By TIOL News Service

MUMBAI, APRIL 03, 2018: THE petitioner challenges an order dated 5th January, 2018, passed by the Assistant Commissioner of Customs (I), New Custom House, Mumbai.

The petitioner claims that several show-cause notices were issued by the DRI, Mumbai, against glassware imports to several importers during the period concerned for under valuation against the import of glassware/s from Indonesia. The Directorate was of the opinion that the discounts claimed by the various importers in the value declared for assessing value and duty was in contravention of the Customs Valuations Rules, 1988. Inasmuch as the discount was held to be impermissible.

Since, in identical matters, different adjudicating bodies had dropped the demand in the year 2000-2001, the petitioner had filed a Bill of Entry and cleared the goods provisionally under Bank Guarantee and expected the Department to issue the show-cause notice as another show cause notice was issued by the Directorate of Revenue Intelligence against the petitioner. The said notice came to be adjudicated, the demand was dropped by order dated 9th March, 2001.

As the said orders were accepted by the department, the petitioner approached the authorities in February 2013 by pointing out that a provisional release order was made in this case, but, nothing further has been done nor the file closed.

In response, after 18 years, the Assistant Commissioner, Customs, issued a letter, in which it is stated that the petitioner should attend the personal hearing for finalizing the subject Bill of Entry.

The petitioner submitted that before such finalization, the Department will have to issue a show-cause notice. Since the petitioner was repeatedly called by issuance of E-mails, eventually, the petitioner attended the proceedings.

Consequently, the impugned order has been passed, operative portion of which reads -

(a) I order the said B/E No.109814 dated 16.02.2000 to be finalized after loading the assessable value to 2.5 times the provisionally assessed value i.e. Rs.3,27,998/- totally amounting to Rs.8,19,995/-.

(b) I confirm Customs Duty of Rs.4,19,838/- on total assessable value of Rs.8,19,995/- and appropriate Rs.1,76,935/- paid on 26.02.2000 at the time of provisional clearance.

(c) I confirm the differential duty of Rs.2,51,903/- to be paid by the importer along with applicable interest.

(d) I order the importer to kept alive the Bank Guarantee No.43/99 dated 23.02.2000 for Rs.3,27,998/- until payment of all dues as above.

The petitioner submits that the impugned order is ex-facie illegal and unsustainable; that in the garb of finalizing the proceedings, the Department cannot take recourse to any other provisions, much less Section 18 of the Customs Act, 1962; that it was mandatory to issue a show-cause notice raising the demand and then adjudicate it; that when the impugned order refers to Section 28 and that has not been adhered to, then, all the more, the petition must be entertained although it is directed against the Order-in-Original and not relegate the petitioner to any appellate remedy.

The counsel for the Revenue inter alia submitted that in the light of an alternate and equally efficacious remedy available to the petitioner, the High Court should not entertain the petition.

After going through the original case file, the High Court observed that a very pertinent endorsement appears in the file, which is dated 24th September, 2004 and it reads -

"As per Commissioner of Customs (Import) order dated 13/09/2004 in F.No.S/26-994/99 Gr-III dated 11/10/1999, the B/E is finalised at the enhanced/loaded value and the revenue deposit amount, if any, may be appropriated towards the Customs Duty. Accordingly, the B/E may be finalised and the Bond may be cancelled."

The High Court, therefore, observed –

+ Here, on the own showing of the Revenue, the process under Section 18 was finalized as per the endorsement and orders of 24th September, 2004, reproduced above.

+ Thereafter no show-cause notice was issued when the duty allegedly became due and payable and within the time stipulated by law. Thus, if the duty was not levied, but, leviable, then, the requirement in law and particularly Subsection (1) of Section 28 was to issue the show-cause notice and within a period of six months from the relevant date.

+ Admittedly, no such show-cause notice is found in the file. Once, there is no such show-cause notice found in the file, then, there was no sanction in law to make an Order-in-Original, particularly, after the period of nearly 18 years from the date of filing of the Bill of Entry and 12 ½ years from the date of the assessment, as contemplated by Sub-sections (1) and (2) of Section 18 .

+ Once such show-cause notice being not issued nor the order impugned in the petition being traceable thereto, then, merely because the petitioner makes a request and appears for a hearing, styled as “A Personal Hearing”, before the Assistant Commissioner, would not vest in him the jurisdiction or the competence mandated by law.

+ Any voluntary submission to the jurisdiction of the authority, when in law he does not possess the same at all, will not suffice nor will waive the legal requirement. There is no such waiver as well, even if it is presumed that the benefit of the law being personal or restricted to the petitioner. Throughout, the petitioner has been demanding and issuance of the show-cause notice and furnishing a copy thereof to him. That requirement in law being not fulfilled, we do not think that we should relegate the petitioner to any alternate remedy to challenge the impugned order.

Concluding that the impugned order is ex-facie illegal and without jurisdiction, the same was quashed and set aside.

The petition was allowed.

(See 2018-TIOL-576-HC-MUM-CUS)