Legal principle

An order rejecting the declared transaction value and confiscating goods without a show-cause notice under section 124 of the Customs Act, 1962 and without written intimation of grounds and a hearing under Rule 12 of the Customs Valuation Rules, 2007 violates natural justice, and the existence of an alternate appeal under section 128 is no bar to writ jurisdiction under Article 226.

Court decision

The Bombay High Court allowed the writ petition, holding the impugned order in original dated 23.09.2020 clearly unsustainable in law as being in violation of the principles of natural justice and of the statutory provisions (section 124 of the Customs Act and Rule 12 of the Valuation Rules); it set aside the order, permitted the proper officer to proceed afresh, if so inclined, after following section 124 and Rule 12, and directed respondent No.2 to assign the hearing to a proper officer other than respondent No.3, with no order as to costs. Relegating the petitioner to appeal, the Court held, does not arise.

Facts

Syska Led Lights Pvt. Ltd., a company engaged in import and manufacture of light products, imported smart plugs vide Bill of Entry No.8311310 dated 28.07.2020, contending that since the goods do not generate wi-fi or bluetooth signals no import licence from the Wireless Procurement Cell was required. After a first check examination and the furnishing of three declarations dated 02.09.2020, the Joint Commissioner of Customs, Gr. VA, Nhava Sheva-V (respondent No.3) passed order dated 23.09.2020 rejecting the declared unit price, redetermining it at USD 13.66097 and USD 22.02365 (C/F value), and demanding differential duty with interest under section 28AA of the Customs Act, 1962. The goods were confiscated under section 111(m) with an option of redemption on payment of a fine of Rs.4,00,000 under section 125, and a penalty of Rs.1,90,000 was imposed under section 112(a). The petitioner filed a writ petition under Article 226 primarily on the ground that the order was passed in gross violation of the principles of natural justice, and obtained interim release of goods against bank guarantee, redemption fine and penalty.

Key provisions

• Rule 12, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Rejection of declared value
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 111(m), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 28AA, Customs Act, 1962 — Interest on delayed payment of duty
• Section 128, Customs Act, 1962 — Appeal to Commissioner (Appeals)
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Rule 9, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Residual method
• Section 14, Customs Act, 1962 — Valuation of goods