@JUDGMENTTAG-ORDER
1. We have heard learned counsel for the parties.
2. This writ petition was filed challenging the show cause notice dated 4.9.2006 issued by the Office of the Commissioner of Customs (Prev.), Jodhpur under Section 18 of the Customs Act, 1962, to show cause as to why the provisional assessment of the second-hand paper making plant and machinery imported by the petitioner should not be finalized, enhancing the declared assessable value by Rs. 3,21,06,615/-, and further, as to why the Customs duty amounting to Rs. 1,63,10,160/- short paid on the said amount should not be recovered from them under Section 18(2) of the Customs Act, 1962. The notice provided for appropriation of the differential amount; the interest chargeable from 1.8.2002 to 23.6.2005 on the amount of differential customs duty, and further, required the noticees to show cause as to why the second-hand paper making plant and machinery imported on undervalued price as well as misdeclaring the age to be less than 10 years old, without valid import licence, be not confiscated under Section 111(d) and 111(m) of the Customs Act, 1962. The notice also proposed penalty to be imposed under Section 112(a) of the Customs Act, 1962. The notices were also given to Shri N.K. Pasari, Shri S.C. Jain, Shri A.K. Sharma, Shri P.D. Agarwal, Shri S.K. Agrawal, Shri J. Nagarajan and Shri Ambreesh Chandra, to show cause, within 30 days, as to why penalty under Section 112(a) of the Customs Act, 1962 should not be imposed upon them, which rendered the goods liable for confiscation. The noticees were required to submit all the evidences upon which they intended to rely in support of their defence. In Para 33 of the notice, it was mentioned that the documents relied upon in the show cause notice, as per the list of documents, are
3. The writ petition was filed on the grounds that the show cause notice is bad in law; violative of principles of natural justice, without jurisdiction and is violative of Article 14 of the Constitution of India. The non-supply of the purported investigation report of US Customs has vitiated the entire proceedings, and further, that the notice is not sustainable, as the same has been issued merely for recovery of the customs duty, under Section 18(2) of the Customs Act, 1962, without finalizing the provisional assessment in disregard to the provisions of law.
4. The writ petition was admitted on an argument that a notice under Section 28 of the Customs Act has not been issued, or served, for realizing the demand.
5. During the pendency of the writ petition, an application was filed to supply all the documents, which have been relied on in the show cause notice, and more particularly, the US Customs report. That application was rejected vide order dated 29.5.2008. The petitioner filed Special Leave to Appeal (Civil)....../2008 CC 14358/2008, arising out of order dated 29.5.2008 (Shree Krishna Paper Mills and Inds. Ltd. v. Union of India and Ors.), which was dismissed as withdrawn on 5.1.2009 by the following order:--
"In this S.L.P., the main grievance of the assessee was that the Department has not supplied to them copy of the U.S. Customs Report on which the Department seeks to place reliance. A copy has been supplied to the assessee. In the circumstances, we see no reason to pass any further directions in this behalf. If the assessee is aggrieved on any of the documents referred to in the Customs Report not being supplied to them, it would be a matter to be considered by the High Court in the pending Writ Petition. Special Leave Petition is dismissed as withdrawn."
6. Learned Senior Counsel appearing for the petitioner submits that the notice is vitiated by bias and malafides, inasmuch as the authorities are pre-determined, in forming an opinion that the duty has been short paid with misdescription of the goods. It is stated that unless final assessment is made, no demand can be raised. It is submitted that the raised amount of short paid customs duty has been assessed and the demand has been raised without making final assessment. Learned Senior Counsel appearing for the petitioner has relied upon the judgments in
7. It is submitted that out of 1085, including US Customs Report, only 503 documents were supplied to the petitioner and the Directors of the petitioner-Company. They have not been given the entire documents to submit an effective reply to the show cause notice, and thus, the petitioner is handicapped in submitting a reply, and that, non-supply of the documents is violative of the principles of natural justice, which will vitiate the entire proceedings.
8. Learned counsel appearing for the respondents would submit that after provisional assessment, the provisional clearance was made and the machinery was installed at the factory premises of the importer, located at Plot No. SPL-A, RIICO Industrial Area, Village and PO Keshwana, Tehsil Kotputli, District Jaipur (Rajasthan). The petitioner had claimed that it had imported second-hand paper making machine falling under Customs Tariff Heading No. 8439.20 from M/s. Industrial Exchange Corporation, 5108 Arrowhead Road, Hanover, Virginia, 23069, USA, during the period from 24.8.2002 to 29.1.2003. It was later on found that the imports were made at grossly under-invoiced value as well as misdeclaring the year of manufacture of the machines, on which the petitioner had contravened the provisions of Section 14 and 46 of the Customs Act and para 2.17 of the EXIM Policy, 2002-07. In order to ascertain the correct year of the manufacture, assistance of the State Forensic Science Laboratory (FSL), Jaipur was taken. The technical experts of FSL visited the factory premises on 9.8.2004, inspected the machinery installed there, and reported on 10.8.2004 that some rubbing impressions were found on the ABB Plates, and some parts could not be examined. They again inspected the machines on 1.11.2004 and reported on 11.11.2004 that certain grinding marks, rubbing impressions were found on the machines. On some equipment, grey painted plots were found, and after removal of the paint, rubbing impressions were observed. On these and further observations, the documents were examined, and it was prima facie found that the duty has been short paid on misdeclaration of the goods, which were imported under the provisional clearance from the Customs.
9. The notice running into 78 pages, with the details and the summary of the documents relied on and enclosed, was admittedly served on the petitioner and its Directors.
10. It is submitted by learned counsel appearing for the respondents that with reference to the show cause notice dated 4.9.2006, photo copies of the documents at serial No. 1 to 503 were provided to the Company and its Directors. While admitting the receipt of 503 documents, a request was made by Shri P.D. Agarwal and Shri Ambreesh Chandra on 6.10.2006 and 7.10.2006 respectively to supply the following documents:--
"(i) Statements of Mr. Robert Caldwell, Mr. Carlos Stafford and any other agency or person taken in USA in the said matter.
(ii) Correspondence made by Customs with NQA QSR and replies thereof.
(iii) Documents submitted by Banks, Insurance Company and the freight forwarder."
11. In response to the request made as above, the Office of the Commissioner, Customs, Jodhpur, vide its letter dated 21.12.2006, gave a reply, which is quoted as follows:--
"Subject : Show Cause Notice C. No. VIII(48)81/Prev/2004 Dt. 04.09.2006. Reg;
Kindly refer to your letter Dt. 06/10/2006 on the above-cited subject. On examination of the documents, it is observed that a number of documents are those, which were either submitted by you to the department at the time of getting the goods, cleared from the customs port or have already been provided to you with the Show Cause Notice. However, copies of the same {mentioned at Serial No. (ii), (iii), (iv), (vi), (vii)} are being provided, as per the list enclosed, for information and necessary action at your end.
Apart from the above, regarding other desired documents the details are given as under:--
� Serial No:(I):- This document cannot be provided, however the gist of the information received is already mention in the SCN;
� Serial No: (vi):- The final report given by FSL has already been provided at S. No. 11 and 12 of the list of relied upon documents to the SCN;
� Serial No. (viii) and S. No. (I) of other documents:- These documents do not exist as Jaipur customs had neither recorded statement nor made any correspondence with any foreign national;
� Other document at S. No. (ii):- No statement has been taken from M/s. Greater water town Chamber or of the persons mentioned Customs at Jaipur. Further the document submitted by you have not been relied upon in the case;
� S. No. (iii):- Communication made by customs with NQA, QSR, SGS and M/s. Apex Associates are not relied upon in the case. However, copies of the statements recorded u/s. 108 of Customs Act, 1962, of the representatives of these firms have already been provided at S. No. 15, 16 and 17 of the relied upon documents to the SCN;
� S. No. (iv):- These communications are the documents of the Importer and have not been relied upon in the case;
� S. No. (v):- No market survey for value and year of manufacture was got done in the instant case. However, report in respect of inspection conducted by FSL has already been provided.
� S. No. (vi):- Office correspondence made with banks, shipping agents, forwarding agents and insurance companies are not relied upon documents, however, details of expenditure incurred by some of the Noticees through their credit cards have already been provided at S. No. 499 to 501 of the list relied upon documents to the SCN;
� S. No. (vii):- the reply submitted by the importer to Customs are their own documents.
In light of the above, it is requested that reply to the Show Cause Notice may be submitted at the earliest, on receipt of above documents, so that further proceedings of adjudication can be initiated.
Encl:- As above.
Yours faithfully,
sd/-
SUPERINTENDENT (ADJ)"
12. From the aforesaid reply, we find that with regard to the US Customs Report, as mentioned in the show cause notice, as also the documents by the banks and correspondences made by the banks, an information was given by the Superintendent (ADJ), vide its letter dated 21.12.2006, that overseas inquiry was got conducted through Indian Consulate in United States through DRI, and the report of the Indian Consulate had already been provided with the show cause notice at Serial No. 18 of the relied upon documents list. Further, regarding office correspondences made with the banks, the noticees were informed that no document submitted by the bank are relied upon documents in the case. The details of the expenditure incurred by some of the noticees through their credit cards was already provided at Serial No. 499 to 501 of the list of relied upon documents to the show cause notice. In addition, the relied upon documents, as required by M/s. Shree Krishna Paper Mills and Industries Limited, were also provided.
13. We may also refer to the reply given by the Assistant Commissioner of Customs (Prev.), Jodhpur dated 13.5.2007, by which the Company as well as its Directors were communicated, that the word and phrase inquiry report from U.S. Customs and U.S. Customs Report" referred to in the show cause notice and in the list of relied upon documents, is the attested copy of the investigation report of U.S. Customs received from the Consulate General of India, New York, USA vide letter dated 14.4.2005 through DRI, New Delhi, under their letter dated 3.5.2005. The copies of the said report and the letters were already provided. The attested copy of the report, alongwith other relied upon documents, was inspected by the noticees/their authorized representatives on 19.3.2007 and 20.3.2007 in his office.
14. From the aforesaid correspondence, preceded by the order of Hon''ble Supreme Court dated 5.1.2009, we have no doubt that all relied upon documents have been supplied to the petitioner, and that, the petitioner is making a pretext of non-supply of documents, to delay the proceedings.
15. The record verifies that all the relied upon documents have been provided to the petitioner, and that, the pendency of the writ petition has been taken as an advantage, in delaying the proceedings.
16. We have examined the judgments cited as above, and do not find that any of the judgments has any relevance to the questions raised before us. The only ground, which survived to be considered in the writ petition, was the supply of documents, which on perusal of the correspondence, preceded by the Hon''ble Supreme Court''s order dated 5.1.2009, does not leave any room for doubt, that nothing further remains to be supplied to the petitioner as relied upon documents by the department.
17. The writ petition was filed against a notice to show-cause, as to why a final assessment may not be made, enhancing the provisional assessment on misdescription of the goods, and further, to show cause as to why on the misdeclaration, the goods be not confiscated. The noticees were required to submit all the evidences upon which they intended to rely in support of their defence. A writ petition against the show cause notice is not ordinarily maintainable, unless the show cause notice has been given by an authority, who has no authority in law to issue such notice; the notice has been issued under a wrong provision of law, or has been addressed to a wrong person. The show cause notice may also be challenged on the ground of malafides, for which there must be sufficient pleading and material to prove the allegations. In the present case, none of the grounds, to successfully challenge a show cause notice have been pleaded, or are existing on record. The show cause notice has been challenged only on the ground that it proposes to enhance the provisional assessment, and calls for a reply, as to why the goods may not be confiscated, without providing all the documents referred to in the show cause notice. We have examined the matter and find that the grounds, on which the show cause notice has been challenged, have not been established and substantiated. All the documents, which have been relied upon for the final assessment, were provided to the petitioner. In Supreme Court, the petitioner had prayed for the copy of U.S. Customs Report, which has also been provided to the petitioner. The reply to supply documents referred to in the customs report has been given to the petitioner. The show cause notice does not suffer from any lack of authority, or any error of jurisdiction.
18. Before parting with the matter, we express our concern to observe that the interim order was obtained by the petitioners on a completely misleading argument, that a notice under Section 28 has not been served, before demand has been raised. There was no question of issuing notice under Section 28 at this stage, when the final assessment was not made. The proceedings in pursuance to the show cause notice was issued at the stage, after the provisional assessment and before making final assessment. The red herring argument, allowed the writ petition to remain pending for a long period of eight years, during which the final assessment could not be made.
19. For the aforesaid reasons, the writ petition is dismissed, with costs quantified at Rs. 1 lac. We do not propose to make any orders with regard to fixing the time limit for giving reply to the show cause notice and for the assessment proceedings, as we have no doubt that the department will comply with the procedural provisions before any final assessment is made, and that, the petitioner will be at liberty to approach this Court, after availing the appellate remedies, in accordance with law.
