By TIOL News Service

CHENNAI, JULY 17, 2013: FACTS : The petitioner has imported gold jewellery classified under the customs tariff heading 711319 from Thailand duly supported by the original Certificate of Origin issued by the designated authority in Thailand. Governments of India and Thailand have entered into a Treaty called "Indo-Thailand Free Trade Agreement" under which certain specified goods can be imported from Thailand into India by Indian importers without having to pay the basic customs duty and countervailing duty; to give effect to the above said Agreement, Government has issued Customs Notification No.85 /2004 dated 31.08.2004 as amended from time to time read with Customs Non-Tariff Notification No.101 -CUS (NT) dated 31.03.2004; the imports under the above said Agreement are liable only for levy of Special Additional Customs Duty of 1%; one of the products specified under the above said Free Trade Agreement is unbranded gold jewellery falling under the Customs tariff heading 7113 19; the import of specified goods under the said Indo-Thailand Free Trade Agreement is subject to the exporter in Thailand furnishing to the Indian Importer a Certificate of Origin of the specified goods as originating from Thailand under the conditions of change upto 4 digit level and local value added content being fulfilled either together or independently of each other, as the case may be, in terms of Rule-6 (b) of the Interim Rules of Origin under the Indo-Thailand Free Trade Agreement; the Certificate of Origin is to be granted by the designated authority in Thailand and the importer in India has to submit, in addition to Bill of Entry, the Certificate of Origin in original issued by the designated authority in Thailand.

The Customs Department on a belief that the petitioner was not entitled to the benefit, seized 12742.5 grams of gold jewellery valued at Rs.3.63 crores from the petitioner and issued a Show Cause Notice proposing demand of duty, confiscation etc. The petitioner is before the High Court challenging the Show Cause Notice.

According to the petitioner, he has been fully complying with all the statutory formalities required to import the specified goods, viz., unbranded gold jewellery from Thailand under the said Free Trade Agreement and to avail the duty concessions granted under the same. He has filed the required Bill of Entry and the Certificate of Origin claiming duty concessions under the Indo-Thailand Free Trade Agreement and the imported goods have been duly assessed and permitted for clearance by the Customs Appraising Authority under Section 47 of the Customs Act, after satisfying himself that the imported goods are not prohibited goods. The petitioner would contend that the copies of documents including the Bills of Entries and Certificates of Origin and Sales Bills, which were seized from the petitioner Company under the same Mahazar were not returned to the petitioner-Company and the petitioner was not even allowed to make copies of the same, despite repeatedly representing for the same in the course of his rendering evidence in response to the Summons issued to him.

It is the case of the respondents that neither the Free-Trade Agreement nor the notifications dated 31.08.2004 have the provisions to restrain the respondents from issuing any show cause notice. They would contend that if the respondents have to wait till the entire matter is resolved and no duties can be demanded and no infringing goods should be held liable for confiscation, pending such resolution between two Sovereign Nations, then the law of limitation will come into force and the duty evaded by persons similar to that of the petitioner can never be demanded resulting in permanent loss to public exchequer, thereby vitiating the due process of law.

The High Court observed,

A perusal of the impugned Show Cause Notice would reveal that the respondents have proceeded against the petitioner on evading payment of Basic Customs Duty on the import made by the petitioner by wrongfully availing exemption on the basis of the Certificate issued by the Kingdom of Thailand. It is given to understand from the last paragraph of the impugned show cause notice that this matter is taken up with the appropriate government authorities of the Kingdom of Thailand and the reply of the government authorities of the Kingdom of Thailand is still awaited.

Law has prescribed certain powers on the authorities empowering them to initiate action against the concerned in cases of violations and such a power has been exercised by the respondents herein in the manner as prescribed. Therefore, unless the respondents have acted contrarily, no Writ of Prohibition could be issued against them.

Though the respondents have taken a specific stand that their action is subject to the outcome of the investigation that has been taken up with the appropriate authorities of the Kingdom of Thailand, the law of this country does not prevent the respondents from initiating any action against the petitioner. In other words, the law of this country is supreme and, as long as there is no conflict with the international agreement, the authorities of this country are well empowered to act in accordance with the law of this nation. As such, in the peculiar circumstances of this case, finding that the authorities have already initiated the investigation with the appropriate government and, without prejudice to the investigation, issued the impugned show cause notice under Section 124 of the Act, this Court is of the considered view that the said Show Cause Notice cannot be interfered with.

So, the High Court directed the petitioner to submit his explanation to the impugned show cause notice, dated 14.11.2012, within a period of four (4) weeks, in which event, the respondents, viz., the authorities concerned shall look into the same, but not take any final decision thereon. Also, considering the peculiar circumstances, the respondents shall maintain status quo as on date till the conclusion of the proceedings. However, any final decision of the respondents is subject to the outcome of the investigation already taken up with the appropriate government and they shall not conclude anything until the position is made clear by the authorities of the Kingdom of Thailand.

(See 2013-TIOL-556-HC-MAD-CUS)