Gujarat High Court
M/S Pacific Powertech Solutions vs Union Of India on 4 March, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025
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Reserved On : 27/11/2024
Pronounced On : 04/03/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10754 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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M/S PACIFIC POWERTECH SOLUTIONS
Versus
UNION OF INDIA & ORS.
==========================================================
Appearance:
DR SUJAY KANTAWALLA WITH MR ANUPAM DIGHE WITH MR KARTIKEY
D KANOJIYA(11031) for the Petitioner(s) No. 1
MR DEVANG VYAS ADDITIONAL SOLICITOR GENERAL WITH MR
SIDDHARTH DAVE WITH MR CB GUPTA(1685) for the Respondent(s) No.
1,2,3,4,5
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Dr.Sujay Kantawalla Page 1 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined with learned advocate Mr.Anupam Dighe with learned advocate Mr.Kartikey D. Kanojiya for the petitioner and learned Additional Solicitor General Mr.Devang Vyas with learned advocate Mr.Siddharth Dave with learned advocate Mr.C.B. Gupta for the respondents.
2. Rule, returnable forthwith. Learned advocate Mr.Siddharth Dave and learned advocate Mr.C.B.Gupta waives service of notice of rule for on behalf of the respective respondents.
3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs :
"a. That this Hon'ble Court may be pleased to hold and declare that i. the investigation carried by the Page 2 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined office of Respondent No.2 is not just and fair and the conduct of the Respondents against the Petitioner herein in pursuance to F.No.GEN/INT/MISC/26/2023, is unwarranted and illegal;
ii. that the continuous provisional attachment of the Petitioner's Bank Account No.6311621118 and Petitioner's Proprietor's Bank Account No. 7211434006 is without any authority of law;
b. That this Hon'ble Court may be pleased to issue a Writ of Mandamus or Writ in the nature of Mandamus or any other appropriate Writ, Order or Direction directing Respondents, their servants, subordinates, and agents:
i. to withdraw Summons dated
07.06.2024 bearing F.No.
F.No.GEN/INT/MISC/26/2023 (Annexure
- C) and any subsequent Summons
issued to the Petitioner;
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NEUTRAL CITATION
C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025
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ii. to refrain from issuing further Summons to the Petitioner seeking for documents related to M/s S.T. Electricals;
iii. to defreeze the Petitioner's Bank Account No. 6311621118 and Petitioner's Proprietor's Bank Account No.7211434006 held with Respondent No.4 bank;
c. That this Hon'ble Court may be pleased to issue a Writ of Certiorari or Writ in the nature of Certiorari or any other appropriate Writ, Order or Direction calling for records and proceedings dealing with Summons dated 07.06.2024 bearing F. No. F. No. GEN/INT/MISC/26/2023 (Annexure- C) and after going into the legality, propriety and validity thereof, to quash and set aside the same.
d. That this Hon'ble Court may be pleased to issue a Writ of Prohibition Page 4 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined or any other appropriate Writ, Order or Direction, directing the Respondents Nos. 2, and 3, their servants, subordinates, and agents to cease and desist from issuing further Summons to the Petitioner in terms of Investigation under F. No. GEN/INT/MISC/26/2023;
e. Pending the hearing and final disposal of the present Petition, this Hon'ble Court be pleased to direct the Respondents:
i. to refrain from issuing further Summons to the Petitioner seeking documents related to M/s S.T. Electricals;
ii. to defreeze the Petitioner's Bank Account No. 6311621118 and Petitioner's Proprietor's Bank Account No. 7211434006 held with Respondent No. 4 bank;
iii. to refrain from taking any
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NEUTRAL CITATION
C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025
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coercive steps against the
Petitioner in furtherance to
proceedings under F.
No.GEN/INT/MISC/26/2023;"
4. Factual matrix giving rise to this petition can be summarised as under :
4.1. The petitioner is engaged in business of trading of (Cold Rolled Grain Oriented) CRGO Strips, Sheets, etc. During Financial Year 2023-24, the petitioner made purchase and sale transactions with one M/s. S. T. Electricals for "CRGO Strips".
4.2. The respondent No.2-Commissioner of Customs (Prevantive), Jaipur initiated inquiry against M/s. S. T. Electricals in respect to an import made by it vide Bill of Entry No.5525864 dated 15.04.2023.Page 6 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025
NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined 4.3. It is the case of the petitioner that on 12.07.2023, the petitioner found that its Bank Accounts having Bank Account No.6311621118 and Bank Account No.7211434006 with Kotak Mahindra Bank Limited were put under a "Debit Freeze" by the respondent No.4- Kotak Mahindra Bank.
4.4. On inquiry, the petitioner was informed that the said action was carried out as per directions from the respondent No.2. Thereafter, the respondent No.3-Superintendent of Customs (Preventive), Jaipur issued summons on 17.05.2024 to the proprietor of the petitioner firm in view of the aforesaid investigation seeking documents such as purchase/sale documents in respect of M/s. S. T. Electricals, books of accounts, ledger, Page 7 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined Bank Accounts details and called upon the petitioner to remain present to tender the oral statement. Another summons dated 07.06.2024 was also issued upon the petitioner seeking the same documents.
4.5. The petitioner thereafter, by letter dated 14.06.2024 sent via Email dated 15.06.2024 addressed to the respondent No.3 raised objections against issuance of summons contending that the respondent No.3 has no jurisdiction to investigate the local purchases made under appropriate invoice and after due payment of local taxes by the petitioner. The petitioner also requested to withdraw the summons.
4.6. The petitioner thereafter, by Email dated 21.06.2024 along with letter dated Page 8 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined 12.06.2024 (inadvertently dated as 12.06.2024 instead of 21.06.2024) submitted copies of invoices and ledger in respect of M/s. S. T. Electricals.
4.7. The petitioner has thereafter preferred this petition.
4.8. Learned advocate Dr. Sujay Kantawalla for the petitioner, at the time of hearing on 01.08.2024, submitted that the respondent could not have continued the provisional attachment of the Bank Accounts of the petitioner after expiry of one year and relied upon the instruction No.19/2024-Customs dated 22nd July, 2024 issued by the Central Board of Indirect Taxes and Customs (CBIC). Considering such submissions, notice was issued upon the respondent vide order dated 01.08.2024. Page 9 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025
NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined 4.9. In response to the notice issued on 01.08.2024, the respondent Nos.2 and 3 filed affidavit-in-reply wherein, the following averments were made :
"5. That, on the basis of an alert received from the Directorate of Revenue Intelligence, Gandhidham that certain importers are importing sub-standard Cold Rolled Grain Oriented (CRGO) Strips/Coils and declaring them as BIS- compliant by submitting false documents that the CRGO Strips/coils pertain to M/s. Thyssenkrupp Electrical Steel, Germany (a BIS registered Global Firm), the investigation was initiated in the matter of goods, namely CRGO Strips (CTH 72261100) imported by M/s. S. T. Electricals, G-58, RIICO Industrial Area, Manda, Jaipur (IEC EDKPS784N), vide Bill of Entry (BoE) No. 5525864 dated 15.04.2023. The importer had filed subject Bill of Entry through Customs Page 10 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined Broker Max Shipping Services at Port ICD, CONCOR, Kanakpura, Jaipur. The investigation revealed that M/s. S. T. Electricals had been involved in import of CRGO Steel Coils/Strips on the basis of forged Mill Test Certificates, to make these goods appear BIS -compliant. Apart from Bill of Entry No.5525864 dated 15.04.2023, it has found that all the past imports made by M/s. S. T. Electricals were on the basis of forged/fake Mill Test Certificates submitted before the Customs Authorities and mis-declaring the description of goods for circumventing the restriction / prohibition imposed on sub-standard CRGO Steel of 1094.47 MT of CRGO Electrical Steel Coils/Strips etc. having assessable value of Rs.13,86,47,042/- from ports situated under the Jurisdiction of Commissioner of Customs, Jodhpur Hqrs at Jaipur, which also appeared grossly undervalued. These sub-standard imported CRGO Steels have been supplied by them to the limited firms, mostly to the Petitioner Page 11 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined firm or sister concerns/related parties to the Petitioner firm. It is also revealed during the investigation that Directorate of Revenue Intelligence, Mumbai had booked a case against the Petitioner during FY 2018-2019 with exactly similar modus operandi involving similar suppliers and Sugrive Meena Commissioner common beneficiaries. Moreover, overseas suppliers M/s Recon Metals GMBH-Germany, M/s MIKO Trading GMBH-Germany, which are common in present case, were also the suppliers in the case of M/s Naravan Power Solution, who dealt with the Petitioner to supply sub-standard CRGO Steel along with forged Mill Test Certificates.
6. That, the above facts, transactions, purchase of substandard CRGO Steels from M/s ST Electricals by the Petitioner therefore require further investigation which cannot be ascertained in absence of oral evidences, therefore Summon dated 17.05.2024 and 07.06.2024 under Section 108 of the Customs Act, 1962, Page 12 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined for submission of documents as well as providing statement/Oral Evidences have been issued to the Petitioner. The Petitioner has not appeared in-person before the investigating officer, resultantly not complied with the Summons. Instead of cooperating in the investigation, the Petitioner has approached this Hon'ble Court with clear intent to avoid the investigation. The petitioner, vide its letters, has itself concluded the investigation, that he has no role in the matter and summons issued are unwarranted. The Petitioner has been found to have deep business connections, banking transactions, goods transactions with Shri Sohan Lal Saran Proprietor of M/s. ST Electricals, Jaipur and Mumbai and role of the Petitioner is subject to investigation, which is pending at the level of the Investigating Officer. The suomotu conclusion of the Petitioner that he is nowhere involved in the case and approaching to this Hon'ble Court is mere attempt with ill intent to avoid and delay the departmental investigation Page 13 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined and wasting precious time of the Hon'ble Court as well as Department."
4.10. Referring to the above averments, reliance was also placed on Section 108 of the Customs Act, 1962 (for short 'the Act') to point out that the petitioner has not remained present pursuant to the summons issued under Section 108 of the Act. It was also contended that M/s. S.T.Electricals had also preferred a Writ Petition before Hon'ble Rajasthan High Court and no stay is granted by Hon'ble Rajasthan High Court on investigation to be carried out by the respondent Nos.2 and 3 which is under progress. It was contended that the investigation against the petitioner is under progress and the petitioner is not co- operating and Bank Accounts were provisionally attached on 12.07.2023 under Section 110(5) of the Customs Act,1962 (for short 'the Act') to Page 14 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined safeguard the Government Revenue. It was also contended that the petitioner never approached the respondents for vacating the provisional attachment but directly has preferred this petition.
4.11. The petitioner filed rejoinder to the said affidavit placing on record various orders passed by Hon'ble Rajasthan High Court in D. B. Civil Writ Petition No.10480 of 2023 filed by M/s. S.T.Electricals to point out that investigation in case of S.T.Electricals is going on, however, respondent Nos.2 and 3 have no jurisdiction to carry the investigation with respect to the goods purchased by the petitioner from M/s. S.T.Electricals as the petitioner has purchased the goods from local market which is alleged to have been imported by Page 15 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined M/s.S.T.Electricals.
4.12. Respondent Nos.2 and 3 thereafter filed additional affidavit-in-reply dated 27.08.2024 placing on record that in the affidavit filed on 2nd August, 2024, it was inadvertently mentioned about the investigation by Director of Revenue Intelligence, Mumbai and correct facts were stated with an apology in paragraph No.2 which is reproduced as under:
"2. That, it is to submit that it is revealed during the Investigation that Directorate of Revenue Intelligence, Mumbai had booked a case during FY 2018-2019 against Shri Narendra Tarachand Purohit (Proprietor of M/s. Shree Chamunda Enterprises) and others with exactly similar modus operandi involving similar suppliers. During that investigation, Shri Narendra Page 16 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined Tarachand Purohit, Proprietor of M/s. Shri Chamunda Enterprises had inter- alia stated in his statement dated 21.02.2019, recorded under Section 108 of the Customs Act, 1962 that his sister Rinku Purohit managed the accounts i.e. sale and purchase of the CRGO steel both in international and domestic market, of all importing companies being run by them; that his brother-in-law Jagdish Purohit (who is proprietor of the present Petitioner M/s. Pacific Powertech Solutions) looked after the sale of the imported CRGO steel in local market. Therefore, essence of submission of respondent was that since petitioner has dealt with such goods in similar modus in that similar matter too. Moreover, the concerned noticees of the said SCNs are sister concerns/related parties to the petitioner as well as are in common in the present case. Annexed herewith and marked as ANNEXURE - R/1 is the copy of Show Cause Notice F.NO. DRI/MZU/C/INT- 45/2019 dated 20.08.2019."Page 17 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025
NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined 4.13. Thereafter, the matter was heard from time to time. Learned Advocate Mr.Sujay Kantawalla for the petitioner submitted that the petitioner has purchased the goods from the local market which is stated in the reply filed by the petitioner pursuant to the summons issued under Section 108 of the Act and that the respondent Nos.2 and 3 lack the jurisdiction to question or investigate local purchases made against proper invoices and after duly paying the local taxes. It was further stated that the goods purchased by the petitioner from M/s.S.T.Electricals were further traded and sold under appropriate invoices. It was submitted that the goods were sold by the petitioner to one M/s.Mayur Enterprises and similar show-cause notice was issued as well as action was taken by the Page 18 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined respondent Nos.2 and 3 in case of M/s.Mayur Enterprises. M/s.Mayur Enterprises therefore preferred Writ Petition (L) No.19554 of 2023 before the Bombay High Court. The Bombay High Court by Judgment and Order dated 08.08.2023 allowed the petition on the same facts wherein, it is observed as under :
"3. The petitioner, in the course of his business, entered into an agreement with one Pacific Powertech Solutions (Pacific) for purchase of CRGO Strips. The petitioner made market enquiries and found that Pacific had purchased the said goods from one GSD Technology, who, in turn, had purchased the goods from one M/s ST Electricals, who is the actual importer of the goods. M/s ST Electricals is located in Jaipur. The petitioner purchased these goods from Pacific under Invoice No. 043 dated 2- 7-2023, No. 044 dated 2-7-2023, No. 045 dated 3-7-2023 and No. 046 dated 5-7- 2023. The petitioner, in the course of Page 19 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined his business, sold the above referred goods, which were purchased from Pacific to one Narayan Power Solutions and one Transel Engineers over the period of 4 July 2023 to 11 July 2023 under various invoices, which are annexed to the petition. The petitioner claims to be a bonafide purchaser of the goods as originally imported by M/s S. T. Electricals and cleared for home consumption.
4. Meanwhile, the Customs Authorities at Jaipur initiated proceedings against M/s ST Electricals alleging undervaluation of goods. M/s ST Electricals has challenged the said action of the authorities before the Rajasthan High Court in Writ Petition No. 10480 of 2023, which is stated to be pending. The Customs Authorities, during the investigation, found that M/s ST Electricals had sold these goods to GST Technology, who, in turn, has sold to Pacific and Pacific has sold goods to the petitioner and the Page 20 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined petitioner has further sold these goods in the market."
4.14. Thus, it is clear from the aforesaid order that the petitioner-M/s.Pacific Powertech Solutions purchased goods from GST Technology and sold the goods to M/s.Mayur Enterprise.
4.15. The Hon'ble Bombay High Court in case of M/s.Mayur Enterprise after considering the submissions of the parties held as under:
"11. Submissions of the Petitioner: The petitioner has contended that he has not imported the goods and that he is a bonafide purchaser in the chain of sale and purchase transaction starting from sale by M/s ST Electricals, who was the original importer. The petitioner submits that since he is not the importer of the goods, the impugned action cannot be initiated against him. The petitioner has further contended Page 21 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined that the goods, which were purchased by him from Pacific, have been sold to Narayan Power Solutions and another and since therefore goods imported by the M/s. ST Electricals are not in his possession. Hence, there cannot be any detention of the goods, which are not the subject matter of original import by M/s. ST Electricals so that there could be a charge of non-payment of duty or for that matter evasion of duty by the petitioner. The petitioner has further submitted that there is no demand or show cause notice against him and, therefore, the attachment of the saving bank account and detention of goods is also without jurisdiction. The petitioner has, therefore, prayed that the saving bank accounts be defreezed, and the action of the respondents in detaining of the goods and documents is without jurisdiction.
12. Submissions of the respondents: Per contra, the respondents have contended that they have power to seize the goods and documents under the provisions of Page 22 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined Section 110(1) of the Act and under the first proviso to Section 110(1) of the Act since the said goods were voluminous in nature, they have been detained by the respondents and not seized, as contended by the petitioner. The respondents have further sought to justify their action by relying upon Sections 28, 110 (5) and 135 of the Act. It is the case of the respondents that they have power to detain the goods, as the goods, which they have detained, are of the same description though not the same goods, which were imported by M/S ST Electricals and, therefore, the impugned action is justified.
ANALYSIS
13. We may clarify that our present analysis is restricted only to the facts of the petitioner before us and in no way should be construed as expression of any views by us on any other pending proceedings.Page 23 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025
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14. At the outset, we wish to observe that as per the affidavit of the respondents dated 31 July 2023, the goods, which were imported by M/s ST Electricals, and which are subject matter of investigation by the Rajasthan authorities, are CRGO Strips/Sheets, which are imported in violation of BIS conditions. However, as per the panchanama dated 26 July 2023, the goods detained are of the description CRGO-Slit Coil and CRGO- Steel Scrap. These two goods appear to be not the same goods. In our prima facie view, the affidavit-in-reply of the respondents would militate against the case of the respondents that the goods, which are detained, are the goods, which were originally imported by M/s ST Electricals. The respondents themselves admit in the reply that goods purchased by the petitioner, which were originally imported by M/s ST Electricals, are already sold by the petitioner. If that be so, then the Page 24 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined said goods cannot be of the ownership of the petitioner. Therefore, the respondents are not contending that they have detained the same goods, which were imported by M/s ST Electricals, but are of similar description which matches with purchase invoice of the said similar description goods. Thus, in our view, on such admission by the respondents the impugned action of detaining goods of the petitioner, would be rendered without jurisdiction.
15. In the context in question it is necessary to note the relevant provisions of the Customs Act.
16. Section 2(14) of the Act defines "dutiable goods" to mean any goods, which are chargeable to duty and on which duty has not been paid. Section 2(15) defines "duty" to mean a duty of customs leviable under the Customs Act. Section 2(22) defines "goods" to include vessels, aircrafts, vehicles, Page 25 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined stores, baggage, currency, negotiable instruments and any other kind of movable property. Section 2(25) defines "imported goods" to mean any goods brought into India from a place outside India but does not include goods, which have been cleared for home consumption. Section 2(26) defines "importer" to mean in relation to any good at any time between their importation and the time when they are cleared for home consumption to include any owner, beneficial owner or any person holding himself out to be the importer. Section 2(34) of the Act defines "proper officer" to mean the officer of customs, who is assigned the functions by the Board or the Principal Commissioner of Customs and Customs or Commissioner of Customs.
17. Section 28 of the Act provides for recovery of duties not levied or not paid or short levied or short paid. Section 28(1) (a) provides that the proper officer shall within the time Page 26 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined provided therein from the relevant date serve a notice on the person chargeable with the duty or interest, which has not been so levied or paid or short levied or short paid. Section 28-AAA provides for recovery of duties in certain cases and Section 28-BA provides for provisional attachment to protect revenue in certain cases, where the proper officer is of the opinion that for the purpose of protecting the interest of revenue, it is necessary so to do by order in writing attached provisionally any property belonging to the person on whom notice is served under subsection (1) or sub-section (4) of section 28 or sub-section (3) of section 28-AAA or Sub-section (2) of Section 28-B as the case may be.
18. Section 110 of the Act provides for seizure of goods, documents and things, if the proper officer has reason to believe that any goods are liable to confiscation under this Act. Sub-section (3) of Section 110 provides Page 27 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined that the proper officer may seize any documents or things which in his opinion will be useful for or relevant to any proceedings under this Act.
19. The analysis of the above provisions of the Act would show that once the goods are cleared for home consumption and enter the domestic market for sale, such goods cannot be seized from the subsequent purchasers and that too if the third person against whom action is initiated has already sold the goods in open market and when there was no demand or proceedings pending for recovery of duty etc. against such third person. In the present case, the goods imported by M/s ST Electricals were initially cleared for home consumption by the said importer and the said goods have changed hands in open market and is also out of the possession of the petitioner. The respondents in their affidavit in reply have referred to the communication from Jodhpur Customs Page 28 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined authorities dated 8 July 2023 and 12 July 2023 wherein the Jodhpur authorities have directed the respondents to seize the very goods imported by M/s ST Electricals. In the said reply, the respondents have stated that these very goods have been sold by the petitioner to Narayan Power Solutions. In our opinion, the situation would have been different if the Customs were to bring some materials to show that the goods in question were being allegedly dealt by M/s. ST Electricals in connivance with the petitioner or that the petitioner was not a bonafide third party purchaser. If this be the case, then the action of detaining the goods of the petitioner was contrary to the revenues own stand and this would hold good for attachment of the bank account. Thus, in our view, on the facts of the present case, the impugned action in detaining the goods in question (some other goods of the petitioner) is contrary to the Page 29 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined provisions of the Act as noted by us more so when same is not pursuant to any recovery of pending dues of the petitioner or proceedings pending against the petitioner under the Act.
20. Section 28 of the Customs Act relied by the respondents deals with the recovery of duties not levied or not paid or short levied or short paid or erroneously refunded. We have perused the provisions of Section 28 of the Act. We wonder as to how this provision which deals with recovery of duties would empower the respondents to justify the detention of the goods under consideration and the attachment of the bank account, would be applicable in the present case. Section 28 nowhere provides for detention of the goods and attachment of the bank accounts more so in the absence of any demand of any duty or penalty or any. proceedings pending against the petitioner. Therefore the reliance placed by the respondents on the Page 30 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined provisions of Section 28, is misconceived.
21. Section 110(1) of the Customs Act also would not assist the case of the respondents. The said provision provides that if the proper officer has reason to believe that any goods are liable to confiscation under the Act, he may seize such goods. Proviso to Section 110(1) provides that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer. There is no material to prima facie show that the goods which are detained as observed above by the respondents are the very goods which were imported by M/s ST Electricals and which were purported to be in the possession of the petitioner. Further Section 110(5) of the Act empowers the proper officer during any proceedings Page 31 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined under the Act provision is attracted to provisionally attach bank account to protect the interest of revenue or to prevent smuggling. We wonder as to how this provision is attracted.
22. Even otherwise, on the facts of the present case, the respondents have not referred to any material or have shown us any documents, as to how the attachment of the petitioner's bank account is to protect the interest of revenue or to prevent smuggling. Therefore, on both these counts attachment of the saving bank account cannot be held to be legal and valid. Further party purchaser of the goods in question, this provision also may not be applicable. the provision of Section 111 provides for confiscation of improperly imported goods. Prima facie, the petitioner being a third party purchaser of the goods in question, this provision also may not be applicable.Page 32 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025
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23. We may also observe that if the case of the respondent is accepted, that the department can detain any goods in the hands of subsequent purchaser of the goods who has purchased them from the open market, then it would lead to an anomalous and chaotic situation. Illustratively, where Mr. A who imports goods and sells them to third parties which are subject matter of various transactions leading to Mr. Z who is a third party purchaser from the open market, such goods cannot be subject matter of any detention by the Customs Authorities merely because import of goods by Mr. A is being investigated.
24. The respondents have also relied upon the provisions of Section 135 to justify their actions. Section 135 deals with evasion of duty and it provides for prosecution, if any person in relation to any goods in any way knowingly is concerned with mis- declaration of value or in any Page 33 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under this Act or any other law for the time being in force with respect to such goods; or acquires possession of or is in any way concerned in carrying, removing, depositing, harboring, keeping, concealing, selling or purchasing or in any other manner dealing with such goods which he knows or has reason to believe are liable to confiscation under section 111 or section 113, as the case may be. In our view, this provision would empower the respondents to initiate criminal action against the persons who are involved and satisfy the pre-condition under sub-section (1) of Section 135 of the Act. In the present case there is no such action which is under challenge or which is initiated and therefore justification sought to be made by the respondents of the impugned action on this ground is also without any authority of law.Page 34 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025
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25. Further section 28 BA of the Act provides for attachment of any property of a person on whom notice under sections 28(1), 28(4), 28-AAA(3) or 28B (2) of the Act is served. In the present case, the respondents have not served notice/s under any of these sections on the petitioner and therefore even on this account the respondents are not justified in attaching bank account and detaining the goods and documents.
26. The respondents have tried to justify their action by stating that they have acted upon communication from the Authorities at Jaipur and they themselves have not taken the action independently but at the behest of the Commissioner, Jaipur. The respondents in the affidavit-in-reply had referred to a communication from Jaipur authority but same is not annexed to the reply nor shown to us. We have not been shown by the respondents any other communication which supports their Page 35 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined contentions that the action is taken at the behest of the communication which even otherwise the respondents could not have acted upon without applying their mind.
27. During the course of the hearing, the respondents have contended that they have not seized the goods but they have only detained the goods. On a query as to whether the department would have the powers to detain the goods in the facts of the present case, we have not been pointed out any such provision which would empower the respondents in the facts of present case, to detain the goods.
CONCLUSION
28. In view of above discussion, the impugned action of the respondents in detaining the goods in question and attaching the bank account of the petitioner without there being any demand due from the petitioner or any proceedings pending is without jurisdiction and without any authority Page 36 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined of law. Accordingly, we pass the following order:
ORDER
(i) We declare that the detention of the goods described in Table A of the panchanama dated 26 July 2023 is illegal and the same shall be revoked on a copy of this order being presented by the petitioner to the concerned authority;
(ii) The respondents are directed to return the documents which are mentioned in Table-B of the panchanama dated 26 July 2023;
(iii) The respondents shall defreeze Savings Account No. 809510264 of the petitioner held with Indian Bank and intimate the communication of the said defreezing to the bank;
(iv) Needless to observe that the petitioner shall co-operate with the Page 37 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined respondents, in connection with proceedings against M/s ST Electricals is concerned;
(v) The petition is allowed in terms of the above order. No order as to costs."
4.16. Thus, from the above, it is clear that the goods in question have already been sold and passed on to M/s.Mayur Enterprise and in the case of M/s.Mayur Enterprise, the Hon'ble Bombay High Court has directed the respondent Nos.2 and 3 to defreeze the account of the said firm and also directed the petitioner before it to co-operate with the respondents. Learned advocate Dr.Sujay Kantawalla thereafter, tendered the draft amendment to join Mr. Sugrive Meena as respondent No.5 who in capacity of Commissioner of Customs (Preventive) initiated the proceedings against Page 38 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined the petitioner. The said draft amendment was allowed by order dated 25th September, 2024 and notice was issued upon the newly joined respondent No.5-Mr. Sugrive Meena in his personal capacity.
4.17. It appears that thereafter, affidavit- in-reply was filed by the respondent No.5 affirmed on 08.10.2024 justifying the action taken by him against the petitioner along with letter dated 08.10.2024 addressed to the Kotak Mahindra Bank to defreeze the bank account of the petitioner with immediate effect. The petitioner has also filed a rejoinder contending that the respondent No.5 has failed to explain the assumption of jurisdiction to initiate the investigation against the petitioner for the goods imported by M/s.S.T.Electricals considering that the goods Page 39 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined purchased in local market are deemed to be duty paid goods.
5.1. Learned advocate Dr. Sujay Kantawalla therefore submitted that the grievance of the petitioner regarding provisional attachment of the Bank Account is now redressed in view of the letter dated 08.10.2024 annexed with affidavit-in-reply filed by the respondent No.5. It was submitted that however, the grievance of the petitioner regarding continuation of investigation by the respondent-Authorities remains, as the respondent-Authorities could not have initiated the proceedings against the petitioner vis-a-vis the goods in question purchased by the petitioner which was imported by M/s. S.T.Electricals, more particularly, when the petitioner has furnished all the relevant documents in Page 40 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined response to the summons dated 12.07.2023. 5.2. It was further submitted that the petitioner has already sold the goods to M/s.Mayur Enterprise which is directed to co- operate in the investigation as per the order passed by the Hon'ble Bombay High Court. It was therefore submitted that the respondent- Authority has continued the investigation only with a view to harass the petitioner which is also evident from the reply filed by the respondent No.5 who has been joined in his personal capacity.
5.3. It was submitted by learned advocate Mr. Kantawalla that the basis of the allegations made against the petitioner by the respondent No.5 in the affidavit upon multiple investigations is nothing but an attempt to Page 41 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined mislead the Court and divert the attention from primary issue of jurisdiction raised in the petition. It was submitted that the goods purchased by the petitioner was already cleared for home consumption and therefore, it ceases to be imported goods, more particularly, when the petitioner has produced the documents with the reply.
5.4. It was therefore submitted that the respondent No.5 has issued the letter dated 08.10.2024 informing the respondent No.4-Bank to unattach the bank account of the petitioner clearly shows the malafide of the respondent, as the bank accounts were ordered to be unattached during the pendency of the petition.
5.5. It was therefore submitted that the Page 42 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined investigation initiated against the petitioner are liable to be dropped and impugned summons are required to be quashed and set aside in the facts of the case.
6.1. Per contra, learned Additional Solicitor General Mr.Devang Vyas for the respondents submitted that the petitioner has purchased the goods imported by M/s.S.T.Electricals who has been found engaged in the business of sub-standard CRGO Steel strips which is confirmed to be bogus/forged by overseas issuer of Mill Test Certificates (for short 'the MTCs').
6.2. It was submitted that as per the provisions of Section 2(33) of the Act which defines 'prohibited goods' and Section 2(39) which defines 'smuggling' read with Section 11A(a) of the Act which defines 'illegal Page 43 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined imports' and 112(b) of the Act which stipulates that any person who acquires possession of or is in any way concerned in carrying, removing, depositing, harboring, etc., and in any other manner dealing with any goods which he knows or has reason to believe are liable to be confiscation under Section 111 of the Act shall be liable for penalty not exceeding the value of the goods or five thousand rupees, whichever is greater. 6.3. It was submitted that the petitioner is the beneficiary of illegally imported prohibited goods along with other purchasers like M/s.Narayan Power Solutions, M/s.Chamunda Enterprise, M/s.Mayur Enterprise who have formed a nexus by whom M/s.S.T.Electricals is being operated and managed for illegal imports of such sub-standard CRGO Steel and therefore, the petitioner is defacto importer being the Page 44 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined beneficiary of such goods.
6.4. It was submitted that import of CRGO are to be complied with Steel and Steel Products (Quality Control) Order, 2020 dated 22.07.2020 of Ministry of Steels and Instruction dated 09.07.2024 issued by CBIC stipulating the norms and BIS compliances for such imports and non-compliance of such guidelines and importing goods on the basis of the forged documents is liable to be classified as prohibited goods as per the provisions of Section 2(33) of the Act. 6.5. It was further submitted that as per Section 135 of the Act, CRGO goods purchased by the petitioner which was imported by M/s.S.T.Electricals on the basis of the forged MTCs didn't bear BIS Marks and therefore, not Page 45 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined only importing but also selling and distribution of such goods by importer as well as its beneficiaries would be liable for penal action under the provisions of the Act. 6.6. It was therefore submitted that the goods purchased by the petitioner from M/s. S.T.Electricals are prohibited and are illegally imported and hence, liable for confiscation under Section 111(d), (m) and (o) of the Act.
6.7. Learned Additional Solicitor General Mr.Devang Vyas along with learned advocate Mr.Siddharth Dave explained in detail the modus operandi of M/s.S.T.Electricals and others including the petitioner by referring to the bill of entries filed by M/s.S.T.Electricals for import of such goods Page 46 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined to show that the petitioner has transferred the amount prior to purchase of the goods to pay the duty by M/s.S.T.Electricals. It was therefore submitted that M/s.S.T.Electricals is nothing but a conduit to import the goods by the petitioner so as to avoid the further investigation by the customs.
6.8. It was further pointed out that the goods imported vide Bill of Entry No.5525864 was uploaded on the route and sold to M/s.GSD Technology, Mumbai who in turn shifted the goods to the petitioner at Vapi and petitioner sold the goods to M/s.Mayur Enterprise at Maharasthra with a same truck number without unloading of the goods. It was therefore tried to be demonstrated that on analysis of movement of vehicles for goods imported by M/s.S.T.Electricals which are prohibited Page 47 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined goods, the petitioner is a beneficiary of import of such prohibited goods and had funded M/s.S.T.Electricals for payment of duty amount as well as the logistic expenses and funds have been transferred to the family members of the proprietors of the beneficiary firms to the bank accounts of M/s. S.T.Electricals. 6.9. It was therefore submitted that investigation is required to be made by the respondents under Section 108 read with Section 112 of the Act. Learned Additional Solicitor General Mr.Devang Vyas has placed on record the copy of the record of the investigation carried out by the respondents to demonstrate that the petitioner is one of the beneficiaries of the import of the prohibited goods.
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NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined 6.10. In support of his submissions, reliance was placed on the decision of this Court in case of Bhavendra Hasmukhlal Patadia versus Union of India through Secretary rendered on 27th April, 2022 in Special Civil Application No.4820 of 2022 to submit that this Writ Petition should not be entertained by this Court as the petitioner ought to have preferred the petition before the Rajasthan High Court as the respondent No.2 is situated at Jaipur. It was submitted that the adjudication order shall be passed by the respondent No.2 at Jaipur and therefore, this Court should not entertain the petition and the petitioner should be relegated to file appropriate Writ Application before the Rajasthan High Court.
6.11. It was submitted that only because the correspondence was addressed to the Office of Page 49 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined the petitioner situated at Vapi, it cannot be termed as small fraction of a cause of action having occurred within jurisdiction of this Court as the show-cause notice and all other investigation is carried out at Rajasthan. It was further submitted that no cause of action can be said to have arisen within the territorial jurisdiction of this Court merely because the show-cause notice issued by the respondent No.2 is served upon the petitioner at Vapi.
6.12. Reliance was also placed on the decision in case of Anwesha Engineering and Projects Limited Versus Indian Oil Corporation Limited rendered on 21.10.2020 in Special Civil Application No.8629 of 2020 in support of these submissions.
6.13. Reliance was also placed on the Page 50 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined decision of Madrash High Court in case of K. Elumalai versus The Commissioner of Customs decided on 04.07.2017 in W.P.No.6650 of 2017 and W.M.P.No.7159 of 2017 reported in 2017 355 ELT 241 (Madras), wherein, it was held that in view of Sub-section (3) of Section 108 of the Act, all persons summoned are required to attend either in person or by an authorized agent before the Officer and therefore, the petitioner ought to have appeared pursuant to the summons in person before the respondent No.2 and therefore the prayer made by the petitioner to quash the summons cannot be entertained in view of the decision of the Hon'ble Apex Court in case of Commissioner of Customs, Culcutta & Others versus M.M.Exports & Another reported in (2007) 212 ELT 165 wherein, it was held that High Court should not interfere at the stage when the Department Page 51 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined has issued summons except in exceptional cases.
6.14. It was therefore submitted that the language of Sub-section (3) of Section 108 of the Act is very clear that if the Officer directs the petitioner to appear in person, the petitioner is bound to appear in person or through authorised agent if such option is given. It was therefore submitted that in view of the order of release of the provisional attachment, the petition has become infructuous and may be rejected as the summons issued by the respondent No.2 cannot be quashed and set aside as the investigation initiated by the respondent No.5 is just and proper in view of the facts which have come on record before the Court.
6.15 As far as the territorial jurisdiction Page 52 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined of this Court is concerned, the contentions of the learned ASG need to be rejected on the following grounds :
A) It is an admitted position that the petitioner is a resident within the territorial jurisdiction of this Court and it is at such place that the petitioner has received the summons which is under challenge herein. Therefore, the primary test of territorial jurisdiction of "part of the cause of action" is definitely met in the circumstances.
B) In the judgment dated 08.08.2023 of the Hon'ble Bombay High Court, it will be seen that Mayur had knocked the doors of the Hon'ble Bombay High Court. This Court could not discern where and in what manner the respondent had challenged the jurisdiction of the Hon'ble Bombay High Court in the case of Mayur. In any case, had they been agrieved by the Hon'ble Bombay High Court exercising jurisidcition, the respondents ought to have challenged the said decision dated 08.08.2023 before the Appellate Forum. As noted elsewhere Page 53 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined in this judgment, the respondents have accepted the judgment dated 08.08.2023, thereby failing to dispute the exercise of jurisdiction of the Hon'ble Bombay High Court in the case of Mayur. Therefore, the stand taken in the case of the petitioner, which is similarly situated that the petitioner ought to have approached the Hon'ble High Court at Rajasthan is without any basis whatsoever and must be rejected.
Therefore, we are of the considered opinion that this Court has the territorial jurisdiction in the present case.
7. Having heard the learned advocates for the respective parties and considering the facts of the case, it appears that the petitioner has purchased the CRGO strips imported by M/s.S.T.Electricals who had imported such goods which are alleged to be prohibited goods. Respondent Nos.2 and 3 have carried out the investigation against M/s.S.T.Electricals Page 54 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined and in turn, against the petitioner and M/s.Mayur Enterprise to whom such goods have been passed on by purchase and sale.
8. The respondent No.5, who was joined in his personal capacity, has filed an affidavit instead of remaining present either in person or through authorised person in response to the notice issued by this Court reiterating what is stated in the affidavit which was filed earlier by him in his official capacity. The affidavit filed by the respondent No.5 affirmed on 08.10.2024 refers to the modus operandi of M/s.S.T.Electricals and the past imports made by M/s.S.T.Electricals of CRGO Strips which were found to be on the basis of forged/fake MTC submitted before the Customs Authority and mis-declaring the description of the goods for circumventing the restriction/prohibition imposed on sub- Page 55 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025
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9. It was contended by respondent No.5 that the petitioner has approached the Court with an intention to avoid the investigation. It was pointed out that the petitioner has been found to have deep business connections, banking transactions, goods transaction with Shri Sohan Lal Sharan, proprietor of M/s.S.T.Electricals, Jaipur and Mumbai and therefore, the role of the petitioner is subject to investigation.
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10. It was also contended that the petitioner cannot therefore claim any innocence to have purchased the goods from local market. Referring to the provisions of Section 108 of the Act, it was contended by the respondent No.5 that the petitioner is bound to respond to the summons issued under the said provisions and appear in person before the respondent No.2.
11. It was also contended by respondent No.5 that the petitioner has purchased the subject goods from M/s.S.T.Electricals amounting to Rs.3,28,78,942/- which were undervalued and therefore, the Bank Accounts were provisionally attached which are now released in view of the provisions of Section 110(5) of the Act as the Bank Accounts attached provisionally are deemed to be defreezed after six months from the date of attachment as no Page 57 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined further extension was given by the competent authority. It was further contended that the role of the petitioner in the impugned transaction of import is subject to investigation and under his jurisdiction. It was also contended that the petitioner has joined the respondent No.5 only with a view to demoralise the Government Officers subordinate to him, who are investigating the case against the petitioner and M/s.S.T.Electricals.
12. From the tenor of the affidavit, it is clear that the respondent No.5, instead of responding to the notice of this Court and appearing before the Court, has filed the affidavit-in-reply reiterating what is stated earlier in the affidavits filed before this Court with an additional fact that the accounts of the petitioner have been defreezed under Section 110(5) of the Act. Page 58 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025
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13. The petitioner in reply to the summons has already furnished all the relevant documents and based upon such documents, respondents have not further issued any summons meaning thereby that, in the documents furnished by the petitioner in form of the purchase register, ledger, bank accounts etc., the respondent No.2 could not find any irregularities so far as the petitioner is concerned. Thus, it is clear that the petitioner has co-operated with the summons issued by the respondent Nos.2 and 3.
14. It also appears from the investigation carried out by the respondent No.5, who is investigating in capacity of Commissioner of Customs (Preventive) (respondent No.2), that the import made by M/s.S.T.Electricals is subject to the outcome of the Writ Petition Page 59 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined filed before the Rajasthan High Court. Thus, the respondent No.5 in capacity of respondent No.2 has exceeded his jurisdiction insisting upon the personal presence of the proprietor of the petitioner firm for the reasons best known to him without there being anything on record which requires further investigation qua the petitioner, more particularly, when the petitioner has sold the goods imported by M/s.S.T.Electricals to M/s.Mayur Enterprise, which is duly recorded in the judgment and order passed by the Hon'ble Bombay High Court as reproduced hereinabove.
15. Therefore, it is very clear that the respondent No.2/5, only with an ulterior motive, is trying to harass the petitioner under the guise of exercising its powers under Section 108 of the Act. It is pertinent to note that in spite of issuance of notice of Page 60 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined this Court, the respondent No.5 has not remained present in person or through authorised person and has tendered the affidavit through the learned advocates for the respondent-Authorities. When this Court has joined the respondent No.5 in his personal capacity, it was incumbent for him to appear and make submissions qua the allegations levelled against him by the petitioner instead of filing an affidavit in reply through the advocate appearing for the Customs Department.
16. We have been given a complete set of photocopies of original file containing the notes of the department from Note No.1 dated 26.04.2023 till Note No.377 dated 22.11.2024. Note No.87 dated 11.07.2023 reads as under:
"Note # 87 Kindly peruse letter 10.07.2023 received from M/s. S. T. Electricals (placed opposite) wherein Page 61 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined the party has registered protest against the provisional attachment of thier bank accounts.
Further, as per letter dated 06.07.2023, the importer has sold the goods to M/s. GSD Technologies, Mumbai vide Invoice No. 18 dated 30.06.2023, 19, 20 & 21 dated 01.07.2023. Further on examination it has come to notice that M/s. GSD Technologies Mumbai has further sold goods to M/s. Pacific Powertech Solutions, Vapi, Gujrat under E-way Bill No. (i) 231612745502 dated 01.07.2023, (ii) 281612540928 dated 30.06.2023, (iii) 251612918212 dated 01.07.2023 & (iv) 281612913500 dated 01.07.2023.
M/s. Pacific Powertech Solutions, Vapi, Gujrat has further sold the goods to M/s. Mayur Enterprises, Kalamboli (Maharasthra) vide E-way Bill No. (i) 601583371095 dated 02.07.2023 (ii) 641583408928 dated 02.07.2023 (iii) 631583640444 dated 03.07.2023 & (iv) 615584305900 dated 05.07.2023.
Further, on checking with the system, it is noticed that M/s. Mayur Enterprises has generated the e-way Bills as detailed below:
EWB No. From GSTIN & To GSTIN From Place & To Place & Pin EWB No. & Dt.
Name & Name Pin
231614130722 27AOAPP2471C1Z 27CYOPP KALAMBOLI/ Rabale MIDC, 231614130722-
8/ MAYUR 7727H1Z 410218 Navi 04/07/2023
ENTERPRISES P/ Mumbai/400701 22:12:00
NARAYAN
Page 62 of 68
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NEUTRAL CITATION
C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025
undefined
POWER
SOLUTIO
NS
261614132066 27AOAPP2471C1Z 27CYOPP KALAMBOLI/ Rabale MIDC, 261614132066-
8/ MAYUR 7727H1Z 410218 Navi 04/07/2023
ENTERPRISES P/ Mumbai/400701 22:17:00
NARAYAN
POWER
SOLUTIO
NS
221614296133 27AOAPP2471C1Z 27AAECR KALAMBOLI/ RABALE NAVI 221614296133-
8/ MAYUR 5971L1ZS 410218 MUMBAI/ 400701 05/07/2023
ENTERPRISES / 12:17:00
RASQUIN
HA
TRANSC
ORE
ELECTRI
CALS
PVT LTD
221614639565 27AOAPP2471C1Z 27CYOPP KALAMBOLI/ Rabale MIDC, 221614639565-
8/ MAYUR 7727H1Z 410218 Navi 05/07/2023
ENTERPRISES P/ Mumbai/400701 21:00:00
NARAYAN
POWER
SOLUTIO
NS
231616276602 27AOAPP2471C1Z 27CYOPP KALAMBOLI/ Rabale MIDC, 231616276602-
8 / MAYUR 7727H1Z 410218 Navi 09/07/2023
ENTERPRISES P/ Mumbai/400701 20:27:00
NARAYAN
POWER
SOLUTIO
NS
271616194942 27AOAPP2471C1Z 27CYOPP KALAMBOLI/ Rabale MIDC, 271616194942-
8 / MAYUR 7727H1Z 410218 Navi 09/07/23
ENTERPRISES P/ Mumbai/400701 13:22:00
NARAYAN
POWER
SOLUTIO
NS
271616536409 27AOAPP2471C1Z 27AATFT KALAMBOLI/ Tata 271616536409
8 / MAYUR 5852A1Z 410218 Talav/412108 10/07/23
ENTERPRISES W/ 15:36:00
TRANSEL
ENGINEE
RS
"Although it is possible that the goods consigned by M/s. Mayur Enterprises are the same which were imported by M/s. S T Electricals vide Be No. 5525864 dated 15.04.2023, Page 63 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined however without enquiry it is not possible to ensure that these are the same goods which have been purchased/received from M/s. Pacific Powertech Solutions.
Further, as per direction, bank account details of the following firms have been obtained and the same are as under :-
1. M/s. GSD Technologies Mumbai - Bank Name : Kotak Mahindra Bank Ltd. - A/c No. :2414037894
2. M/s. Pacific Powertech Solutions -
Bank Name: Kotak Mahindra Bank- A/c No. : 6311621118
3. M/s. Mayur Enterprises - Bank Name : Indian Bank-A/c No.6010527667." Thus the primary allegation of importing the goods are on ST Electricals and the role of the petitioner is confined only to that of a seller.
Note No.138 dated 01.09.2023 is also of great significance because by way of the said note, the orders of Hon'ble Bombay High Court Page 64 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined dated 25.07.2023 and 08.08.2023 have been clearly noted. Subsequently from the Notes, it is seen that the issue of filing an appeal against the order dated 08.08.2023 of Hon'ble Bombay High Court has been discussed but no appeal has been filed against the same and therefore, the order dated 08.08.2023 of the Hon'ble Bombay High Court has become final. The aforesaid notes are also conspicuous in their absence with regard to the implementation of the Hon'ble Bombay High Court's decision dated 08.08.2023 to the case of the petitioner and inspite of the fact that the department has been chastized by the Hon'ble Bombay High Court, it seems to have singularly gone after the petitioners, although, admittedly as discussed here in above, the department was of the clear view that the petitioners were at-least one step Page 65 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined removed from the actual alleged perpetrators in the eyes of department namely ST Electricals and Mayur. Inspite of the same, the respondent no.5 due to the reasons best known to him has continued to harass the petitioner and the reasons for the same or any plausible explanation for the same, have not been forthcoming from respondent no.5.
17. The respondent No.5 has thus acted in total disregard to the notice issued by this court by tendering affidavit only similarly as that of the petitioner filing reply in response to the summons issued under Section 108 of the Act. However, notice issued by this Court against the respondent No.5, while exercising jurisdiction under Article 226/227 of the Constitution of India, is having wider implication than summons issued under Section Page 66 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined 108 of the Act and respondent No.5 has ignored the notice by tendering the affidavit-in-reply instead of appearing in person or through authorised person or an advocate.
18. Be that as it may, in the facts of the case when the petitioner has filed the detailed reply in response to the summons issued under Section 108 of the Act, no further purpose would be served to continue the investigation qua the petitioner by the respondent-Authorities.
19. In view of the foregoing reasons, the petition succeeds and is accordingly allowed. The summons dated 12.07.2023 are duly complied with and the respondents are therefore restrained from issuing the further summons to the petitioner in respect of the transaction in question/import of goods by Page 67 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025 NEUTRAL CITATION C/SCA/10754/2024 CAV JUDGMENT DATED: 04/03/2025 undefined M/s.S.T.Electricals qua Bill of Entry No.5525864 dated 15.04.2023 which was purchased by the petitioner from local seller and in turn sold to M/s.Mayur Enterprise. Rule is made absolute to the aforesaid extent. No orders as to cost.
(BHARGAV D. KARIA, J) (D.N.RAY,J) PALAK BRAHMBHATT Page 68 of 68 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Mar 05 2025 Downloaded on : Wed Mar 05 22:06:25 IST 2025