M/S NEW ERA TRADING PVT LTD  Vs THE COMMISSIONER OF CUSTOMS EXPORT & ANR.

W.P.(C) 842/2021 Page 1 of 10

$~19
* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Date of Decisio n : 21st January , 2021

+ W.P.(C) 842/2021 & CM A PPL.2146/2021 (exemption)

M/S NEW ERA TRADING PVT LTD ….. Petitioner
Through : Mr.Prem Rajan with Mr.Himanshu
Kaushik, Advocates.

versus

THE COMMISSIONER OF CUSTOMS EXPORT
& ANR. ….. Respondent s
Through: Mr.Arunesh Sharma, Advocate for
Mr.Harpreet Singh, SSC for R -1.
Ms.Akanksha Mehra, Advocate for Mr.Aditya
Singh, Standing Counse l for R -2/DRI.

CORAM:
HON’BLE THE CHIEF JUSTICE
HON’BLE MS. JUSTICE JYOTI SINGH

JUDGMENT

: D. N. PATEL, Chief Justice (Oral)

CM APPL.2146/2021 (exemption)
Allowed, subject to just exceptions.
The application is disposed of.
1. This p etition has been preferred with the following prayers: – W.P.(C) 842/2021
“(a) To issue a writ of Certiorari quashing the show cause
notice dated 24.01.2020 issued under DRI/AZU/CI/ENQ –
39/(INT -25/2016)/6825/ being time barred as per
provisions of Section 28 of the Custom Ac t,1962; and/ or
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(b) such other appropriate writ, order or direction as this
Hon’ble Court may deem fit may also be issued .”

(emphasis supplied)

2. Learned counsel appearing for the petitioner has taken this court to
the show cause notice dated 24.01.2020, issued by respondent No.2, which
is Annexure A -1
3. Learned counsel appearing for the petitioner has relied upon State of
Punjab v. Bhatinda District Co -op. Milk P. Union Ltd.; 2007 (217) E.L.T.
325 (S.C.) , Madina (UZ) Impex v. Union of India; 2019 (368) E.L.T. 555
(Del.) and Famina Knit Fabs v. Un ion of India; 2020 (371) E.L.T. 97 (P &
H) and submit s that the question of the SCN being time barred be decided
by this Court at the threshold . to the memo of this writ petition. It is contended by l earned
counsel that (a) show cause notice (SCN) issued by respondent No. 2 is
barred by time and (b) Respondent No.2 does not have the power,
jurisdictio n and authority to issue the aforementioned SCN . Moreover,
learned counsel submit s that the grievance ventilated in the present petition
is covered by various decisions of the Hon’ble Supreme Court and this
Court and other High Courts in favour of the peti tioner .
4. We have heard learned counsel appearing for the petitioner at length
and look ed into the facts of the present c ase. Some crucial facts that emerge
are enumerated below : –
(a) Case of the respondent as set out in the SCN is that the
petitioner had fraudulently availed Special Focus Market Scheme (SFMS)
benefits by producing forged house BLs and Landing Certificat e, wherein
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consignee country was deliberately mis -declared by them for availing undue
benefits under the Scheme.
(b) The allegations in para 3.1 of SCN dated 24.01.2020 read as
under: –
“3.1 Intelligence developed by the officers of Directorate of
Revenue Intellig ence (DRI), Zonal Unit, Ahmedabad indicated
that M/s New Era Trading Pvt. Ltd. (hereinafter referred to as
“New Era” for the sake of brevity) had fraudulent ly availed
Special Focus Market Scheme (SFMS) benefits, by producing
forged House BLs and l anding certificates , wherein consignee
country was deliberately mis-declared by them for the purpose
of availing undue benefit under SFMS. It was gathered that Shri
Shanti Swaroop Sharma, who looked after all the activities of
“New Era” had adopted this mo dus operandi mainly in respect
of
(c) It is further alleged that during the course of investigation, it
was found that in exports to Armenia, Azerbaijan, Kazakhstan, Sudan and
Ethiopia etc. However, the goods had never travelled to the
destination shown on the export documents.”
(emphasis supplied)

TR-1 and TR -2 copies of shipping bills , port of discharge
and country of destination were found manually changed and forwarded to
Additional C ommissioner of Customs, Exports and filed. The port of
discharge had been manually changed to J ebel Ali from Bandar A bbas,
Awassa and Sudan and country of destination had been manually changed to
Dubai and the same were endorsed with the customs stamp. It is further
alleged that the amendments were wilfully done and the export goods did
not correspond with the material particulars with regard to the port of
discharge and country of destination. On enquiry with the freight forwarder
and the custom broker, it was revealed that amendments were done and the
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goods were diverted and despite the fact that the goods never reached the
country mentioned in the shipping bills, the Landing Certificate was issued
to obtain the SFMS benefits , despite knowing that the peti tioner was not
eligible for the same.
(d) Para 4.2 of the SCN is also relevant and reads as follows:
“4.2. On scrutiny of documents produced by “New Era”, it was
revealed that the exporter had shown export of readymade
garments from ICD Tughlakabad to Azerbaijan, Kazakhstan,
Sudan and Ethiopia during the period from March, 2013 to
September, 2013 under Special Focus Market scheme. “New
Era” had filed 203 Shipping bills declaring FOB value of Rs.
102,25,88,997/ – for purported export to Azerbaijan,
Kazakhs tan, Sudan and Ethiopia under SFMS (as detailed in
Annexure -A attached to the SCN)
Thus, from a reading of the SCN, it appears that the petitioner had
filed 203 shipping bills declaring FOB value of Rs. 102,25,88,997/ – for
purported export to Azerbaijan, Kazakhstan, Sudan and Ethiopia under
SFMS . All thes e shipping bills were to be verified by the Department by
cross -checking with the other concerned Departments/Officers. Similarly,
during the course of investigation, TR -I/TR -II copies of the shipping bills
were to be verified. As the p ort of discharge and the country of destination
were found manually changed , further investigation was done and
information was sought from Additional Commissioner of Customs . Further, it was also noticed
that against the said exports, the exporting firm was issued duty
credit scrips/authorisation under SFMS for export of product to
notified mark et/countries (as listed in Appendix 37C of HBP
vol.1) by DGFT, Delhi, as per para 3.14 of FTP 2009 -2014 and
same were sold to various importers in India for availing duty
exemption for import of goods. ”
(emphasis supplied)

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(Exports), ICD, Tughlakabad, New Delhi. The signatures of the Officer
endorsed on the shipping bills as well as the customs stamps , etc. were to be
verified . This was time consuming process and thus prima facie we do not
find merit in the contention of the petitioner that the SCN was barred by
time. It goes without saying that investigation to unearth fra ud and/or
collus ion with respect to as many as 203 shipping bills , with the
involvement of several Departments cannot be completed overnight.
Looking at the allegations in the SCN and the details of the investigations
carried out as well as the provisions of Section 28AAA of the Customs
Act, 1962, we are of the prima facie view that the SCN is not time barred.
5. The other contention raised by the counsel for the petitioner is that
under Section 28 (1) (a) of the Customs Act, 1962 where any duty has not
been levied or not paid or has been short levied or short paid or erroneously
refunded for any reason other than reasons of collusion or any wilful mis –
statement or suppression of facts then within two years of the relevant date a SCN is required to be served a nd under Section 28 (4) the time limit for
demand is five years in case of collusion etc. The present impugned notice has proposed to demand and recover the duty relatable to 32 duty credit
authorisations issued by DGST under Section 28AAA of the Customs A ct,
1962 . A reading of the provisions, according to counsel for the Petitioner
shows that the limitation to demand and recover the duty ended on
11.09.2018 or 22.03.2019 since the exports were made between 08.03.2013 and 12.09.2013 and FMS Authorisation wa s issued between 19.06.2013 to
23.04.2014 and thus the SCN issued on 24.01.2020 is time barred. 6. Learned counsel for the respondent on the other hand has relied on the
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Section 28AAA of the Customs Act to contend that the SCN is not time
barred inasmuch as the petitioner is guilty of suppression of facts and wilful mis-statements in claiming the benefits under the Scheme. Prima facie we
find merit in the contention of the respondent.
7. Hon’ble Supreme Court in the case of
Commissioner of Customs,
New Delhi v. C.T. Scan Research Centre (P) Ltd. ,
“3. ……….. (2003) 11 SCC 25 has
held as under: –
A contention was raised by the respondent that notice
was issued after five years and therefore, the demand of duty was
time-barred as per the provisions of Section 28 of the Customs
Act. That contention was accepted by the Tribunal on the ground
that as the notice was issued beyond the permissible limit of five
years provided under Section 28 of the Customs Act, the demand
was time -barred. The Tribunal also arrived at the conclusion
that show -cause notice was issued by invoking the provisions of
extended period of limitation by the Assistant Commissioner and
hence it was without jurisdiction as per Section 28(1) of the
Customs Act.

4. At the time of hearing of this matter , learned counsel for the
appellant submitted that in such cases Section 28(1) is not
applicable and the issue is decided by the decision rendered by
this Court in Commr. of Customs (Import) v. Jagdish Cancer and
Research Centre [(2001) 6 SCC 483] .

5. In the aforesaid decision, this Court specifically held that in
such cases provisions of Section 28(1) of the Customs Act were
not attracted because the said section covers cases of duty not
levied, short -levied or erroneously refunded etc. Hence, th e
impugned judgment and order passed by the Tribunal requires to
be set aside as there was no question of complying with the
provisions of Section 28(1) of the Customs Act.
(emphasis supplied)

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8. We are also of the view that the present writ petition is pre mature as
the petitioner is yet to file reply to the SCN. Hon’ble Supreme Court in the
case of Union of India and Ors. v. Coastal Container Transporters
Association & Ors.
“30. On the other hand, we find f orce in the contention
of the learned Senior Counsel, Shri Radhakrishnan,
appearing for the appellants that reported in (2019) 20 SCC 446 , has held as under: –
the High Court has
committed error in entertaining the writ petition under
Article 226 of the Constitution of India at the stage of show –
cause notic es. Though there is no bar as such for
entertaining the writ petitions at the stage of show -cause
notice, but it is settled by a number of decisions of this
Court, where writ petitions can be entertained at the show –
cause notice stage. Neither it is a case of lack of jurisdiction
nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice.
31. The
High Court ought not to have entertained the writ petition,
more so, when against the final orders appeal lies to this
Court.

The judgment of this Court in Union of India v.
Guwahati Carbon Ltd.; (2012) 11 SCC 651 relied on by the
learned Senior Counsel for the appellants also supports
their case. In the aforesaid judgment, arising out of the
Central Ex cise Act, 1944, this Court has held that excise
law is a complete code in order to seek redress in excise
matters and held that entertaining writ petition is not proper
where alternative remedy under statute is available . When
there is a serious dispute wi th regard to classification of
service, the respondents ought to have responded to the
show -cause notices by placing material in support of their
stand but at the same time, there is no reason to approach
the High Court questioning the very show -cause noti ces.
Further, as held by the High Court, it cannot be said that
even from the contents of show -cause notices there are no
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factual disputes.”
(emphasis supplied)

Hon’ble Supreme Court in the case of Malladi Drugs and Pharma
Limited v. Union of India & Anr . reported in (2020) 12 SCC 808 , has held
as under: –
“2. The High Court, has, by the impugned judgment
held that the appellant should first raise all the objections
before the authority who have issued the show -cause notice
and in case any adverse order is passed against the
appellant, then liberty has been granted to approach the
High Court.
3. The High Court’s order was passed way back in 1997.
Neither party knows whether the Department has proceeded
further and/or whether any order has been passed pursu ant
to the show -cause notice.
Even otherwise, in our view, the
High Court was absolutely right in dismissing the writ
petition against a mere show -cause notice. We see no
reason to interfere. The appeals stand dismissed. There will be no order as to costs. ”
(emphasis supplied)
Hon’ble Supreme Court in the case of
Commissioner of Central
Excise, Haldia v. Krishna Wax Private Limited
“14. It has been laid down by this Court that the excise
law is a complete code in itself and it would normally not be
appropriate for reported in (2020) 12 SCC
572, has held as under: –
a writ court to entertain a petition under
Article 226 of the Constitution and that the person
concerned must first raise all the objections before the
authority who had issued a show -cause notic e and the
redressal in terms of the existing provisions of the law could
be taken resort to if an adverse order was passed against
such person. For example in Union of India v. Guwahat
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Carbon Ltd., it was concluded; “The Excise Law is a
complete code in or der to seek redress in excise matters and
hence may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution”, while in
Malladi Drugs & Pharma Ltd. v. Union of India, it was
observed:
“… The High Court, has, by the impugned
judgment held that the appellant should first raise
all the objections before the Authority who have
issued the show -cause notice and in case any
adverse order is passed against the appellant, then liberty has been granted to approach the
High Court …
… in our view, the High Court was absolutely
right in dismissing the writ petition against a
mere show -cause notice.”
(emphasis supplied)

9.
Since the matter is at the stage of SCN, which in our prima facie
opinion is not time barred , especial ly looking to Section 28 AAA of the
Customs Act, 1962 and the facts of this case. W e are not inclined to
entertain the petition at this stage. It is open to the petitioner to file a reply in
response to the SCN
10. and a decision shall be taken thereafter by t he
respondents, in accordance with law and taking into account the stand of the
petitioner. It is also open to the petitioner to raise the grounds taken in the
present petition in reply to the SCN including the objection to the
jurisdiction, power and auth ority of the concerned respondent to issue the
SCN which is one of the grounds urged in the petition.
Respondents are hereby directed to take a decision pursuant to the
SCN dated 24.01.2020 in accordance with law , Rules, Regulations and
Government Policie s applicable to the facts of the case and also keeping in
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mind the evidence on record, as early as possible and practicable. The issues
raised herein with respect to the SCN being time barred, applicability of
Section 28 (1) or Section 28AAA as well as the jurisdiction of the concerned
authority are also left open to be decided by the concerned respondent.
11.
12. Writ petition is hereby disposed of with the above obser vations. Needless to state that the decision shall be taken without being
influenced by this order including the prima facie view taken on the question
of limitat ion.

CHIEF JUSTICE

JYOTI SINGH , J
JANUARY 21, 2021
a/kks
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