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2023-TIOL-879-HC-MUM-CUS
Narayan Power Solutions Vs UoI
Cus - Petitioner seeks unsealing of their office premises and submits that the respondent Assistant Commissioner of Customs would not have the authority and jurisdiction to seal the office premises u/s 105 of the Customs Act and that too without any notice.
Held: Power to search cannot mean a power to seal - A power to seal the premises is a drastic power - Such powers cannot be exercised unless the same is expressly conferred by law - Also the respondents have not supported their contention of such power being vested with the Customs Officers citing any authority on such proposition - It results in tinkering with substantive rights of a person to hold, use and occupy any immovable property - The property may be used for the business purposes or otherwise, hence, any action to seal the premises would have a direct bearing and effect on legal rights of the person to use and occupy the premises as guaranteed by Article 300A of the Constitution - The action of sealing would amount to suspension or taking away of such legal right, which cannot be resorted unless the procedure in law is adopted namely in a given case an opportunity of a hearing being granted unless the law otherwise would so prescribe - Once the sealing of the premises is of business premises, it would adversely affect the right to carry on business which is a fundamental right as guaranteed under Section 19(1)(g) of the Constitution - In the opinion of the Bench, it is for such reasons in providing for powers under Section 105 of the Customs Act of search, the legislature has kept out and/or has not included within its purview a power to seal, and has confined the power only to search the premises - Bench directs the customs officers as also the representatives of the petitioner to remain present at the premises of the petitioner and in the presence of the parties, the premises be unsealed and search operation be undertaken, to which the petitioner shall co-operate in all respects - Petition disposed of: High Court [para 6, 8, 11]
- Petition disposed of: BOMBAY HIGH COURT
2023-TIOL-878-HC-KERALA-CUS
Safir P Vs CC
Cus - Question for consideration is - Can a vehicle be seized by the Customs on an apprehension that it may be used as a means of transport of smuggled goods?.
Held:
+ Court is of the opinion that the jurisdiction under Article 226 can be exercised in the present case to bring a quietus to the dispute raised, instead of relegating the petitioner to the remedy of adjudication under section 122 of the Act. [para 7]
+ Concededly, at the time when the vehicle was intercepted, there was no gold inside - Therefore, evidently, till the seizure, the smuggled gold had not entered the car at any point in time. Further, petitioner, as the owner of the vehicle, is not alleged of any involvement in smuggling. [para 8]
+ On a reading of section 106 of the Act, it is evident that power is conferred upon the officers to search a vehicle if they suspect that the vehicle is involved in smuggling or other offences under the Act. Significantly, the said power to search does not confer a right to seize the vehicle on suspicion. [para 9]
+ Right to seize goods arises only when the goods are liable for confiscation. Only goods that are liable for confiscation can be seized under the Act. In other words, the power to seize, under the Act, is intrinsically connected with the power of confiscation. [para 11]
+ Section 115(2) of the Act renders a vehicle liable for confiscation if it was 'used as a means of transport' in the smuggling of goods or in the carriage of any smuggled goods. The word 'used as a means of transport', in its ordinary sense, partakes the character of use in the past or in the present.
+ The admitted case of the Department is that the smuggled goods had never found a place inside the car, nor had the person carrying the smuggled goods entered the car, either in the past or in the present. The said circumstance only indicates a possible future use of the car as a means of transport of the smuggled goods. [para 13]
+ The power of confiscation is a penal provision. The courts ought not to ascribe a meaning broader than that it ordinarily bears, especially in the case of a penal provision.
+ The words 'used as a means of transport' in section 115(2) of the Act can only be interpreted as 'already used as a means of transport' or as 'presently being used as a means of transport'. The possibility for future use of the vehicle as a means of transport of smuggled goods cannot be brought within the purview of the power of confiscation. [para 14]
+ Therefore the words 'used as a means of transport' in section 115(2) of the Act can only be interpreted as 'already used as a means of transport' or as 'presently being used as a means of transport'. The possibility for future use of the vehicle as a means of transport of smuggled goods cannot be brought within the purview of the power of confiscation.
+ Such conferment of vast and unguided powers will even fall foul of Article 14 of the Constitution of India. [para 15]
+ Seizure of the vehicle bearing registration No.KL-52-R-9498 owned by the petitioner is illegal and the respondent shall release the vehicle to the petitioner immediately.
- Petition allowed: KERALA HIGH COURT
2023-TIOL-877-HC-DEL-GST
Jupiter Exports Vs CGST
GST - Petitioner has challenged the impugned order passed u/s 74(9) of the Act, 2017 [raising a total demand of Rs.6,67,74,062/-, which includes the tax amount of Rs.2,88,90,416/-, interest for a sum of Rs.89,93,230/-, and penalty to the tune of Rs.2,88,90,416/- for the tax period of April 2018 to March 2019] principally on the ground that the same has been passed in gross violation of the principles of natural justice as the petitioner was not afforded an opportunity of personal hearing before passing of the impugned order.
Held: It is an admitted case that neither the petitioner nor any legal representative on its behalf had been granted any personal hearing so as to explain or canvas its case before the Adjudicating Authority. The respondent despite being afforded several opportunities to file the counter affidavit, has not denied the allegations or the contentions raised by the petitioner - In terms of the provisions of the CGST Act [s.75], the concerned Officer is statutorily required to grant an opportunity of hearing in case the request is received in writing from the person chargeable with tax or penalty - It further provides that such hearing has to be given when the Officer contemplates any adverse decisions against such person - Thus, when the statute itself provides that a hearing is required to be given to the person against whom an adverse decision is contemplated, it cannot be contended on behalf of the authorities that the same is not mandatory - When the legislature mandates that an opportunity of a personal hearing is to be given to a party, the authorities cannot be allowed to contend to the contrary - The respondents' contention that no personal hearing is required to be given to the party, is contrary to the statute - Court is of the opinion that the department could not have taken such stand contrary to statutory framework – Bench also fails to understand the reason for the Adjudicating Officer to observe that the visit of the representatives of the petitioners in the office of the Officer and the telephonic conversation, the Officer had with the proprietor of the petitioner, could be termed as equivalent to personal hearing - It is not the respondent's case that hearings were conducted in a virtual mode and, therefore, the personal hearing was granted over the telephone - Telephonic conversations for a brief period cannot be a substitute for a personal hearing or for that matter be construed as a hearing at all - The expression personal hearing or the opportunity of being heard is not a mere empty formality - It is also not a case of Revenue that the multiple adjournments were taken by the petitioner in order to delay the adjudication - The Officer seems to be in some sort of hurry to conclude adjudication prior to the end of Financial Year on 31.03.2021 and passed the order, the very next day of filing of the reply - Availability of alternate remedy does not operate as a bar on the power of the High Court to exercise jurisdiction under Article 226 of Constitution of India - Almost two years of the judicial time has been wasted only for the reason that respondent at first wanted to place the counter affidavit on record and then sought further time to file counter affidavit and then decided to contest the present writ petition without filing any affidavit of the concerned officer - These kind of practices cannot be countenanced - The same has the effect of not only causing harassment to the litigants but also wasting the precious judicial time of the Court - Court, therefore, considers it apposite to impose a cost of Rs.5,000/- on the respondent - Order is also to be also sent to the Commissioner of GST, Department of Trade and Taxes, Vyapar Bhawan, IP Estate, New Delhi for necessary information and compliance - Demand order dated 25.03.2021 is set aside and matter is remanded to enable the respondent to pass a fresh order: High Court [para 12, 18, 19, 20, 22, 24, 29, 33, 37, 38]
- Petition allowed: DELHI HIGH COURT
2023-TIOL-876-HC-MAD-CX
GGN Spinning Mills Pvt Ltd Vs CESTAT
CX - CENVAT - Machineries imported during the period September 1997 to April 1999 had been transferred from A to the B Unit in the year 2002 - Officials noted that in arriving at the value of capital goods for the purpose of payment of excise duty, the depreciation computed under the Written Down Value method (WDV method), has been adopted, at 25%, in line with the provision under the Income Tax Act, 1961 - Officials were of the view that the straight line method ought to have been adopted as prescribed by the Central Board and Excise and Customs under Circular No.643/34/2002- CX read with Board's Letter No.495/16/93-CUS IV, dated 26.05.1993 - Officials noted that the original assessable value of the capital goods was a sum of Rs.1,67,20,299/- and the credit availed thereupon was a sum of Rs.20,60,055/- - The value adopted at the time of transfer was Rs.61,52,111/- claiming depreciation on WDV method, and the removal was on payment of duty of Rs.9,84,338/- - Scale of depreciation adopted by the Department by applying the stipulation under the 1993 Board Letter resulted in the assessable value of goods removed computed as Rs.1,04,64,531/- and the duty thereupon, Rs.16,74,325/- - The differential duty arrived of Rs.6,89,987/- was demanded - Main argument of appellant was that the 1993 Board Letter was inapplicable to the present transaction as those had been issued in the context of second-hand motor vehicles and not machineries; that the Letter would not prevail over Rule 4(4) of the CCR 2002, that specifically refers to depreciation under the Income Tax Act, 1961 - Demand was confirmed but in appeal the Commissioner (A) accepted the submissions of the assessee that the appropriate method of computing depreciation would be as prescribed under the Income Tax Act as the goods transferred constituted capital goods and that, in any event, the exercise was revenue neutral - While allowing the department appeal and remanding the matter, the CESTAT [order dated 18.01.2011] has proceeded on the premise that a consistent and uniform methodology was being followed in cases similar to the present matter, by adopting the straight line method of reckoning depreciation, and there is no reason why there should be any deviation in this matter; however, the computation of depreciation in the show cause notice was not proper and remanded the matter - This CESTAT order was appealed to the High Court [order dated 29.01.2014] which remanded the matter to the Tribunal - Consequently, the CESTAT passed an order dated 19.12.2014 [ 2015-TIOL-1644-CESTAT-MAD] holding that that appellants are liable to pay differential duty on the value of capital goods removed to their sister unit by adopting depreciation as per the Board's circular No.643/34/2002 dt. 1.7.2002 read with Circular No.495/16/1993-Cus. dt.26.5.93 ; that the adjudicating authority in the order dt. 28.11.2003 has correctly demanded differential duty; OIO is restored to the extent of confirming the demand of Rs.6,89,987/- and interest - Aggrieved, assessee has filed the present appeal before the High Court.
Held: On and with effect from 13.11.2007 Proviso was inserted in Rule 3(5) of the Cenvat Credit Rules 2004 (in short '2004 CCR') providing for a methodology of deduction in the Rules itself and which laid down that if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method; that for capital goods, other than computers and computer peripherals @2.5% for each quarter - The reference to depreciation under the Income Tax Act in Rule 4(4) is in an entirely different context and has no application as urged by the Appellant - This, by no means, can be understood to relate to Rule 3(4) of the methodology of valuation required thereunder - This condition has to be seen solely in the context of availment of CENVAT credit only and has no bearing on the valuation of the goods - Scheme of the grant / reversal of credit gives a clear indication as to the stipulated methodology of valuation for the purposes of Rule 3(4) - Bench sees no reason to deviate from this methodology which, admittedly, is being followed in a consistent manner - The provision has always been at a flat rate and there has been no option extended to the assessee in regard to the manner by which the depreciation may be computed - Substantial questions are answered in favour of the revenue and this appeal by assessee is dismissed: High Court [para 25, 28, 31,32]
- Appeal dismissed: MADRAS HIGH COURT
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