Calcutta High Court
Delta International Limited & Anr vs The Commissioner Of Customs & Ors on 23 December, 2010
Author: I.P. Mukerji
Bench: Kalyan Jyoti Sengupta, I.P. Mukerji
1
A.P.O. No. 625 of 2003
W.P. No. 900 of 1998
A.P.O. No. 21 of 2006
W.P. No. 672 of 1998
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
PRESENT:
The Hon'ble JUSTICE KALYAN JYOTI SENGUPTA
AND
The Hon'ble JUSTICE I.P. MUKERJI
DELTA INTERNATIONAL LIMITED & ANR.
Versus
THE COMMISSIONER OF CUSTOMS & ORS.
DELTA INTERNATIONAL LIMITED & ANR.
Versus
THE COMMISSIONER OF CUSTOMS & ORS.
Judgment on: 23rd December, 2010.
I.P. MUKERJI, J.
FACTS & ARGUMENTS:
One is an appeal from the Judgment and Order dated 12th January 2006 passed by the Hon'ble First Court in W.P. No. 672 of 1998, Delta International Limited - v - The Commissioner of Customs and others. This judgment and order adopts the judgment and order 12th May 2003 in W.P. No. 900 of 1998, where the facts are identical. This judgment and order is also under appeal before us. We will 2 discuss the facts of W.P. No. 900 of 1998, as it will cover the facts of the other writ as well.
The subject matter of challenge is very short. But these proceedings have continued in this court for a period of about twelve years or so. The writ challenges a show cause notice dated 13th August 1997 issued by an Assistant Commissioner of Customs. In it, against the caption "subject" it was stated "non-realisation of customs duty". In the body of the show cause notice, which is very terse and ambiguous, it is stated that customs duty amount of Rs.7,08,98,160/- was short levied for a consignment. Perusal of the show cause notice will not reveal any clear meaning. Nor will it indicate the circumstances under which it was issued.
This show cause notice has been challenged. One very short point taken is that the customs authorities had no power to issue this show cause notice. Examination of the show cause notice shows that this notice was issued alleging nonpayment of customs duties of Rs.7,08,98,160/. But under what circumstances this customs duty is payable have not been disclosed. The appellant/writ petitioner did not file any reply to the show cause notice nor did they appear before the adjudicating officer. An adjudication order was passed 3 confirming the demand on 19th/20th March 1998. In the adjudication order some light can be seen regarding the foundation of the show cause notice. Between 18th September 1987 and 3rd April 1992 the 100% export oriented unit of the appellant writ petitioner sold 3161.86 metric tons of jute twine. While clearing the goods in the domestic tariff area the said unit of the appellant/writ petitioner paid only central excise duty; customs duty was not paid. Further the said unit transferred some of the finished good to its main unit in the domestic tariff area during 1989 - 1990 and 1990 to 1991. Both customs and central excise duties were not paid. These duties amount to Rs.7,08,98,160/-. Applicable interest @ 20% per annum from the date of clearance of the goods has also been claimed by the customs authorities.
It is contended on behalf of the appellant/petitioner that the duty which was sought to be levied was under the proviso to section 3 of the Central Excise Act 1944 which is as follows:
"Provided that the duties of excise which shall be levied and collected on any [excisable goods which are produced or manufactured, -
" (i) * * * * *
(ii) by a hundred percent export-oriented
undertaking and brought to any other place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in 4 force, on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value; the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962( 52 of 1962) and the Customs Tariff Act, 1975( 51 of 1975)."
Therefore, central excise duty on excisable goods produced by a 100% export oriented undertaking would be according to the provisions of the Customs Act 1962.
The ground of the appellant/writ petitioner is that it is central excise duty and that a customs officer had no power to issue the show cause notice or to adjudicate upon it. Therefore, the show cause notice and all proceedings emanating from it are invalid and a nullity.
The learned counsel for the petitioner has cited the following decisions which are discussed below.
In Commissioner of C. Ex. & Customs - v - Suresh Synthetics, reported in 2007(216) E.L.T. 662 (S.C.) a show cause notice was issued to the assessee demanding Customs duty with penalty and interest with regard to a 100% export oriented unit for clearance in the domestic tariff area. The Supreme Court while upholding the order of the tribunal said that such duty was excise duty and not customs duty. It was held that the show cause notice was defective. He has also 5 cited Commissioner of C. Ex. & Customs, Mumbai - v - I.T.C. Ltd. reported in 2006 (203) E.L.T. 532 (S.C.), and Collector of Central Excise, Bhubaneshwar
- v - Re-Rolling Mills reported in 1997(94) E.L.T. 8 (S.C.), and argued that since there was provisional assessment and no final assessment, there could not be any demand for duty by the show cause notice. We were also shown Directorate of Enforcement - v - Deepak Mahajan, reported in 1994 (70) E.L.T. 12 (S.C.) to argue that powers under the Customs Act, 1962 and Central Excise Act, 1944 are to be exercised by officers under those Acts. On the other hand, Mr. N.C. Roychowdhury, learned Senior Counsel for the respondents cited ONGC Ltd. - v - Sendhabhai vastram Patel and others, reported in (2005)6 Supreme Court Cases 454. He has also referred to M/s. D. Cawasji and Co., etc., etc., - v- State of Mysore and another, reported in AIR 1975 Supreme Court 813 and Bombay Municipality - v - The Advance Builders and others, reported in AIR 1972 SC 792. The submission which was advanced was that the jurisdiction of the court under Article 226 of the Constitution was equitable and discretionary. In the facts and circumstances of this case this decision ought not to be exercised in favour of the appellant/ writ petitioner.
Further, he has cited various provisions of the Customs and Central Excise Act. He submitted that this duty was computed as a customs duty but is only collected as central excise duty. He has cited various notifications where 6 customs officers can act as central excise officers. He has relied on the following notifications:
"(a) Notification No. 45/67 dated 01.04.1967, whereby Central Board of Excise and Customs have appointed Customs Officer as Central Excise Officers;
(b) Notification No. 40/97(NT) dated 10.09.1997 as amended uptil 16.03.2000 gives full gives full territorial jurisdiction of Calcutta and Holdia Port, Dum Dum Airport, and upto high water mark of river Hooghly to Customs Officer.
(c) EOU Administrative Control over Export Oriented Units, Circular No. 72/2000-Cus-Dated 31.08.2000 on Customs Officers;
(d) Notification No. 38/2001 dated 26.06.2001 whereby Customs Officers were authorized to act as Central Excise Officers in respect of 100%EOU. All the above notifications have been filed in Court being annexure to Affidavit of Document dated 17.11.2006.
(e) P.D. Bond dated 08.12.1998 in favour of the President of India through the Commissioner of Customs."
Under section 12E (renumbered after amendment) of the Central Excise Act, 1944 a central excise officer may exercise the powers and discharge the duties conferred or imposed by this Act on any other central excise officer who is subordinate to him. The appointment of customs officers is dealt with in section 4 of the Customs Act.
DISCUSSION AND FINDINGS:
In our opinion, the flaw in the show cause notice is fundamental. The subject says "non-realization of customs duty". The body of the show cause notice does not disclose how there is non-realization of customs duty or short payment of it. 7 However, documents have been brought on record including an affidavit-in- opposition and notes of submission purporting to establish what was to be collected was central excise duty and that such duty is computed as customs duty, but nevertheless, collected as central excise duty. The customs authorities by virtue of the above notifications had power to issue the show cause, it was submitted.
In our opinion, whether they have the power to do so or not is very secondary. No case has prima facie been made out against the appellant/ writ petitioner which he can be required to answer. Under well settled principles if a show cause notice does not disclose any contravention or infraction of any provision of law the person or such show cause notice is a nullity. But, here, it is not such a case. The grounds made in the show cause notice allege that customs duty of Rs.7,08,98,160/- is due but the reasons in support of such claim in the show cause notice are very ambiguous so much so it is impossible to understand anything else by reasonably any prudent person. Therefore, the appellant/ writ petitioner, in our opinion, is not in a position to answer such show cause notice, which is against the rules of natural justice.
The court in its appellate jurisdiction should not, on the basis of submissions made in the affidavit or in the notes of submission or from the bar, allow to incorporate the missing ingredients in the show cause notice. That is plainly impermissible. The show cause notice has to be adjudged the way it is issued. The duty described in the show cause notice is described as customs duty and 8 the show cause notice has been issued by a customs officer. The court should not travel beyond this point and try to unearth the details of the matter so as to justify or the unjustify the show cause notice.
The learned judge passing the final judgment and order dated 12th May 2003 in the writ application addressed the main issue correctly at page 239 of the paper book when he said ""The principal question which falls for a decision is "whether the show cause notice and the final determination made by the customs authority are acts without jurisdiction 7"." Then His Lordship proceeded to discuss the principle of restitution in detail. Then, the purported subject matter of the show cause notice was discussed in great detail. There is discussion as to how the appellant from a 100% export oriented unit was permitted to operate in a domestic tariff area unit. Several earlier orders of this court were discussed in detail including those in an earlier suit filed by the appellant being suit No. 1044 of 1987. The learned Judge of the First Court has also discussed the point of limitation taken by the appellant, that the proposed assessment was barred by limitation and that the contention of the respondents that the earlier assessment was provisional was not tenable. In the judgment and order under appeal we do not find a discussion of the real issue in the writ application, that is, does or does not the show cause notice disclose prima facie case to initiate action. We think that substantially different arguments might have been made before the court below. The point of restitution was not taken before us at all. The point of limitation has been taken. 9 The learned judge of the court below seems to have dismissed the writ application only on the ground that in his opinion, the writ petitioner had not come to court with clean hands. Apart from that we do not find any other cogent reason in the judgment and order for dismissal of the writ application. The only reason why the show cause notice falls through, in our opinion, is that it is completely devoid of any grounds or reasons or particulars in support of its claim for short paid customs duty against the appellant/writ petitioner. Therefore, on the basis of the principles in the above Supreme Court judgments this show cause notice has to be set aside.
We think if a point of limitation has been raised, in the facts and circumstance of the case it cannot be appreciated at all because the show cause notice itself is atrociously vague. This question which is mixed question of facts and law cannot be gone into unless the show cause notice is apparently valid in all senses. Hence, there is no necessity of going into this question We set aside the judgments and orders dated 12th May 2003 and 12th January 2006 and the respective show cause notices. However, this will not preclude the respondents or the Central Excise Authorities to issue a fresh show cause notice in accordance with law. Since the Central Excise authorities are not a party to these proceedings, the Registrar, Original Side will send a certified copy of this order to the Chief Commissioner of Central Excise, Kolkata. The appeals are allowed to the above extent.10
Urgent certified photocopy of this judgment and order, if applied for, to be provided upon complying with all formalities.
I agree, (I.P. MUKERJI, J.) (KALYAN JYOTI SENGUPTA, J.)