RELIANCE INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal has been preferred against the order dated 19th of November, 1987 of Sujata Manohar, J. dismissing the writ petition filed by the appellants (hereinafter referred to as "thepetitioners") summarily, though by speaking order.

(2.) The petition challenges the legality of a notice dated 10th of February, 1987 issued by the Deputy Collector of Customs of Bombay, who has been joined as respondent No. 3 in the writ petition. Respondent Nos. 1 and 2 are the Union of India and the Collector of Customs respectively. The show cause notice is of nearly 33 pages which gives a detailed history of the facts and circumstances under which the 1st petitioner company, namely, Reliance Industries Ltd., of which the 2nd petitioner is the Principal Officer and the shareholder, imported equipment under import licences issued to them for setting up plant for the manufacture of polyester filament yarn (PFY). The facts leading the petition have been, with respect, ably summarised by the learned Single Judge. It is not necessary to mention the same again in details in this order. Briefly stated, the Reliance Industries Ltd., formerly known as Reliance Textile Industries, were given import licence for importing plant and equipment for the manufacture of PFY with an annual capacity of 10,000 M.T. The plant was to be established at Patalganga, a place in Raigad District. Subsequently, another import licence was given for importing further machinery with a capacity of 15,125 M.T. per annum. With the import and the installation of the second set of machinery, for which valid import licence was given, the installed capacity of the plant would be 25,125 M.T. per annum of PFY. The petitioners contend that the import of the machinery was made in accordance with the import licences given by the Central Government and in accordance with the normal procedure under which they were cleared by the proper officer under Section 47 of the Customs Act, 1962. Import duty, however, was assessed provisionally and final assessment was to be made after reconciliation of all the items imported.

(3.) The show cause notice dated 10th of February, 1987 recalls these and other facts, but proceeds to point out that the officers of the Customs Department paid a visit to the plant at Patalganga and inspected the same in the presence of the officer of the 1st petitioner company. The show cause notice recalls that the import licences given to the 1st petitioner company were for plant and machinery which would have annual capacity of 25,125 M.T. of PFY. The figures of actual production are much above the installed capacity. This is established from the returns filed by the company with the Excise Department. Paragraph 17 of the show cause notice records that it had been found that the entire PFY plant-capacity, calculated in any of the ways, was more than 55,000 M.T. per annum which was more than double the declared licensed capacity. From this an inference has been drawn that equipment more than what is permitted under the import licence has been imported by the 1st petitioner company and, therefore, there is evasion of import duty. The total admitted invoice price of the plant having declared capacity of 25,125 M.T. per year was Rs. 61.47 crores. On this basis, the invoice price of the PFY plant having installed capacity of 55,440 M.T. per annum would be Rs. 122.94 crores. The show cause notice, therefore, alleges that there was a misdeclaration of the plant imported and says that total duty recoverable on the basis of calculations made in the show cause notice was Rs. 119.64 crores. It was also alleged in the show cause notice that the imported equipment is liable to be confiscated. The notice purports to take action under Section 111(d), (1) and (m) of the Customs Act, 1962, read with Section 3 of the Import and Export Control Act, 1947.