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2015 Supreme(Del) 3249
IN THE HIGH COURT OF DELHI AT NEW DELHI
RAJIV SHAKDHER, J.
M/S SANTOSH HANDLOOM - Petitioner
versus
THE COMMISSIONER OF CUSTOMS (IMPORT) & ORS - Respondents
W.P.(C) 3598/2015
Decided on : 23.11.2015
For the Petitioner: Mr Priyadarshi Manish, Mrs Anjali J. Manish, Mr Rahul Ranjan & Mr Piyus Kumar, Advs.
For the Respondents:Mr Kamal Nijhawan & Ms Shreya Sinha, Advocates for R- 1 & 2.
Mr Satish Aggarwala & Mr Amish Aggarwala, Advocates for R-3.
The main legal point established in the judgment is the requirement for proper compliance with statutory provisions of the Customs Act, particularly in relation to the service of notices and the availability of alternative remedies.
Headnote:
Customs Act - Failure to comply with statutory provisions of Section 110(2) - Sections 110, 124, 143, 146, 147 of the Act - The court found that the show cause notice and the order passed thereof were unsustainable in law due to various irregularities. The court held that the respondents were required to release the seized goods to the petitioner and rejected the argument of alternative remedy available to the petitioner by way of an appeal.
Fact of the Case:
The petitioner imported goods classified as quilt covers and filed bills of entry. The Department of Revenue Intelligence (DRI) detained the goods, drew samples, and sent them for testing. The petitioner sent representations for release of the detained goods and obtained a report confirming the goods as 'polyester woven printed quilt case'. The Deputy Commissioner of Customs ordered provisional release of the goods, but the value was re-assessed and an extended period of six months was triggered without proper service of the show cause notice.
Finding of the Court:
The court found that the show cause notice and the order passed were unsustainable in law due to irregularities in the service and timing of the notice. The court held that the respondents were required to release the seized goods to the petitioner and rejected the argument of alternative remedy available to the petitioner by way of an appeal.
Issues: The issues involved the validity of the show cause notice and the order passed under Section 110(2) of the Customs Act, and the availability of an alternative remedy by way of an appeal.
Ratio Decidendi: The court held that the service of the show cause notice on the Customs House Clearing Agent (CHA) was not in accordance with the law, and the entire defense mounted by the respondents fell. The court also rejected the argument of an alternative remedy available to the petitioner by way of an appeal.
Final Decision: The court allowed the reliefs sought in terms of prayers (a) and (b), requiring the respondents to release the seized goods to the petitioner and rejected the argument of alternative remedy available to the petitioner by way of an appeal.
RAJIV SHAKDHER, J
1. In this writ petition the principal grievance, which has been raised, is that, there has been a failure on the part of the respondents to comply with the statutory provisions of Section 110(2) of the Customs Act, 1962 (in short the Act).
1.1 The petitioner claims that the respondents have detained the imported goods beyond the period of six (6) months without issuing a show cause notice as contemplated under Section 110(2) of the Act.
1.2 The show cause notice and the order passed thereof by the respondents to demonstrate that they have taken recourse to the proviso appended to Section 110(2) of the Act, which enables triggering of an extended period of six (6) months, has no legal sanctity, according to the petitioner, for the following reasons:
(i) Firstly, the show cause notice seeking extension of time for compliance of the requirements of Section 124 of the Act, is ante-dated.
(ii) Secondly, the service of show cause notice effected on the Customs House Clearing Agent (in short the CHA), is no service in the eyes of law, being contrary to the provisions of Section 153 of the Act.
2. The aforesaid are the broad contours of the issues which arise for consideration in the present writ petition. The reason, that I have set out these broad contours, is that, there are other connected writ petitions qua which arguments have been addressed by both sides, whereupon judgment has been reserved in each of those matters. The legal submissions advanced, in these cases, by both sides are common. Therefore, it is common ground that a decision in this case would apply on all fours to the other connected matters.
3. The specifics which concern this writ petition, are as follows:
3.1 The petitioner vide commercial invoice dated 25.05.2014 had placed an order for polyester quilt covers (in short quilt covers) and 100% polyester bed sheet sets. The price per quilt cover was shown as USD 1.25 per piece, while in so far as the polyester bed sheets were concerned, each set was priced at USD 1 per set. The goods under the said invoice were shipped, on 03.06.2014.
3.2 A second order was placed by the petitioner vide commercial invoice dated 30.05.2014. This time around, the goods ordered were only quilt covers. As in the earlier invoice, the price indicated was USD 1.25 per piece.
3.3 Upon arrival of the goods, the petitioner filed two bills of entry, on 15.07.2014. In respect of invoice dated 25.05.2014, a bill of entry bearing no. 6097564 was filed, and a sum of Rs. 7,01,673/- was paid as duty against a declared value of Rs. 24,31,985.57/-. In so far as invoice dated 30.05.2014 was concerned, a bill of entry no. 6097566 of even date i.e. 15.07.2014 was filed and a duty in the sum of Rs. 4,17,550/- was paid against a declared value of Rs. 14,46,626.23/-.
3.4 The Department of Revenue Intelligence (in short the DRI) detained the goods on 25.07.2014, on the ground that the goods imported were not quilt covers. The officers of the DRI were of the view that the goods imported were in fact “….a running length of printed fabric which has been folded at mid length having loose stitching on two sides…”. Accordingly, two panchnamas of even date i.e. 25.07.2014 were drawn. The officers of the DRI also drew samples of the goods detained. These samples were sent for testing and for seeking an expert opinion, on an aspect which I will advert to in the latter part of my narration.
3.5 It is common ground though that the goods, which were seized by the DRI, are lying stored, at present, in a warehouse.
3.6 The petitioner, however, on its part has sent several representations for release of goods detained, to various officers of the Customs. These representations are dated : 04.08.2014, 07.10.2014, 22.10.2014, 29.10.2014 and 17.11.2014. Pertinently, while, in the first two representations the petitioner simply asked for release of goods, in the representations which followed, a request in the alternative, was made, that they be r
