MPM Gold House v. Commissioner of Customs (Preventive) & Others

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR.JUSTICE S.V.BHATTI`** ## **`&`** ## **`THE HONOURABLE MR.JUSTICE BASANT BALAJI`** ``` MONDAY, THE 21[ST] DAY OF FEBRUARY 2022 / 2ND PHALGUNA, 1943 ``` ## **`WA NO. 781 OF 2021`** ## **`WP(C) 4078/2021 OF HIGH COURT OF KERALA`** ## **`APPELLANT/S:`** ``` MPM GOLD HOUSE,DOOR NO. 71/81, PANAMKUKKATH HOUSE, POOCHIANIPADAM, URAKAM P.O, TRISSUR-680 562, REPRESENTED BY ITS MANAGING PARTNER P.M. MANIKANDAN, AGED 48 YEARS, S/O. SRI. MADHAVAN, R/O. PANAMKUKKATH HOUSE, POOCHIANIPADAM, URAKAM P.O, TRISSUR-680 562 ``` ``` BY ADV P.A.AUGUSTIAN ``` ## **`RESPONDENT/S:`** - `1 THE COMMISSIONER OF CUSTOMS (PREVENTIVE),5TH FLOOR, CATHOLIC CENTRE, BROADWAY, COCHIN-682 031.` - `2 THE ASSISTANT COMMISSIONER OF CUSTOMS` - `(PREVENTIVE), ST NAGAR, THRISSUR DIVISION, URAKAM P.O, THRISSUR-680 001` - `3 ADDL. UNION OF INDIA,REPRESENTED BY JOINT SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI-110001.` - `4 ADDL. THE CHAIRMAN,CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI-110001.` - `(ADDITIONAL R3 AND R4 ARE IMPLEADED AS PER ORDER DATED 08/07/2021 IN IA NO.2/2021 IN WA NO. 781/2021)` - `BY ADVS.SHRI.P.VIJAYAKUMAR, ASG OF INDIA` ``` MANU S., ASG OF INDIA ``` ``` THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON ``` ``` 21.02.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` **WA 781/2021** -2- ## **S.V.BHATTI & BASANT BALAJI, JJ.** - - - - - - - - - - - - - - -- - - -- - - - - - - - - - -- - - - - - - - - ## WRIT APPEAL NO.781 of 2021 - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - ## JUDGMENT (Dated this the 21[st] day of February 2022) ## Basant Balaji J., The petitioner in W.P.(C) No.4078 of 2021 is the appellant. The Writ Petition was filed for calling records of proceedings leading to Ext.P13 Show Cause Notice and quash the same. A further prayer was also sought to release the gold covered under Ext.P13 to the petitioner. (The parties are referred to in this judgment as arrayed in the writ petition). 2. The case of the petitioner is that M/s.Srikumaran Thangamaligal has supplied 2 kg of gold bars of foregin origin to the petitioner for manufacturing ornaments. A preventive operation was launched by the 2[nd] respondent and two foreign marked gold biscuits procured by the **WA 781/2021** petitioner were seized. Though he produced Ext.P3, the Investigating Officer refused to accept Ext.P3 stating that there is no supporting documents to prove that the said gold bar is imported by paying customs duty. The respondents also intercepted Mr.Haridasan, when he was coming from Chennai and around 2599.08 grams of gold was taken into custody from his possession. The arrest of the employee was recorded and he was released on the same day. The petitioner took up the matter with his supplier M/s.Srikumaran Thangamaligal and to prove his _bonafide,_ he produced Ext.P8. The petitioner filed a petition for the release of the gold taken into custody by the respondents. When there was delay in releasing the gold as requested by the petitioner, he approached this Court by filing W.P.(C) No.24510 of 2020 and during the pendency of the Writ Petition a show cause notice dated 24.11.2020 was served on the petitioner to show cause why gold totally weighing 2599.08 grams seized from the petitioner’s staff should not be confiscated under Sections 111(d), (m) and (i) of the **WA 781/2021** -4- Customs Act, 1962 and penalty should not be imposed under Section 112 of the Customs Act, 1962. The petitioner filed preliminary objection and requested to issue relied documents for detailed The upon submitting reply. petitioner challenged the issuance of the show cause notice in the Writ Petition. 3. The learned Single Judge, after elaborately going through the show cause notice marked as Ext.P13, came to the conclusion that the Writ Petition is pre-mature. As per Ext.P13 the petitioner was directed to show cause. The learned Single Judge found that the petitioner is free to advance all his contentions before the competent authority and leaving open all his rights, the Writ Petition was dismissed. 4. Aggrieved by the judgment of the learned Single Judge, this Writ Appeal is filed by the appellant/petitioner. 5. The main ground raised by the counsel for the appellant is that the learned Single Judge ought to have considered that there was complete lack of jurisdiction on **WA 781/2021** -5- the part of the authority who has initiated action and the Writ Petition is fully maintainable before this court under Article 226 of the Constitution of India. It was also submitted that the appellant had furnished sufficient evidence regarding lawful possession of gold which was seized from the appellant and staff of the appellant and in the absence of any evidence regarding the smuggling of gold, there is no power vested on the respondents to investigate into the matter. Another contention raised by the counsel for the appellant was that the learned Single Judge ought to have considered that as per Section 123 of the Customs Act, 1962, the burden of proof regarding legal procurement of gold lies on the appellant and since the appellant has discharged the burden by proving that the gold recovered from him is legally imported to India and not smuggled gold, no proceedings should not have been initiated against him. 6. A counter affidavit was filed by the Assistant Solicitor General of India for respondent Nos.1 to 4. **WA 781/2021** -6- 7. The respondents contended that acting upon reliable intelligence gathered in the presence of two independent witnesses, the Superintendent of Customs, Customs Preventive Division, Thrissur at about 7.30 hours on 16.10.2019 intercepted Mr.Haridasan M and a search was conducted to ascertain whether he was carrying any smuggled gold with him. On said search, it was found that 2599.08 grams of yellow coloured metalic item was recovered from him. On questioning him, he revealed that the said metalic item is brought to be given to Sri.Manikandan P M. An assay certificate dated 16.10.2019 was issued for the yellow metalic item as for which the market value of gold cut pieces would come to around Rs.1,02,53,370/-. The petitioner filed Ext.P9 letter dated 4.11.2019 seeking release of gold. But the said application could not be entertained as the investigation was in an initial stage and the customs authorities were in the process of interrogating and taking evidence. What was stated in the request was an unconditional release of the gold, which **WA 781/2021** -7- is contrary to the provisions of Section 110A of the Customs Act, 1962. It was also submitted that in view of Covid 19 pandemic, a detailed show cause notice as per Section 124 of the Customs was issued to the petitioner on 24.11.2020. The statutory mandated period of one year from the date of seizure was relaxed and the show cause notice was extended to 31.12.2020 vide notification dated 27.6.2020. 8. The show cause notice was issued after taking the statements under Section 108 of the Customs Act, 1962 from all the concerned parties including the petitioner. The respondents relied on the judgment of the Hon’ble Supreme Court in **Union of India v.** reported **Kunisetty Sathyanarayana [(2006) 12 SCC 28]** , wherein it was held that no Writ Petition lies against the show cause notice unless the notice is without jurisdiction or otherwise wholly illegal. They also relied on the judgment of the Hon’ble Supreme Court reported in **Haldia v. Krishna Wax Private Ltd [(2020) 12 SCC 572]** , in which it was held **WA 781/2021** -8- that it must be noted that while issuing a show cause notice what is entertained by the Department is only a _prima facie_ view, on the basis of which, the show cause notice is issued. The determination comes only after response or representation is preferred by the person to whom the show cause notice is addressed. As a part of his response, the person concerned may present his viewpoint on all possible issues and only thereafter the determination or decision is arrived at. The Excise law is a complete code in itself and it would normally not be appropriate for a writ court to entertain a petition under Article 226 of the Constitution of India and that the person concerned must first raise all the objections before the authority who had issued a show cause notice and the redressal in terms of the existing provisions of law could be taken resort to if an adverse order was passed against such persons. 9. Heard the learned counsel, Adv.P A Augustine for the appellant/petitioner and the learned Central Government counsel, Adv.S Krishna appearing for the **WA 781/2021** -9- respondents. 10. The objection to the show cause notice in Ext.P13 is touching upon a jurisdictional fact. At the first blush of the submission, it attracted us to tread little deep into the matter and whether for ourselves we can find out, by accepting the version now canvassed by the petitioner, the show cause could be called without jurisdiction. We are afraid that such consideration by this court under Article 226 of the Constitution of India, would literally intercept the discretion of the officers under the Act for deciding whether a jurisdictional fact arises or established by the totality of the circumstances to invoke the jurisdiction under the Act or party has discharged the burden for exonerating him from any action under the Act. Such a review, we are convinced, our discretionary jurisdiction is not exercised particularly in the circumstances of the case. 11. On the other findings recorded by the learned Single Judge, we are in complete agreement with him that these objections, if properly stated before the primary **WA 781/2021** authority, the primary authority is under obligation to examine, enquire and determine the case of the petitioner objectively, in accordance with law. While confirming the order of the learned Single Judge, we are of the view that the respondents can be directed to complete the enquiry initiated pursuant to and in terms of Ext.P13 show cause notice as expeditiously as possible, preferably within four weeks from the date of receipt of a copy of this judgment. The Writ Appeal is dismissed with the above observations. ## **sd** **S.V.BHATTI JUDGE** **sd BASANT BALAJI, JUDGE** _dl/_ **WA 781/2021** -11- ## **`APPENDIX OF WA 781/2021`** ``` PETITIONER ANNEXURES Annexure 1TRUE COPY OF THE ORDER NO. GEN/INV/FUP/58/2021 CUS-PRE-DIV-THRISSUR DATED 09.04.2021. ``` ## `RESPONDENTS EXHIBITS` ``` EXT.R1(a)TRUE COPY OF THE ORDER DATED 3.9.2021 ISSUED BY THE OFFICE OF ASSISTANT COMMISSIONER, CUSTOMS PREVENTIVE DIVISION, THRISSUR EXT.R1(b)TRUE COPY OF THE ORDER DATED 27.9.2021 ISSUED BY THE JOINT COMMISSIONER, CUSTOMS PREVENTIVE COMMISSIONERATE, COCHIN EXT.R1(c)TRUE COPY OF THE CIRCULAR DATED 16.8.2017 ISSUED BY THE MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL BOARD OF EXCISE & CUSTOMS (ANTI- SMUGGLING UNIT) ```