TMI Blog1987 (6) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... e of two consignments of low carbon mild steel defective CRCA sheets (as declared) shipped from Antwerp ex-s.s. Vanila rot no. 217/85, line no. 61 and 62 covering quantities 246.14 M/T and 196.98 M/T clearances of the said consignments against the following import trade control licences. Line No. 61 Name of the licence holder Nature of licence Licence No. Face value of the licenses value debited 1. Monali Sea Food Pvt. Ltd., Calcutta REPlicence endorsed with para. 138 13(ii) of A.M. 1985 Policy P/L 3073640 dt. 13-7-1984 FI.3 Rs. 133500 Rs. 66750 2. -do- -do- P/L 3073639 dt. 13-7-1984 FI.3 Rs. 20800 Rs. 10400 3. Pronier Enterprises 32/46 Chandi Ghosh Road, Calcutta-40 REPlicence endorsed with para. 13 of A,M, 1985 A.M. I Policy P/L 3075910 dt. 16-1-1985 A-16(ii) Rs. 165000 Rs. 33000 4. -do- -do- P/L 3075907 dt. 16-1-1985 A-16(ii)B Rs. 165000 Rs. 33000 5. Jalan Commercial Agency, 514, Rabi-ndra Sarani, Calcutta-5 REP licence endorsed with para. 138 of A.M. 1985 Policy P/L3075907 dt. 16-1-198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er para 138(1) of A.M. 1985 Policy, the said facilities are applicable for import of raw-materials, components, consumables, spares and packing materials as are related to the products exported or manufactured by the exporters concerned. It appears that CRCA sheets defective are not required by M/s. Monali Sea Foods Pvt. Ltd. for their use insofar as CRCA sheets get rusted and contaminate the food items packed. CRCA sheets are normally used for manufacture of Iron safes, trunks, buckets and such other articles and not for food processing. Hence this appears to be a case of misuse of facilities granted under para 138 of the Import Policy. Hence it appears that licence Nos. P/L 3073640, dated 13-7-1985 and P/L 3073639, dated 13-7-1984 for clearance of goods valued at Rs. 77,150 are not valid for the import of the goods in question. 4. Similarly, in respect of line No. 61 licence No. P/L 3075910, dated 6-1-1985 issued to M/s. Pronier Enterprises, Calcutta and No. P/L 375786, dated 16-1-1985 issued to M/s. Jalan Commercial Agency, Calcutta are REP licences issued against exports of products falling under A 16(i) which are non-ferrous semis and manufactures, namely, lead semis, extrus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of under-invoicing can be understood from the following evidences : (a) The goods are declared as low carbon mild steel defective CRCA sheets. The invoices are not supported with the mills' test certificates. No documents have been produced to show the details of defect of the goods imported. (b) The-actual nature or the goods have to be ascertained on examination of the goods. The importers are requested to arrange immediate examination of the goods. (c) The value declared for the goods is F.F. 1400 per MT. F.O.B. Antwerp which works out to Rs. 1850 per MT approx. and CIF Rs. 2433. (d) Imports of CRCA defective sheets have been noticed at Calcutta at prices higher than Rs. 2433 per MT. Hence on the face of it the goods appear to be undervalued. The extent of undervaluation can be ascertained only on examination of the goods. 10. In the circumstances M/s. S.A. International, P-3, New CIT Road, Calcutta-73 is called upon to furnish the following details: (a) Their relationship with M/s. NTS-A. P. Landowski Samis, Paris either directly or indirectly. (b) The name and address the intending agents in India. (c) The details of local commission paid, if any. (d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as not valid and the import should not be considered as unauthorised rendering the goods liable to confiscation under Section 111 (d) and (m) of the said Act, and why penalty should not be imposed on them under Section 112 ibid. It was further stipulated in the said show cause that the written representation along with supporting documents should be addressed to the Collector of Customs, Customs House, 15/1, Strand Road, Calcutta-l so as to reach him on or before 15th May, 1985. It was also specifically indicated in the said show cause notice that if the petitioner wished to be heard in person before the case was adjudicated, they may state so in the written representation. If no reply is received, the case may be adjudicated ex parte. 6. That during the course of hearing, Mr. B.N. Sen, the Senior Advocate assisted by Shri A. K. Ganguly, the learned Advocate, appearing for the petitioner placed the original show cause notice Nos. and date of the show cause notice was left blank. Subsequently, they were filled up and indicated on the top of the show cause notice as 8-5-1985, whereas the copy of the show cause notice, which was sent to M/s. J.C. Bose Sons was dated 9-5-1985. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is dispensed with. The petitioner is directed to serve copies of the writ petition upon all the respondents within one week from date and file affidavit of service thereafter." 10. Paragraph 3(h) of the affidavit filed on behalf of the respondent reads thus: "It requires a thorough investigation but on the face of the documents available it appears that the imports have been made in an unauthorised and illegal manner and contrary to the Customs Act as also to the Import and Export Act, 1947 and Import (Control) Order, 1955 (as amended)." 11. Mr. Sen claimed and asserted that while issuing the show cause notice, the respondents consciously and deliberately did not take into consideration while calculating the F.O.B. value of the following 3 licences, viz., (1) P/L 3038683/C, ) P/L 3075910/C and (3) P/L 3075788/C. In that event, no reasonable person should form opinion even prima facie that the declared F.O.B. value of the goods was not covered by the licences. It was also as sorted by him that on the bill of entry it was specifically mentioned that the imported goods would be handed over to the actual users only. All the letters of authority specified the nature of goods, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required for manufacturing of agricultural implements like tanks and components. The imported goods are required by the said exporters for manufacturing their said products. Copies of the certificates issued by the Director of Industries to the said exporters affidavit as claimed by Mr. Sen are relevant contained in Annexure "C" to the supplementary affidavit as also copy of the certificates of J. Ganguly Co., Chartered Consulting Engineer, as contained in Annexure "D" Pioneer Enterprises and Jalan Commercial Agency do not manufacture only the items of goods mentioned in the show cause notice, the said exporters also manufacture other items as would be apparent from the respective certificates issued by the Director of Industries, it was totally incorrect that there had been any misuse of paragraph 138 of the relevant Import Policy on the other hand, there has been deliberate misreading of paragraph 138 of the Import Policy on the part of the authority who issued the impugned show cause notice. The names of exporters have been wrongly mentioned in paragraph 4 and 5 of the show cause notice The correct names should be "Pioneer Enterprises" and not "Premier Enterprises" and the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s common knowledge that France has not any major port and the French goods are normally exported from the Port of Antwerp in Belgium. 19. Paragraph 9 of the show cause notice, according to the petitioner, constituted the very basis of the show cause notice- During the course of hearing it is claimed and contended by Mr. Sen, assisted by Mr. A.K. Ganguly, learned Advocate that the show cause notice incurably suffered from infirmity that crept in the show cause notice. 20. Para 9, according to Mr Sen, did disclose that there was no material at the time of issuing the show cause notice. On a plain reading of the said paragraph 9 of the show cause notice, it. would appear that at least on 8th May, 1985, there was "understanding" of certain evidences, which were yet to be effective examined, ascertained and objectively looked into by the concerned adjudicatory authority, was the foundation of the show cause notice. The word "understanding" according to the petitioner, cannot be the foundation of the show cause notice. Mr Sen pinpointed that without ascertainment of the actual nature of the goods, and examination, the show cause notice was issued in unseemly haste and in over-zealous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods in question have been declared as defective. They were wrongfully declared as defective. 25. Mr. Sen in his reply effectively and strenuously contended that the three-fold submissions of Mr. Roychowdhury do not stand a moment's judicial scrutiny and proceeded to join the issues raised by Mr. Roychowdhury. 26. Mr. Sen also submitted that the licences produced are the same; licences which were produced at the time of opening of letter of credit. The customs authorities specified only three licences which were used at the time of opening L/C but did not go into the details that the L/C was enhanced. While enhancing the L/C the licences were produced before the customs-authorities and the same licences were given to the bank at the time of enhancing the L/C. The bank certificate was also produced. 27. It was further argued by Mr. Sen that the plea of the respondents that imported goods are not required for the "Export" product is wholly without any substance inasmuch as it is not the only condition of the licence. The licence was issued in terms of para 138(1) of Import Trade Control Policy, 1984-85, which reads thus :- "138(1). REP licences issued to manufacturer-expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice was issued at the time when the investigation was being continued. The investigation report is the foundation of the show cause notice. In absence of the report, the show casue could be said to have been based on understanding of the adjudicating authority. Before the completion of the investigation the show cause notice was issued without being supported by basic or primary feet or material. Reference may be made to a judgment. 31. Lord Radcliffe, Edward (Inspector of Taxes) v. Bairstow reported in 1956 Appeal Cases page 4. Relying on the said decision, Mr. Justice P.B. Mukherjee (as he then was) analysed the position as follows:- "But the importance of classical observations of Lord Radcliffe lies in the distinction between primary facts and 'inferences' drawn from them and in laying down when the later are questions of law although expressed in three seemingly different expressions in jurisprudence on this point, namely, (i) no evidence to support the determination, (ii) evidence is inconsistent with the determination and (iii) the true and only reasonable conclusion contradicts the determination as to the learned Lord's preference for the third expression as being most ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed to justify the charge of under-invoicing either by documentary or by evidence of remittance of under-invoiced amount. 35. In my view this Court in the exception circumstances will be justified in interfering with the show cause notice on the basis as indicated above. Apart from the said basis, the adjudicatory authority while directing that the investigation should proceed quickly should have waited till the reception of the investigation report containing all the basic and primary facts. The show cause notice merely on the basis of understanding appearing in para 9 without having the support of primary or basic facts would be open for challenges on the ground that at the stage ascertainment and examination was inconclusive and incomplete. The incorrect data or incomplete investigation cannot and could not constitute the grounds within the meaning of Section 124 of the said Act. 36. The grievance raised is that the notice that has been issued, apart from being uncertain and indeterminate, is founded upon assumption and presumption to such an extent that the petitioner had no reasonable opportunity of defending himself. The notice under Section 124 of the said Act is a sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt provisions of law and in utter disregard of the opinion and endorsement of the concerned officer, issued the show cause notice and hence under the Article 226 of the Constitution the Court can interfere with the show cause notice at this stage. In the instant case the show cause notice issued by the customs authbrity seeking to initiate the proceeding to prejudice of the petitioner acted in excess of jurisdiction and hence the show cause notice can be challenged by a writ petition. The show cause notice in my view also violated the concept of justice and fair play inasmuch as the petitioner was precluded from replying to the show cause notice on 15th May, 1985. Respondents ought not to have sent or despatched the same. Reference may be made to the decision of Collector of Central Excise v. Somarmall Purohit 1979 ELT-J 631 (SC) and Charandas Malhotra v. The Collector of Customs AIR 1968 Cal 28. The show cause notice having been founded upon surmise the conjecture and no ground having been effectively disclosed, the interference of this Court under Article 226 of the Constitution is warranted. 39. The contention of Mr. Roychowdhury, although very attractive in appearance, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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