Managing Directors of the Company to be summoned only when authorized representatives are not cooperating

The Hon'ble Gauhati High Court in Century Plyboards (India) Ltd. &Anr. v. the Union of India & Ors. [WP(C) 3210 of 2022 dated May 18, 2022] held that the Managing Director ("MD") of a company should not be directly summoned by authorities under Section 108 of the Customs Act, 1962 ("the Customs Act"). Further held that, authorized representatives of a company are to be summoned and MD can only be summoned, if the former is not cooperating or if investigation is to be completed expeditiously.

Facts

Century Plyboards (India) Ltd. ("the Petitioner") is an Indian manufacturer, seller and exporter of plywoods, laminates, doors, PVCs, and veneers. The Petitioner offers plywood products under the brand name, Century Ply, and exports its range of products to over 20 countries.

In furtherance of an enquiry conducted by the Revenue Department ("the Respondent") in connection with import of EPCG Licenses by the Petitioner, a summon dated April 27, 2022 under Section 108 of the Customs Act had been directly issued to the MD of the Petitioner by its name, without providing the alternative of it being issued to an authorized representative. Being aggrieved, the Petitioner has filed this petition.

The Petitioner contended that the Respondent cannot issue summon directly to the MD of any company for enquiry as per Circular No. F. No. 208/122/89-CX.6 dated October 13, 1989 ("the Circular") issued by the CBEC.

Issue

Whether the Respondent can issue summon directly to the MD of any company for enquiry under Section 108 of the Customs Act?

Held

The Hon'ble Gauhati High Court in WP(C) 3210 of 2022 dated May 18, 2022held as under:

• Observed that, it is the practice of the Respondent not to issue the summon to the MD or the other directors without any justification.
• Further noted that summoning of the MD should be undertaken only as a last resort in cases where assesses are not cooperating or the investigations are to be completed expeditiously and there is no reasoned view formed by the Respondent that the Petitioner is not cooperating or that the presence of the MD specific is required for the investigation.
• Held that, the Respondent cannot directly summon the MD of the Petitioner.
• Quashed the summon issued to the MD of the Petitioner.
• Directed the Respondent to issue the summons to an authorized representative of the Petitioner as per the Circular.
• Opined that, the summons to be issued to the Petitioner Company shall henceforth be done in the required manner in accordance with the law provided in the Circular.