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2024 Supreme(Online)(GUJ) 24562
HIGH COURT OF GUJARAT
BHARGAV D. KARIA, NIRAL R. MEHTA, JJ
M/S GAIL (INDIA) LIMITED – Appellant
Versus
UNION OF INDIA – Respondent
R/SPECIAL CIVIL APPLICATION NO. 7238 of 2022
The court ruled that show-cause notices issued under Section 28(4) of the Customs Act were invalid due to lack of jurisdiction, as there was no evidence of willful misstatement or suppression of facts by the petitioner.
Headnote:(A) Customs Act, 1962 - Section 28(4) - Jurisdiction of the Adjudicating Authority - The petitioner, a Government company, challenged the show-cause notices issued for alleged non-compliance with customs duty exemption notifications. The court found that the notices were issued without jurisdiction as there was no willful misstatement or suppression of facts by the petitioner. (Paras 4.6, 5.1, 9, 15)
(B) Exemption Notifications - Conditions for exemption - The court ruled that the conditions for claiming customs duty exemption were misinterpreted by the authorities, and the petitioner had complied with the necessary requirements. (Paras 5.4, 6.1, 10)
Facts of the case:
The petitioner faced demands for customs duty based on alleged conversion loss and non-submission of utilization certificates for imported LNG. The petitioner contended that the show-cause notices were issued without jurisdiction as there was no evidence of willful misstatement or suppression of facts.
Findings of Court:
The court held that the show-cause notices and the subsequent Order-in-Original were vitiated due to lack of jurisdiction, as the allegations of suppression were unfounded.
Issues: The main issues were whether the show-cause notices were validly issued under Section 28(4) and whether the petitioner had complied with the conditions of the exemption notifications.
Ratio Decidendi: The court concluded that the Adjudicating Authority could not assume jurisdiction under Section 28(4) as there was no evidence of willful misstatement or suppression of facts.
Result: Show-cause notices and Order-in-Original quashed.
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned senior advocate Mr.S.N. Soparkar with learned advocate Mr.Akshat Khare for the petitioner and learned advocate Mr.C.B. Gupta for the respondents.
1.1 Rule, returnable forthwith. Learned advocate Mr.C.B. Gupta waives service of notice of Rule on behalf of the respondents.
2. Having regard to the controversy in narrow compass, with consent of learned advocates for the respective parties, the petition is taken up for final consideration today.
3. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for the following reliefs.
“A. Your lordship may be pleased to allow and admit this petition.
B. Your lordship may be pleased to quash and set aside the impugned common Order- in-Original No. AHA-Custm-000- COM-021- 022-21 dated 20.01.2022 passed by Respondent No.2 Principal Commissioner of Custom, Ahmedabad against Show Cause Notice No. VIII/10-12/Pr.Commr/O&A/2019 dated 19.06.2020 and Show Cause Notice No.SCN/01/CH- Dahej/2021-22 dated 23.08.2021 issued u/s. 28(4) of the Customs Act, 1962 ….”
4. Brief facts of the case are as under.
4.1 The petitioner is a Government company under section 617 of Companies Act, 1956 read with section 2(45) of Companies Act, 2013. As per the "Memorandum of Association" (MOA) of the petitioner, one of the objects under clause-5 of MOA is to act as an agent of Government of India and to implement its scheme in the country.
4.2 The petitioner is availing customs duty exemption under Notification No.12/2012-custom dated 17th March, 2012 under Entry No.139. Subsequently, Notification 12/2012 was amended by Notification No.36/2013 dated 22nd July, 2013 and further amended by Notification No.30/2014 dated 20th October, 2014. Under the said amendments in
the Notification, period for submission of certificates were extended to twelve months from the date of import.
4.3 Thereafter, the said Notification of the year 2012 was amended by Notification No.31/2015- custom dated 07th May, 2015 by inserting Entry No.139B and by inserting Condition No.102. For claiming exemptions under Notification of the year 2015, one of the conditions under Condition No.102 was that the importer was required to furnish firstly the invoices of sale of Re- gasified LNG (for short “RLNG”) to power generating company as defined under Section 2(28) of the Electricity Act, 2003 and secondly, utilization certificate from such power generating companies. The said documents were to be submitted before the concerned customs authorities within a period of three months from the date of import or such extended period not more than six months as allowed by the Commissioner of Customs.
4.4 The Government of India had circulated a scheme for utilization of gas-based power generation capacity to encourage utilization of Gas. The petitioner has been nominated as E-bid RLNG Operator by Government of India under said scheme. As per Clause No.5(i) of the said scheme, Union of India had granted waiver of custom duty on imported LNG for the use by a power generating company and the procedure for claiming exemption under said Scheme has been made out in Annexure- III thereof. In view of the above Scheme, respondent custom authority has granted exemption from custom duty vide Notification No.31/2015- Custom dated 07th May, 2015. The said scheme was for the period of two years, i.e. for F.Y. 2015-2016 and F.Y. 2016-2017.
4.5 Subsequently, after the end of the scheme in March 2017, the respondent authorities have continued the exemption on imported LNG by Notification No.52/2017-customs dated 30th June, 2017. The said Notification came into effect from 01st July, 2017 and under Sr. No.10 thereof, the earlier exemption on imported LNG was continued with condition No.3. The said prescribed condition No.3 was akin to earlier condition No.102 introduced under Notification of the year 2015 with only deviation that importer was required to provide only utilization
