S.A. International Vs. Collector of Customs - Court Judgment

S.R. Roy, J.

1. By this writ petition the petitioner challenged the show cause notice No. S. 15-25/25-5IB dated 9.5.1985. The said show cause notice was issued under Section 124 of the Customs Act, 1962 (For short the said Act hereafter). The said show cause notice read thus:

'NOTICE UNDER SECTION 124 OF THE CUSTOMS ACT, 1962

Subject:- Import of 246.140 M/T in 108 bundles of low carbon mild steel CRCA sheets declared as defective Ex-s.s. Vanil, rot No. 217/85 dated 2.5.1985 line No. 61 and 196.980 M/T low carbon mild steel CRCA sheets declared as defective ex-Vanil, rot No. 217/85, line No. 62 importers M/s. S.A. International, P-3, New C.I.T. Road, Calcutta - 73, Shippers M/s. ETS A-P Landowski Samis, Paris, Port of shipment Antwerp - undervaluation and unauthorised import - regarding.

1. M/s. C Bose & Sons, Customs House Agents filed two bills of entry on behalf of M/s. S. A. International, P-3, New I.I.T. Road, Calcutta 73 for clearance of two consignments of low carbon mild steel defective CRCA sheets (as declared) shipped from Antwerp ex-s.s. Vanila rot No. 217/85, line No. 61 and 62 covering quantities 246.14 M/T and 196.98 M/T clearances of the said consignments against the following import trade control licences.

Line No. 61-----------------------------------------------------------------------------------Name of the licence Nature of licence Licence No. Face value of theholder licenses & valuedebited----------------------------------------------------------------------------------1. Monali Sea Food REP licence endorsed P/L 3073640 Rs. 133500 Pvt. Ltd., Calcutta with para. 138 13(ii) of dt. 13-7-1984 _________A.M. 1985 Policy Fl. 3 Rs. 667502. -do- -do- P/L 3073639 Rs. 20800dt. 13-7-1984 _________Fl. 3 Rs. 104003. Pronier Enterprises REP licence endorsed P/L 3075910 Rs. 16500032/46 Chandi Ghosh with para. 13 of A.M. dt. 16-1-1985 ___________Road, Calcutta-40 1985 Policy A-16(1) Rs. 330004. -do- -do- P/L 3075907 Rs. 165000dt. 16-1-1985 ___________A-16(ii)B Rs. 330005. Jalan Commercial REP licence endorsed P/L3075907 Rs. 163000Agency, 514, Rabi- with para. 138 of A.M. dt. 16-1-1985 ___________ndra Sarani, Calcutta-5 1985 Policy A-16(II)B Rs. 326006. -do- -do- P/L 3075809 Rs. 200000dt. 11 -2-1985 ___________A-16(II)B Rs. 400007. -do- -do- P/L 3075786 Rs. 163000dt. 16-1-1985 ___________A-16(i) Rs. 326008. Associated Indus- -do- P/L 3038681 Rs. 395560tries, Balu Bazar, dt. 4-3-1985 ___________Cuttack A-5 Rs. 1977809. Kalinga Enterpri- REP licence endorsed P/L 3075005 Rs. 75200ses, 22, Canning with para. 138 of A.M. dt. 16-1-1985 ___________Street, Calcutta-1 1985 Policy A-5 Rs. 13334Total licence debited Rs. 459464___________Line No. 621. Metal & Alloy Indus- REP licence endorsed P/L 3075970 Rs. 119600tries, 2, Ganesh Ch. with para. 138 of A.M. dt. 18-2-1985 ___________Avenue, Calcutta-13 1985 Policy A-5 Rs. 597872. -do- -do- P/L 3075084 Rs. 336500dt. 5-1-1985 ___________A-5 Rs. 168250Total licence debited Rs. 228037 Total declared FOB value Rs. 820592.58Total value of licences produced Rs. 687501.00_____________Balance left uncovered Rs. 133091.58--------------------------------------------------------------------------------

Thus, prima facie, as per declaration, goods valued at Rs. 1,33,091.58 is not covered by any licences.

2. All the import licences mentioned above are non-transferable licences issued with actual user conditions. The licence holders in turn have issued letters of authority in favour of M/s. S.A. International, P-3, New CIT Road, Calcutta-73, authorising them to import goods, without specifying the nature of goods, description of goods quantity or any other particulars required by them. It is the condition of the licences that the goods imported shall be handed over to the licence holders for use in their factory.

3. In respect of line No. 61, two licences belong to M/s. Monali Sea Food Pvt. Ltd., Calcutta issued against export product classifiable under F 1.3 of Appendix 17 of the Import Policy. SI. No. F 1.3 relates to fish and fish products, all others including frog legs. As per para 138(1) of A.M. 1985 Policy, the said facilities are applicable for import of raw-materials, components, consumables, spares and packing materials as are related to the products exported or manufactured by the exporters concerned. It appears that CRCA sheets defective are not required by M/s. Monali Sea Foods Pvt. Ltd. for their use insofar as CRCA sheets get rusted and contaminate the food items packed. CRCA sheets are normally used for manufacture of iron safes, trunks, buckets and such other articles and not for food processing. Hence this appears to be a case of misuse of facilities granted under para 138 of the Import Poticy. Hence it appears that licence Nos. P/L 3073640 dated 13-7-1985 and P/L 3073639 dated 13-7-1984 for clearance of goods valued at Rs. 77,150 are not valid for the import of the goods in question.

4. Similarly, in respect of line No. 61 licence No. P/L 3075910, dated 6-1-1985 issued to M/s. Pronier Enterprises, Calcutta and No. P/L 375786, dated 16-1-1985 issued to M/s. Jalan Commercial Agency, Calcutta are REP licences issued against exports of products falling under A 16(i) which are non-ferrous semis and manufactures, namely, lead semis, extrusions and solder wires, CRCA sheets are not required. Again licence Nos P/L 3075907, dated 16-1-1985 issued to M/s. Pronier Enterprises, alcutta, P/L 3075788 dated 16-1-1985 and P/L 3075809 dated 11-2-1985 issued to M/s. Jalan Commercial Agency related to the export products A 16(ii)(b) of Appendix 17 (non-ferrous semis and manufactures namely semis/extrusions of copper alloy). For the manufacture of the said products CRCA sheets dated 4-3-1985 (sic) issued to M/s. Associated Industries, Balu Bazaar, Cuttack and P/L3075905, dated 16-1-1985 issued to M/s. Kalinga Sanitary Containers, G.P. sheets are required and not CRCA sheets. If CRCA sheets are used, they will get rusted and contaminate the products causing damage to human life. All these cases appear to show the extent of misuse of para. 138 facility of the import policy.

5. As explained above, the licence Nos. P/L 3075970 dated 18-2-1985 and P/L 3075084, dated 5-1-1985 issued in the name of M/s. Metal & Alloy Industries Ltd., against export product AS (open top sanitary containers) are also not valid for the shipment of the goods in question.

6. I n the circumstances explained above and in the absence of valid supporting documents, the entire goods covered by line No. 61 and 62 with a total declared value of Rs. 8,20,592.58 appear to have been imported unauthorisedly without the cover of valid import trade control licences and hence the entire goods are liable to confiscation under Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Import and Export (Control) Act, 1947.

7. In the instant case, letters of credit were opened for the shipment of goods against the following import trade control licences as evident from the invoices produced.

(a) P/S 1960813 dated 19-12-1984

(b) P/s 2240410 dated 20-1-1985

(c) P/s 1960962 dated 23-1-1985

(d) P/s 1960818 dated 23-1-1985

(e) P/s 1960809 dated 19-12-1984

The importers however, did not produce the above licences but produced entirely different licences.

8. The goods appear to be grossly under invoiced. The goods are shipped from Antwerp, Belgium whereas the invoices are issued by one M/s. A.P. Landowski Samis, Paris. It appears that the name of the actual suppliers is suppressed and that M/s. A. P. Landowski Samis, Paris is only a middleman who have been used for resorting to under-invoicing of goods.

9. The extent of under-invoicing can be understood from the following evidences:

(a) The goods are declared as low carbon mild steel defective CRCA sheets. The invoices are not supported with the mills' test certificates. No documents have been produced to show the details of defect of the goods Imported.

(b) Theattual nature of the goods have to be ascertained on examination of the goods. The importers, are requested to arrange immediate examination of the goods.

(c) The value declared for the goods is F.F. 1400 per MT. F.O.B. Antwerp which works out to Rs. 1850 per MT approx. and CIF Rs. 2433.

(d) Imports of CRCA defective sheets have been noticed at Calcutta at prices higher than Rs. 2433 per MT. Hence on the face of it the goods appear to be undervalued. The extent of undervaluation can be ascertained only on examination of the goods.

10. In the circumstances M/s. S.A. International, P-3, New CIT Road, Calcutta-73 is called upon to furnish the following details:

(a) Their relationship with M/s. NTS-A. P. Landowski Samis, Paris either directly or indirectly.

(b) The name and address of the intending agents in India.

(c) The details of local commission paid, if any.

(d) The name of the actual suppliers of the goods.

(e) The details of insurance policy taken by the shippers.

(f) Country of origin certificate.

(g) Mills test certificate

(h) Copies of the detailed correspondence with the suppliers.

(i) Copies of the contracts or agreements with the licence holders.

11. M/s. S.A. International is also called upon to show cause why the licences should not be considered as unauthorised rendering the goods liable to confiscation under Section 111 (d) and (m) of the Customs Act, 1962 and why penalty should not be imposed on them under Section 112 ibid. The written representation along with supporting documents should be addressed to the Collector of Customs, Customs House, 15/1, Strand Road, Calcutta so as to reach him on or before 15-5-1985. If they wish to be heard in person before the case.

2. The petitioner imported two consignments of low carbon mild steel defective CRCA sheets from France under sale contract entered into between the petitioner and the exporters ETS Landowski, Paris. The petitioner submitted invoice, packing list, import licence, bill of entry, bill of lading in respect of above two consignments imported by the petitioner as per s.s. Vanil and submitted their bills of entry for clearance of goods from Calcutta Customs under valid licences. The said bills of entry were numbered as 100 and 101.

3. On May 9,1985 the respondent made an endorsement of the contract to the effect.

'Goods may be examined in presence of S.I.B. Officer before assessment of bill of entry'. The said consignments were examined by S.I.B. Metal Expert and the Shed Appraiser on May 15, 1985 at No. 12/KPD. The goods were examined. They found the goods and made the endorsement to the following effect:

'12 KPD

6815 S 104/9, 41 83 & 60

Opened S/57 above for appraisement in presence of S.I.B. Officer and Metal Expert Appr. Shri Dasgupta. Checked declaration, sizes and thickness and found in order as per invoice. Goods are found to be defective secondary.'

4. By this writ petition the petitioner challenged the show cause notice No. S.I 5-25/25-51B, dated 9.5.1985. The said show cause notice was issued under Section 124 of the said Act.

5. By the said show cause notice dated 9-5-1985 as contained in Annexure 'B' to the writ petition, the petitioner was called upon to show cause why the licences should not be considered as not valid and the import should not be considered as unauthorised rendering the goods liable to confiscation under Section 111 (d) and (m) of the said Act, and why penalty should not be imposed on them under Section 112 ibid. It was further stipulated in the said show cause that the written representation along with supporting documents should be addressed to the Collector of Customs, Customs House, 15/1, Strand Road, Calcutta-l so as to reach him on or before 15th May, 1985. It was also specifically indicated in the said show cause notice that if the petitioner wished to be heard in person before the case was adjudicated, they may state so in the written representation. If no reply is received, the case may be adjudicated ex parte.

6. That during the course of hearing, Mr. B.N. Sen, the Senior Advocate assisted by Shri A.K. Ganguly, the learned Advocate, appearing for the petitioner placed the original show Cause notice Nos. and date of the show cause notice was left blank. Subsequently, they were filled up and indicated on the top of the show cause notice as 8-5-1985, whereas the copy of the show cause notice, which was sent to M/s. J.C. Bose & Sons was dated 9-5-1985. There was a clear variance between the date appearing in the show cause notice addressed to the petitioner and the show cause notice sent to M/s. J.C. Bose & Sons inasmuch as show cause notice was taken on 9-5-1985 whereas the show cause notice sent to the petitioner was dated 8-5-1985.

7. From a reference to the show cause notice, copy whereof was produced before the Hon'ble Court, it would appear that the collector of Customs sent the same after 15th May, 1985, i.e., after the expiry of the last date of the reply of the petitioner to the show cause notice.

8. From a reference to the envelope produced before this Hon'ble Court by the petitioner it would appear that the said show cause notice, which was required to be dealt with by the petitioner by 15th May, 1985, was sent at the time when the right of the petitioner to make representation or to answer the said show cause notice was stultified or whittled down.

9. The petitioner, pursuant to the direction of the order passed by the Hon'ble Court on 17th May, 1985 filed the supplementary affidavit, which was sworn and affirmed on 3rd December, 1985 the text of the order of the Hon'ble Court dated 17th May, 1985 is set forth hereunder:

'Considering the facts and circumstances of the case, I think it is a fit case where an ex parte interim order should be passed directing the respondents not to conclude the adjudication proceedings and/or not to give any effect to the said show cause notice dated 9th May, 1985 or to the order, if any, passed in the matter and further the respondents are directed to store the imported goods in warehouse as provided under Section 49 of the Customs Act without payment of the customs duty and to keep the same in the warehouse until further order from this Court. The petitioner is given liberty to file supplementary affidavit as also to get the affidavit verified and stamped by the reopening date. The petitioner is also given liberty to add the Port Commissioner a party in the writ petition. The petitioner is given liberty to apply for further or other interim order upon notice to the respondents. Let this matter come up 'For orders' one week after the summer vacation as specially fixed matter. Liberty is given to the respondents to apply for variation or vacation of the interim order upon notice to the respondents. In view of the urgency of the matter, Rule 25A of the Writ Rule is dispensed with. The petitioner is directed to serve copies of the writ petition upon all the respondents within one week from date and file affidavit of service thereafter.'

10. Paragraph 3(h) of the affidavit filed on behalf of the respondent reads thus:

'It requires a thorough investigation but on the face of the documents available it appears that the imports have been made in an unauthorised and Illegal manner and contrary to the Customs Act as also to the Import and Export Act, 1947 and Import (Control) Order, 1955 (as amended).'

11. Mr. Sen claimed and asserted that while issuing the show cause notice, the respondents consciously and deliberately did not take into consideration while calculating the F.O.B. value of the following 3 licences, viz., (1) P/L 3038683/C, (2) P/L 3075910/C and (3) P/L 3075788/C. In that event, no reasonable person should form opinion even prima facie that the declared F.O.B. value of the goods was not covered by the licences. It was also asserted by him that on the bill of entry it was specifically mentioned that the imported goods would be handed over to the actual users only. All the letters of authority specified the nature of goods, description of the goods required to be imported on behalf of the licence holders by the letters of authority-holder. The copies of the original letters of authority were submitted to the customs authorities as contained in Annexure 'A' to the supplementary affidavit. The petitioner also effectively controverted that the allegations made in para 2 of the show cause notice were false and without any basis. The petitioner also raised specific grievances to the effect that CRCA sheets get rust and contaminated the food items packed are totally redundant and irrelevant, apart from being incorrect, because the exported sea foods are never packed in iron containers.

12. Mr. Sen thereafter referred to para 138 of the relevant Import Policy [which] permits the exporter licence holders to import such materials as are related to the products exported or manufactured by the exporter concerned/whether manufactured in the same factory or some other factories of the same manufacturer. It was claimed and contended by Mr. Sen that the iron trays are consumable and they are meant for single use in course of manufacture of sea foods or for processing sea foods, which are meant for export. The petitioner further asserted that paragraph 3 of the show cause notice is therefore, without any basis. The use of CRCA sheets as mentioned in para 3 is not exhaustive. It is according to Mr. Sen totally incorrect that CRCA sheets are not used for food processing. The summons being the basis of paragraph 3 of the show cause notice, the said show cause notice suffers from lack of actual data or proper grounds.

13. Mr. Sen also seriously assailed that para 4 of the show cause notice is based on deliberate distortion and misconstruction of paragraph 138(1) of the relevant Import Policy, Inasmuch as It was not necessary under para. 138(1) of the Import Policy that the imported goods are actual goods. All the manufacturers and the licence holders mentioned in paragraph 4, manufacture various other items of goods than those are actually exported on the particular occasion.

14. Ail the said exporters also manufacture agricultural products for which CRCA sheets defectives are required as basic raw materials. The said exporters manufacture the said goods in their factory and they need CRCA sheets defective for making such manufacture. There could not be any dispute that CRCA sheets defectives are required for manufacturing of agricultural implements like tanks and components. The imported goods are required by the said exporters for manufacturing their said products. Copies of the certificates issued by the Director of Industries to the said exporters affidavit as claimed by Mr. Sen are relevant contained in Annexure 'C' to the supplementary affidavit as also copy of the certificates of J. Ganguly & Co., Chartered Consulting Engineer, as contained in Annexure 'D'. Pioneer Enterprises and Jalan Commercial Agency do not manufacture only the items of goods mentioned in the show cause notice. The said exporters also manufacture other items as would be apparent from the respective certificates issued by the Director of Industries. It was totally incorrect that there had been any misuse of paragraph 138 of the relevant Import Policy. On the other hand, there has been deliberate misreading of paragraph 138 of the Import Policy on the part of the authority who issued the impugned show cause notice. The names of exporters have been wrongly mentioned in paragraph 4 and 5 of the show cause notice. The correct names should be 'Pioneer Enterprises' and not 'Premier Enterprises' and the correct name should be 'Metal & Allow Industries' and riot 'Metal & Alloys Industries Ltd.'. This revealed complete non-application of mind on the part of the issuing authority. The petitioner further asserted that there has been no ground for even assuming for any reasonable person that there has been any unauthorised importation or that there is any ground for confiscation of the imported goods. As such, Section 111(d) of the said Act, 1962 and Section 3(2) of the Imports and Exports (Control) Act, 1947 have got no application in this Instant case.

15. The petitioner while challenging the very basis of the show cause notice, asserted in para 9 of the supplementary affidavit that the show cause notice is wholly irrelevant and redundant inasmuch as the import licence mentioned in the letter of credit would be produced at the time of clearance of the goods. Mr. Sen asserted that it has been practice of the customs authorities to allow clearance of the goods on production of any valid import licence also not mentioned in the letter of credit.

16. Similarly paras 8 and 9 of the show cause notice Are seriously challenged by the petitioner on the ground that the same were based on surmises and conjectures and did not disclose any grounds. Apart from being factually incorrect, CRCA sheets defective have been constantly valued by the Customs authorities @ Rs. 2400 per MT at the relevant time.

17. The petitioner referred to certain instances as contained in the list in Annexure 'E' to the supplementary affidavit. The said Annexure 'B' relates to the relevant bills of entry in respect of imports mentioned therein from relevance to the same file that there has been an order of the Collector of Customs that CRCA sheets defectives should be assessed at the flat rate of not less than Rs. 2400 per MT of c.i.f. value. In the instant case, the goods imported has been declared at Rs. 433 per MT The Assistant Collector of Customs, who issued the impugned show cause notice, could not and did not form any bona fide opinion that the imported goods were under-invoiced and it is within the knowledge of the customs authorities, which was the common practice that no mill test certificate is required in respect of defective CRCA sheets.

18. Paragraph 8 of the show cause notice, according to the petitioner reveals totally prejudged view of the issuing authority inasmuch as it is common knowledge that France has not any major port and the French goods are normally exported from the Port of Antwerp in Belgium.

19. Paragraph 9 of the show cause notice, according to the petitioner, constituted the very basis of the show cause notice. During the course of hearing it is claimed and contended by Mr. Sen, assisted by Mr. A.K. Ganguly, learned Advocate that the show cause notice incurably suffered from infirmity that crept in the show cause notice.

20. Para 9, according to Mr. Sen, did disclose that there was no material at the time of issuing the show cause notice. On a plain reading of the said paragraph 9 of the show cause notice, it would appear that at least on 8th May, 1985, there was 'understanding' of certain evidences, which were yet to be effective examined, ascertained and objectively looked into by the concerned adjudicatory authority, was the foundation of the show cause notice. The word 'understanding' according to the petitioner, cannot be the foundation of the show cause notice. Mr. Sen pinpointed that without ascertainment of the actual nature of the goods, and examination, the show cause notice was issued in unseemly haste and in over-zealous manner. Mr. Sen submitted that the customs authorities were not in possession at the time of the issue of the show cause notice of any material which could be relied on as evidence nor was there any primary and basic fact:

21. Mr. Sen submitted that the customs authorities were not in possession at the time of issue of the show cause notice of any material which could be relied on as evidence as is there any primary and basic fact forming the basis of the show cause notice.

22. Mr. N. Roychowdhury, the Senior Advocate, assisted by Mrs. Kalyani Chowdhury, appearing in support of the respondents seriously resisted the plea of Mr. Sen and referred to the various paragraphs of the affidavit in opposition affirmed by Satyajtt Chakraborty, the Assistant Collector of Customs for S.I.B. and pointed out that respondents seriously denied the validity of the licence on the ground that time of the licences was the subject-matter of the imports for which the bills of entry in the instant case was presented by the petitioner. It was further contained that the petitioner did not produce any certificate against the declaration made, that the value declaration appeared to be lower than the actual accepted price, that It appeared from documents filed that the imports were made In an unauthorised, illegal manner and contrary to the accepted mode, that also against the Imports and Exports (Control) Act, 1947 and Imports (Control) Order, 1955, that the show cause notice issued by the authority was valid, legal and bona fide. The show cause notice furnished adequate and sufficient grounds.

23. Mr. Roychowdhury strenuously argued that this Court should not entertain the writ petition at this stage when only the show cause notice was issued to the petitioner, and the petitioner shall have ample opportunity to reply to the show cause notice which should and could not be adjudicated by this Court and this Court should not substitute Itself for the adjudicating authority. Besides, there is no warrant for interference by this Court under Article 226 of the Constitution.

24. Apart from the objection to the maintainability of the writ petition, Mr. Roychowdhury advanced three fold submissions :-

(I) that the licences produced for clearance are different from those produced for opening of letter of credit.

(II) The goods imported were not required for export product.

(III) the goods in question have been declared as defective. They were wrongfully declared as defective.

25. Mr. Sen in his reply effectively and strenuously contended that the three-fold submissions of Mr. Roychowdhury do not stand a moment's judicial scrutiny and proceeded to join the issues raised by Mr. Roychowdhury.

26. Mr. Sen also submitted that the licences produced are the same licences which were produced at the time of opening of letter of credit. The customs authorities specified only three licences which were used at the time of opening L/C but did not go into the details that the L/C/was enhanced. While enhancing the L/C the licences were produced before the customs authorities and the same licences were given to the bank at the time of enhancing the L/C. The bank certificate was also produced.

27. It was further argued by Mr. Sen that the plea of the respondents that imported goods are not required for the 'Export' product is wholly without any substance inasmuch as it is not the only condition of the licence. The licence was issued in terms of para. 138(1) of Import Trade Control Policy, 1984-85, which reads thus :-

'138(1). REP licences issued to manufacturer-exporters, against their exports of select products manufactured by them will be valid, within their overall value, for import of items of raw materials, components, consumables, spares and packing materials, as are related to the products exported or manufactured in the same factory as the one from which the goods were exported or some other factory of the same manufacturer, subject to 'actual user' condition. This special facility will be subject to the conditions laid down hereunder.'

28. Mr. Sen submitted that on plain reading of the said paragraph it is very clear that the import licences which are issued under this paragraph shall remain valid not only for items of raw materials related to the products exported or manufactured by the exporters concerned in their factory whether manufactured in the same factory or by some other factory of the same manufacturers. Furthermore, the goods in question were examined by the Customs Officers, Shed Appraiser, SIB Metal expert who found that the goods were defective, invoice description were in conformity with the physical verification of the goods, price thickness and size as per declaration.

29. The expression 'grounds' appearing in Section 124 of the said Act means all the basic facts and materials which must be taken into account by the adjudicating authority in making show cause notice. Therefore, nothing less than the basic facts and materials which weighed with the adjudicating authority in issuing show cause notice must be mentioned therein. The grounds must contain a pith and substance of the basic facts. Incorrect date, inconclusive examination and notion are incapable of being themselves forming of facts, although there is a rule in the distinction between primary facts and inference drawn therefrom. The expression 'understanding' appearing in the show cause notice is also incapable of being itself primary fact.

30. When the case comes before the Court, it is its duty to examine the determination of the authorities concerned having regard to its knowledge. Investigation being in process and the evidence not having been called out, it can safely be said there is no primary fact nor basic fact to support the grounds as made out in the same show cause notice. The concerned adjudicating authority had no occasion to consider the primary facts which were just being called at the time when the show cause notice was issued at the time when the investigation was being continued. The investigation report is the foundation of the show cause notice. In absence of the report, the show cause could be said to have been based on understanding of the adjudicating authority. Before the completion of the investigation the show cause notice was issued without being supported by basic or primary fact or material. Reference may be made to a judgment.

31. Lord Radcliffe, Edward (Inspector of Taxes) v. Bairstow reported in 1956 Appeal Cases page 4. Relying on the said decision, Mr. Justice P.B. Mukherjee (as he then vas) analysed the position as follows :-

'But the importance of classical observations of Lord Radcliffe lies in the distinction between primary facts and 'inferences' drawn from them and in laying down when the later are questions of law although expressed in three seemingly different expressions in jurisprudence on this point, namely, (i) no evidence to support the determination, (ii) evidence is inconsistent with the determination and (iii) the true and only reasonable conclusion contradicts the determination as to the learned Lord's preference for the third expression as being most appropriate.'

32. Observation of Lord Radcliffe and the analysis made by the Hon'ble Mr. Justice P.B. Mukherjee were followed by this Court in a later decision in Golam Mahiuddin v. State of West Bengal AIR 1964 Cal. 506.

'All Administrative Tribunals must act in good faith, must have regard to relevant considerations only, must disregard all irrelevant considerations, must not seek to promote purposes alien to the letter or the spirit of legislation that gives it power to it and must not act arbitrarily or capriciously. In other words, an Administrative Tribunal must act bona fide on relevant considerations and also act with a sense of responsibility in discharge of its duties.'

The investigation not being over, the examination and ascertainment of basic and primary facts remained in the stage of exploration, the show cause notice was issued merely on the basis of mere understanding of the adjudicatory authority.

33. It was not possible nor could it said to be possible for the adjudicatory authority to issue show cause notice when the concerned authority was not certain about what would be the result of the examination and ascertainment. The adjudicating authority at the material time on the basis of incomplete investigation could not have arrived even at the conclusion. The show cause notice was founded upon a mere fancy and surmise of the adjudicatory authorities. There was a complete absence of fairness in the present case. The customs authority in issuing the show cause notice under Section 124 of the said Act acted in a quasi-judicial capacity. The show cause notice not having been transmitted to the petitioner before 15th May, 1985 the petitioner's right of effectively replying to the said show cause notice was seriously prejudiced. No explanation was offered by the customs authority as to why and in what circumstances the show cause notice was sent to the petitioner after the expiry of the period of reply to the show cause notice as aforesaid. No explanation was given as to why the said show cause notice reached the petitioner only on 23rd May, 1985. It is evident that the customs authority failed to act reasonably and with a sense of responsibility in discharge of statutory function. The reply to the show cause notice in my view was asked for by adjudicatory authority for supplementing the show cause notice.

34. The department miserably failed to justify the charge of under-Invoicing either by documentary or by evidence of remittance of under-invoiced amount.

35. In my view this Court in the exception circumstances will be justified in interfering with the show cause notice on the basis as indicated above. Apart from the said basis, the adjudicatory authority while directing that the investigation should proceed quickly should have waited till the reception of the investigation report containing all the basic and primary facts. The show cause notice merely on the basis of understanding appearing in para 9 without having the support of primary or basic facts would be open for challenges on the ground that at the stage ascertainment and examination was inconclusive and incomplete. The incorrect data or incomplete investigation cannot and could not constitute the grounds within the meaning of Section 124 of the said Act.

36. The grievance raised is that the notice that has been issued, apart from being uncertain and indeterminate, is founded upon assumption and presumption to such an extent that the petitioner had no reasonable opportunity of defending himself. The notice under Section 124 of the said Act is a statutory notice and the conditions as provided for in the said section must be vigorously, scrupulously and strictly adhered to. If it is necessary to inform a person whose goods are sought to be confiscated or who is sought to be seriously affected or penalised on the grounds upon which it is set in motion, it therefore, follows such ground must be clear and specific so that the person sought to be fastened with notice afforded an effective opportunity of defending himself. Salutory principle criminal jurisprudence and of natural justice must operate with its full force. Show cause notice impugned in the writ petition, instead of affording petitioner prove legal importation, required the petitioner to disprove the conclusion already arrived at by the authority.

37. In the case of Collector of Central Excise and Land Customs, Shillong and Anr. v. Sanawarmal Purohit and Anr. reported in 1979 Excise Law Times 613, it was held that it is the duty of the quasi-judicial authority to inform the person charged before him of the charges with full details of evidence-in support of the charge and to give them an opportunity to meet those charges and offences against them. It was further held by the Supreme Court in the aforesaid decision (supra) that if the Tribunal has acted without or patently in excess of jurisdiction or conducted the proceedings before it in a manner contrary to the rules of natural justice or offending the essence of justice or fair play, the High Court would be competent to exercise power to issue the prerogative writ or certiorari to correct the order of the Tribunal even if an appeal to a departmental authority was open and the aggrieved party did not avail of their remedy.

38. From the relevant documents, as annexed to the writ petition as also supplementary affidavit, it appears that the price directed to be assessed should not be lower than Rs. 2400 and the documents thus produced by Mr. Roychowdhury related to the period of 1986 and not of the year 1985. The said document be tried as part of the record. The show cause notice, in my view, can be challenged in a proceeding under Section 226 of the Constitution, if it is shown that the concerned authority acted in gross violation of the provisions of law and in utter disregard of the materials on record. In the instant case, the authority concerned, without having regard to the relevant provisions of law and in utter disregard of the opinion and endorsement of the concerned officer, issued the show cause notice and hence under the Article 226 of the Constitution the Court can interfere with the show cause notice at this stage. In the instant case the show cause notice issued by the customs authority seeking to initiate the proceeding to prejudice of the petitioner acted in excess of jurisdiction and hence the show cause notice can be challenged by a writ petition. The show cause notice in my view also violated the concept of justice and fair play inasmuch as the petitioner was precluded from replying to the show cause notice on 15th May, 1985. Respondents ought not to have sent or despatched the same. Reference may be made to the decision of Collector of Central excise v. Somarmall Purohit 1979 ELT-J 631 (SC) and Charandas Malhotra v. The Collector of Customs : AIR1968Cal28 . The show cause notice having been founded upon surmise the conjecture and no ground having been effectively disclosed, the interference of this Court under Article 226 of the Constitution is warranted.

39. The contention of Mr. Roychowdhury, although very attractive in appearance,'; the same lacks in substance inasmuch as the show cause notice could not have been issued* at the time when the concerned authorities directed that the investigation should proceed quickly. The show cause notice should also be opened for judicial review for the reasons as elaborately discussed above. Judicial review of the show cause notice suffered from illegality, Irrationality and procedural impropriety which in the facts of the case call for interference by this Court under Article 226 of the Constitution of India. No answer could be found either in the affidavit or from Mr. Roychowdhury as to how, why and in what circumstances the show cause notice without being supported by basic facts and materials could be issued. The affidavit in opposition of the respondents disclosed that the show cause notice was issued before completion of investigation. Therefore, there is no factual basis nor there is any material on record to sustain the show cause notice and the same was issued merely on surmise and conjectures. The endorsement made on 9th May and 15th May by the concerned officials demolish the very intention of the show cause notice.

40. The entire show cause notice having been issued without any application of mind cannot but be quashed.

41. In view of the foregoing reasons, I allow the writ application. The respondents are directed to assess the duties payable by the petitioner forthwith and upon the payment of the duty in full, by the petitioner, the respondents are to release the goods without any loss of time. The petitioner at the first instance be required to pay the warehousing the demurrage charges. The respondents are also directed to refund the petitioner warehousing and demurrage charges within 18 days from the presentation of the bill for the aforesaid charges. Since the petitioner was unnecessarily fastened with the proceedings, the liability of the payment as regards the warehousing and demurrage charges cannot be imposed on the petitioner.

There will be no order as to costs.