M/S R.K.Trade Links vs Union Of India

These two petitions are filed by the different petitioner’s challenging the orders dated 10.10.2023 (Exhibit P1). Since the grounds of challenge in both the writ petitions are on identical set of facts, they are being decided by way of this common order.

The relief sought for in both the writ petitions are of identical nature, which for ready reference is being reproduced herein under:

“…to issue a writ, order, or direction more particularly one in the nature of Writ of Mandamus declaring the letter O.R. No. 124/2023-Adjn.Cus (PC) dated 10-10- 2023 as illegal as being opposed Article 14 and 19(1)(g) of Constitution of India and consequently direct the 3rd Respondent to supply the examination reports which are part of Bills of Entry in all the imports, determine his jurisdiction as a preliminary issue and thereupon proceed with adjudication if it has jurisdiction by affording opportunity to examine and cross examine the officers who examined the goods and the person who photographed the alleged sample of the goods imported…”

Heard Sri G. Vidhyadhar Reddy, learned counsel for the petitioner, Sri Gadi Praveen Kumar, learned Dy. Solicitor General of India appearing for the respondent No.1 and Sri Dominic Fernandes, learned Senior Standing Counsel appearing for the respondent Nos.2 and 3.

For proper understanding of the issue, it would also be relevant to take note of the relevant portion of the contents of the impugned order:

“Please refer to the Show cause Notices issued in OR No. 124/2023 Dated 26.05.2023, C. No. Cus/Hyd/11/2023 – SIIB issued by the Principal Commissioner, Customs, Hyderabad.

In this regard, it is to inform that the Principal Commissioner is pleased to grant personal hearing in person on 19.10.2023 at 11:00 Hrs. You are therefore requested to appear before the Principal Commissioner of Customs, Hyderabad Customs Commissionerate at 7th Floor, GST Bhavan, LB Stadium Road, Basheerbagh, Hyderabad, on the date and time mentioned above, in person or through authorized person/counsel. ”

In the said backdrop, it would be relevant now to narrate the following facts for proper adjudication of the issue:

(a) The petitioner is said to have imported few consignments of nut pieces from M/s.Hai NHI Production Trading One Member Company Limited, and another consignment from M/s.November Import Export Co. Ltd., Vietnam.

(b) The petitioner imported these goods taking advantage of the notification dated 01.06.2011 granting exemption of such goods from all duties as well as notification dated 31.12.2009 which stated ‘determination of origin of goods under the

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preferential trade agreement between Government of ASEAN and India Rules 2009’. The petitioner imported these nut pieces declaring the said goods as agricultural rejected nut pieces residues and waste (used in animal feed) which is otherwise unfit for human consumption. The petitioner declared the category of the goods under the classification under Customs Tariff Sub-Heading 23080000.

(c) Initially, the 4th respondent did not allow clearance of the goods as per the classification claimed by the petitioner including the certificate given by the authority in the exporting country on the basis of the alleged wrong classification of the said goods. The product was seized by the custom authorities upon the same reaching the destination in India. Subsequently, after the product was subjected to laboratory test in two different categories, the product was cleared. The test report of both the laboratories showed the said product to be unfit for human consumption.

(d) It is said that the petitioner took possession of all those products and thereafter, is said to have sold it in the open market. Subsequently, a pre-notice consultation was convened between the parties. It was contended by the respondent-Department that from the documents available on record, it appears that the product imported was broken cashew nuts and have been wrongly classified under the Customs Tariff Sub-Heading 23080000 whereas it ought to have been under CTH 08013210. This product under the CTH 08013210 would have attracted BCD @ 30%, SWS @ 10% and IGST @ 5%.

After the aforesaid pre-consultation, the respondent-Department had issued a show cause notice on 26.05.2023 under Section 28(4) of the Customs Act, 1962 (for short ‘the Act’). The said show cause notice was subjected to challenge by the petitioner in two different writ petitions i.e. W.P.Nos.20748 and 21245 of 2023. The challenge to the show cause notice among other grounds mainly was on the following grounds:

(a) The authority issuing the show cause notice not being the competent authority under the Customs Act;

(b) The authorities have not taken into consideration the response and explanation given to the department at the time of the pre-notice consultation;

(c) The show cause notice does not deal with the submission of the petitioner made in their explanation to the pre-notice consultation;

(d) The show cause notice proceedings is per se bad in law for the reason that the product has already been subjected to test before two of the laboratories and both the laboratories have given a report that the product being unfit for human consumption.

The said two writ petitions came up for hearing before this Bench and this Bench vide its order dated 16.08.2023 dismissed the said two writ petitions at the stage of admission itself declining to interfere at the show cause notice stage relying upon the decision of the Hon'ble Supreme Court of India in the cases of Malladi Drugs and Pharma Limited vs. Union of India (2020) 12 S.C.C. 808, Commissioner of Central Excise vs. Krishna Wax Private Limited (2020 12 SCC 572 and Union of India and another vs. Guwahati Carbon Limited (2012) 11 SCC 651. While dismissing the two writ petitions, this Bench had reserved the right of the petitioner to respond to the show cause notice and thereafter to avail appropriate remedies available under the Act.

The said decision of this Court was not challenged by the petitioner any further. However, they entered appearance before the authorities concerned and did not submit any response to the show cause notice. On the contrary, they filed a representation on 23.06.2023, 15.07.2023 and 23.09.2023 not in the form of a reply to the show cause notice. Rather seeking for various irrelevant information so as to avoid a decision on the show cause proceedings. When the petitioner did not give any response to the show cause notice in spite of the liberty being reserved by the High Court in the earlier round of litigation, the respondent No.3 was now left with no other option but to issue impugned notice dated 10.10.2023 whereby the petitioner was called upon for personal hearing on 19.10.2023. It is this notice which is under challenge in the present writ petitions.

If we look into the decision of this Court in the earlier round of litigation, it would be evidently clear that this Court was reluctant to entertain the writ petitions on account of the allegations levelled against the petitioner to be of serious nature. The finding of this Court while dismissing the said writ petitions in paragraph No.15 reads as under:

“Learned counsel for the petitioner had also relied upon certain decisions where the exemption has been granted in respect of waste materials and scrap materials. However, when we went through the contents of the impugned show-cause notice there were certain serious allegations levelled against the petitioner, firstly, so far as selling the product in the open market loosely and which presumably was for human consumption; secondly, the sale being not made to any of the agencies dealing with animal feeds; thirdly, the petitioner violating the declaration that he had given in the course of the import being made; fourthly, there being no sufficient documents / invoices or details of the sale made by the petitioner in respect of the entire consignment imported by them. Further, taking note of the CTH classification, cashew nuts and broken cashew nuts both are leviable with BCD @ 30%, SWS @ 10% and IGST @ 5%. Unlike the CTH sub-heading 23080000 which is agricultural rejected nut pieces residues and waste unfit for human consumption, which is totally free from the duties under the Customs Act. Thus, if the allegations are found to be true, the petitioner would stand evading huge amount of tax money.”

This Bench having dismissed the said two writ petitions at the show cause stage, are again of the considered opinion that this is not the stage when writ jurisdiction is to be invoked by the petitioner. Particularly, in the teeth of the decision rendered in the two earlier writ petitions filed by the petitioner.

Once when this Court had directed the petitioner to respond to the show cause notice, it was required for the petitioner to have responded to the same and participated in the entire show cause proceedings and thereafter, to take appropriate legal recourse available under the Act. The petitioner cannot be permitted to approach the Writ Court at every stage or as a matter of routine. From plain reading of the contents that is reflected in the show cause notice (Exhibit P2), it would be evidently apparent as regards the allegations levelled against the petitioner which on due consideration is of very serious nature.

We are therefore of the considered opinion that the instant writ petitions deserve to be and are accordingly rejected, reserving the right of the petitioner to participate in the show cause proceedings and to lead appropriate evidence in support of his contentions. No order as to costs.

Miscellaneous applications, pending if any, shall stand closed.