9911796707
TMI Blog2015 (11) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... ggering of an extended period of six (6) months, has no legal sanctity, according to the petitioner, for the following reasons: (i) Firstly, the show cause notice seeking extension of time for compliance of the requirements of Section 124 of the Act, is ante-dated. (ii) Secondly, the service of show cause notice effected on the Customs House Clearing Agent (in short the CHA), is no service in the eyes of law, being contrary to the provisions of Section 153 of the Act. 2. The aforesaid are the broad contours of the issues which arise for consideration in the present writ petition. The reason, that I have set out these broad contours, is that, there are other connected writ petitions qua which arguments have been addressed by both sides, whereupon judgement has been reserved in each of those matters. The legal submissions advanced, in these cases, by both sides are common. Therefore, it is common ground that a decision in this case would apply on all fours to the other connected matters. 3. The specifics which concern this writ petition, are as follows: 3.1 The petitioner vide commercial invoice dated 25.05.2014 had placed an order for polyester quilt covers (in short quilt cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by one of its associate firms. The Textile Committee vide its report dated 25.08.2014 confirmed that the sample submitted to it could be classified as "...polyester woven printed quilt case...". 3.8 By a communication dated 26.11.2014, the Deputy Commissioner of Customs ordered provisional release of goods, which were the subject matter of the two bills of entry referred to above. As per the terms fixed for release (as indicated in the said communication), the petitioner was required to submit two PD Bonds in the sum of Rs. 19,59,246/- and Rs. 28,03,294/-, and two bank guarantees, in the sum of Rs. 11,22,453/- and Rs. 16,49,178/-. 3.9 The bank guarantees, as indicated in the communication, were of a value which was equivalent to 20% of the differential duty as the goods were assessed under CTH 54077400. 4. The aforementioned communication went on to state that the DRI had already granted permission under Section 49 of the Act, so that, demurrage and detention charges on the imported consignment could be minimized. 4.1 It is important though, to note, that in this very communication the Deputy Commissioner of Customs had indicated the "re-assessed" value of the imported consig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation of the provisions of Section 110(2) and 124(a) of the Act. This fact is being highlighted by me, as during the course of submissions, erroneously, the counsel for respondent no. 1 and 2 had conveyed that because of the limited nature of the notice, the counter affidavits filed were confined to only aspects which related to the alleged violation of Section 110(2) and Section 124(a) of the Act. 5.3 This statement was made by the counsel for respondent no.1 and 2, when arguments were sought to be advanced by the counsel for the petitioner in relation to Section 17 and 18 of the Act. Briefly, the counsel for the petitioner had attempted to convey to the court that even though in the letter dated 26.11.2014 the respondents had ostensibly ordered provisional release of the goods, they had in fact carried out a re-assessment and, therefore, were required to pass a speaking order under Section 17(5) of the Act. 5.4 In other words, it was argued by the counsel for the petitioner that the order for provisional release was required to be made under Section 18 of the Act, while that for re-assessment was required to be passed under Section 17(5) of the Act. Since in the letter dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation but also purported waiver of the petitioner's valuable right to personal hearing by its CHA, was accepted without the CHA being asked to tender his authority to represent the petitioner. 8. Mr. Nijhawan, who appeared for respondent no. 1 and 2, on the other hand, submitted that the goods of the petitioner along with those of 14 others, were seized, as the DRI, had a genuine concern that goods, which were printed fabric, were being imported as made up quilt covers by having the fabric folded at mid-length with loose stitching on two sides. 8.1 It was submitted that the respondents had obtained the opinion of the Apparel Export Promotion Council (in short the AEPC), as also that of the Textile Committee. Learned counsel submitted that the AEPC had opined that the sample submitted to them (which was drawn from the imported consignment), would fall in the category of "fabric" or "upholstery fabric". 8.2 Mr. Nijhawan, however, accepted the position that the show cause notice dated 23.01.2015 was dispatched via post on 30.01.2015. Similarly, in so far as the order dated 23.01.2015 was concerned, Mr. Nijhawan submitted that it was dispatched on 31.01.2015. 8.3 It was, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) The petitioner has imported goods which have been classified as quilt covers. The bill of entries were filed accordingly, and requisite duty, was deposited, as per the classification made by the petitioner. (ii) The DRI, however, detained/ seized the goods on 25.07.2014. A panchnama of even date was drawn up and samples were taken. The samples were sent by the DRI to AEPC, and the Textile Committee. While the AEPC opined that the samples could be categorized as fabric, or upholstery fabrics, the Textile Committee only opined upon the composition of the samples. (iii) On the other hand in the report dated 25.08.2014, submitted by the Textile Committee to the petitioner, the conclusion reached was that the sample could be classified as "polyester woven printed quilt case" under HSN 6302.22. (iv) The period of six (6) months from the date of seizure by the DRI would come to an end on 24.01.2015 (v) The show cause notice dated 23.01.2015 was dispatched by post on 30.01.2015, at 1511 hours from Kalkaji Head Quarters, which was delivered on 03.02.2015 at 1437 hours. (vi) The order dated 23.01.2015, passed qua the show cause notice of the said date i.e. 23.01.2015, was dispatch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od not exceeding six (6) months. 10.3 In the facts obtaining in this case, if the date of dispatch, by post, of the show cause notice dated 23.01.2015 is taken into account, then, clearly, on a plain reading of provisions of Section 110(2) read with Section 124(a), the respondents would have to return the goods to the petitioner. The reason for the same being, that the show cause notice dated 23.01.2015, seeking to trigger the extended period provided for in the proviso to sub-section (2) of Section 110, was dispatched only on 30.01.2015. 10.4 The respondents, however, have tried to meet this challenge by taking shelter under the factum of receipt of show cause notice by the CHA, on 23.01.2015. A careful perusal of the receipt appended with the counter affidavit of respondent no.1 and 2 would show that these are hand written receipts, which have been received, in most cases, by the G-card holders of the CHA. What is not known, though, whether the show cause notice was sealed in an envelope or was handed over without an envelope. 10.5 Be that as it may, the respondents in paragraph 7 of the show cause notice, make the following averments: "....7. In case, the noticees are inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved save and except in the case of petitioner and the Balaji handloom. In the case of the petitioner and the Balaji Handloom, it is stated that even though the test report of the Textile Committee and expert opinion of the AEPC had not been received, since the said entities had not declared the Unit Quantity Code against each tariff item, the quantification of goods in square meters was required to be done for calculation of duty which necessitated the re-examination of the goods. 11. Though, whether this reason, would constitute a sufficient ground for extension of time appears to be weak as in the petitioner's case, the AEPC's opinion was received on 14.08.2014, while the Textile Committee report was generated on 04.09.2014 - even if one were to accept these reasons necessitating extension of time, the manner of its extension is clearly not in accordance with the law. The reason, that I have come to this conclusion is as follows. 11.1 Section 153 of the Act provides the manner in which any order or decision passed, or any summons or notices issued under the Act are required to be served. In order to appreciate the scope of the said provision, it may be relevant to extract the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope of the duties of an agent, and in that sense, the authority of the CHA, is provided for in the definition of customs broker, in regulation 2(c) of the Customs Brokers Licensing Regulations, 2013 (in short the 2013 Regulations). The said definition reads as follows: "..... (c) "Customs Broker" means a person licensed under these regulations to act as agent for the transaction of any business relating to the entry or departure of conveyances or the import or export of goods at any Customs Station;..." 11.4 In case the CHA, represents to the customs authorities that he has the authority to accept orders, notices, summons, orders or decisions, it is incumbent upon him to produce the same before the concerned authority. A provision in respect of this aspect is found in regulation 11(a) of the 2013 Regulations. The same reads as follows: ".... Regulation 11. Obligation of Customs Broker. - A Custom Broker shall - (a) obtain an authorisation from each of the companies, firms or individuals by whom he is for the time being employed as a Customs Broker and produce such authorisation whenever required by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There are other sub-sections appended to Section 146A, which I do not propose to refer to as they are not relevant for the present case. 12.3 Section 147 provides for liability of a principal and agent. Sub-section (1) of Section 147 provides, where anything under the Act is required to be done by the owner, importer or exporter of any goods, it may be done on his behalf by his agent. 12.4 Sub-section (2) provides that any act done by the agent of the owner, importer or exporter of any goods, shall unless contrary is proved, be deemed to have been an act done, with the knowledge and consent of such owner, importer or exporter, so that, in any proceedings, the owner, importer or exporter shall also be liable as if things had been done by him. 12.5 Sub-section (3) of Section 147 provides that when any person is explicitly or impliedly authorized by the owner, importer or exporter of any goods, to be his agent, in respect of such goods, for all or any purposes of the act, such person shall, without prejudice to the liability of the owner, importer or exporter, be deemed to be the owner, importer or exporter of such goods for such purposes. 12.6 There is a proviso to sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 147 statutorily recognizes the fact that anything which an owner, importer or exporter of goods is required to do, it can be done on his behalf by an agent. Therefore, quite logically, sub-section (2) of Section 147 provides that if, any act is done by the agent of an owner, importer or exporter of goods, then it shall be deemed to have been done with the knowledge and consent of such an owner, importer or exporter. The purpose being, that the principal can be held liable in a proceedings carried out under the Act for the acts done by his agent as if they were done with his knowledge and consent. 13.3 Sub-section (3) of Section 147 creates a deeming fiction, and in that sense, is an extension of the agency principle and, therefore, provides that when any person is expressly or impliedly authorized by an owner, importer or exporter of any goods, to be his agent, he is deemed to be the owner, importer or exporter of such goods, albeit without prejudice to the liability of the principal i.e. the owner, importer and exporter. This deeming fiction comes with a caveat that if, it involves aspects related to non-levy of duty or short-levy of duty or even duty which is erroneously ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with the mandate of the law which has received judicial imprimatur, would be required to release the goods seized, to the petitioner. 16. Before, I conclude I must deal with the argument of Mr. Nijhawan that there is an alternative remedy available to the petitioner by way of an appeal, and therefore, the writ petition ought not to be entertained. According to me, this submission, will not help the cause of the respondents in this case as the entire proceedings for the reasons indicated above were beyond jurisdiction, therefore, this plea of the respondents is rejected. 17. Which brings me to a question, as to whether the confiscation proceedings can proceed in the matter? The answer to that question lies in the judgement of the Supreme Court in the case of Harbans Lal vs Collector of Central Excise and Customs 1993 (67) E.L.T. 20 (SC). In other words while the order passed under the proviso to Section 110(2) is held invalid, it would not in any manner affect the investigation, which is presently underway. With the quashing of the show cause notice dated 23.01.2015, and the order of even date i.e. 23.01.2015, the position which will obtain is that the respondents will have t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
