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TaxTMI 
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2026 (4) TMI 957
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....icable to the transactions which have taken place in a foreign territory. 3. The impugned show-cause notices have been issued to the Petitioner no.1 which is an entity constituted in Germany, who had sold to Indian importers the allegedly mis-declared goods and that too prior to the amendment of the Act i.e. the amendment incorporating Sub-Section (2) of Section 1 of the Act by Finance Act, 2018 (Act No. XIII of 2018) with effect from 29th March 2018, and to Petitioner No. 2, which is incorporated under the Companies Act, 1956 which provides technical and support services to the Karl Mayer Group of Companies in relation to the installation, start-up and warranty cover, for machines delivered to India by the Karl Mayer Group. Considering that the facts and the issues are similar in all the three petitions. It is convenient to dispose of all the three writ petitions by this common judgment. 4. Earlier these petitions have been heard on several occasions, when substantive interim orders were passed by the co-ordinate Bench of this Court. By an order dated 25th September 2023 passed on the first two petitions (Writ Petition Nos. 7882 of 2023 and 10561of 2023) Rule was issued and ....
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....inal hearing after the pleadings are complete, would not have any extraterritorial operation so as to become applicable to the foreign entity in Germany. 5. Mr. Rastogi, learned counsel for the petitioners in support of his contention has brought to our notice that in a similar case where show cause notice was issued to the petitioners by the Commissioner of Customs (NS-V), Jawaharalal Nehru Custom House, Custom Zone-II, Mumbai and to another noticee, namely, M/s. Maruti Knit Tex, the show cause notice against the petitioners was dropped by an Order-in-Original dated 30 December, 2020. It is submitted that in responding to such show cause notice, the petitioners had urged similar contentions as been urged in the present petition that the Commissioner of Customs inter alia did not have jurisdiction and hence there was no question of any order levying penalty being passed against the petitioners, which was merely a foreign exporter based in Germany. It was thus urged that the petitioner being situated outside India, there was no question of any penalty being imposed or in such context the show cause notice would be valid. Mr. Rastogi would hence submit that the position in t....
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....enue has also fairly stated that it would be appropriate that the officer himself addresses the Court on this issue. 3. The above directions would not preclude the concerned officer in taking appropriate position as directed by us in paragraph 7 of our order dated 17 July, 2023. 4. Stand over to 11 September, 2023 at 2.30 p.m." 4. However, what was observed in the order was completely overlooked when we set down the proceedings to be heard on 11 September 2023, when the Court has passed the following order:- The State of Affairs is thoroughly disappointing. On 4th September 2023, we had passed an order that the officer who was issuing instructions to the learned counsel for Respondent Nos.2 and 3 and who had not given appropriate instructions to Respondent Nos.2 and 3 be called to remain present in the Court which was fairly agreed by the learned counsel for the Revenue when she stated that it would be appropriate that the officer himself addresses the Court. 2. In pursuance of such order, today, Mr. Ramlingeshwar Rao is present in the Court, who stated that he is the Assistant Commissioner of Customs. Mr. Ramlingeshwar Rao had addressed....
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....designated officer to issue the impugned show cause notices to a foreign entity, we would be required to hear the parties on the merits of their respective contentions, at the final hearing of the petition. Hence, Rule. Respondents waive service. 7. In the light of the above discussion and considering the provisions of Section 1(2) of the Customs Act prior to its amendment by Finance Act,2018 (w.e.f. 29.3.2018) as also considering the effect of the said amendment, in our opinion, the petitioners have made out a prima facie case for grant of interim reliefs. Hence, pending the hearing and final disposal of the petitions, the impugned show cause notices shall stand stayed. Ordered accordingly. 8. Liberty to the parties to apply for final hearing after the pleadings are complete. 5. As similar reliefs are prayed for, it would further be convenient to reproduce the prayers in the lead petition (Writ Petition No.7882 of 2023), which are reproduced below : "a. Issue a writ, order or direction in the nature of Mandamus, or any other appropriate writ, order or direction declaring that the Respondent no.2, 3 and 4, as the case may be, have issued the impugned S....
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....machines", and claiming exemption under Notification No. 12/2012-CE dated 17th March 2012 and/or Notification No.16/2015, dated 1st April 2015, as the case may be (hereinafter referred to as the exemption notifications); (iv) On the basis of the above, the DRI-L initiated an inquiry against several importers who had imported the said machines. Further, statements of authorized representatives of these importers were recorded with respect to the import of the said machines under bills of entry and it was alleged that the importers had allegedly mis-declared the description of said machines; (v) On the basis of the investigation carried out, in so far as the importers were concerned, Petitioner No. 2's office at Ahmedabad was visited by the officers of DRI-L. A summons dated 11th October 2017 bearing Sr. No.949 was served on Petitioner No. 2. Mr. Piyush Pathak, the representative of Petitioner No. 2 at the Ahmedabad office, submitted a letter to the DRI-L officials setting out the business details carried out at Ahmedabad and his incapacity to assist the DRIL officials in technical matters. Consequently, the DRI-L again issued a summons to Petitioner No. 2's Mumbai ....
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....ad with Section 28 of the Act to the Petitioners, alleging that the Petitioners had aided/abetted the main noticees, i.e., Indian importers, to perpetuate the import fraud. The main noticees were different importers situated in India. Besides the main noticees, the show-cause notices were also issued to Petitioner No. 1 through Petitioner No. 2. Further, summons in this regard was also issued to Petitioner No. 2, seeking information relating to the imports in question, despite Petitioner No. 2's non-involvement in sales of Petitioner No. 1's machines in India. Further, by way of aforesaid show-cause notices, penalties under Sections 112 and 114AA of the Act were proposed to be levied on the Petitioners. 8. Being aggrieved by the aforesaid show-cause notices, the present petition has been filed by the Petitioners. 9. We have heard learned counsels for the parties. Mr. Abhishek A. Rastogi along with Ms. Pooja M. Rastogi and Ms. Meenal Songire along with Ms. Aarya More and Mr. Chayank Bohra appeared for the Petitioners, and Ms. Nitee Punde along with Ms. Mamta Omle appeared for the Respondents. With the assistance of learned counsel for the parties, we have perused the record an....
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....tends to all proceedings that are penal in nature or impose civil consequences of a punitive character. The Respondents' attempt to invoke a post-2018 statutory enlargement ofjurisdiction to penalize conduct alleged to have occurred earlier directly offends this constitutional prohibition. Any interpretation permitting such retrospective penal exposure would render Article 20(1) otiose and must therefore be rejected. iv. It is next submitted on behalf of the Petitioners that Article 245 of the Constitution circumscribes legislative competence territorially and mandates that laws of Parliament may have extra-territorial operation only where the statute expressly or by necessary implication so provides. In the absence of such explicit conferment prior to 29th March 2018, authorities functioning under the statute could not have assumed jurisdiction over foreign entities situated outside India. Administrative or quasi-judicial authorities derive their powers strictly from the statute and cannot exercise a wider jurisdiction than that contemplated by the legislature itself. Consequently, proceedings initiated against a foreign exporter for a pre-amendment period are ultra v....
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....ot choose between conflicting precedents based on preference; they must apply the binding one as determined by the settled rules of precedent. Failure to do so renders the impugned action arbitrary and violative of Article 14 of the Constitution of India, as similarly situated persons would otherwise be subjected to inconsistent legal standards. It was therefore submitted that the Respondents' reliance solely upon Prerna Singh (supra) is legally untenable and contrary to the settled hierarchy of precedential authority. The impugned action suffers from a jurisdictional and legal infirmity insofar as it is founded upon a non-binding precedent, while ignoring binding Division Bench rulings. ix. It was further contended that since the decisions of the division benches of the Tribunal which have decided the issue in favour of the taxpayers have not been challenged by the Revenue by Appellate proceedings, the same have attained finality and cannot be disputed in other cases/ proceedings. Administrative authorities cannot circumvent this finality by re-agitating the same question in other proceedings involving identical facts and issues. It was therefore contended that in the....
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....he Act imposing penalties on Petitioner No. 1, who is situated outside India, are justified. iv. The Respondents also sought to place reliance on the decisions of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case of Prerna Singh (supra). In view thereof, the Respondents submitted that the DRI-L had reasons to believe that for the purposes of Sections 112 and 114AA of the Act, penalties would be imposable on Petitioner No. 1 since they aided and abetted in the evasion of customs duty in India. ANALYSIS AND FINDINGS : 12. Considering the rival contentions, we proceed to render our findings on the present petitions. 13. After perusal of the records and looking at the factual conspectus of the case, we are of the view that in the present petition, liability is sought to be foisted on the Petitioners merely because the importers of goods are situated in India, and they had allegedly mis-declared the warp knitting machines imported from Petitioner No. 1 as "fully-fashioned high-speed knitting machines" and claimed the benefit of the exemption notifications. This liability has been foisted without attributing any role to the Petitioners. This to....
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....of the Act provide that if any goods do not correspond in respect of value or in any other particular with the entry made under this Act, or in the case of baggage, with the declaration made under Section 77 of the Act, and in respect of goods under trans-shipment, the declaration for trans-shipment referred to in proviso to Section 54(1) is not correct, then the said goods are liable for confiscation. Further, Section 46 of the Act stipulates the conditions which an importer has to fulfil for entry of goods on the importation thereof in India. Further, Section 17(1) of the Act deals with assessment of duty, and the said Section casts a duty on any importer entering any imported goods under Section 46, or an exporter entering any goods to be exported under Section 60, to self-assess the duty, if any, leviable on the goods. The provisions of Sections 17, 46, and 111(m) of the Act are reproduced below: 17. Assessment of duty.-(1) An importer entering any imported goods under section 46, or an exporter entering any export goods under section 50, shall, save as otherwise provided in section 85, self-assess the duty, if any, leviable on such goods. (2) The proper offic....
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....ncipal Commissioner of Customs or Commissioner of Customs] may, in cases cases where it is not feasible to make entry by presenting electronically [on the customs automated system], allow an entry to be presented in any other manner: Provided further that] if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub-section, the proper officer may, pending the production of such information, permit him, previous to the entry thereof (a) to examine the goods in the presence of an officer of customs, or (b) to deposit the goods in a public warehouse appointed under section 57 without warehousing the same. (2) Save as otherwise permitted by the proper officer, a bill of entry shall include all the goods mentioned in the bill of lading or other receipt given by the carrier to the consignor. [(3) The importer shall present the bill of entry under sub-section (1) before the end of the next day following the day (excluding holidays) on which the aircraft or vessel or vehicle carrying the goods arrives at a customs s....
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....e, there was no role played by such exporter, i.e., Petitioner No. 1, with regard to the alleged mis-declaration of the imported machines and therefore, the show-cause notices could not be issued to Petitioner No. 1. 18. As a corollary thereto, the penalties which have been imposed under Section 112 and 114AA of the act also have no legs to stand on, inasmuch as there is no role that is attributable to the Petitioners making them liable for penalty under Section 112 of the Act. The provisions of Section 112 of the Act are reproduced below: 112. Penalty for improper importation of goods, etc.-Any person,- (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable,- (i) in the case of goods in respect of which any prohibiti....
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....s not fulfil conditions as envisaged in Section 112 of the Act. The charge of abetment and aiding the Indian importers has also not been established by the Department. Neither has any evidence been adduced by the Department to show the active role played by the Petitioners in perpetrating the alleged mis-declaration of the imported goods. We are therefore of the view that in the absence of any ingredients which are prescribed in Section 112 of the Act, the Petitioners cannot be made liable for the penalty as sought to be imposed by the impugned show-cause notices. 20. As we have held that the Petitioners are not liable for penalty under section 112 of the Act, they will also not be liable for penalty under section 114AA of the Act as the same is in respect of penalty for use of false and incorrect material and is imposable if a person knowingly or intentionally makes, signs, or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business. In the facts of the present case neither Petitioner No. 1, nor Petitioner No. 2 have submitted or caused submission of false inform....