Shreyansh Marble Tiles Pvt Ltd. Vs Commissioner of Customs (CESTAT Ahmedabad)
Conclusion: After amendment of section 110(2) it was concluded that no separate notice was necessary, before extending the period of limitation by a further six months (for issuance of show cause notice); the authority had to record reasons in writing, which of course, should be based on materials and inform the concerned party about the extension before the expiry of the first period of six months.
Held: Assessee-company pointed out that DRI officers searched the residential premises of assessee’s director and the factory premises of assessee-company. At the factory premises, the officers found huge stocks of marble and granites in the open premises of the factory. That the crystallized glass panels were stored in another premises adjacent to the above factory premises and assessee informed the officers that they had imported another eight containers of crystallized glass panels. That thereafter the officers along with assessee entered the godown premises . That DRI officers resumed the high sea sales, import purchase file, import file, sales bill file. Further, the goods imported at the assessee factory premises were stated to be imported by bill of entry and in this regard eight bills of entry mentioned was given. That, further the aforementioned goods were detained through separate detention memo dated 09 December 2018 and the goods were handed over to the Director of the Appellant Company for safe custody. That assessee’s director was also issued summons to appear on 10 December 2018 at 10:00 AM before the DRI with reference to mis-declaration / undervaluation in respect of crystallized glass panel and rough marble blocks by assessee-company. That by communication dated 13 May 2019 the assessee’s company was informed that goods imported by him pertaining to bill of entry No.7756415 date 08.12.2016 filed with Customs House, Gujarat, Port Limited, Pipavav, which was detained vide seizure memo dated 09 December 2018 and seized vide seizure memo dated 12 January 2019 which was actually valued at Rs.61,188 / – instead of Rs.50,478/- as declared in the bill of entry thereby evading differential duty of ―Rs. 3,153/-‖. That the Commissioner of Customs (Preventive), Jamnagar, in exercise of powers vested with him under first proviso of Section 110(2) of the Customs Act, 1962 had extended the time limit for issuance of Show Cause Notice for goods.It was held the effect of these amendments, was that the rigour of unamended Section 110(2) had been softened. Now, a person, whose goods were detained, can claim provisional release. It was apparent that a textual reading of Section 110(2) would lead one to conclude that no separate notice was necessary, before extending the period of limitation by a further six months (for issuance of show cause notice); the authority had to record reasons in writing, which of course, should be based on materials and inform the concerned party about the extension before the expiry of the first period of six months.
FULL TEXT OF THE CESTAT JUDGEMENT
This appeal has been filed by M/s. Shreyansh Marble Tiles Pvt. Limited against the order of Commissioner extending time limit for issuance of show cause notice under Section 110(2) of Customs Act, 1962.
2. Learned Counsel for the appellant pointed out that DRI officers on 09 December, 2018 searched the residential premises of the Appellant’s Director and the factory premises of the Appellant company at B-63, Ambaji Industrial Area, Palapur, Ahmedabad Highway Road, Abu Road, Sirohi, Rajasthan. That, at the factory premises the officers found huge stocks of marble and granites in the open premises of the factory. That the crystallized glass panels were stored in another premises adjacent to the above factory premises and the Appellant informed the officers that they had imported another eight containers of crystallized glass panels. The imports were through Mundra Port (four containers) and lCD, Tughlakabad (Port of discharge Pipavav) (four containers) and the same was yet to be cleared from the port or under process of clearance. That thereafter the officers along with the Appellant entered the godown premises situated at B-61A, Ambaji Industrial Area, Palanpur, Ahmedabad Highway Road, Abu Road, Sirohi. That DRI officers resumed the high sea sales, import purchase file, import file, sales bill file. Further, the goods imported at the Appellant factory premises were stated to be imported by bill of entry and in this regard eight bills of entry mentioned was given. That, further the aforementioned goods were detained through separate detention memo dated 09 December 2018 and the goods were handed over to the Director of the Appellant Company for safe custody. That the Appellant’s Director was also issued summons dated 09 December 2018 to appear on 10 December 2018 at 10:00 AM before the DRI, Ahmedabad Zonal Unit with reference to mis-declaration / undervaluation in respect of crystallized glass panel and rough marble blocks by the Appellant company.
2.1. Learned Counsel stated that on 20 December 2018, the goods of the Appellant company imported against Bill of Entry No. 9298407 dated 17 December 2018 were examined at Saurashtra – CFS, AP & SEZ, Mundra which were declared as ―Crystallized Glass Panel B Grade‖ of different size (2800x1500x17mm) and (2800×1200 x17mm) which were ,,/,. imported from Hong Kong. The said consignment of containers lying in the premises of Saurashtra — CFS, Mundra, were detained for further investigation. That, by letter dated 20.12.2018 the Inspector, (SIIB Import), lCD, TKD directed the Senior Manager, CONCOR, lCD, TKD, New Delhi to shift the containers covered under bills of entry No.9244913 dated 13 December 2018 filed by the Appellant Company and the said seal should be cut in presence of SIIB officials.
2.2. Thereafter, vide Panchnama dated 21 December 2018, the officers of SIIB Import examined the goods imported vide bill of entry No.9244913 dated 13 December 2018 imported by the Appellant’s company. That the Customs officers informed that as inquiry was being conducted by the DRI officers, Ahmedabad Zonal Unit, it may take some more time and accordingly, the goods may be warehoused in terms of Section 49 of the Customs Act, 1962. That on 26 December 2018 the Appellant’s Director was issued another summons for appearing on 03 January 2019 before the DRI office. That by letter dated 28 December 2018, the Appellant company requested Deputy/ Assistant Commissioner of Customs, Customs House, Mundra, Mundra Port, for provisional assessment with regard to bill of entry No.9436001 dated 27 December 2018 and stated that two containers had arrived on 23 December 2018 and were lying uncleared on account of SIIB alerts. The SIIB detained the shipments in connection with the DRI alert at Mundra port. That the Appellant Company requested permission so that the goods may be provisionally assessed. That the Appellant Company by letter dated 28 December 2018 requested the Assistant Director, DRI, Ahmedabad that the goods i.e. Crystallized Glass Panel B Grade, imported vide bill of entry No. 9244913 dated 13 December 2019 and 9298407 dated 17 December 2019, which were seized vide seizure memos dated 13 December 2018 and 21 December 2018, were correctly classified under CTSH 70169000 and there is no mis-declaration in terms of description as well as the value. It was further requested that since verification was pending by the DRI and Customs authorities, the clearance of the goods may be allowed under bond or bank guarantee or both, so that the goods imported by the Appellant might not suffer additional costs for storage at the ports / CFS. That, on 28 December 2018, the appellant requested Customs to issue NOC at the earliest to the Customs authorities at the port of Mundra MPSEZ and lCD, Tughlakabad, respectively to allow the Appellant to clear the goods on payment of appropriate differential duties, if any, reserving their rights to contest the same in future. That by letter dated 30 December 2018, addressed to Deputy Director, DRI, Ahmedabad Zonal Unit appellant stated that the goods detained at lCD, TKD, Delhi were dreadfully fragile and liable to be completely destroyed in shifting to warehouse. Therefore, in the interest of justice and prevention of any loss they requested to immediately release the goods on provisional assessment basis and to prevent further loss of the goods and demurrage they were ready to bear the bond and bank guarantee of whatever amount be desired from the office. Thereafter, on 31 December 2018 the Appellant deposited amount of Rs.20 Lacs in respect of consignment already cleared by the Customs and sold in local market, other than detained goods. That by letter dated 02 January 2019 the Appellant’s Director addressed a letter to the DRI officer that a very high fever had gripped him and doctors had advised medical rest for a week.
2.3 Learned Counsel further pointed out that on 03.01.20 19 the officers had examined the goods at Saurashtra Freight Pvt. Limited, CFS, AP & SEZ, Mundra pertaining to bills of entry No.9436001 dated 27 December 2018 which was declared as crystallized glass panel — B- Grade. That these goods were also detained by detention memo dated 03 January 2019 on allegation of suspected undervaluation and mis-declaration. That the Senior Intelligence Officer vide their letter dated 07 January 2019, directed the Appellant’s Director to supply original bill of entry along with all supporting documents such as commercial invoice packing list, bill of lading, freight and insurance paid document etc. from 2016 till date other than documents withdrawn under Punchnama dated 09 December 2018 at the earliest.
2.4. Learned Counsel pointed out that, on 08 January 2019 the Appellant’s Director went to DRI Ahmedabad office at 15:50 hours to request for NOC for releasing goods detained by DRI Ahmedabad at Mundra and TKD Port. He pointed out that although the summons issued to the Appellant for appearance on 11 January 2019, at around 16:30 hours DRI started taking statement and continued till 7:00 AM and the Appellant was not allowed to sleep the whole night. That the Appellant was completely under stress mentally and physically and further appellant’s signatures were taken on various papers. That on the next day i.e. on 09 January 2019, the Appellant was summoned again and the complete statement was prepared on the computer in his absence and in the DRI office. That at approximately 13 hours on 09 January 2019 the DRI officers made him sign the statement and some papers. That even statements of Shri Rakesh Patni and Kaushik Thakkar was also got signed by him forcefully. Then subsequently the Appellant was arrested on 09 January 2019 at 16:30 hours. That the Appellant was produced on 09 January 2019 before the Additional Chief Metropolitan Magistrate at Ahmedabad and in the application for judicial remand stated that the Appellant had allegedly done undervaluation of a goods with regard to import of crystallized glass panel. That on 10 January 2019 the Appellant was in jail and he made deposit Rs.60 Lacs vide demand drafts with regard to the imports of crystallized glass panel already made by M/s. Shreyansh Marble Tiles Pvt. Limited. That on 12 January 2019 by seizure memo cum no objection for provisional release, the SlO, DRI, Ahmedabad Zonal Unit seized the goods which were detained by Punchnama on various dates. That SIIB vide letter dated 23.01.2019 had accorded permission of provisional release of the said goods pertaining to bill of entry No.92449 13 dated 13.12.2018, 3772283 dated 27.10.2017 and 4282641 dated 06.12.2017 on submitting bond of re-determined value of goods of Rs.33,84,917/-, bank guarantee equal to differential duty of Rs.2,98,917/- and additional bank guarantee of Rs. 1 Lac. 2.26 That by letter dated 28 January 2019 SIO, DRI, Ahmedabad Zonal Unit had rebutted the allegations made by the Appellant’s Director on 13 January 2019. That by communication dated 13 May 2019 the Appellant’s company was informed that goods imported by him pertaining to bill of entry No.7756415 date 08.12.2016 filed with Customs House, Gujarat, Port Limited, Pipavav, which was detained vide seizure memo dated 09 December 2018 and seized vide seizure memo dated 12 January 2019 which was actually valued at Rs.61,188 / – instead of Rs.50,478/- as declared in the bill of entry thereby evading differential duty of ―Rs. 3,153/-‖. That the Commissioner of Customs (Preventive), Jamnagar, in exercise of powers vested with him under first proviso of Section 110(2) of the Customs Act, 1962 has extended the time limit for issuance of Show Cause Notice for goods.
3 Being aggrieved by the impugned order dated 13 May 2019, the Appellant preferred the present appeal mainly on the following grounds:-
(a) That the impugned order/communication has been passed without issuing the Show cause notice and giving opportunity to be heard to the appellant before extending the time limit for issuance of Show cause notice under the provisions of Section 110(2) of the Customs Act, 1962;
(b) That even the amendment to the provisions of Section 110(2) of the Customs Act, 1962 by Finance Act, 2018 will not alter the situation as for grant of personal hearing the extension of Show cause notice;
(c) That the amendment to the provisions of Section 110(2) of the Customs Act, 1962 by Finance Act, 2018 will not alter the situation as for grant of personal hearing before extending the time limit for issuance of Show cause notice;
(d) That the Commissioner has totally ignored the law laid down by the Hon’ble Supreme Court of India in the case of I.J. Rao, Assistant Collector of Customs vs. Bibhuti Bhushan Bagh – 1989 (42) ELT 338 (SC) wherein it has been held that extension of six months period for issuance of Show Cause Notice cannot be done by the Commissioner without hearing the appellants;
(e) That the Apex Court had also in the case of Harbans Lal vs. Collector of Customs reported as 1993 (67) ELT 20 (SC) has held that by extending the time limit under Section 110(2) of the Customs Act, 1962 owner of seized goods is entitled to notice because the seized goods on the expiry of six months are required to be returned to him and if that period was to be extended, he has vested right to be heard;
(f) Learned Counsel further relied on the case of Assistant Collector of Customs vs. Charan Das Malhotra – 1983 (13) ELT 1477 (SC), Sardar Kulwant Singh vs. CCE & Cus and Ors – 1981 (8) ELT 3 (Del.) and Tribunal decision of Delhi Bench in the case of Swees Gems & Jewellery & Aardhya Impex CGST & CE, Jaipur-I, Final Order No. 50283-50284/2019 dated 21.02.2019.
4. Learned Authorised Representative relies on the impugned order. He pointed out that after the amendment to Section 110 of the Customs Act, 1962 the law is substantially changed. He pointed out that the said provisions, after amendment, have been examined by the Hon’ble Rajasthan High Court in their judgment in the case of CC (Preventive) Jodhpur vs. Swees Gems and Jewellery – 2019 (368) ELT 455 (Raj.). He pointed out that the decision of Ahmedabad bench in the case of M/s. Gastrade International (Order No. A/10956/2019 dated 03 June 2019) passed by relying on the decision of Delhi Bench in the case of Swees Gems & Jewellery vide Final Order No. 50283-50284/2019, has been set-aside by the Hon’ble Rajasthan High Court and therefore, no reliance can be placed on the decision of Ahmedabad Bench in the case of Gastrade International (supra).
5. We have gone through the rival submissions. We find that the primary issue is if the Commissioner of Customs can exercise powers granted to him under Section 110(2) of the Customs Act, 1962 without issuance of show cause notice and without granting hearing to the The appellants have essentially relied upon the decision of the Tribunal in the case of Swees Gems and Jewellery which in turn relied on various decisions of High Courts and Supreme Court. It is seen that those decisions of High Courts and Supreme Court which have been relied on by the Tribunal in the case Swees Gems and Jewellery pertains to unamended Section 110(2). We find that the said decision of Tribunal in the case of Swees Gems and Jewellery has been set-aside by the Hon’ble Rajasthan High Court with following observations:-
11. Before proceeding to analyze the parties’ rival submissions, it would be useful to extract the pre-amended law, and the provision of Section 110(2) after the amendment. They are set out, in a tabular manner, as follows:
