Cus - Post-amendment by FA, 2012, Section 153 of CA, 1962 does not provide for service of SCN on a customs agent - right of owner of goods cannot be defeated without prior notice on him - seized goods rightly ordered to be released: HC
By TIOL News Service
NEW DELHI, MAY 16, 2016: THIS is a Revenue appeal seeking to impugn the order [2015-TIOL-2661-HC-DEL-CUS] passed by the Single Judge allowing the writ petition filed by the respondent.
The relevant facts are that the respondent had by commercial invoice(s) placed an order of Polyester Quilt Covers, 100% Polyester Bed Sheet set of three pieces PVC pack for which 100% payment was made in advance.
On arrival of the goods, the respondent filed bill of entry. However, the goods were not cleared and were detained by the DRI officers after conducting an examination on 25.07.2014.
On 04.08.2014 a detailed representation was sent to the ADG, DZU, Delhi pointing out that the imported goods were covered and used as quilt covers as they had been assembled by sewing and the three sides were closed whereas one side was kept open for filling up. A request was made for release of the goods.
On 26.11.2014, the appellants intimated to the respondent the conditions for provisional release of the goods. The respondent was directed to submit PD Bonds and bank guarantees for different amounts against the two bills of entry. The amounts were based on a provisional re-assessment of the price done by the appellants.
The appellants, in the meantime, allegedly issued a SCNdated 23.01.2015, in terms of s.110 of Customs Act, 1962for extension of time to issue SCNu/s 124 of the Act. A personal hearing was proposed to be held on the same date. Without providing any personal hearing, vide order dated 23.01.2015 the period was extended.
The respondent contended that the impugned order although dated 23.01.2015 was despatched only on 31.01.2015. Reliance was placed on envelopes in which the show cause notice and the impugned order were received, and the tracking records of the two documents to claim that the show cause notice and the impugned order are back dated.
Hence, a writ petition was filed stating that in view of the expiry of six months from the date of seizure of goods without issuance of any show cause notice, in terms of Section 110 (2) of the Customs Act, 1962, the goods are liable to be returned to the respondent.
The department had filed a counter affidavit and submitted that the notice was duly served on the authorized customs broker of the respondent on the said date with a request to appear for a personal hearing either at 1230 hours or 1430 hours on the same date. The customs broker submitted a letter on the same date conveying that they did not want any personal hearing on behalf of the importers. It is only thereafter that the impugned order dated 23.01.2015 was passed by the Commissioner of Customs extending the period by six months. Reliance was placed on Sections 146, 146A and 147 of the Act to submit that authorized customs brokers were duly empowered to make an appearance before an officer of the Customs.
The Single Judge noted that in 2012 an amendment took place in the said Section 153(a) of the Act by deleting the phrase "or to his agents" and whereby the said Section now provides that an order or decision passed or summons or notice issued under the Act shall be served by sending it by registered post or by approved courier to the person to whom it was intended. Earlier the service could also be affected on the agent. The phrase "to his agents" as stated as one of the modes of service in Section 153(a) was deleted.
Based on the said amendment, the order concluded that the legislature had consciously done away with service of order or decision or summons or notice on an agent or customs agent who operates under a special contract with an importer or exporter and that an agent or customs agent would not be authorized to receive show cause notice. Inasmuch as the impugned order granted relief to the respondent.
However, the order also clarified that the same would not, in any manner whatsoever, affect the investigation that was underway. It is only the seized goods which would have to be returned to the respondent and no more inasmuch as the appellant would be free to continue their investigation and proceed to the next step towards trial by complying with the provisions of Section 124 of the Act.
As mentioned, Revenue is in appeal against this order before the Division Bench.
The High Court after considering the submissions made by both sides inter alia observed thus -
++ Under the un-amended provisions of Section 153, an agent could also be served an order, or decision, or summons or notice issued under the Act. Clearly the amendment has been introduced to ensure service on the person concerned.
++ Post amendment by FA, 2012, a notice issued under the Act can be served by sending it by registered post or by approved courier and if for some reason, it cannot be served, by affixing it on the notice board of the customs house. The said Section does not provide for service of show cause notice on a customs broker/customs agent.
++ In the present case, none of the procedures as stipulated under Section 153 of the Act were followed by the appellant while serving a show cause notice before exercising power under proviso to sub-section 2 of Section 110 of the Act. The service on the custom agent was no service and vitiates the order dated 23.1.2015.
The appellant Revenue then tried to rely on Sections 146, 146A and 147 of the Act to contend that service could also be effected on the CHA/customs agent.
The High Court extracted the sections relied upon and observed -
++ In our opinion, confiscation/seizure of goods would not fall within the meaning of "import of goods" as used in Section 146 of the Act and Regulation 2(c) of the Customs Broker Licensing Regulations, 2013. Such confiscation being penal in nature cannot be termed to be a part of the duty of a custom agent. Service would have to be effected on the owner of the goods personally or through agent so specifically authorized to accept.
++ Clearly the right of owner of goods cannot be defeated without prior notice on him. Hence, the contention of the appellant that service of the show cause notice could also be effected on the Custom Agent in view of Sections 146, 146A& 147 of the Act is a contention without merits.
Holding that there is no merit in the Revenue appeal, the same was dismissed.
(See 2016-TIOL-936-HC-DEL-CUS)
