UNION OF INDIA & Ors. v. Ms. Himanshi

Petitioner No.1 is the partnership firm and petitioner No.2 is the proprietorship concern of petitioner No.3, who is also impleaded in his individual capacity. They are aggrieved by the composite Show Cause Notice (for short, ‘SCN’) issued to the two firms dated 26.09.2025 (Annexure P-1). The notice is primarily assailed on the ground that the jurisdictional facts justifying the issuance of the notice are lacking in the facts of the case and, therefore, the impugned action deserves interference by this Court under Article 226 of the Constitution of India.

#2. Undisputed facts of the case are that the two firms were engaged in importing areca nuts. During the course of business, the petitioners imported certain consignments from Sri Lanka. The documents were submitted along with the consignments received by the CWP-2537-2026 (O&M) 2 petitioners, demonstrating that the imported areca nuts had Sri Lanka as the country of origin, for which certificates were uploaded by the petitioners. The petitioners also availed the duty exemption benefit under Notification No.26/2000-Cus (Tariff) dated 01.03.2000, in the form of differential customs duty amounting to Rs.78,07,398/-. The customs authorities proceeded to verify the credentials of the documents furnished by the petitioners, while exercising jurisdiction under Section 28DA of the Customs Act, 1962 read with Rule 6 of the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020. Apart from the petitioners, various other importers were also proceeded against on similar lines. The certificates of origin issued by the authorities of Sri Lanka were verified through the High Commission of India at Colombo. The authorities based in Sri Lanka responded vide their communication containing the following details:- Sr. No. CoO certificate number BE number and date Port of import Name of the importer Name of the supplier 1 2 CO/ISFTA/ 28.09.2020 9022212 01.10.2020 INLDH6 RV International Basnayaka Exports CO/ISFTA/ 29.09.2020 9022210 01.10.2020 INLDH6 RV International Basnayaka Exports Final verification report by Department of Commerce CoO has been sent to CID investigation CoO has been sent to CID investigation Remarks (discrepancies observed by FTA cell and informed to Department of Commerce) CoO reference number indicated the CoO number “CO/ISFTA/ 2019/20211”. Further mentioned as “2020EXP- RVINT03” whereas as per the CoO the invoice no. is “2020EXP- RVINT03-A.” The dat eof coO is stated as “20.10.2020” in the report whereas the CoO has date indicated as “09.09.2020.” CWP-2537-2026 (O&M) 3 3

#3. CO/ISFTA/ 20.10.2020 9277949 20.10.2020 INLDH6 Star Spices Basnayaka Exports CoO not issued by Department of Commerce As per the above description, the certificate of origin relied upon by petitioner No.1 dated 20.10.2020 was never issued by the Department of Commerce. So far as petitioner No.2 is concerned, the certificate of origin contains a mismatch, inasmuch as the invoice mentioned therein is different from the invoice mentioned in the certificate of origin relied upon by the petitioner. The communication also intimated that the certificate of origin had been sent to the CID for investigation. It is on the basis of the above information furnished that the SCN has been issued to the petitioners.

#4. The petitioners have assailed the SCN primarily on the ground that the certificate of origin was issued in the year 2020, whereas the clarification in that regard was sought and received in June 2024, which reveals that, in respect of petitioner No.2, the certificate of origin has been sent to the CID for investigation. Learned Senior Counsel for the petitioners states that, so far as petitioner No.1 is concerned, she does not intend to press the writ petition, as an apparent fallacy is noticed in the certificate of origin, in view of the fact that such certificate of origin was, in fact, never issued by the Department of Commerce. Learned Senior Counsel, however, presses the writ petition in respect of petitioner No.2.

#5. On behalf of petitioner No.2, reliance is placed upon the judgments passed by the Hon'ble Supreme Court of India in Kothari CWP-2537-2026 (O&M) 4 Filaments Vs. Commissioner of Customs (Port), 2009 (2) SCC 192 and Pooja Batra Vs. Union of India and others, 2009 (5) SCC 296.

#6. In Kothari Filaments (supra), the facts have been noticed by the Supreme Court in paragraphs 9 to 13, which are reproduced hereinafter:- “9. The show-cause notice is a detailed one. It is stated therein that through departmental source, overseas enquiries had been carried out. The information which was gathered during the said overseas enquiry through departmental source, however, was not final and conclusive. Be that as it may, concededly, no document pertaining thereto was supplied or was shown to the appellant. The Commissioner of Customs, however, in his order dated 29-12-2000 made liberal use of the said information, stating: “In the meantime, through departmental source the overseas enquiry was carried out and it was partly ascertained that the exporting company, Texpo International of 57 Wyndham St., 5th Floor, Hong Kong does exist which is registered with the business register Hong Kong. This is a partnership concern. However, the relationship between Indian importers, M/s Kothari Filaments and the Belgian company, Lok Hauk Food and Texpo International, Hong Kong could not be verified. Regarding verification of genuineness of documents produced by Texpo International, Hong Kong and attested by Indian Chambers of Commerce revealed that the attestation of documents by them was made in normal course, they neither verified the contents of the documents nor undertake any responsibility for the contents of the documents attested. Evidence to this effect cannot be disclosed at this juncture since the enquiry is yet to be completed.” CWP-2537-2026 (O&M) 5

#10. Inter alia, relying on or on the basis of the result of the said purported enquiry, it was held: “On overseas enquiry, as is evident from Paras 27 and 28 of the show-cause notice that there exists a firm in the name and style of M/s Lok Hauk Food in Belgium. But this firm is not engaged in the business of tetracycline. It is only a restaurant. The proprietor of the firm also stated that some mischievous elements have made use of their letterheads to wrongly implicate them. This overseas enquiry at least establishes the fact that the goods were in fact not meant for the Belgian importer. Moreover, the matter of stacking of tetracycline along with lithopone also would lead anybody to conclude that tetracycline was mixed up with lithopone in such an intermingled fashion that it would be evident to conclude that tetracycline is meant for concealment.”

#11. The question which arises for consideration is as to whether the impugned order was passed in violation of the principles of natural justice. Before, however, we advert to the said question, we may notice the stand taken by the respondents herein in their counter-affidavit before this Court, which is in the following terms: “In Paras 27 and 28 of the show-cause notice, sufficient indications have been given as regards the outcome of the overseas enquiry. Although the documents were not given to them, the initial burden was upon the appellants to show their bona fide mistake. Unless sufficient materials are placed by the appellants showing that it was a mistake on the part of the foreign exporter to send wrong items and the conclusion of the overseas enquiry was wrong, the Customs Authority has no liability to disclose their materials. The position would have been different if the initial onus was upon the Customs Authority to prove mala fide CWP-2537-2026 (O&M) 6 intention of the appellants and in such case, it could be legitimately argued by the appellants that in the absence of disclosure of documents they were unable to controvert the veracity of such documents.”

#12. Does the show-cause notice make enough indication in regard to the nature of enquiry as also the conclusions thereof is the question? In our opinion, it does not.

#13. Para 27 of the show-cause notice clearly demonstrates that the contents of the document were not verified. It had categorically been stated that as the enquiry was yet to be completed, disclosure of the evidence was not permissible. Despite the fact that the result of such overseas enquiry was not conclusive, as noticed hereinbefore, liberal use thereof was made by the Commissioner of Customs in his order. The Commissioner of Customs was conscious of the fact that the result of the enquiry was not conclusive one way or the other. It is one thing to say that denial to supply the documents collected in the said enquiry has a statutory backing but it is another thing to say that use thereof was to be made without supplying the copies thereof.”

#7. In Pooja Batra (supra), the Supreme Court has essentially reiterated the principles laid down in Kothari Filaments (supra). In Kothari Filaments (supra), the overseas inquiry through departmental sources had not become final and conclusive. No document pertaining thereto was supplied or shown to the appellant either. The appellant therein was also not apprised of the factual accusations forming the basis of the action. It was in this context that the Supreme Court found the jurisdictional facts to be missing, and consequently interfered with the action of the Department. However, the facts of the present case are quite CWP-2537-2026 (O&M) 7 distinct.

#8. In this case, petitioner No.3 is the proprietor of the two firms, which have relied upon certificates of origin issued by the Sri Lankan authorities, regarding the import of areca nuts having originated from Sri Lanka. One of the certificates, i.e. in respect of petitioner No.1, is confirmed to have not been issued by the Ministry of Commerce itself. The certificate, in respect of petitioner No.1, therefore lacks genuineness.

#9. So far as petitioner No.2 is concerned, the invoice number mentioned in the certificate of origin is at variance with the invoice number relied upon by the petitioner. The mere fact that the Sri Lankan authorities have referred the matter to the CID for investigation would not mean that the apparent dichotomy noticed in the certificate of origin stands obliterated. The reference of the matter to the CID for investigation can always be to unearth other aspects involved in the matter. However, so long as the apparent dichotomy noticed by the authorities is not disputed, the issuance of the notice cannot be assailed on the ground of lack of jurisdictional facts. We are otherwise not required to examine the petitioner's defence in respect of the factual dichotomy noticed in the certificate of origin, as such facts would require examination at the level of the customs authorities in the first instance.

#10. In the facts of the case, we find that jurisdictional facts do arise justifying the issuance of the SCN, and the petitioner's explanation in respect of the alleged anomalies pointed out therein can always be furnished before the authorities. Such aspects are not required to be CWP-2537-2026 (O&M) 8 adjudicated by us at this stage.

#11. Leaving it open for the petitioner(s) to explain the dichotomy noticed in the impugned notice before the customs authorities, and for its examination by the competent authority, this writ petition is dismissed. The authority that has issued the notice is otherwise the competent authority for the purpose.

#12. All pending miscellaneous application(s), if any, shall also stand disposed of. [ASHWANI KUMAR MISHRA] ACTING CHIEF JUSTICE [ROHIT KAPOOR] JUDGE JULY 03, 2026 Rahul Joshi

#1. Whether Speaking/reasoned 2. Whether Reportable Yes/No Yes/No