@JUDGMENTTAG-ORDER
K. Sampath, J.@mdashThe prayer in the Writ Petition is for issue of a writ of certiorarified mandamas calling for the records from the Assistant
Commissioner of Customs, Respondent No. 4, quash the communication-cum-demand dated 21.7.1997 bearing F. No. S.45/EU/HE/704, 723
and 757/96 Gr.7 (Annexure-X), direct Respondents 4 and 5 to restore and release the bank guarantees provided by Respondent No. 5 as per
Annexure-V and direct the Respondents to return all documents like the account books, advance, licence, DEEC pass books, stock registers,
delivery slips, etc. seized from the Petitioner-firm and retained by all or any of them, on the following allegations:
The Petitioner-firm is an export-oriented firm carrying on business in the manufacture of brass artware. The main business of the firm consists of
importation of raw materials and exportation of end product manufactured out of that raw material popularly known as ''inputs'' under the duty
Exemption Scheme. The firm is registered under I.E.C. No. 0494014580 and RBI Code No. MB-001859. A licence issued under the Duty
Exemption Scheme shall bear a time bound export obligation which the licence holder should fulfil. Contemporaneously, the licensing authority
under the Scheme will issue the connected Duty Exemption Entitlement Certificate (DEEC in short). The DEEC book is issuued in two parts, one
for imports and the other for exports. The period for fulfilment of the export obligation under a duty free licence is one year commencing from the
date of issue of the licence. In respect of the Petitioner-concern the validity period fixed was extended to 18 months under Public Notice No. 6
(PN)/1997 - 2002, dated 10.4.1997. Exports made in anticipation of grant of duty free licence are also accepted towards discharge of the export
obligation, subject to approval of the application for grant of licence by the licensing authorities. Before clearance of the first consignment of import
under this Scheme, a licence holder is required to execute an end-use bond with bank guarantee for an amount equal to 25% of the C.I.F. value of
the advance licence or for an amount equal to 100% of the customs duty. The bank guarantee would be liable to be forfeited in full or equivalent to
the shortfall, if the importer failed to fulfil his export obligation. The Petitioner was granted four quantity based advance licences under the DEEC
Scheme by the second Respondent herein. They are:
(i) 04008971 dated 22.3.1996
(ii) 04008972 dated 22.3.1996
(iii) 04009105 dated 5.4.1996
(iv) 04009188 dated 9.4.1996
for the import of brass scrap. The maximum quantity of input allowed to be imported is as per the Import Policy valid from 1.4.1992 to
31.3.1997. The Petitioner is permitted to deduct 7.5% wastage of the total quantity imported and the balance is liable to be exported as finished
decorative artware. The Petitioner-concern has been maintaining proper statements of the imports and exports made and they were also
scrutinised by the fourth Respondent and endorsements were made by him periodically. The appraising section of the Customs Department has
also verified and audited the transactions before clearing each consignment before export. Due entries have been made in the DEEC book. The
Petitioner-firm completely fulfilled its export obligation on or before 22.7.1997 and the tabular statement marked as Annexure-I would give the
particulars. Xerox copies of three DEEC pass books are also produced and marked as Annexure-II series.
Some jealous competitors of the Petitioner-concern had made some false accusations against the Petitioner-concern as if it was misutilizing the
imported material and contravening some of the provisions of the Customs Act. On 20.7.1996 Respondent No. 8, viz. the Superintendent of
Central Excise, Headquarters, Preventive, Chennai-34, with a team of his subordinates raided the Petitioner-firm and also its sister concern
Chamundi International, of which the deponent of the affidavit is the Proprietor, his wife Mrs. Bhavani Devi being the Proprietress of the Petitioner-
concern. The eighth Respondent simultaneously conducted a raid of the factory premises of the Petitioner-concern at No. 105, Acharappan Street,
Chennai-79. and seized a number of documents from the Petitioner premises at No. 15, Ponnappan Lane and the documents seized included the
day books of the years 1995-96 and 1996-97, stock register of the year 1995-96 and 1996-97. A list of the documents seized is produced as
Annexure-III. The deponent was coerced into making an inculpatory statement. The statement was dictated to the deponent''s brother Phool Singh
in English and the deponent was compelled to put his signature on the said statement on 20.7.1996. This statement was retracted by the deponent
at the earliest opportunity. The Central Excise Officers had further recorded tutored statements of one Packrisamy, Selvaganapathy, Customs
House Agent Kamalesh Jain, Partner of Jain Metal Rolling Mills (JMRM) to coak up a false case of misutilization of the imported material against
the Petitioner-concern. Notwithstanding the Petitioner having accurately accounted for the entire quantity of raw material imported by it under the
subject Scheme (sic) and fulfilled part of its export obligation on the date of the search and seizure by the Central Excise Officers, still the officers
continued to fish in troubled waters by carrying on investigation till the end of 1996. All these were without jurisdiction and also ex facie vindictive,
oppressive and amounted to criminal trespass. Thereafter, the Revenue Intelligence started a tirade against the deponent and his firms. The seventh
Respondent issued summons pursuant to which the deponent surrendered three advance licences with the relevant DEEC pass books in two parts
each and some shipping bills, all in original as per Annexure-IV on 13.3.1997. The seventh Respondent also recorded the statement of the clearing
agent, job workers, godown keeper and factory manager for creating evidence of misutilization of the imported material. The seventh Respondent
however could not find any material to incriminate or pin the deponent with any violation of the provisions of the Scheme.
Thereafter, the Petitioner-concern received a letter from the sixth Respondent dated 7.7.1997 stating that it had received a registered letter from
Respondent No. 4 enforcing five bank guarantees executed by the sixth Respondent in favour of the fourth Respondent. The sixth Respondent
therefore called upon the Petitioner-concern to remit a sum of Rs. 4,20,000/-. The fourth Respondent further gave a reminder to the sixth
Respondent bearing dated 25.7.1997 calling upon the latter bank to expedite payment of Rs. 7,01,000/- without further delay. The telegram and
letter by the Petitioner were of no avail. The Petitioner concern received a copy of the letter dated 11.7.1997 by the fifth Respondent Indian
Overseas Bank addressed to the fourth Respondent Assistant Commissioner of Customs, stating that the fifth Respondent had remitted the amount
of Rs. 3,76,000/- to the fourth Respondent towards invocation of the bank guarantee amount. At this stage, the Writ Petitioner filed a Writ Petition
seeking a mandamus for a direction to the fourth and the fifth Respondents to restore and release the bank guarantee directing Respondent No. 4
to forbear from enforcing the bank guarantee provided by the sixth Respondent in favour of the fourth Respondent directing Respondents 3, 7 and
8 to return all documents like account books, advance licences and DEEC books seized from the Petitioner-firm and retained by any or all of them
and the fourth Respondent to release all bank guarantees given so far either by the fifth Respondent or the sixth Respondent.
This Writ Petition was dismissed by S.S. Subramani, J. on 14.8.1997 treating the same as a contractual matter not warranting interference under
Article 226 of the Constitution of India. The Petitioner-firm, thereafter, received a reminder dated 11.8.1997 from the sixth Respondent calling
upon the Petitioner to remit the sum of Rs. 4,20,600/- with 24% interest towards the enforcement guarantees given by the bank, copy of which is
produced as Annexure-IX.
Thereafter, on 21.8.1997 the Petitioner-concern received a communication dated 21.7.1997 by the fourth Respondent alleging inter alia that since
the Petitioner-concern had failed to fulfill the export obligation, the bank guarantees executed for the said licences had been enforced. In the same
communication, the fourth Respondent called upon the Petitioner-firm to pay the alleged balance duty amount to the tune of Rs. 11,19,993/-
together with interest at 24% per annum within three days from the date of receipt of the letter failing which he threatened to invoke Section 142 of
the Customs Act for recovery of the said amount without reference to the Petitioner-firm. This communication-cum-demand is being questioned in
the present Writ Petition.
2. The grounds of attack are as under:
The fourth Respondent is not the competent authority to determine whether the Petitioner-concern had fulfilled the export obligation or not. The
sole and exclusive authority under the DEEC Scheme in respect of all matters including fulfilment of export obligation is (to be adjudicated upon
by) the second Respondent, the Joint Director General of Foreign Trade. Even conceding without admitting that the fourth Respondent had any
such power, it had been exercised in a colourable manner as set out already and it was absolutely arbitrary, patently perverse without a semblance
of fair play and without observance of the principles of natural justice. The fourth Respondent had not acted judicially and within the letter and spirit
of the DEEC Scheme. The impugned communication-cum-demand being a self-serving assertion of the fourth Respondent, is without any basis or
hypothesis. It is exproprietory unconstitutional and violative of Articles 14, 19(1)(g) and Article 300-A of the Constitution of India. The fourth
Respondent had purported to invoke Section 142 of the Customs Act, which could not be done without prior determination of the actual amount
falling due, which ought to have been done after giving a reasonable opportunity of being heard to the Petitioner. This has resulted in irretrievable
injustice to the Petitioner. The unilateral enforcement of the bank guarantees was patently illegal and ultra vires the powers of the fourth
Respondent as the liability for which the bank guarantees were given had not occurred at all. The non-fulfilment of the export obligation had to be
monitored and decided only by the second Respondent as contemplated in the subject Scheme itself as would be evident from paragraph 125(a)
of the Hand book of Procedures, Volume I, for the EXIM Policy applicable for the period 1992 to 1997. All the four licences in the instant case
had been issued by the second Respondent on or after 22.3.1996 and as per Public Notice No. 6(PW) 1997-2002, dated April 10, 1997 the
period for advance licences issued on or after 1.10.1995 had been extended to 18 months from 12 months and the validity would expire on or
after 21.9.1997. The question of non-fulfilment of the export obligation, if any, could be decided only after two months of the date of expiry of the
period of obligation, which in the instant case would be 21.11.1997. The Petitioner-concern had fulfilled its export obligations even by 22.7.1997
to the knowledge of the fourth Respondent. All the relevant records evidensing this are only with the fourth Respondent and they will bear out the
truth of this statement. The fourth Respondent ought to have checked up the assertion of the Writ Petitioner regarding the fulfilment of the export
obligation and without doing that, he had wrongly taken action against the Writ Petitioner. The search was made in the Petitioner''s office and
factory premises and this was indulged in by the over-zealous Central Excise Officers without any credible information in hand. They are wholly
unwarranted and bereft of lawful authority. The Central Excise Officials had no role to play vis-a-vis the DEEC Scheme and it was only the second
Respondent who had jurisdiction over the latter. The search and seizure were illegal. Because of this the Petitioner was facing incalculable hardship
in the management of its day-to-day business. Actions of Respondents 4, 7 and 8 were all without jurisdiction and ultra vires.
3. So far as the prayer for direction to Respondents 4 and 5 to restore and release the bank guarantees provided by the fifth Respondent is
concerned, it is already settled by the decision in the earlier Writ Petition, viz. W.P. No. 12152/97. The learned Counsel for the Writ Petitioner
represented that a Writ Appeal was filed against the decision in the Writ Petition and the same was also dismissed. The learned Counsel
contended, that notwithstanding the order of dismissal by S.S. Subramani, J. he was entitled to canvass the correctness of the act of the
Respondents in invoking the bank guarantees. A number of decisions were cited for the proposition that the Court had ample powers for granting
injunction restraining invocation of bank guarantees. The learned Counsel also referred to further decisions to drive home his point that this Court
could take a view different from the one taken by S.S. Subramani, J. The learned Counsel relied on a Bench judgment of the Calcutta High Court
in Virjiban Dass Moolji v. Biseswar Lal Hargovind ILR 48 Cal 69 and the judgment of the Bombay High Court in In Re: Peregrino Rodrigues, .
4. The learned Counsel Mr. Ilias Ali appearing for the contesting Respondents, submitted that what Subramani, J. said in the earlier Writ Petition
would operate as res judicata. Subramani, J. while dealing with the question in paragraph 7 of his judgment observed as follows:
I do not think in a matter like this, this Court has to look into the inter se dispute between the Petitioners and the Customs Authorities. The Bank is
bound to honour the guarantee and that too without any demur when demand is made. If there is any dispute between Petitioners and Customs
Authorities, that is a matter which they have to agitate separately.
In paragraph 8 the learned Judge further stated as follows:
I have already said that in both these cases, they have no case of fraud. There cannot be any question of irretrievable injury since the person
honouring the Bank guarantee is the Government of India. Petitioners have no case that they will not be in position to realize the amount if ultimately
it is found that the Petitioners were not liable to pay the amount.
This view of the learned Judge has been affirmed by the Bench. In my view, what Subramani, J. said in the earlier Writ Petition will, as rightly
contended by the other side, operate as res judicata. It has been held by the Supreme Court in several cases that where a petition under Article
226 is dismissed on the merits it operates as res judicata and bars a fresh petition under Article 226 even where it is passed without hearing the
other party. (Basu page 608)
(1) Daryao and Others Vs. The State of U.P. and Others,
(2) P.D. Sharma Vs. State Bank of India, ;
(3) State of U.P. and another Vs. Labh Chand, .
The only means by which a judgment under Article 226 can be reopened is by applying for review or by taking the matter by way of appeal. No
review was filed and the appeal had also been dismissed. The point is concluded by res judicata and cannot be reopened. Of course, it is made
clear that in the event of it being ultimately found that the Petitioner would not be liable, the amount could always be recovered from the
Government. The decision relied on by the learned Counsel, viz. Virjiban Dass Mooli v. Biseswar Lal Hargovind ILR 48 Cal 69 which has laid
down that a Judge on the Original Side is ordinarily bound to consider with respect the decision of another Judge on the Original Side produced
before him, but if he is convinced that the decision is erroneous, he is not under an obligation to follow it against his own judgment and the decision
in In Re: Peregrino Rodrigues, which has held that a single Judge of the High Court can dissent from and in effect reverse a prior decision of a
single Judge of co-ordinate jurisdiction of the same High Court if he considers that the principle on which the prior decision was based was not the
right principle and the true principle was quite the contrary, will not apply to the facts of this case. What the learned Counsel requires this Court to
do is to sit in judgment over the decision of a learned single Judge, which cannot be done. It is also not necessary to refer to the various decisions
cited by the learned Counsel on the question of invocation of bank guarantees in view of what has already been stated and decided.
5. Notice of motion was ordered in the Writ Petition and Mr. K. Ilias Ali, learned Additional Central Government Standing Counsel, entered
appearance for Respondents 1 to 4 and 7. Mr. G. Dhesiyji for Respondent 5 and Mr. M. Kamalanathan for Respondent 6. No appearance was
entered for the eighth Respondent.
6. A counter affidavit has been filed on behalf of Respondents 3, 4, 7 and 8. The counter has been sworn to by one Mr. C.G. Chandramouli,
Assistant Commissioner of Customs (Legal). Customs House, Chennai-1. The allegations in the counter affidavit are as follows:
The present Writ Petition is not maintainable in view of the dismissal of W.P. No. 12152/97. The issues raised in the earlier Writ Petition are
substantially similar to the issues raised in the present Writ Petition. The Writ Petition is premature and an abuse of process of Court. The detailed
show cause notice u/s 124 of the Customs Act, 1962 dated 21.7.1997 had been issued to the Petitioner, the proprietress of the Petitioner-concern
and Babulal, the deponent of the Writ affidavit by the Commissioner of Customs, Customs House, Chennai. The Writ Petition is only a ruse to
obstruct the investigation of the offences committed by the Petitioner and its partner and Babulal and to prevent a proper adjudication of the issues
involved therein. The Petitioner had wilfully avoided service of the show cause notice. The bank guarantees had already been invoked by the fourth
and the sixth Respondent vide their letter dated 21.8.1997 and the Petitioner sent a demand draft for Rs. 7,01,000/- to the fourth Respondent and
it had been deposited. The bank guarantees were unconditional bank guarantees and the fourth Respondent had every right to invoke the bank
guarantees.
7. Pursuant to the notice of the seventh Respondent, it was found that the Petitioner had illegally sold the imported materials in contravention of the
DEEC Scheme and the Customs Act and Notifications. The fourth Respondent was duly appraised of this by the seventh Respondent under their
letter dated 17.6.1997 of the evasion of customs duty by the Petitioner. To protects the interest of the Revenue, the fourth Respondent invoked the
bank guarantees and in due course show cause notice was also issued to the Petitioner, to its proprietress and Babulal. The show cause notice has
to be read as part and parcel of the counter. From the investigations of the authorities it was found that there was a diversion of the imported
materials and therefore the show cause notice was issued. The claim of the Petitioner to unblemished record of business was made to suit the
outcome of the adjudication proceedings. The search and the seizures by Respondents 4, 7 and 8 were not illegal. The Respondents had authority
in law to conduct searches and seizures under the Customs Act, and Central Excise and Salt Act, among others. The searches and seizures were
made only according, to law. The statements were not recorded under duress. The Respondents were only discharging their duty, which led to the
detection of the evasion of customs duty to the tune of nearly Rs. 42,75,784/-. The allegations were only to hide the illegalities of the Petitioner''s
action. The fourth Respondent had the power to investigate into breach of conditions subject to which goods were imported. The power had not
been exercised in an arbitrary manner. The order dated 21.7.1997 was not unconstitutional or violative of Articles 14, 19(1)(g) or 300-A of the
Constitution of India. The proposed action u/s 142 of the Customs Act was also sustainable and valid inasmuch as the duty liability was determined
at the time of importation. Only the payment of the duty that was exempted under the Customs Notification 149/95 amended by C.N.162/95. The
bank guarantees were unconditional and the same could be invoked by the fourth Respondent to protect the interest of the Revenue. Paragraph
125-A applied only to the licensing authorities and not the fourth Respondent. The charge against the Petitioner of illegal transfer/sale of the
imported raw materials would be a violation of C.N. No. 149/95 amended by C.N.162/95 and the Petitioner would be liable for payment of
customs duty. The documents and records seized from the Petitioner contained vital evidence and disclosed the fraud committed by the Petitioner.
The documents ""were required for the adjudication of the show cause notice dated 21.7.1997 issued to the Petitioner. The bank guarantees were
invoked on the basis of the report of the investigation that the Petitioner sold the imported goods in open market without utilizing the same for the
purpose of its export obligation. The Petitioner had already executed end-use bonds for the bank guarantees in respect of the three bill of entires,
viz. No. 23411 dated 14.5.1996, No. 23259 dated 17.5.1996 and No. 24419 dated 20.5.1996. On the basis of the report relating to the non-
use of the imported materials for export obligation, the fourth Respondent invoked the bank guarantees and also directed the Petitioner to pay the
balance amount of duty covered by the abovementioned bills of entry together with interest as per the said bond. The Petitioner imported the
goods under the four licences and totally 11 bills of entries were filed. The demand notice related to the above three bills of entries mentioned and
the end-use bonds covered the three bill of entries. The fourth Respondent had every right to demand the balance duty. If the Petitioner had
performed the export obligation as contended by it, it would be open to the Petitioner to question the demand before the fourth Respondent. Till
such time the Petitioner putforth its defence the demand notice dated 21.7.1997 would be kept in abeyance. The Notification No. 148/95 dated
19.9.1995 as amended by No. 29/96 dated 15.6.1996 clearly stipulated that the materials which were imported were not to be disposed of or
utilized in any manner except for discharge of export obligation or replenishment of such materials and materials so replenished were not to be sold
or transferred to any other person. It also stipulated at the time of clearance of imported materials, a bond should be executed with such surety or
security and in such form or for such sum as may be specified by the Assistant Commissioner of Customs binding themselves to pay on demand an
amount equal to the duty leviable. The amount demanded by the fourth Respondent was in order. The allegation in the ground that it was only the
licensing authorities who were empowered to initiate any action for non-performance of export obligation was not correct. The Customs
Authorities had the power to investigate whether the goods imported free of duty were used to comply with export obligation or not and they had
every right to initiate proceedings u/s 111(o) of the Customs Act. There were no merits in the Writ Petition and the same is liable to be dismissed.
8. A reply has been filed on behalf of the Writ Petitioner. In the reply it is stated as follows:
The counter has been sworn to by a person not at all a party in the Writ Petition. The very fact that a third person has chosen to file the counter
affidavit would show that the third, the fourth, the seventh and the eighth Respondents have exercised powers which they did not possess either
individually or collectively. It is also incorrect for the deponent to say that he is well acquainted with the facts of the case as the same cannot be
true, as anything if at all, he could state only from the records and not from his personal knowledge. Conceding that the deponent is competent to
file a counter Respondents 3, 4, 7 and 8 have no jurisdiction to set the law in motion against the Petitioner under any of the provisions of the
Customs Act. It is only the licensing authority, viz. Respondent 2, who could if at all take action against the Petitioner in accordance with the
provisions of the Foreign Trade (Development and Regulation) Act, 1992 and not Respondents 3, 4, 7 or 8. The second Respondent has not
chosen to file any counter affidavit and the present counter affidavit has to be rejected in the interests of justice, equity and fair play.
9. The points raised in W.P. No. 12152/97 are neither substantially similar nor have they become res judicata. The Writ Petition is not premature
nor is it an abuse of process of Court. It is only Respondents 3, 4, 7 and 8 who have abused their powers and also exceeded their respective
jurisdictions by indulging in which hunting and for creating a contravention of the Customs laws. It is not correct to say that the Petitioner had
wilfully avoided the service of the show cause notice purporting to have been issued u/s 124 of the Customs Act. Section 124 reads with Section
110(2) of the Customs Act would clearly show that the fourth Respondent suffers from inherent want of jurisdiction in issuing the show cause
notice to the Petitioner or initiate any adjudication proceedings thereto, particularly in the context of the Petitioner having already fulfilled his export
obligations on or before 22.7.1997. Again, conceding without admitting that the issue of show cause notice by the third Respondent is justified for
some reason, the unilateral enforcement of the bank guarantees by the fourth Respondent without waiting for the reply to the show cause notice by
the Petitioner, is outright unjust and premature. The Respondents have acted in undue haste resulting in irretrievable damage to the Petitioner.
A person''s health, home and his property, which includes his hard earned money have to be protected by this Court againstt loot and organised
robbery by the executive arm of the State through resort to illegal steps, unlawful means and measures. Respondents 3, 4, 7 and 8 cannot be
allowed to become Judges of their
10. The bank guarantees coming under the purview of the DEEC Scheme are conditional and could never be said to be unconditional. The
proceeds of all the bank guarantees detained by the fourth Respondent should be directed to be reimbursed to the Petitioner within ""ex debito
justitia"". The dependant has not referred to any provision of law under which the seventh Respondent had investigated. Respondents 3, 4, 7 and 8
have acted in a manner as if there is some parallel, unwritten, invisible Customs or Central Excise Code quite different from the one enacted for the
citizens. No probative value could be attached to the ipse dixit averments of the deponent on deciding the present Writ Petition. What is done in
contravention of the provisions of an Act of Parliament cannot be made the subject matter of an action. All the shipping bills for the finished
products have been countersigned by the fourth Respondent, who has not chosen to file a counter denying the averments made in the Writ
affidavit. The subsequent investigation of the Respondents, show cause notice and adjudication proceedings are all in the nature of witch-hunting,
extra-statutory, mala fide, motivated and are not based on legally admissible evidence, but on conjectures, surmises and tutored statements of the
Petitioner recorded by some Central Excise Officers under duress, which were later retracted by the Petitioner. The contents of documents cannot
be permitted to be disproved by oral or hearsay evidences.
11. Another additional affidavit has been filed on behalf of the Petitioner. That was necessitated because a copy of a show cause notice dated
21.7.1997 had been included in the typed set of papers filed on behalf of the Respondents on 26.11.1997. There was also another show-cause
notice received by the deponent in the name of Chamundi International of which the deponent was the proprietor. This show cause notice was
received during the third week of November, 1997. Since this show cause notice had not been received by the Petitioner till the filing of the Writ
Petition and at the time of preliminary arguments the prays in the Writ Petition was based on the material then available sans the show cause notice.
Even in the counter affidavit filed by the Assistant Collector of Customs Act (Legal), no statement of the Petitioner mentioned in the show cause
notice has been relied upon. But, in reply to the arguments on behalf of the Petitioner the learned Counsel for the Respondents had relied upon the
contents of the show cause notice and this is against the Principles of Natural Justice. The reliance placed by the Government Pleader in producing
new documents and placing reliance upon the same without serving it upon the Writ Petitioner prior to the filing of the Writ Petition has caused
serious prejudice to the Petitioner. It has therefore become necessary to file an additional affidavit and offer his explanation to the show cause
notice.
12. In the additional affidavit, the husband of the proprietress of the Petitioner-concern has set out in detail the objections to the show cause notice.
The additional affidavit has set out in detail the circumstances under which the search and the seizure took place. It is not necessary to reproduce
the details in extenso at this stage. If and when necessary those details will be adverted to at later stages of this order.
13. Let us first dispose of the objection raised by the learned Counsel for the Petitioner with regard to the competence of the deponent of the
counter to swear to the counter affidavit. In my view, this objection cannot be sustained. There must have been some arrangements in the
concerned department for enabling any particular officer to take care of legal matters relating to the departments and in the process, the deponent
would have been authorized to attend to legal matters. It is stated that the deponent is the Assistant Commissioner of Customs (Legal). He claims
knowledge of the facts of the case being the Officer in charge of the Legal Cell. He must be quite aware of the facts of the case. His swearing to
the counter cannot be objected to. No authority is cited to substantiate the contention that the deponent is precluded from filing a counter in his
capacity as Assistant Commissioner of Customs (Legal).
14. It has been held by the Supreme Court in S. Pratap Singh Vs. The State of Punjab, and The Calcutta Gas Company (Proprietary) Ltd. Vs.
The State of West Bengal and Others, that when allegations of mala fides are made against any official, the counter affidavit must be filed by the
concerned official himself unless there be any other person having personal knowledge of the facts. It is to be stated that the Petitioner has not
alleged mala fides against any particular official of the departments. In these circumstances, there is no embargo on accepting the counter and
looking into the same in answer to the allegations made in the affidavit filed in support of the Writ Petition.
15. We will also have to take into consideration certain subsequent developments. The quashing prayed for in the Writ Petition is in respect of the
demand notice dated 21.7.1997 received by the Petitioner on 21.8.1997. From the counter it is seen that a show cause notice has been issued. It
also bears a date 21.7.1997. The complaint of the Writ Petitioner is that he did not receive any show cause noticed The deponent came to know
about the show cause notice from the reference to the show cause notice in the counter and from the inclusion of the show cause notice in the
typed set of papers filed on behalf of the contesting Respondents. The deponent has further stated that only the sister concern of the Petitioner
Chamundy International had received the show cause notice dated 21.7.1997 in the third week of November, 1997. If it is found that the Writ
Petitioner did not receive the show cause notice and that it had knowledge only after the receipt of the counter that it was seen only on receiving
the typed set filed on behalf of the contesting Respondents on 20.11.1997 and the receipt of the show cause notice in November, 1997 by
Chamundy International, then there could absolutely be no legal impediment in taking into consideration these developments and mould the relief.
This is what the Writ Petitioner has prayed for in the additional affidavit and has also pressed during the arguments. Mr. M. Ranka, learned
Counsel, also relied on the judgment of this Court in P. Rathinaswami Pillai v. The Regional Transport Authority, Salem and Anr. 1965 (1) MLJ
526 and the judgment of the Full Bench of the Allahabad High Court in Gyan Chand Bhatia Vs. Rent Control and Eviction Officer and Another, .
16. Mr. K. Ilias Ali, learned Additional Central Government Standing Counsel for the contesting Respondents, submitted that the Petitioner could
not be allowed to change his track and it should confine itself to what is stated in the writ affidavit. In support of his contention, the learned Counsel
relied on the following judgments:
(1) N.P. Singh Deo Vs. State of Orissa and Others,
(2) Sri Raghavendraswami Mutt at Nanjangud Vs. The State of Andhra Pradesh and Another, .
(3) Filmistan (P) Ltd. Vs. Balkrishna Bhiwa and Another, ; and
(4) J.K. Cotton Spinning and Weaving Mills Co. Ltd. Vs. Sales Tax Officer, Kanpur and Another, .
17. In the Orissa case cited by the learned Standing Counsel for the contesting Respondents, the Petitioner by accepting vesting Notification and
by treating himself as ex-intermediary made an application u/s 6 and 7 of the Orissa Estates Abolition Act and received settlement in regard to
certain extent of land. In that background, the Bench of the Orissa High Court held that it would not be appropriate to allow him for the first time
to go back upon his own action and permit him to contend that the property in regard to which claim was confined in the writ application was not
on estate. This decision will not apply to the facts of the present case.
18. In the Andhra case relied on by the learned Standing Counsel Sri Raghavendraswami Mutt at Nanjangud the Andhra Bench declined to permit
the Petitioner in the case before it to raise a plea involving investigation into facts not already on record for the first time at the hearing. According
to the Bench of the Andhra Pradesh the grounds which were not taken in the Writ Petition nor before the Commissioner of H.R. & C.E. whose
order was impugned, could not be raised at the time of hearing the petition. For the reasons to be stated at the end of this particular aspect of the
discussion, this decision will also not apply to the facts of the present case.
19. In Pilmistan (P) Ltd. etc. Supra the Supreme Court while dealing with the power under Article 227 of the Constitution of India held that,
the question whether on application for. approval to the dismissal of-workman u/s 33(2)(b) provision of Industrial Disputes Act was made as a
part of the same transaction or at the same time the dismissal was effected as required by the proviso, being a question of fact depending on the
circumstances of each case, where the workman does not press the plea of contravention to the proviso before the Industrial Tribunal, the High
Court was in error in considering such plea requiring investigation of facts and adjudicating on the same in petition under this Article.
This decision also, in my view, will not support the stand taken by the learned Standing Counsel.
20. Equally, the decision of the Supreme Court in J.K. Cotton Spinning and Weaving Mills Co. Ltd. referred to supra will not apply to the present
situation. In that case, it was held by the Supreme Court that ""in a Writ Petition by a company against the order of a Sales Tax Officer u/s 8(3)(b)
read with Rule 13 of the Central Sales Tax Act Rules, it was not open to the High Court to expand the scope of the petition challenging the
correctness of that order and to deal with matters which were never in issue or to decide that other categories of goods which the Sales Tax
Officer had not ordered to be deleted did not fall within the terms of Section 8(3)(b) read with Rule 13."" I will give my reasons for rejecting this
objection by the learned Standing Counsel after referring to the decisions cited by the learned Counsel for the Writ Petitioner.
21. In P. Rathinaswami Pillai already referred to, a Bench of this Court held that,
the High Court under Article 226 which was of wide amplitude and enabled the Court to do justice in the most comprehensive sense, could ignore
the form of relief sought by the applicant and grant him the necessary relief by issuing the appropriate writ.
22. In the Allahabad Full Bench case relied on by the learned Counsel for the Writ Petitioner dealing with the question of existence of alternative
remedy where the tenant filed a Writ Petition without applying for revision u/s 7-A(4) or Section 7-F of the U.P. Act 3 of 1947, the Full Bench
held that where the High Court refused writ on the ground of existence of adequate alternative remedy depended upon its discretion, the Full
Bench in paragraph 16 of its judgment discussed in detail as to what an adequate alternative remedy was. The existence of the show cause notice
is mentioned for the first time in the counter in para 6 of the counter filed in November, 1997 though the affidavit had been sworn to on
13.11.1997. The typed set of the contesting Respondents had been signed on 12.11.1997 and served on the Petitioner''s Counsel on 20.11.1997.
In the written submission made on behalf of the Writ Petitioner in paragraph 14 this is referred to. It is the contention on behalf of the Writ
Petitioner that there was no service of notice as required u/s 110(2) of the Customs Act. It is met by the learned Standing Counsel for the
Department that the Customs Officers had complied with the procedure contemplated u/s 110(2) of the Customs Act for service of notice. As
soon as the show cause notice could not be served through post, it was affixed on the notice board of the Customs House. I am of the view that
there is substance in the contention of the learned Counsel for the Writ Petitioner that the Petitioner came to know about the show cause notice
only in November, 1997. If really the Petitioner had knowledge of the show cause notice earlier, then the Petitioner would have challenged that
notice and not the demand notice dated 21.7.1997. It will be unjust to drive the Writ Petitioner to take separate proceedings.
23. It has been held by the Supreme Court in K.S. Rashid and Son Vs. The Income Tax Investigation Commission etc., and Kavalappara
Kottarathil Kochunni Moopil Nayar Vs. The State of Madras and Others, and Prabodh Verma and Others Vs. State of Uttar Pradesh and
Others, that the Court is not confined to the form of the prerogative writs or the order asked for by the Petitioner, but has the discretion to frame a
proper order, which would suit the exigencies of the case before the Court. The Court should not dismiss a petition on the ground that proper relief
has not been asked for. The contesting Respondents also cannot have any grievance. In fact, they are relying on the show cause notice. They are
not taken by surprise. They have to support the show cause notice.
24. Now let us analyse the demand notice de hors the show cause notice. The demand notice states that the Writ Petitioner had not fulfilled its
export obligations. The order is not specific. It is contended and it is also sought to be proved on behalf of the Writ Petitioner by producing
documents duly countersigned by the authorities that export obligations had been fulfilled. The learned Counsel took me through the various
documents filed in the case and the several endorsements made by the authorities and demonstrated that the export obligations which were
complained of as having not been fulfilled by the Writ Petitioner, have been fully complied with. The learned Counsel relied on the judgment of the
Bombay High Court in Bombay Chemicals Pvt. Ltd. Vs. Appellate Collector of Customs, and a decision of the Gujarat High Court in Vishnu B.
Seernani Vs. Government of India, and submitted that the demand notice was irregular and improper. In Bombay Chemicals Private Ltd. v.
Appellate Collector of Customs, it was held that where the Petitioners had duly complied with all the conditions necessary for the grant of
exemption under the Notification dated 1.3.1968, it was not open to be argued that they were not conclusive in so far as the granting of exemption
was concerned or that the Customs Authorities had a right to sit in judgment over the certificates which were obligatory to be furnished to the
Customs Authorities for the purpose of obtaining the exemption. It was held by the learned Judge of the Bombay High Court that,
the Customs Authorities had no jurisdiction whatsoever to sit in appeal over the certificates which had been granted by DGTD or Director of
Industries as the case my be and come to their own conclusion. Those certificates were binding and conclusive upon the Customs Authorities.
Once these certificates had been produced and the conditions mentioned in the Notification referred to supra had been complied with, then it was
obligatory upon the Customs Authorities to grant the exemption thereunder.
25. In Vishnu B. Seernani a Bench of the Gujarat High Court at Ahmedabad dealing with confiscation of seized goods by the Customs Authorities
held that the Customs Authorities, themselves were at fault by seizing the goods and preventing their export and therefore the confiscation was ex
facie bad and untenable when no wilful non-compliance with export obligations could be spelt out.
26. It is not seriously disputed or demonstrated on behalf of the contesting Respondents that the export obligations had not been fulfilled by the
Writ Petitioner. But, the burden of the song of the Respondents, is that during the investigation it was found that there was diversion of the
imported materials and a show cause notice was issued and it had to be adjudicated upon.
27. It is contended by the learned Counsel for the Writ Petitioner that the search and seizure by the authorities were illegal. According to the Writ
Petitioner, the authorities, who did search had no jurisdiction and equally the authorities of the sister department, viz. Customs Revenue
Department, had also no jurisdiction to follow suit and create hardship and untold misery to the Petitioner. Very serious allegations have been
made against the search and the seizure. The learned Counsel referred to the additional affidavit filed on behalf of the Writ Petitioner disputing the
various allegations in the show cause notice. The learned Counsel also relied on a number of decisions in support of his contentions.
28. The learned Counsel relied on the Full Bench decision of the Himachal Bench of the Delhi High Court in State Vs. Bhawani Singh and Others,
, a judgment of the Supreme Court in K.T.M.S. Mohd. and Anr. v. Union of India etc. 1992 Crl.L.J. 2781 and the decision of this Court by
Padmanabhan, J. in C. Ranganathan v. The President/Secretary of School Committee of Maruthamalai Sri Subramanya Devasthanam Higher
Secondary School 1997 I MLJ 678.
29. Countering the arguments of the learned Counsel. Mr. Ilias Ah submitted that the departmental authorities had ample jurisdiction to search and
seize and it was not open to the Petitioner to contend that such a right was not available. The learned Counsel relied on the following decisions in
support of his submission:
(1) Sheshank Sea Foods Pvt. Ltd., Karnataka Vs. Union of India (UOI) and Others, ;
(2) Madanlal Steel Industries Ltd. Vs. Union of India,
(3) Bussa Overseas and Properties (Private) Limited and another Vs. Union of India and another, ; and
(4) Assistant Collector of Customs v. Pratap Rao Sait 1972 KLT 307.
30. In Broom''s Legal Maxims one of the maxims mentioned is Domus Sua Cuique Est Tutissimum Refugium - Every man''s house is his castle.
The Full Bench of the Delhi High Court relied on by the learned Counsel for the Petitioner Mr. Ranka has held as follows:
Searches under the Code of Criminal Procedure have to be conducted strictly in accordance with the formalities and within the legal limits
prescribed in the Code. An Indian Citizen''s house is his castle, because next to his personal freedom comes the freedom of his home. Just as a
citizen cannot be deprived of his personal liberty except under authority of law, similarly no officer of the State has a prerogative right to forcibly
enter a citizen''s house except under the authority of law, which is open to be examined by the Courts of law and justice.
31. In K.T.M.S. Mohd. and Anr. v. Union of India 1992 Crl.L.J. 2781 the Supreme Court has held that the statement of person recorded u/s 39
of the Foreign Exchange Regulation Act, 1947 must be examined only qua a provision of FERA and not with reference to provisions of any other
alien Act such as income tax Act.
32. In Gomathi Ammal and Others Vs. Pitchammal and Others, Padmanabhan, J. held that the action of a Secretary, who had no power to
suspend an employee, cannot be later on ratified by the School Committee and make the order of suspension valid. It is the contention of the
learned Counsel that the authorities had no right to conduct a search and seize the documents and the investigation by the sister Department was
also improper and illegal. I do not think that the contention of the learned Counsel in this regard is well-founded. It has been held by the Supreme
Court in Sheshank Sea Foods Pvt. Ltd., Karnataka Vs. Union of India (UOI) and Others, relied on by the learned Counsel for the Department
that the Customs'' jurisdiction to investigate violation of condition of exemption to raw material imported under advance licence issued under
DEEC Scheme was beyond question. The terms of Section 111(o) of the Customs Act enabled the Customs Authorities to investigate.
33. In Bussa Overseas and Properties (P) Ltd. and Anr. v. Union of India and Anr. referred to already, it was held by a Bench of the Bombay
High Court that questions such as whether the correct declaration of the raw materials was given by the registered exporter, whether the R.E.P.
licence was properly issued for the raw material actually used in the product exported and whether the R.E.P. licence was misused and if so what
should be done about it all fell within the domain of the licensing authorities.
34. In Assistant Collector of Customs v. Pratap Rao Sait 1972 KLT 307 it was held by the Kerala High Court that,
Before action was taken u/s 123 of the Customs Act, it was necessary that the proper officer should entertain the belief that the goods were liable
to confiscation under the Act, when the belief such as any reasonable man in the circumstances of the case would entertain about the existence or
non-existence of a thing. But the non-mentioning of reasons in the search warrant would not vitiate the authorization.
I am clearly of the view that the search and the seizure by the authorities could not be faulted.
35. No doubt, certain statements were taken from the deponent in the writ affidavit and he had retracted the statements he had made. The learned
Counsel for the Writ Petitioner relied on a judgment given by the CEGAT, South Regional Bench, Madras, in 1991 (55) ELT 580 Tribunal and
submitted that the statements recorded could not be relied upon, especially when retracted. In giving that judgment the Tribunal had relied on a
judgment of the Supreme Court in Sankaraiah v. State of Rajasthan AIR 1978 SC 453 and an unreported judgment of a Bench of this Court in
R.S. Kalyanaraman v. Collector in W.A. No. 454/78. In Sankaraiah v. State of Rajasthan the Supreme Court held as follows:
The circumstances under which the Appellant was kept though unofficially, in the Customs House for a long spell of time and inculpatory statement
emerging after such a detention do not inspire any confidence in our mind about the voluntary nature of the same.
It was held by a Division Bench of the Madras High Court in Writ Appeal No. 454/78 as follows:
It is well established that such retracted statements of accomplice cannot form the sole basis for finding a person guilty without any further
corroboration. In this case both the original as well as the appellate authority have found the Appellant guilty of abetting the import of contraband
gold only on the basis of the retracted statement which have not got corroboration from other materials. Hence we cannot agree with the
conclusion arrived at by the authorities that the guilt as against the Appellant has been duly established.
36. I may however say that this is a matter to be gone into in the adjudication proceedings. But, one thing is certain that the search and the seizure
by the officials cannot be questioned.
37. The next point to be gone into is with regard to the service of the show cause notice. We have to see if the show cause notice had been served
on the Petitioner prior to service of the demand notice. The demand notice and the show cause notice both bear date 21.7.1997. The demand
notice alone was served on the Writ Petitioner on 21.8.1997. The show cause notice had not been officially served on the Writ Petitioner, though
as contended by the learned Standing Counsel for the contesting Respondents, as it was not possible to serve the Writ Petitioner. Following the
provisions of Section 153 of the Customs Act, the show cause notice was put up on the Notice Board of the Customs Office and that would be
sufficient service. It is not brought to the notice of this Court as to the exact date on which it was done. It should have been only after the alleged
attempts to serve the Writ Petitioner had failed. From the xerox copies of the postal endorsements produced it is seen that the posting of the notice
on the Notice Board of the Customs Office would not have been earlier than 18.8.1997. It is contended by the learned Counsel for the Writ
Petitioner that the Petitioner had received the demand notice dated 21.7.1997 on 21.8.1997. If really the show cause notice also had been sent to
the Writ Petitioner, it would have definitely been received by the Petitioner. However, one thing is clear that the show cause notice had not been
served on the Writ Petitioner prior to the service of the demand notice, which was on 21.8.1997. In paragraph 2 of the additional affidavit of
Babulal it is stated as follows:
I have filed the above Writ Petition against the impugned communication dated 21.7.1997 of the fourth Respondent herein. I have filed the above
Writ Petition on 30.8.1997. Till the filing of the Writ Petition I did not receive any other notice including the show cause notice reported dated
21.7.1997. I have received the typed set of papers filed by the Government Pleader through my Counsel. However, I have received another show
cause notice in the name of Chamundy International of which I am the Proprietor during the third week of November, 1997. When service prior to
filing of the counter by the Department is disputed, it is for the Respondents to show as to when the show cause notice was served. Nowhere it is
stated as to how the Petitioner was served. No additional counter has been filed. The point is squarely raised in the oral and written arguments.
The learned Counsel also relies on a judgment of this Court in K. Rama Rao v. Additional Collector of Customs, Calcutta and Anr. 1983 ELT
2267 Madras. It is contended by the learned Standing Counsel for the Department that the decision in Rama Rao v. Additional Collector of
Customs, Calcutta and Anr. would not apply to the facts of the present case. In that case it was held that,
If the Petitioner had denied the service of show cause notice, which was alleged to have been sent by registered post to him and the department
had Sailed to produce any acknowledgment due or postal receipt, it could not be said that service of notice as required u/s 110(2) of the Customs
Act, 1962 had been made and if provisions of Section 153(b) of the Customs Act were resorted, it was necessary to show the particulars of
display and mere showing of office note in official file was not sufficient.
It was also held in that case that,
Section 110(2) of the Customs Act, 1962 was explicit when it is stated that if no show cause notice was given within the stipulated period, the
goods seized should be returned to the persons from whose possession they were seized.
In that case, it was found that show cause notice had not been issued within the prescribed time and the seized goods were therefore directed to
be returned. The learned Judge Justice Nainar Sundaram as he then was, further observed that,
show cause notice was a statutory mandate and should not be ambiguous because it brought forth certain consequences ensuring the benefit to the
citizen and therefore, statutory requirements with regard to the service of the show cause notice should be complied with strictly by the
Government failing which drastic consequences would follow.
38. According to the learned Standing Counsel in the present case there was evidence to show that the show cause notice had been despatched
by registered post with acknowledgment due. From the xerox copies of the endorsements in the papers relating to that it is found that the show
cause notice had not been served on the Writ Petitioner. It is also not shown as to the manner in which the show cause notice was displayed as per
Section 153(b) of the Act. No copy of the show cause notice with the requisite endorsement showing compliance with Section 153(b) of the Act
was produced for perusal of the Court, It has therefore to be held that there was no proper service of the snow cause notice.
39. Another intriguing feature is how the show cause notice and the demand notice bear the same date unless it is stated that one has nothing to do
with the other. It is not the case of the Respondents that one has nothing to do with the other. If they relate to the same subject matter, their
contemporaneous issuance assuming that they were issued on the same day will raise serious doubt about the bona fides and impartiality of the
powers that be, it would even amount to their having prejudged the whole issue. Perhaps that is the reason which prompted the authorities to state
in, the counter affidavit that till such time the show cause notice was adjudicated upon, the notice of demand would be kept in abeyance. The
swearing to the counter in November, 1997 and the copy of the show cause notice being served on Chamundy International in November, 1997,
in my view, are not mere coincidences. There is something more than what meets the eye.
40. The prayer in the Writ Petition is for quashing the communication-cum-demand notice dated 21.7.1997. It cannot stand by itself. If it is found
that either there had been no show cause notice issued previous to that or that they had been contemporaneously issued or that the show cause
notice had been issued subsequent to the demand notice - in any one of the above contingencies the demand notice has to go. It is for the
contesting Respondents to show that the show cause notice preceded the demand notice.
41. One important objection raised by the learned Standing Counsel for the contesting Respondents is that in the investigation carried out by the
department people it was found that the Writ Petitioner had parted with the inputs in favour of third parties and those third parties had given
statements against the Writ Petitioner in respect of what they got and what they did with the materials imported by the Writ Petitioner and passed
on to them and having regard to the terms of the licence given to the Writ Petitioner what the Writ Petitioner did was clearly illegal against the
provisions of the terms of the licence granted to the Writ Petitioner and therefore, the proceedings culminating in the show cause notice were
perfectly in order and the Writ Petitioner was therefore answerable to the show cause notice. The learned Standing Counsel also pointed out that
in the licence given to the Writ Petitioner there is space provided for showing the names of the other licensees and this would indicate that the
licensees had no authority to transfer the imported material to any body else and ask him to manufacture for the licensee.
42. Mr. M. Ranka drew my attention to the Manual to the Text of Handbook of Procedures 1997-2002 and in particular to paragraph 7.17 which
is to the following effect:
The licence holder has the option to have the material processed though any other manufacturer including a jobber. However, the licence holder
shall be solely responsible for the imported items and fulfilment of export obligations.
It will be pertinent to refer to paragraph 7.18 also, which runs as follows:
If the applicant desires to have the name of any manufacturer or jobber added to the licence, he may apply for such endorsement. Such
endorsement shall be mandatory where prior import before export is a condition of the Advance Licence and the licence holder desires to have the
material processed through any other manufacturer or jobber.
This also answers the point raised by the learned Standing Counsel for the department, i.e. if the applicant desires to have the name of any
manufacturer or jobber added to the licences, the word used is ''may'' and not ''shall''. Such an endorsement shall be mandatory only where prior
import before export is a condition of the Advance Licence and the licence holder desires to have the material processed through any other
manufacturer or jobber.
43. The learned Standing Counsel drew my attention to para (vii) of General Exemption No. 84-G to drive home his point. The said paragraph
runs as follows:
Exemption to materials imported against Advance Licence issued on or after 19.9.1995: In exercise of the powers conferred by Sub-section (1) of
Section 25 of the Customs Act, 1962 (52 of 1962) the Central Government being satisfied that it is necessary in the public interest so to do,
hereby exempts materials imported into India against an Advance Licence applied for and issued on or after 19th September, 1995, with an
obligation to export products specified in the Table annexed to this Notification (hereinafter referred to as the said licence), from the whole of the
duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and from the whole of the
additional duty leviable thereon u/s 3 of the said Customs Tariff Act, subject to the following conditions; namely:
(i) to (vi) omitted.
(vii) exempt materials shall not be disposed or utilised in any manner except for utilization in discharge of export obligation or for replenishment of
such materials and the materials so replenished shall not be sold or transferred to any other person.
I am unable to see how from this it can be spelt out that there is a prohibition for giving the materials imported to another manufacturer or jobber. It
is also not brought to my notice that there is any condition in the Advance Licences that an endorsement of the name of the manufacturer or jobber
has to be made. In these circumstances, the contention on behalf of the contesting Respondents that the Writ Petitioner has no right to transfer the
imported materials to supporting manufacturers to manufacture the export products and export the same, has really no substance. What is stated
above is only a sample of the contention raised by the contesting Respondents and the answer to such a contention by the Writ Petitioner.
44. I do not intend to deal with every one of the contentions raised in the show cause notice and the objections of the Writ Petitioner. Suffice it to
say that all is not well with what has been done by the department. It is difficult to digest as to how the show cause notice and the demand notice
could be issued on the same date unless the authorities had practically decided the matter and jumped the gun.
45. The learned Counsel for the Petitioner brought to my notice the judgment of the Gujarat High Court in Motilal Lalchand Shah Vs. L.M. Kaul
and Another, and submitted that the demand notice and the show cause notice cannot be reconciled and both have to be quashed by following the
ratio of the said decision. In that case, the Bench of the Gujarat High Court quashed the show cause notice holding that the basis as declared in the
show cause notice was quite contrary to the case, which was found by the Collector subsequently. The show cause notice showed the Petitioner
as a person dealing in the goods of foreign origin and the amount of Rs. 51,000/- and odd seized as representing the sale proceeds of goods of
foreign origin. But, subsequently, the department took a contrary stand that the amount in question represented the sale proceeds of prohibited
articles, viz. silver, which the Petitioner took near the port of Daman for purposes of export. In that view, the, show cause notice was quashed and
in the course of quashing the show cause notice, the learned Judged observed as follows:
The obligation of issuing notice u/s 124 is a notice which must be in writing informing the person sought to be held liable as to the grounds on which
it is proposed to confiscate the goods or the imposing of penalty. The grounds must, in our opinion, state precisely and clearly the facts which
constitute the customs offence. Even at the cost of repetition we must say that the grounds stated in the show cause notice were that the Petitioner
was a person dealing in the goods of foreign origin and the amount in question represented sale proceeds of such goods. The case found after the
hearing was that the Petitioner was a person dealing in snuggled goods, inasmuch as he took the prohibited articles for purposes of export from a
place which is not a recognized port or a place for purposes of export under the Customs Act. Therefore, the ground which were notified to the
Petitioner and the grounds which were ultimately found to be proved by the Collector are quite contrary. We have no hesitation in saying that this
would clearly cause prejudice to the Petitioner who was deprived of sufficient opportunity to defend himself. On that ground also, therefore, the
order of the Collector required to be quashed and set aside.
We have already noticed that the grounds stated in the show cause notice have nothing to do with the demand made in the demand notice, both
dated 21.7.1997.
46. It should also be noticed that the delay in issuing the show cause notice has not been properly explained, though it was sought to be contended
by the learned Standing Counsel that there was suppression of material facts and the department was entitled to have an extended period for
issuing show cause notice. This also, in my view, would amount to the authorities prejudging the whole issue. The Writ Petitioner had been
condemned unheard, as otherwise the show cause notice and the demand notice cannot be contemporaneous. The learned Standing Counsel
submitted that the fact that the authorities have undertaken to keep the demand notice in abeyance till the adjudication of the show cause"" notice is
sufficient indication that the authorities have acted fairly or would act fairly in the instant case. I, do not agree. They have been over-zealous and
have been in the wrong. By offering to keep the demand notice in abeyance they are not doing anything virtuous. No other point is argued before
me.
47. The discussion above obliges me to interfere and I pass the following order:
The demand notice dated 21.7.1997 will stand quashed. The articles and the documents seized from the Petitioner will be returned to the
Petitioner. The authorities are at liberty to continue the adjudication proceedings according to the provisions of the Act and the Rules framed
thereunder. The Writ Petition will stand allowed to the extent indicated above. There will, however, be no order as to costs.
48. In view of the orders passed in the main Writ Petition, no orders are necessary in W.M.P. No. 21584/97.
