far higher in value as compared to Heavy Melting Scrap of Iron or Steel. 9. It is, therefore, urged that the petitioner was well aware that the imported pr....
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....According to this decision, the alternative and efficacious remedy once is available and when there are disputed questions of facts involved in the writ petitions, the writ petitions are to be dismissed in limine. 13. According to the respondent, the petitioners have made request for provisional release of goods under Section 110 (A) of the Act and there is no question of non ­ availability of alternative remedy with them. They can fulfill the condition of provisional release of the goods to be issued by the adjudicating authority and if they are not agreeable, they can always have an option to file an appeal in terms of Customs Act. The detentions and seizures made by the respondent No.3 since are in accordance with law, the petition is merit less. 14. affidavit-­in-­reply for and on behalf of the respondent No.2 also dealt with the same issue and insisted that the importer has applied for provisional release of the seized goods, the provisional release of the goods has been given as under: (i) Goods seized under Seizure Memo No.03.08.2020 of M/s. CMR Chiho Recycling Technologies Pvt. Ltd., for quantity:78710.6 kgs valued at 17225108/­ provisionally ....
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....ee irons. The petitioner processes and separates the said scraps of non­usable and non­serviceable electric motors with Wet Shredder, Copper Pullers, Copper Granulator. Again according to the petitioner, the availing benefit of concessional rate of duty is the matter of belief of assesses and does not amount to mis­declaration or suppression for the purpose of unduly availing benefit of concessional rate of duty. The authority always has hidden behind the principle of confidentiality during the investigation and it does not disclose what is the intelligence. There was no intelligence about any illegality, but the authority has jumped to the conclusion that there is a mis­declaration or mis­representation. The detention and seizure of the goods, according to the petitioner, is without following the provision of law. The exercise of powers of seizure under Section 110 of the Act is arbitrary, without jurisdiction and therefore is illegal. The respondent failed to explain the rational to rush to the seizure of the goods. The proper officer cannot proceed to seize the goods under Section 110 of the Act, unless he has a reason to believe the goods are liable to confi....
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....o adjudicate the issue in question. The principles of natural justice also have been violated and hence, in absence of any proper opportunity to the petitioner also, the civil liabilities of the petitioner company demanding the huge amount of custom duty would be impermissible. 21. Both the sides have relied on the following decisions and some of which shall be discussed at an appropriate point, as and when needed. Sr No. Judgments/citations 1 Commissioner of Customs vs. Gaurav Enterprise, 2006 (193) ELT 532 (Bom.) 2 Commissioner of Central Excise vs. Wockhardt Life Science Limited, 2012 (277) ELT 299 (SC) 3 Northern Plastics Limited vs. Commissioner of Customs & Central Excise, 1998 (101) ELT 549 (SC) 4 Commissioner of Customs, Calcutta vs. G.C. Jain, 2011 (269) ELT 307 (SC) 5 PSL Limited vs. Commissioner of Customs, Kandla, 2015 (328) ELT 177 (Tri-Ahmedabad), 6 Commissioner of Customs and C.Ex.Kanpur vs. Jas International, 2011 (272) ELT 282 (Tri-Delhi) 7 Krupa Chaton Mfg.Company Pvt. Ltd vs. UOI, SCA No.7499 of 2017 8 Eagle Impex Vs. CC, Kandla, 2017 (350) ELT 107 (Tri-Ahmd.) 9 Sarvalakshmi Paper and Board Vs.C.C., M....
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....risdiction to entertain this petition in wake of the availability of the alternative efficacious remedy. As contended by the respondent, this petition is premature and the Courts have adopted restraint and have chosen not to intervene at the stage of show cause notice when ample opportunity would be available to the party before the statutory authority. 23. The law on the point if is regarded, it is quite clear that jurisdiction under Article 226 of the Constitution of India is not to be resorted to ordinarily when the alternative and efficacious remedy is available, unless of course the very issuance of notice is not sustainable under the law. 24. However, before this Court proceeds further to adjudicate upon the factual challenges which have been raised before this Court, ratio of the decision of Apex Court in case of Union of India vs. Indalco Industries, 2003 (3) SCR P.377 needs to be referred to where in no unclear terms it has been held that invocation under Article 226 needs to be exceptional. It has also time and again frowned upon such interference particularly under the taxing statute. "There can be no doubt that in matter of taxation, it is inappropriate f....
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....r not even the preliminary facts should be tried by a High Court in a writ petition, must naturally depend upon the circumstances of each case and upon the nature of the preliminary issue raised between the parties. Having regard to the circumstances of the present dispute, we think the court of appeal was right in taking the view that the preliminary issue should more appropriately be dealt with by the Tribunal. The appeal court has made it clear that any party who feels aggrieved by the finding of the Tribunal on this preliminary issue may move the high Court in accordance with law. Therefore, we are not prepared to accept Mr. Sastris argument that the Appeal court was wrong in reversing the conclusion of the trial Judge insofar as the trial Judge proceeded to deal with the question as to whether the action of the appellant was a closure or a lockout." 14. In State of Uttar Pradesh v. Brahm Datt Sharma and Anr., AIR (1987) SC 943 : [1987] 2 SCC 179, this Court held: "9. The High Court was not justified in quashing the show cause notice. When a show cause notice is issued to a government servant under a statutory provision calling upon him to show cause, ordinari....
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.... Union of India and Anr. v. Kunisetty Satyanarayana, (2006) 12 SCALE 262." 24.2. It is thus quite clear that the writ jurisdiction under Article 226 is not to be entertained against the show cause notice when statute provides for mechanism which is efficacious, alternative and productive as the very purpose of issuance of show cause notice to afford opportunity of hearing to the party concerned and on showing of the cause to the statutory authority, a final decision is to be rendered, it is pre-matured to interfere with the show cause notice by the court. Although, the Court has wide powers under Article 226 of the Constitution and it can also exercise in certain circumstances at the stage of issuance of show cause notice (when the show cause notice is totally non est etc.) Accordingly such powers are not to be exercised by the Court and this approach of self restraint and self limitation is adopted by the High Court always and that being a well settled position of law, no further dilation is needed. 25. Before this Court proceeds to consider whether at the stage of show cause notice, it needs to entertain this petition or whether show cause notice is non est totally in the e....
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....or General, DRI. The Apex Court addressed the issue as to whether the DRI had authority in law to issue a show cause notice under Section 28(4) of the Act for recovery of the duties not levied nor paid when the goods were cleared for import by a Deputy Commissioner of Customs, who decided that the goods were exempted. 25.5. The provision of the Customs Act, Section 28(4) empowers the recovery of the duty not paid, part paid or erroneously refunded by reason of collusion or any willful mis­statement or suppression of facts and confers the power of recovery on the proper officer. The Apex Court interpreted as to who could be called the proper officer. The Apex Court held that the proper officer must necessarily mean the proper officer, who in the first instance assessed and cleared the goods which in the matter before the Apex Court was the Deputy Commissioner Appraisal Group. Because no fiscal statue has shown the power to re­open the assessment or recover the duties which escaped the assessment could be conferred on an officer other than the one (of the rank of the officer) who initially took the decision to assess the goods. It also went to an extent of saying that stat....
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...." can determine duty not levied/not paid, it does not mean any proper officer but that proper officer alone. We find it completely impermissible to allow an officer, who has not passed the original order of assessment, to re­open the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment. The nature of the power conferred by Section 28 (4) to recover duties which have escaped assessment is in the nature of an administrative review of an act. The section must therefore be construed as conferring the power of such review on the same officer or his successor or any other officer who has been assigned the function of assessment. In other words, an officer who did the assessment, could only undertake reassessment [which is involved in Section 28 (4)]. 15. It is obvious that the re­assessment and recovery of duties i.e. contemplated by Section 28(4) is by the same authority and not by any superior authority such as Appellate or Revisional Authority. It is, therefore, clear to us that the Additional Director General of DRI was not "the" proper o....
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....entral Board of Excise and Customs, hereby assigns the officers and above the rank of officers mentioned in Column (2) of the Table below, the functions as the proper officers in relation to the various sections of the Customs Act, 1962, given in the corresponding entry in Column (3) of the said Table: ­ Sr.No. Designation of the Officers Functions under Section of the Customs Act, 1962 (1) (2) (3) 1. Commissioner of Customs (i) Section 33 2. Additional Commissioner of Customs (i) Sub-section (5) of Section 46; and (ii) Section 149 3. Deputy Commissioner or Assistant Commissioner of Customs and Central Excise (i) ....... (ii)........ (iii) ....... (iv) ........ (v)......... (vi) Section 28; ........ 19. It appears that a Deputy Commissioner or Assistant Commissioner of Customs has been entrusted with the functions under Section 28, vide Sl. No.3 above. By reason of the fact that the functions are assigned to officers referred to in Column (3) and those officers above the rank of officers mentioned in Column (2), the Commissioner of Customs would be included as an officer entitled to perform the function under ....
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....ad no power to do so in purported exercise of powers under a section which does not confer any such power. 22. In the above context, it would be useful to refer to the decision of this Court in the case of Commissioner of Customs vs. Sayed Ali and Another5 wherein the proper officer in respect of the jurisdictional area was considered. The consideration made is as hereunder:­ "16. It was submitted that in the instant case, the import manifest and the bill of entry were filed before the Additional Collector of Customs (Imports), Mumbai; the bill of entry was duly assessed, and the benefit of the exemption was extended, subject to execution of a bond by the importer which was duly executed undertaking the obligation of export. The learned counsel argued that the function of the preventive staff is confined to goods which are not manifested as in respect of manifested goods, where the bills of entry are to be filed, the entire function of assessment, clearance, etc. is carried out by the appraising officers functioning under the Commissioner of Customs (Imports). 17. Before adverting to the rival submissions, it would be expedient to survey the relevant ....
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....ions to be performed under this Act, means the officer of customs who is assigned those functions by the Board or the Commissioner of Customs;' It is clear from a mere look at the provision that only such officers of customs who have been assigned specific functions would be 'proper officers' in terms of Section 2(34) the Act. Specific entrustment of function by either the Board or the Commissioner of Customs is therefore, the governing test to determine whether an 'officer of customs' is the 'proper officer'. 20. From a conjoint reading of Sections 2(34) and 28 of the Act, it is manifest that only such a Customs Officer who has been assigned the specific functions of assessment and re­ assessment of duty in the jurisdictional area where the import concerned has been affected, by either the Board or the Commissioner of Customs, in terms of Section 2(34) of the Act is competent to issue notice under section 28 of the Act. Any other reading of Section 28 would render the provisions of Section 2(34) of the Act otiose inasmuch as the test contemplated under Section 2(34) of the Act is that of specific conferment of such functions." 23. We, therefore, hold....
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....n, when otherwise all facts are known to the department beforehand cannot enable the department to seize the goods as the same surely would not amount to mis­declaration nor would it render the goods liable to be confiscation as per the settled position of law. 26.2 It is insisted that the subjective satisfaction is based on irrelevant material and not sustainable and is without jurisdiction. There is no rational nexus between the material and the subjective satisfaction and therefore, it needs to be set aside. The Court shall need to essentially examine as to whether the subjective satisfaction was not arbitrary or capricious or was sufficient or not as per the statute and whether the same was not that of a normal rational human being or was not germane to the issue or was not as per requirement of the concerned statute and was by way of mere conjecture or surmise. His grievance is that as per the settled law the imported product has to be assessed in the condition in which it is imported and be made available for assessment since what happens subsequently is not of much consequence. 26.3 He has further argued that post importation process from which different products c....
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....CTH 7204 49 00 under the other Ferrous Waste and Scrap and thereby availed undue benefit of concessional rate of custom duty at the rate of 2.5% instead of 5% scrap what contended copper and aluminum and not only iron and steel, this intentional and deliberate nondeclaration needs stringent dealing. He also urged that Cannon India Pvt. Ltd. (supra) can also be urged before the statutory authority while arguing show cause notice. 28. As can be noticed from the detailed submissions and the ratio laid down in Cannon India Pvt. Ltd. (supra) in the instant case also, the importer has filed bills of Entry at Thar Dry Port, ICD Customs, Sanand and declared the description of the product as "Discarded and Non- serviceable semi broken Motor Scrap" classifying the same under the Custom Tariff Act 7204 49 00 under the heading of other Ferrous Waste and Scrap. The benefit of concessional rate of 2.5% had been availed by the petitioner vide serial No.368 of Notification No.50/2017:CUS dated 30.06.2017. The said serial No.368 is notified for "melting scrap of iron or steel (other than stainless steel)" for chapter 7204 in the said Notification. 29. It is alleged in the show cause notice an....
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....formed a reasonable belief of the petitioner having taken undue benefit of the concessional rate of duty. It is the officer of the DRI, who was not anywhere in the picture when the import took place, had acted and detained the goods and later on also confiscated the same. A very serious challenge in the instant case is also to the action of the DRI officer of detention and seizure dated 29.07.2020 and 03.08.2020 so also of the confiscation dated 11.08.2020 along with the challenge to the very action of show cause notice on the part of the respondent. 31. What is vital for the Court to regard is the factual details of the case on hand before applying the judgment of the Cannon India Pvt.Ltd. (supra) while exercising powers of detention, the DRI alleges that the custom authorities had been induced by the petitioner to clear the goods which had been imported by alleged willful mis­statement and suppression of the facts and this action according to the DRI had led to the wrongful availment of the concessional rate of duty. This mis­declaration of the product along with the concessional rate of duty resulted into the short payment of custom duty and therefore, it chose to not....
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.... (a) and the representation referred to in clause (b) may at the request of the person concerned be oral. Provided further that notwithstanding the issuance of notice under this section, the proper officer may issue a supplementary notice under such the circumstances and in such manner as may be prescribed. 32.5 It also appears that under Section 125 of the Customs Act, there is an option to pay the fine in lieu of confiscation as the said provision provides that "whenever confiscation of any goods is authorized by this Act, the officer adjudging it may, in case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit". 33. Thus, after once the officer concerned forms a reasonable belief in relation to the goods imported, firstly what happened was the detention and thereafter, the seizure of the goods. 33.1 Such goods had been pe....
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....g allowed the import for not allowing the benefit of reduced rate of duty is because the Copper scrap and the Aluminum scrap in the material imported to the extent of 10% and 5% respectively and approximately could be taken out eventually from these broken motors. That essentially appears to be the reason for disallowing of the exemption. As is apparent from the material in the certificate of analysis produced at the time of clearance of the goods itself, the existence of the Copper scrap is also disclosed. It is not disputed by the respondent No.3 that such certificate of analysis had been produced. The same has also finds a specific mention in the panchnama dated 03.08.2020 and in the letter dated 03.08.2020 addressed to the petitioner by the Assistant Commissioner, ICD, Sanand. 35.1 It is in the beginning of this communication referred to "during the course of post clearance audit of the Bills of Entry filed by you in respect of clearance of goods viz.,"Discarded and non­serviceable semi­broken motor scrap". It has been noticed that the documents like bill of lading, PSIC and certificate of analysis indicate that the imported scrap consisted of (i) Copper scrap, Barle....
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.... Act and has been held to be invalid. The learned counsel for the Union, could not dispute the said proposition as well as the applicability of the judgment to the facts of the present case, therefore, applying the principles enunciated in the case of Canon India Private Ltd (supra) the petition deserves to be allowed. 37. The decision of the Apex Court rendered in case of Commissioner of Customs, Calcutta vs. G.C. Jain, reported in 2011 (269) E.L.T. 307 shall also need to be referred to at this stage where dispute was whether Butyl Acrylate Monomer (BAM) can be said to be an adhesive for the purpose of allowing the duty free clearances against advance license issued under the DEEC scheme. "24. It is also observed that the demand is hit by the bar of limitation inasmuch as the appellant had cleared the goods in question after declaring the same in the bills of entries and giving correct classification of the same. Availing of benefit of a notification, which the Revenue subsequently formed an opinion was not available, cannot lead to the charge of misdeclaration or mis­statement, etc. and even if an importer has wrongly claimed his benefit of the exemption, it is fo....