Pre-notice consultation is not mandatory for preventive show cause notices under the Customs Act, and such notices are not determinative but allow for petitioners to respond to allegations.

(per the Hon’ble Sri Justice P.SAM KOSHY Heard Mr. Atul Chitale, learned Senior Counsel appearing on behalf of Mr. E. Venkatesh Siddhartha, learned counsel for the petitioner and Mr. Dominic Fernandes, learned Senior Standing Counsel for CBIC, appearing for the respondent Nos.1 to 3.

2. The present are two writ petitions of identical nature between the same parties where two different show cause notices issued by the 3^rd respondent dated 31.10.2022 and 29.11.2022 under Section 28 (4) of the Customs Act, 1962 (briefly ‘the Act’ hereinafter) are under challenge.

3. The parties being the same, the orders under challenge also being of identical nature and the grounds and contentions on behalf of the petitioners as well as the respondents also being the same in both the writ petitions, we proceed to decide the two writ petitions by this common order.

4. The whole case revolves around the same parties on a show cause notice issued to them under Section 28(4) of the Act. The Directorate of Revenue Intelligence (in short, ‘DRI’) received certain information in respect of the misappropriation of duty free gold bullion received by the petitioners under the Special Economic Zone Scheme for manufacture and export of studded gold jewellery.

5. A search was conducted on the premises of the petitioners Sri Krishna group of companies and other entities along with the directors/partners. During the course of search, certain seizures were made and in respect of the said seizures, show cause notices dated 26.06.2020 and 27.06.2020 were issued under Section 124 of the Act. These two show cause notices were subjected to challenge by way of two different writ petitions i.e. Writ Petition No.29508 of 2021 and Writ Petition No.29531 of 2023. Initially the High Court granted an interim protection in both these writ petitions restraining respondents from initiating any consequential steps pursuant to the aforesaid two show cause notices.

6. In the course of search and seizure proceedings, it was revealed to the DRI officials that huge quantity of gold bullion imported by the petitioner was being fraudulently diverted into the local market for delivery at the shops in Hyderabad and where the petitioners were required to export gold bullion jewelries prepared by them from the imported gold bullion. The petitioners were found to be sending fake gold jewellery showing it to be the export of the gold jewellery manufactured from the gold bullions imported by them. Similarly, it was also in the course of enquiry found that these gold bullions were being diverted into the local market by being given to different dealers operating in Hyderabad.

7. It was based upon all these fraudulent deeds on the part of the petitioners which led to the issuance of show cause notices dated 31.10.2022 and 29.11.2022 and which are under challenge in the two writ petitions.

8. Both these show cause notices have been issued under Section 28