The issuance of a show cause notice under the Customs Act is not time-barred if allegations involve fraudulent activity, requiring further investigation.

JUDGMENT

D.N. Patel, Chief Justice (Oral)

CM APPL.2146/2021 (exemption)

Allowed, subject to just exceptions.

The application is disposed of.

W.P.(C) 842/2021

1. This petition has been preferred with the following prayers:-

"(a) To issue a writ of Certiorari quashing the show cause notice dated 24.01.2020 issued under DRI/AZU/CI/ENQ- 39/(INT-25/2016)/6825/being time barred as per provisions of Section 28 of the Custom Act,1962; and/or

(b) such other appropriate writ, order or direction as this Hon'ble Court may deem fit may also be issued."

(emphasis supplied)

2. Learned counsel appearing for the petitioner has taken this court to the show cause notice dated 24.01.2020, issued by respondent No.2, which is Annexure A-1 to the memo of this writ petition. It is contended by learned counsel that (a) show cause notice (SCN) issued by respondent No.2 is barred by time and (b) Respondent No.2 does not have the power, jurisdiction and authority to issue the aforementioned SCN. Moreover, learned counsel submits that the grievance ventilated in the present petition is covered by various decisions of the Hon'ble Supreme Court and this Court and other High Courts in favour of the petitioner.

3. Learned counsel appearing for the petitioner has relied upon State of Punjab v. Bhatinda District Co-op. Milk P. Union Ltd.; 2007 (217) E.L.T. 325 (S.C.), Madina (UZ) Impex v. Union of India; 2019 (368) E.L.T. 555 (Del.) and Famina Knit Fabs v. Union of India; 2020 (371) E.L.T. 97 (P & H) and submits that the question of the SCN being time barred be decided by this Court at the threshold.

4. We have heard learned counsel appearing for the petitioner at length and looked into the facts of the present case. Some crucial facts that emerge are enumerated below :-

(a) Case of the respondent as set out in the SCN is that the petitioner had fraudulently availed Special Focus Market Scheme (SFMS) benefits by producing forged house BLs and Landing Certificate, wherein consignee country was deliberately mis-declared by them for availing undue benefits under the Scheme.

(b) The allegations in para 3.1 of SCN dated 24.01.2020 read as under:-

"3.1 Intelligence developed by the officers of Directorate of Revenue Intelligence (DRI), Zonal Unit, Ahmedabad indicated that M/s New Era Trading Pvt. Ltd. (hereinafter referred to as "New Era" for the sake of brevity) had fraudulently availed Special Focus Market Scheme (SFMS) benefits, by producing forged House BLs and landing certificates, wherein consignee country was deliberately mis-declared by them for the purpose of availing undue benefit under SFMS. It was gathered that Shri Shanti Swaroop Sharma, who looked after all the activities of "New Era" had adopted this modus operandi mainly in respect of exports to Armenia, Azerbaijan, Kazakhstan, Sudan and Ethiopia etc. However, the goods had never travelled to the destination shown on the export documents."

(emphasis supplied)

(c) It is further alleged that during the course of investigation, it was found that in TR-1 and TR-2 copies of shipping bills, port of discharge and country of destination were found manually changed and forwarded to Additional Commissioner of Customs, Exports and filed. The port of discharge had been manually changed to Jebel Ali from Bandar Abbas, Awassa and Sudan and country of destination had been manually changed to Dubai and the same were endorsed with the customs stamp. It is further alleged that the amendments were wilfully done and the export goods did not correspond with the material particulars with regard to the port of discharge and country of destination. On enquiry with the freight forwarder and the custom broker,