AI Drafter 
TaxTMI 
TaxTMI 
2025 (3) TMI 395
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....s petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs : "a. That this Hon'ble Court may be pleased to hold and declare that i. the investigation carried by the office of Respondent No.2 is not just and fair and the conduct of the Respondents against the Petitioner herein in pursuance to F.No.GEN/INT/MISC/26/2023, is unwarranted and illegal; ii. that the continuous provisional attachment of the Petitioner's Bank Account No.6311621118 and Petitioner's Proprietor's Bank Account No. 7211434006 is without any authority of law; b. That this Hon'ble Court may be pleased to issue a Writ of Mandamus or Writ in the nature of Mandamus or any other appropriate Writ, Order or Direction directing Respondents, their servants, subordinates, and agents: i. to withdraw Summons dated 07.06.2024 bearing F.No. F.No. GEN/INT/MISC/26/2023 (Annexure - C) and any subsequent Summons issued to the Petitioner; ii. to refrain from issuing further Summons to the Petitioner seeking for documents related to M/s S.T. Electricals; iii. to defreeze the Petitioner's Bank Acco....
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....spondent No.3-Superintendent of Customs (Preventive), Jaipur issued summons on 17.05.2024 to the proprietor of the petitioner firm in view of the aforesaid investigation seeking documents such as purchase/sale documents in respect of M/s. S. T. Electricals, books of accounts, ledger, Bank Accounts details and called upon the petitioner to remain present to tender the oral statement. Another summons dated 07.06.2024 was also issued upon the petitioner seeking the same documents. 4.5. The petitioner thereafter, by letter dated 14.06.2024 sent via Email dated 15.06.2024 addressed to the respondent No.3 raised objections against issuance of summons contending that the respondent No.3 has no jurisdiction to investigate the local purchases made under appropriate invoice and after due payment of local taxes by the petitioner. The petitioner also requested to withdraw the summons. 4.6. The petitioner thereafter, by Email dated 21.06.2024 along with letter dated 12.06.2024 (inadvertently dated as 12.06.2024 instead of 21.06.2024) submitted copies of invoices and ledger in respect of M/s. S. T. Electricals. 4.7. The petitioner has thereafter preferred this petition. 4.8. Learned ....
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....torate of Revenue Intelligence, Mumbai had booked a case against the Petitioner during FY 2018-2019 with exactly similar modus operandi involving similar suppliers and Sugrive Meena Commissioner common beneficiaries. Moreover, overseas suppliers M/s Recon Metals GMBH-Germany, M/s MIKO Trading GMBH-Germany, which are common in present case, were also the suppliers in the case of M/s Naravan Power Solution, who dealt with the Petitioner to supply sub-standard CRGO Steel along with forged Mill Test Certificates. 6. That, the above facts, transactions, purchase of substandard CRGO Steels from M/s ST Electricals by the Petitioner therefore require further investigation which cannot be ascertained in absence of oral evidences, therefore Summon dated 17.05.2024 and 07.06.2024 under Section 108 of the Customs Act, 1962, for submission of documents as well as providing statement/Oral Evidences have been issued to the Petitioner. The Petitioner has not appeared in-person before the investigating officer, resultantly not complied with the Summons. Instead of cooperating in the investigation, the Petitioner has approached this Hon'ble Court with clear intent to avoid the investiga....
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.... 2nd August, 2024, it was inadvertently mentioned about the investigation by Director of Revenue Intelligence, Mumbai and correct facts were stated with an apology in paragraph No.2 which is reproduced as under: "2. That, it is to submit that it is revealed during the Investigation that Directorate of Revenue Intelligence, Mumbai had booked a case during FY 2018-2019 against Shri Narendra Tarachand Purohit (Proprietor of M/s. Shree Chamunda Enterprises) and others with exactly similar modus operandi involving similar suppliers. During that investigation, Shri Narendra Tarachand Purohit, Proprietor of M/s. Shri Chamunda Enterprises had inter-alia stated in his statement dated 21.02.2019, recorded under Section 108 of the Customs Act, 1962 that his sister Rinku Purohit managed the accounts i.e. sale and purchase of the CRGO steel both in international and domestic market, of all importing companies being run by them; that his brother-in-law Jagdish Purohit (who is proprietor of the present Petitioner M/s. Pacific Powertech Solutions) looked after the sale of the imported CRGO steel in local market. Therefore, essence of submission of respondent was that since petitioner has ....
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....ctricals and cleared for home consumption. 4. Meanwhile, the Customs Authorities at Jaipur initiated proceedings against M/s ST Electricals alleging undervaluation of goods. M/s ST Electricals has challenged the said action of the authorities before the Rajasthan High Court in Writ Petition No. 10480 of 2023, which is stated to be pending. The Customs Authorities, during the investigation, found that M/s ST Electricals had sold these goods to GST Technology, who, in turn, has sold to Pacific and Pacific has sold goods to the petitioner and the petitioner has further sold these goods in the market." 4.14. Thus, it is clear from the aforesaid order that the petitioner-M/s. Pacific Powertech Solutions purchased goods from GST Technology and sold the goods to M/s. Mayur Enterprise. 4.15. The Hon'ble Bombay High Court in case of M/s. Mayur Enterprise after considering the submissions of the parties held as under: "11. Submissions of the Petitioner: The petitioner has contended that he has not imported the goods and that he is a bonafide purchaser in the chain of sale and purchase transaction starting from sale by M/s ST Electricals, who was the original importer.....
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....Slit Coil and CRGO- Steel Scrap. These two goods appear to be not the same goods. In our prima facie view, the affidavit-in-reply of the respondents would militate against the case of the respondents that the goods, which are detained, are the goods, which were originally imported by M/s ST Electricals. The respondents themselves admit in the reply that goods purchased by the petitioner, which were originally imported by M/s ST Electricals, are already sold by the petitioner. If that be so, then the said goods cannot be of the ownership of the petitioner. Therefore, the respondents are not contending that they have detained the same goods, which were imported by M/s ST Electricals, but are of similar description which matches with purchase invoice of the said similar description goods. Thus, in our view, on such admission by the respondents the impugned action of detaining goods of the petitioner, would be rendered without jurisdiction. 15. In the context in question it is necessary to note the relevant provisions of the Customs Act. 16. Section 2(14) of the Act defines "dutiable goods" to mean any goods, which are chargeable to duty and on which duty has not been....
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.... too if the third person against whom action is initiated has already sold the goods in open market and when there was no demand or proceedings pending for recovery of duty etc. against such third person. In the present case, the goods imported by M/s ST Electricals were initially cleared for home consumption by the said importer and the said goods have changed hands in open market and is also out of the possession of the petitioner. The respondents in their affidavit in reply have referred to the communication from Jodhpur Customs authorities dated 8 July 2023 and 12 July 2023 wherein the Jodhpur authorities have directed the respondents to seize the very goods imported by M/s ST Electricals. In the said reply, the respondents have stated that these very goods have been sold by the petitioner to Narayan Power Solutions. In our opinion, the situation would have been different if the Customs were to bring some materials to show that the goods in question were being allegedly dealt by M/s. ST Electricals in connivance with the petitioner or that the petitioner was not a bonafide third party purchaser. If this be the case, then the action of detaining the goods of the petitioner was c....
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.... documents, as to how the attachment of the petitioner's bank account is to protect the interest of revenue or to prevent smuggling. Therefore, on both these counts attachment of the saving bank account cannot be held to be legal and valid. Further party purchaser of the goods in question, this provision also may not be applicable. the provision of Section 111 provides for confiscation of improperly imported goods. Prima facie, the petitioner being a third party purchaser of the goods in question, this provision also may not be applicable. 23. We may also observe that if the case of the respondent is accepted, that the department can detain any goods in the hands of subsequent purchaser of the goods who has purchased them from the open market, then it would lead to an anomalous and chaotic situation. Illustratively, where Mr. A who imports goods and sells them to third parties which are subject matter of various transactions leading to Mr. Z who is a third party purchaser from the open market, such goods cannot be subject matter of any detention by the Customs Authorities merely because import of goods by Mr. A is being investigated. 24. The respondents have a....
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....goods but they have only detained the goods. On a query as to whether the department would have the powers to detain the goods in the facts of the present case, we have not been pointed out any such provision which would empower the respondents in the facts of present case, to detain the goods. CONCLUSION 28. In view of above discussion, the impugned action of the respondents in detaining the goods in question and attaching the bank account of the petitioner without there being any demand due from the petitioner or any proceedings pending is without jurisdiction and without any authority of law. Accordingly, we pass the following order: ORDER (i) We declare that the detention of the goods described in Table A of the panchanama dated 26 July 2023 is illegal and the same shall be revoked on a copy of this order being presented by the petitioner to the concerned authority; (ii) The respondents are directed to return the documents which are mentioned in Table-B of the panchanama dated 26 July 2023; (iii) The respondents shall defreeze Savings Account No. 809510264 of the petitioner held with Indian Bank and intimate the communicatio....
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....e to the summons dated 12.07.2023. 5.2. It was further submitted that the petitioner has already sold the goods to M/s. Mayur Enterprise which is directed to co- operate in the investigation as per the order passed by the Hon'ble Bombay High Court. It was therefore submitted that the respondent- Authority has continued the investigation only with a view to harass the petitioner which is also evident from the reply filed by the respondent No.5 who has been joined in his personal capacity. 5.3. It was submitted by learned advocate Mr. Kantawalla that the basis of the allegations made against the petitioner by the respondent No.5 in the affidavit upon multiple investigations is nothing but an attempt to mislead the Court and divert the attention from primary issue of jurisdiction raised in the petition. It was submitted that the goods purchased by the petitioner was already cleared for home consumption and therefore, it ceases to be imported goods, more particularly, when the petitioner has produced the documents with the reply. 5.4. It was therefore submitted that the respondent No.5 has issued the letter dated 08.10.2024 informing the respondent No.4-Bank to unattach the ba....
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....ed by M/s. S.T. Electricals on the basis of the forged MTCs didn't bear BIS Marks and therefore, not only importing but also selling and distribution of such goods by importer as well as its beneficiaries would be liable for penal action under the provisions of the Act. 6.6. It was therefore submitted that the goods purchased by the petitioner from M/s. S.T. Electricals are prohibited and are illegally imported and hence, liable for confiscation under Section 111(d), (m) and (o) of the Act. 6.7. Learned Additional Solicitor General Mr. Devang Vyas along with learned advocate Mr. Siddharth Dave explained in detail the modus operandi of M/s. S.T. Electricals and others including the petitioner by referring to the bill of entries filed by M/s. S.T. Electricals for import of such goods to show that the petitioner has transferred the amount prior to purchase of the goods to pay the duty by M/s. S.T. Electricals. It was therefore submitted that M/s. S.T. Electricals is nothing but a conduit to import the goods by the petitioner so as to avoid the further investigation by the customs. 6.8. It was further pointed out that the goods imported vide Bill of Entry No.5525864 was upload....
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.... the decision in case of Anwesha Engineering and Projects Limited Versus Indian Oil Corporation Limited rendered on 21.10.2020 in Special Civil Application No.8629 of 2020 in support of these submissions. 6.13. Reliance was also placed on the decision of Madrash High Court in case of K. Elumalai versus The Commissioner of Customs decided on 04.07.2017 in W.P.No.6650 of 2017 and W.M.P.No.7159 of 2017 reported in 2017 355 ELT 241 (Madras), wherein, it was held that in view of Sub-section (3) of Section 108 of the Act, all persons summoned are required to attend either in person or by an authorized agent before the Officer and therefore, the petitioner ought to have appeared pursuant to the summons in person before the respondent No.2 and therefore the prayer made by the petitioner to quash the summons cannot be entertained in view of the decision of the Hon'ble Apex Court in case of Commissioner of Customs, Culcutta & Others versus M. M. Exports & Another reported in (2007) 212 ELT 165 wherein, it was held that High Court should not interfere at the stage when the Department has issued summons except in exceptional cases. 6.14. It was therefore submitted that the language of Su....
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.... alleged to be prohibited goods. Respondent Nos.2 and 3 have carried out the investigation against M/s. S.T. Electricals and in turn, against the petitioner and M/s. Mayur Enterprise to whom such goods have been passed on by purchase and sale. 8. The respondent No.5, who was joined in his personal capacity, has filed an affidavit instead of remaining present either in person or through authorised person in response to the notice issued by this Court reiterating what is stated in the affidavit which was filed earlier by him in his official capacity. The affidavit filed by the respondent No.5 affirmed on 08.10.2024 refers to the modus operandi of M/s. S.T. Electricals and the past imports made by M/s. S.T. Electricals of CRGO Strips which were found to be on the basis of forged/fake MTC submitted before the Customs Authority and mis-declaring the description of the goods for circumventing the restriction/prohibition imposed on sub-standard CRGO Steel strips and it was tried to contend that the petitioner being one of the beneficiaries, summons were issued as purchase of sub-standards CRGO Strips by the petitioner requires further investigation which cannot be ascertained in absenc....
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....irregularities so far as the petitioner is concerned. Thus, it is clear that the petitioner has co-operated with the summons issued by the respondent Nos.2 and 3. 14. It also appears from the investigation carried out by the respondent No.5, who is investigating in capacity of Commissioner of Customs (Preventive) (respondent No.2), that the import made by M/s. S.T. Electricals is subject to the outcome of the Writ Petition filed before the Rajasthan High Court. Thus, the respondent No.5 in capacity of respondent No.2 has exceeded his jurisdiction insisting upon the personal presence of the proprietor of the petitioner firm for the reasons best known to him without there being anything on record which requires further investigation qua the petitioner, more particularly, when the petitioner has sold the goods imported by M/s. S.T. Electricals to M/s. Mayur Enterprise, which is duly recorded in the judgment and order passed by the Hon'ble Bombay High Court as reproduced hereinabove. 15. Therefore, it is very clear that the respondent No.2/5, only with an ulterior motive, is trying to harass the petitioner under the guise of exercising its powers under Section 108 of the Act. It ....
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....614296133 27AOAPP2471C1Z 8/ MAYUR ENTERPRISES 27AAECR 5971L1ZS / RASQUIN HA TRANSC ORE ELECTRICALS PVT LTD KALAMBOLI/ 410218 RABALE NAVI MUMBAI/ 400701 221614296133- 05/07/2023 12:17:00 221614639565 27AOAPP2471C1Z 8/ MAYUR ENTERPRISES 27CYOPP 7727H1Z P/ NARAYAN POWER SOLUTIONS KALAMBOLI/ 410218 Rabale MIDC, Navi Mumbai/400701 221614639565- 05/07/2023 21:00:00 231616276602 27AOAPP2471C1Z 8 / MAYUR ENTERPRISES 27CYOPP 7727H1Z P/ NARAYAN POWER SOLUTIONS KALAMBOLI/ 410218 Rabale MIDC, Navi Mumbai/400701 231616276602- 09/07/2023 20:27:00 271616194942 27AOAPP2471C1Z 8 /MAYUR ENTERPRISES 27CYOPP 7727H1Z P/ NARAYAN POWER SOLUTIONS KALAMBOLI/ 410218 Rabale MIDC, Navi Mumbai/400701 271616194942- 09/07/23 13:22:00 271616536409 27AOAPP2471C1Z 8 / MAYUR ENTERPRISES 27AATFT 5852A1Z W/ TRANSEL ENGINEERS KALAMBOLI/ 410218 Tata Talav/412108 271616536409 10/07/23 15:36:00 "Although it is possible that the goods consigned by M/s. Mayur Enterprises are the same which were imported by M/s. S T Electricals vide Be No. 5525864 dated 15.04.2023, however without enquiry it is not possible to ensure that these are the ....